ANTERO RESOURCES Corp 10-Q for FY2023 Q1

ANTERO RESOURCES Corp (AR)

10-Q 2023-04-26 For: 2023-03-31

Added on April 12, 2026

About this 10-Q

ANTERO RESOURCES Corp filed this 10-Q on April 26, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.41B; up 79.0% from $786.84M a year earlier
Net income: $261.2M; compared with a net loss of $174.7M a year earlier
Diluted EPS: $0.69; compared with -$0.50 a year earlier

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Delaware		80-0162034
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1615 Wynkoop Street, Denver, Colorado		80202
(Address of principal executive offices)		(Zip Code)

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	AR	New York Stock Exchange

Large Accelerated Filer ☒		Accelerated Filer ☐
Non-accelerated Filer ☐		Smaller Reporting Company ☐
Emerging Growth Company ☐


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		1
PART I—FINANCIAL INFORMATION		3
Item 1.	Financial Statements (Unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	43
PART II—OTHER INFORMATION		44
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities	44
Item 4.	Mine Safety Disclosures	44
Item 6.	Exhibits	45
SIGNATURES		46


			(Unaudited)
	December 31,		March 31,
	2022		2023
Assets
Current assets:
Accounts receivable	$	35,488		30,207
Accrued revenue		707,685		379,337
Derivative instruments		1,900		6,242
Prepaid expenses and other current assets		42,452		21,856
Total current assets		787,525		437,642
Property and equipment:
Oil and gas properties, at cost (successful efforts method):
Unproved properties		997,715		1,013,780
Proved properties		13,234,777		13,450,257
Gathering systems and facilities		5,802		5,882
Other property and equipment		83,909		87,091
		14,322,203		14,557,010
Less accumulated depletion, depreciation and amortization		(4,683,399)		(4,771,093)
Property and equipment, net		9,638,804		9,785,917
Operating leases right-of-use assets		3,444,331		3,401,994
Derivative instruments		9,844		9,825
Investment in unconsolidated affiliate		220,429		219,515
Other assets		17,106		16,253
Total assets	$	14,118,039		13,871,146
Liabilities and Equity
Current liabilities:
Accounts payable	$	77,543		83,685
Accounts payable, related parties		80,708		99,784
Accrued liabilities		461,788		318,084
Revenue distributions payable		468,210		381,880
Derivative instruments		97,765		28,716
Short-term lease liabilities		556,636		553,532
Deferred revenue, VPP		30,552		29,757
Other current liabilities		1,707		2,103
Total current liabilities		1,774,909		1,497,541
Long-term liabilities:
Long-term debt		1,183,476		1,312,046
Deferred income tax liability, net		759,861		822,010
Derivative instruments		345,280		75,854
Long-term lease liabilities		2,889,854		2,851,571
Deferred revenue, VPP		87,813		81,075
Other liabilities		59,692		60,657
Total liabilities		7,100,885		6,700,754
Commitments and contingencies
Equity:
Stockholders' equity:
Preferred stock, $0.01 par value; authorized - 50,000 shares; none issued		—		—
Common stock, $0.01 par value; authorized - 1,000,000 shares; 297,393 shares issued and 297,359 outstanding as of December 31, 2022, and 299,321 shares issued and outstanding as of March 31, 2023		2,974		2,993
Additional paid-in capital		5,838,848		5,806,031
Retained earnings		913,896		1,102,340
Treasury stock, at cost; 34 shares and zero shares as of December 31, 2022 and March 31, 2023, respectively		(1,160)		—
Total stockholders' equity		6,754,558		6,911,364
Noncontrolling interests		262,596		259,028
Total equity		7,017,154		7,170,392
Total liabilities and equity	$	14,118,039		13,871,146


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended March 31,
	2022		2023
Revenue and other:
Natural gas sales	$	995,792		668,315
Natural gas liquids sales		660,305		495,435
Oil sales		63,294		51,811
Commodity derivative fair value gains (losses)		(1,011,380)		126,192
Marketing		69,038		58,529
Amortization of deferred revenue, VPP		9,272		7,533
Other revenue and income		519		533
Total revenue		786,840		1,408,348
Operating expenses:
Lease operating		17,780		29,321
Gathering, compression, processing and transportation		590,278		645,172
Production and ad valorem taxes		52,808		49,276
Marketing		98,896		81,361
Exploration and mine expenses		898		763
General and administrative (including equity-based compensation expense of $4,649 and $13,018 in 2022 and 2023, respectively)		35,691		57,261
Depletion, depreciation and amortization		168,388		167,582
Impairment of property and equipment		22,462		15,560
Accretion of asset retirement obligations		2,444		878
Contract termination		8		29,550
Loss (gain) on sale of assets		1,786		(91)
Other operating expense		—		225
Total operating expenses		991,439		1,076,858
Operating income (loss)		(204,599)		331,490
Other income (expense):
Interest expense, net		(37,713)		(25,700)
Equity in earnings of unconsolidated affiliate		25,178		17,681
Loss on early extinguishment of debt		(10,654)		—
Loss on convertible note inducement		—		(86)
Total other expense		(23,189)		(8,105)
Income (loss) before income taxes		(227,788)		323,385
Income tax benefit (expense)		53,092		(62,183)
Net income (loss) and comprehensive income (loss) including noncontrolling interests		(174,696)		261,202
Less: net income (loss) and comprehensive income (loss) attributable to noncontrolling interests		(18,277)		47,771
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation	$	(156,419)		213,431

Income (loss) per share—basic	$	(0.50)		0.72
Income (loss) per share—diluted	$	(0.50)		0.69

Weighted average number of shares outstanding:
Basic		314,081		296,763
Diluted		314,081		311,846


					Additional		Retained Earnings
	Common Stock				Paid-in		(Accumulated		Treasury Stock				Noncontrolling		Total
	Shares		Amount		Capital		Deficit)		Shares		Amount		Interests		Equity
Balances, December 31, 2021		313,930	$	3,139		6,371,398		(617,377)		—	$	—		308,932		6,066,092
Equity component of 2026 Convertible Notes, net		—		—		(24,411)		3,229		—		—		—		(21,182)
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		780		8		(10,385)		—		—		—		—		(10,377)
Repurchases and retirements of common stock		(3,690)		(37)		(74,745)		(25,263)		—		—				(100,045)
Equity-based compensation		—		—		4,649		—		—		—		—		4,649
Distributions to noncontrolling interests		—		—		—		—		—		—		(35,757)		(35,757)
Net loss and comprehensive loss		—		—		—		(156,419)				—		(18,277)		(174,696)
Balances, March 31, 2022		311,020	$	3,110		6,266,506		(795,830)		—	$	—		254,898		5,728,684

Balances, December 31, 2022		297,393	$	2,974		5,838,848		913,896		(34)	$	(1,160)		262,596		7,017,154
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		514		5		(11,464)		—		—		—		—		(11,459)
Conversion of 2026 Convertible Notes		4,030		40		17,132		—								17,172
Repurchases and retirements of common stock		(2,616)		(26)		(51,503)		(24,987)		34		1,160		—		(75,356)
Equity-based compensation		—		—		13,018		—		—		—		—		13,018
Distributions to noncontrolling interests		—		—		—		—		—		—		(51,339)		(51,339)
Net income and comprehensive income		—		—		—		213,431		—		—		47,771		261,202
Balances, March 31, 2023		299,321	$	2,993		5,806,031		1,102,340		—	$	—		259,028		7,170,392


Balance as of December 31, 2022 ⁽¹⁾	$	220,429
Equity in earnings of unconsolidated affiliate		17,681
Dividends from unconsolidated affiliate		(31,285)
Elimination of intercompany profit		12,690
Balance as of March 31, 2023 ⁽¹⁾	$	219,515


Asset retirement obligations—December 31, 2022	$	59,485
Obligations incurred		248
Accretion expense		878
Settlement of obligations		(308)
Revisions to prior estimates		196
Asset retirement obligations—March 31, 2023	$	60,499


		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
Total awarded and unvested—December 31, 2022	4,676,219	$	15.29
Granted	1,425,619		25.98
Vested	(892,595)		3.20
Forfeited	(58,898)		22.46
Total awarded and unvested—March 31, 2023	5,150,345	$	20.27


Dividend yield		—	%
Volatility		82	%
Risk-free interest rate		4.61	%
Weighted average fair value of awards granted—Absolute TSR	$	33.96


		Weighted
	Number of	Average Grant
	Units	Date Fair Value
Total awarded and unvested—December 31, 2022	1,329,725	$	23.18
Granted	417,466		28.51
Vested	—		—
Total awarded and unvested—March 31, 2023	1,747,191	$	24.45


					(Unaudited)
	December 31, 2022				March 31, 2023
	Fair		Carrying		Fair		Carrying
	Value ⁽¹⁾		Value ⁽²⁾		Value ⁽¹⁾		Value ⁽²⁾
2026 Notes	$	100,987		96,123		100,987		96,179
2029 Notes		410,860		402,872		415,257		403,011
2030 Notes		556,260		593,908		556,500		594,083
2026 Convertible Notes		406,039		55,773		209,135		38,673
Total	$	1,474,146		1,148,676		1,281,879		1,131,946


				Weighted
				Average
Commodity / Settlement Period	Index	Contracted Volume		Price
Natural Gas
April-December 2023	Henry Hub	43,000	MMBtu/day	$	2.37	/MMBtu


				Weighted Average
Commodity / Settlement Period	Index to Basis Differential	Contracted Volume		Hedged Differential
Natural Gas
April-December 2023	NYMEX to TCO	50,000	MMBtu/day	$	0.525	/MMBtu
January-December 2024	NYMEX to TCO	50,000	MMBtu/day		0.530	/MMBtu


				(Unaudited)
	Balance Sheet	December 31,		March 31,
	Location	2022		2023
Asset derivatives not designated as hedges for accounting purposes:
Commodity derivatives—current	Derivative instruments	$	—		397
Embedded derivatives—current	Derivative instruments		1,900		5,845
Embedded derivatives—noncurrent	Derivative instruments		9,844		9,825

Total asset derivatives ⁽¹⁾			11,744		16,067

Liability derivatives not designated as hedges for accounting purposes:
Commodity derivatives—current ⁽²⁾	Derivative instruments		97,765		28,716
Commodity derivatives—noncurrent ⁽²⁾	Derivative instruments		345,280		75,854

Total liability derivatives ⁽¹⁾			443,045		104,570

Net derivatives liability ⁽¹⁾		$	(431,301)		(88,503)


	Statement of
	Operations	Three Months Ended March 31,
	Location	2022		2023
Commodity derivative fair value gains (losses) ⁽¹⁾	Revenue	$	(994,483)		127,080
Embedded derivative fair value gains (losses) ⁽¹⁾	Revenue	$	(16,897)		(888)


			Three Months Ended March 31,
Cost	Classification	Location	2022		2023
Operating lease cost	Statement of operations	Gathering, compression, processing and transportation	$	365,834		381,283
Operating lease cost	Statement of operations	General and administrative		2,867		2,937
Operating lease cost	Statement of operations	Contract termination		—		1,122
Operating lease cost	Statement of operations	Lease operating		45		21
Operating lease cost	Balance sheet	Proved properties ⁽¹⁾		7,759		39,770
Total operating lease cost			$	376,505		425,133

Finance lease cost:
Amortization of right-of-use assets	Statement of operations	Depletion, depreciation and amortization	$	118		92
Interest on lease liabilities	Statement of operations	Interest expense		14		114
Total finance lease cost			$	132		206

Short-term lease payments			$	48,760		37,701


	Operating Leases		Financing Leases		Total
2023	$	561,359		891		562,250
2024		685,290		1,181		686,471
2025		609,654		1,139		610,793
2026		556,196		804		557,000
2027		457,972		38		458,010
Thereafter		1,252,713		—		1,252,713
Total lease payments		4,123,184		4,053		4,127,237
Less: imputed interest		(721,190)		(944)		(722,134)
Total	$	3,401,994		3,109		3,405,103


			Processing,
			Gathering,
	Firm		Compression		Operating and		Imputed Interest
	Transportation		and Water Service		Financing Leases		for Leases		Other
	(a)		(b)		(c)		(c)		(d)		Total
Remainder of 2023	$	886,835		53,618		426,736		135,514		641		1,503,344
2024		1,145,151		62,892		532,603		153,869		—		1,894,515
2025		1,131,583		51,545		486,033		124,760		—		1,793,921
2026		1,129,147		18,368		459,014		97,985		—		1,704,514
2027		1,124,462		17,080		384,371		73,639		—		1,599,552
Thereafter		5,465,800		85,209		1,116,346		136,367		—		6,803,722
Total	$	10,882,978		288,712		3,405,103		722,134		641		15,299,568


	Three Months Ended March 31, 2022
					Equity Method
	Exploration				Investment in		Elimination of
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliate		Total
Sales and revenues:
Third-party	$	717,283		69,038		395		(395)		786,321
Intersegment		519		—		218,096		(218,096)		519
Total revenue		717,802		69,038		218,491		(218,491)		786,840

Operating expenses:
Lease operating		17,780		—		—		—		17,780
Gathering, compression, processing, transportation and water handling		590,278		—		42,012		(42,012)		590,278
General and administrative		35,691		—		17,931		(17,931)		35,691
Depletion, depreciation and amortization		168,388		—		28,300		(28,300)		168,388
Impairment of property and equipment		22,462		—		—		—		22,462
Other		57,944		98,896		1,094		(1,094)		156,840
Total operating expenses		892,543		98,896		89,337		(89,337)		991,439
Operating income (loss)	$	(174,741)		(29,858)		129,154		(129,154)		(204,599)
Equity in earnings of unconsolidated affiliates	$	25,178		—		23,232		(23,232)		25,178
Capital expenditures for segment assets	$	215,876		—		84,267		(84,267)		215,876


	Three Months Ended March 31, 2023
					Equity Method
	Exploration				Investment in		Elimination of
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliate		Total
Sales and revenues:
Third-party	$	1,349,476		58,529		272		(272)		1,408,005
Intersegment		343		—		259,203		(259,203)		343
Total revenue		1,349,819		58,529		259,475		(259,475)		1,408,348

Operating expenses:
Lease operating		29,321		—		—		—		29,321
Gathering, compression, processing, transportation and water handling		645,172		—		57,873		(57,873)		645,172
General and administrative		57,261		—		17,347		(17,347)		57,261
Depletion, depreciation and amortization		167,582		—		35,196		(35,196)		167,582
Impairment of property and equipment		15,560		—		—		—		15,560
Other		56,838		105,124		714		(714)		161,962
Total operating expenses		971,734		105,124		111,130		(111,130)		1,076,858
Operating income (loss)	$	378,085		(46,595)		148,345		(148,345)		331,490
Equity in earnings of unconsolidated affiliates	$	17,681		—		24,456		(24,456)		17,681
Capital expenditures for segment assets	$	351,312		—		42,279		(42,279)		351,312


					Amount of
	Three Months Ended March 31,				Increase		Percent
	2022		2023		(Decrease)		Change
Production data ^{(1) (2)}:
Natural gas (Bcf)		199		194		(5)	(3)	%
C2 Ethane (MBbl)		4,005		6,141		2,136	53	%
C3+ NGLs (MBbl)		9,638		9,857		219	2	%
Oil (MBbl)		724		831		107	15	%
Combined (Bcfe)		285		295		10	4	%
Daily combined production (MMcfe/d)		3,165		3,274		109	3	%
Average prices before effects of derivative settlements⁽³⁾:
Natural gas (per Mcf)	$	5.01		3.45		(1.56)	(31)	%
C2 Ethane (per Bbl) ⁽⁴⁾	$	16.74		11.73		(5.01)	(30)	%
C3+ NGLs (per Bbl)	$	61.55		42.95		(18.60)	(30)	%
Oil (per Bbl)	$	87.45		62.35		(25.10)	(29)	%
Weighted Average Combined (per Mcfe)	$	6.04		4.13		(1.91)	(32)	%
Average realized prices after effects of derivative settlements⁽³⁾:
Natural gas (per Mcf)	$	3.60		3.38		(0.22)	(6)	%
C2 Ethane (per Bbl) ⁽⁴⁾	$	16.63		11.73		(4.90)	(29)	%
C3+ NGLs (per Bbl)	$	61.14		42.89		(18.25)	(30)	%
Oil (per Bbl)	$	86.76		61.90		(24.86)	(29)	%
Weighted Average Combined (per Mcfe)	$	5.03		4.08		(0.95)	(19)	%
Average costs (per Mcfe):
Lease operating	$	0.06		0.10		0.04	67	%
Gathering and compression	$	0.71		0.72		0.01	1	%
Processing	$	0.67		0.81		0.14	21	%
Transportation	$	0.70		0.66		(0.04)	(6)	%
Production and ad valorem taxes	$	0.19		0.17		(0.02)	(11)	%
Marketing expense, net	$	0.10		0.08		(0.02)	(20)	%
Depletion, depreciation, amortization and accretion	$	0.60		0.57		(0.03)	(5)	%
General and administrative (excluding equity-based compensation)	$	0.11		0.15		0.04	36	%


				Total Number	Approximate
				of Shares	Dollar Value
				Repurchased	of Shares
				as Part of	that May
	Total Number			Publicly	Yet be Purchased
	of Shares	Average Price		Announced	Under the Plan
Period	Purchased ⁽¹⁾	Paid Per Share		Plans	($ in thousands)
January 1, 2023 - January 31, 2023	2,940,407	$	29.21	2,581,827		1,234,929
February 1, 2023 - February 28, 2023	32,735		27.92	—		1,234,929
March 1, 2023 - March 31, 2023	—		—	—		1,234,929
Total	2,973,142	$	29.20	2,581,827


Exhibit Number		Description of Exhibit
3.1		Amended and Restated Certificate of Incorporation of Antero Resources Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-36120) filed on October 17, 2013).
3.2		Second Amended and Restated Bylaws of Antero Resources Corporation, dated February 14, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 10-K (Commission File No. 001-36120) filed on February 15, 2023).
31.1*		Certification of the Company’s Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 7241).
31.2*		Certification of the Company’s Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 7241).
32.1*		Certification of the Company’s Chief Executive Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 1350).
32.2*		Certification of the Company’s Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 1350).
95.1*		Federal Mine Safety and Health Act Information.
101*		The following financial information from this Quarterly Report on Form 10-Q of Antero Resources Corporation for the quarter ended March 31, 2023 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


ANTERO RESOURCES CORPORATION

By:	/s/ MICHAEL N. KENNEDY
	Michael N. Kennedy
	Chief Financial Officer and Senior Vice President–Finance

Date:	April 26, 2023


Date: April 26, 2023

/s/ Paul M. Rady
Paul M. Rady
President and Chief Executive Officer