ANTERO RESOURCES Corp 10-Q for FY2022 Q1

ANTERO RESOURCES Corp (AR)

10-Q 2022-04-27 For: 2022-03-31

Added on April 12, 2026

About this 10-Q

ANTERO RESOURCES Corp filed this 10-Q on April 27, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $786.84M; down 34.7% from $1.2B a year earlier
Net loss: $174.7M; compared with a net loss of $11.1M a year earlier
Diluted EPS: -$0.50; compared with -$0.05 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		2
PART I—FINANCIAL INFORMATION		4
Item 1.	Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46
Item 4.	Controls and Procedures	47

PART II—OTHER INFORMATION		48
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities	48
Item 6.	Exhibits	49
SIGNATURES		50


			(Unaudited)
	December 31,		March 31,
	2021		2022
Assets
Current assets:
Accounts receivable	$	78,998		45,755
Accrued revenue		591,442		660,884
Derivative instruments		757		263
Other current assets		14,922		17,874
Total current assets		686,119		724,776
Property and equipment:
Oil and gas properties, at cost (successful efforts method):
Unproved properties		1,042,118		1,001,420
Proved properties		12,646,303		12,786,692
Gathering systems and facilities		5,802		5,802
Other property and equipment		116,522		123,824
		13,810,745		13,917,738
Less accumulated depletion, depreciation, and amortization		(4,283,700)		(4,384,971)
Property and equipment, net		9,527,045		9,532,767
Operating leases right-of-use assets		3,419,912		3,285,337
Derivative instruments		14,369		10,516
Investment in unconsolidated affiliate		232,399		234,390
Other assets		16,684		15,714
Total assets	$	13,896,528		13,803,500

Liabilities and Equity
Current liabilities:
Accounts payable	$	24,819		67,769
Accounts payable, related parties		76,240		73,259
Accrued liabilities		457,244		341,692
Revenue distributions payable		444,873		408,347
Derivative instruments		559,851		1,152,299
Short-term lease liabilities		456,347		455,723
Deferred revenue, VPP		37,603		35,864
Other current liabilities		11,140		16,099
Total current liabilities		2,068,117		2,551,052
Long-term liabilities:
Long-term debt		2,125,444		1,959,944
Deferred income tax liability, net		318,126		254,633
Derivative instruments		181,806		311,005
Long-term lease liabilities		2,964,115		2,830,175
Deferred revenue, VPP		118,366		110,832
Other liabilities		54,462		57,175
Total liabilities		7,830,436		8,074,816
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; 313,930 shares and 311,020 shares issued and outstanding as of December 31, 2021 and March 31, 2022, respectively		3,139		3,110
Additional paid-in capital		6,371,398		6,266,506
Accumulated deficit		(617,377)		(795,830)
Total stockholders' equity		5,757,160		5,473,786
Noncontrolling interests		308,932		254,898
Total equity		6,066,092		5,728,684
Total liabilities and equity	$	13,896,528		13,803,500


☒	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,
	2021		2022
Revenue and other:
Natural gas sales	$	720,369		995,792
Natural gas liquids sales		440,319		660,305
Oil sales		44,686		63,294
Commodity derivative fair value losses		(177,756)		(1,011,380)
Marketing		164,790		69,038
Amortization of deferred revenue, VPP		11,150		9,272
Other income		640		519
Total revenue		1,204,198		786,840
Operating expenses:
Lease operating		24,547		17,780
Gathering, compression, processing, and transportation		605,077		590,278
Production and ad valorem taxes		44,697		52,808
Marketing		162,077		98,896
Exploration		219		898
General and administrative (including equity-based compensation expense of $5,642 and $4,649 in 2021 and 2022, respectively)		44,074		35,691
Depletion, depreciation, and amortization		194,026		168,388
Impairment of oil and gas properties		34,062		22,462
Accretion of asset retirement obligations		788		2,444
Contract termination		91		8
Loss on sale of assets		—		1,786
Total operating expenses		1,109,658		991,439
Operating income (loss)		94,540		(204,599)
Other income (expense):
Interest expense, net		(42,743)		(37,713)
Equity in earnings of unconsolidated affiliate		18,694		25,178
Loss on early extinguishment of debt		(43,204)		(10,654)
Loss on convertible note equitization		(39,046)		—
Transaction expense		(2,291)		—
Total other expense		(108,590)		(23,189)
Loss before income taxes		(14,050)		(227,788)
Income tax benefit		2,946		53,092
Net loss and comprehensive loss including noncontrolling interests		(11,104)		(174,696)
Less: net income (loss) and comprehensive income (loss) attributable to noncontrolling interests		4,395		(18,277)
Net loss and comprehensive loss attributable to Antero Resources Corporation	$	(15,499)		(156,419)

Loss per share—basic	$	(0.05)		(0.50)
Loss per share—diluted	$	(0.05)		(0.50)

Weighted average number of shares outstanding:
Basic		296,746		314,081
Diluted		296,746		314,081


					Additional
	Common Stock				Paid-in		Accumulated		Noncontrolling		Total
	Shares		Amount		Capital		Deficit		Interests		Equity
Balances, December 31, 2020		268,672	$	2,686		6,195,497		(430,478)		322,566		6,090,271
Issuance of common shares		31,388		314		238,551		—		—		238,865
Issuance of common units in Martica Holdings, LLC		—		—		—		—		51,000		51,000
Equity component of 2026 Convertible Notes, net		—		—		(116,381)		—		—		(116,381)
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		1,130		11		(5,656)		—		—		(5,645)
Distributions to noncontrolling interest		—		—		—		—		(24,699)		(24,699)
Equity-based compensation		—		—		5,642		—		—		5,642
Net income (loss) and comprehensive income (loss)		—		—		—		(15,499)		4,395		(11,104)
Balances, March 31, 2021		301,190		3,011		6,317,653		(445,977)		353,262		6,227,949

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)
Distributions to noncontrolling interest		—		—		—		—		(35,757)		(35,757)
Repurchases and retirements of common stock		(3,690)		(37)		(74,745)		(25,263)		—		(100,045)
Equity-based compensation		—		—		4,649		—		—		4,649
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


Balance as of December 31, 2021 ⁽¹⁾	$	232,399
Equity in earnings of unconsolidated affiliate		25,178
Dividends from unconsolidated affiliate		(31,285)
Elimination of intercompany profit		8,098
Balance as of March 31, 2022 ⁽¹⁾	$	234,390


Asset retirement obligations—December 31, 2021	$	53,952
Obligations incurred		583
Accretion expense		2,444
Settlement of obligations		(886)
Obligations on sold properties		(42)
Revisions to prior estimates		689
Asset retirement obligations—March 31, 2022	$	56,740


		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
Total awarded and unvested—December 31, 2021	5,930,607	$	5.15
Granted	13,764		20.03
Vested	(1,356,548)		2.66
Forfeited	(17,510)		9.37
Total awarded and unvested—March 31, 2022	4,570,313	$	5.92


		Weighted
	Number of	Average Grant
	Units	Date Fair Value
Total awarded and unvested—December 31, 2021	1,847,279	$	8.31
Granted	—		—
Vested	—		—
Forfeited	—		—
Cancelled (unearned)	—		—
Total awarded and unvested—March 31, 2022	1,847,279	$	8.31


					(Unaudited)
	December 31, 2021				March 31, 2022
	Fair		Carrying		Fair		Carrying
	Value ⁽¹⁾		Value ⁽²⁾		Value ⁽¹⁾		Value ⁽²⁾
2025 Notes	$	594,866		581,117		—		—
2026 Notes		370,013		321,738		359,190		321,912
2029 Notes		654,080		577,149		630,603		577,335
2030 Notes		641,400		593,234		612,000		593,399
2026 Convertible Notes		331,655		52,206		574,995		79,598
Total	$	2,592,014		2,125,444		2,176,788		1,572,244


				Weighted
				Average
Commodity / Settlement Period	Index	Contracted Volume		Price
Natural Gas
April-December 2022	Henry Hub	1,138,988	MMBtu/day	$	2.49	/MMBtu
January-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 2022	NYMEX to TCO	60,000	MMBtu/day	$	0.515	/MMBtu
January-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	2021		2022
Asset derivatives not designated as hedges for accounting purposes:
Commodity derivatives—current	Derivative instruments	$	—		—
Embedded derivatives—current	Derivative instruments		757		263
Commodity derivatives—noncurrent	Derivative instruments		—		—
Embedded derivatives—noncurrent	Derivative instruments		14,369		10,516

Total asset derivatives ⁽¹⁾			15,126		10,779

Liability derivatives not designated as hedges for accounting purposes:
Commodity derivatives—current ⁽²⁾	Derivative instruments		559,851		1,152,299
Commodity derivatives—noncurrent ⁽²⁾	Derivative instruments		181,806		311,005

Total liability derivatives ⁽¹⁾			741,657		1,463,304

Net derivatives liability ⁽¹⁾		$	(726,531)		(1,452,525)


	Statement of
	Operations	Three Months Ended March 31,
	Location	2021		2022
Commodity derivative fair value losses ⁽¹⁾	Revenue	$	(169,967)		(994,483)
Embedded derivative fair value losses ⁽¹⁾	Revenue	$	(7,789)		(16,897)


			Three Months Ended March 31,
Cost	Classification	Location	2021		2022
Operating lease cost	Statement of operations	Gathering, compression, processing, and transportation	$	376,930		365,834
Operating lease cost	Statement of operations	General and administrative		2,488		2,867
Operating lease cost	Statement of operations	Lease operating		22		45
Operating lease cost	Balance sheet	Proved properties ⁽¹⁾		28,759		7,759
Total operating lease cost			$	408,199		376,505

Finance lease cost:
Amortization of right-of-use assets	Statement of operations	Depletion, depreciation, and amortization	$	127		118
Interest on lease liabilities	Statement of operations	Interest expense		28		14
Total finance lease cost			$	155		132

Short-term lease payments			$	16,842		48,760


	Operating Leases		Financing Leases		Total
Remainder of 2022	$	473,271		316		473,587
2023		611,202		122		611,324
2024		600,773		114		600,887
2025		540,291		68		540,359
2026		489,589		5		489,594
2027		397,379		—		397,379
Thereafter		989,503		—		989,503
Total lease payments		4,102,008		625		4,102,633
Less: imputed interest		(816,671)		(64)		(816,735)
Total	$	3,285,337		561		3,285,898


			Processing,
	Firm		Gathering and		Land Payment		Operating and		Imputed Interest
	Transportation		Compression		Obligations		Financing Leases		for Leases
	(a)		(b)		(c)		(d)		(d)		Total
Remainder of 2022	$	784,307		39,867		1,051		342,866		130,721		1,298,812
2023		1,071,563		63,219		—		456,976		154,348		1,746,106
2024		1,044,479		59,262		—		470,543		130,344		1,704,628
2025		1,023,947		47,960		—		433,548		106,811		1,612,266
2026		1,018,345		14,783		—		404,385		85,209		1,522,722
2027		1,016,780		14,783		—		331,516		65,863		1,428,942
Thereafter		5,012,734		83,813		—		846,064		143,439		6,086,050
Total	$	10,972,155		323,687		1,051		3,285,898		816,735		15,399,526


	Three Months Ended March 31, 2021
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Sales and revenues:
Third-party	$	1,038,768		164,790		—		—		1,203,558
Intersegment		640		—		224,121		(224,121)		640
Total revenue	$	1,039,408		164,790		224,121		(224,121)		1,204,198

Operating expenses:
Lease operating	$	24,547		—		—		—		24,547
Gathering, compression, processing, and transportation		605,077		—		39,314		(39,314)		605,077
General and administrative		44,074		—		17,930		(17,930)		44,074
Depletion, depreciation, and amortization		194,026		—		26,850		(26,850)		194,026
Impairment of oil and gas properties		34,062		—		—		—		34,062
Impairment of midstream assets		—		—		1,379		(1,379)		—
Other		45,795		162,077		5,061		(5,061)		207,872
Total operating expenses		947,581		162,077		90,534		(90,534)		1,109,658
Operating income	$	91,827		2,713		133,587		(133,587)		94,540
Equity in earnings of unconsolidated affiliates	$	18,694		—		20,744		(20,744)		18,694
Capital expenditures for segment assets	$	123,158		—		28,389		(28,389)		123,158


	Three Months Ended March 31, 2022
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Sales and revenues:
Third-party	$	717,283		69,038		236,159		(236,159)		786,321
Intersegment		519		—		(17,668)		17,668		519
Total revenue	$	717,802		69,038		218,491		(218,491)		786,840

Operating expenses:
Lease operating	$	17,780		—		—		—		17,780
Gathering, compression, processing, and transportation		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 oil and gas properties		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


	As of December 31, 2021
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Investments in unconsolidated affiliates	$	232,399		—		696,009		(696,009)		232,399
Total assets	$	13,864,402		32,126		5,544,001		(5,544,001)		13,896,528


	Three Months Ended				Amount of
	March 31,				Increase		Percent
	2021		2022		(Decrease)		Change
Production data ^{(1) (2)}:
Natural gas (Bcf)		207		199		(8)	(4)	%
C2 Ethane (MBbl)		4,405		4,005		(400)	(9)	%
C3+ NGLs (MBbl)		9,926		9,638		(288)	(3)	%
Oil (MBbl)		960		724		(236)	(25)	%
Combined (Bcfe)		299		285		(14)	(5)	%
Daily combined production (MMcfe/d)		3,322		3,165		(157)	(5)	%
Average prices before effects of derivative settlements ⁽³⁾:
Natural gas (per Mcf) ⁽⁴⁾	$	3.48		5.01		1.53	44	%
C2 Ethane (per Bbl)	$	8.20		16.74		8.54	104	%
C3+ NGLs (per Bbl)	$	40.72		61.55		20.83	51	%
Oil (per Bbl)	$	46.55		87.45		40.90	88	%
Weighted Average Combined (per Mcfe)	$	4.03		6.04		2.01	50	%
Average realized prices after effects of derivative settlements⁽³⁾:
Natural gas (per Mcf)	$	3.56		3.60		0.04	1	%
C2 Ethane (per Bbl)	$	7.53		16.63		9.10	121	%
C3+ NGLs (per Bbl)	$	39.79		61.14		21.35	54	%
Oil (per Bbl)	$	45.80		86.76		40.96	89	%
Weighted Average Combined (per Mcfe)	$	4.05		5.03		0.98	24	%
Average costs (per Mcfe):
Lease operating	$	0.08		0.06		(0.02)	(25)	%
Gathering and compression	$	0.74		0.71		(0.03)	(4)	%
Processing	$	0.62		0.67		0.05	8	%
Transportation	$	0.67		0.70		0.03	4	%
Production and ad valorem taxes	$	0.15		0.19		0.04	27	%
Marketing (revenue) expense, net	$	(0.01)		0.10		0.11	*
Depletion, depreciation, amortization, and accretion	$	0.65		0.60		(0.05)	(8)	%
General and administrative (excluding equity-based compensation)	$	0.13		0.11		(0.02)	(15)	%


				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	Paid Per Share		Plans	($ in thousands) ⁽²⁾
January 1, 2022 - January 31, 2022 ⁽¹⁾	592,250	$	17.52	—		N/A
February 1, 2022 - February 28, 2022	210,832		21.57	208,807	$	995,498
March 1, 2022 - March 31, 2022	3,481,214		27.45	3,481,214		899,955
Total	4,284,296	$	25.78	3,690,021


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		Amended and Restated Bylaws of Antero Resources Corporation (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-36120) filed on October 17, 2013).
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).
101*		The following financial information from this Quarterly Report on Form 10-Q of Antero Resources Corporation for the quarter ended March 31, 2022 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive 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 27, 2022


Date: April 27, 2022

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