Antero Resources (AR) Defies Analyst Sentiment with Strong Financials, Stock Movement

Antero Resources Corporation (NYSE: AR) has reported its financial and operating results for the fourth quarter of 2023, along with year-end 2023 estimated proved reserves and 2024 guidance. The company's net production averaged 3.4 billion cubic feet equivalent per day (bcfe/d), marking a 6% increase from the previous year. Antero also realized a pre-hedge natural gas equivalent price of $3.52 per thousand cubic feet equivalent (mcfe), representing a $0.64 per mcfe premium to NYMEX pricing. The company's net income was reported at $95 million, with adjusted net income at $71 million (non-GAAP). Additionally, adjusted EBITDAX was $322 million (non-GAAP), and net cash provided by operating activities was $312 million.

Paul Rady, Chairman, CEO, and President of Antero Resources, highlighted the company's achievements in 2023, stating, “2023 was highlighted by significant capital efficiency improvements throughout the year. Our drilling and completions teams maintained a remarkable pace, setting numerous company records in 2023. This impressive performance led to faster cycle times across our development program and allowed us to release one drilling rig at the end of 2023 and release one completion crew earlier this month."

Looking ahead to 2024, Rady added, “2024 is expected to be a transformational year for our sector as we enter the second wave of LNG export facility buildouts. By the end of 2025, total exports, including LNG and Mexico pipeline flows, are expected to increase by nearly 8 billion cubic feet per day (bcf/d), far outpacing supply growth during that time. Antero is uniquely positioned to benefit from this demand surge through our extensive firm transportation portfolio, which delivers 100% of our natural gas out of basin, including 75% that is delivered to the LNG fairway."

Michael Kennedy, CFO of Antero Resources, commented on the company's outlook for 2024, noting, “Due to our capital efficiency gains and a lower base decline rate, our total maintenance capital budget is down nearly 30% in 2024 compared to the prior year. Our significant leverage to NGL prices, which today are up over 15%, or $5 per barrel from the fourth quarter of 2023, also boosts our 2024 outlook. This reduced maintenance capital combined with sharply higher NGL prices is expected to generate free cash flow in 2024 despite today’s challenging natural gas strip."

Antero Resources' 2024 guidance includes a drilling and completion capital budget of $650 to $700 million, with net production expected to average between 3.3 and 3.4 bcfe/d during 2024. The company also anticipates a 26% decrease in drilling and completion capital compared to 2023, along with a 41% decrease in land capital budget.

The full 8-K submission by Antero Resources Corporation can be accessed here.

2018 2019 2020 2021 2022 2023
Revenue (MM) $4,140 $4,409 $3,492 $4,619 $7,138 $5,573
Revenue Growth n/a 6.5% -20.8% 32.3% 54.53% -21.93%
Operating Margins 2% -22% -27% 1% 36% 22%
Net Margins -1% -7% -36% -3% 28% 18%
Net Income (MM) -$46 -$293 -$1,260 -$154 $2,026 $1,020
Net Interest Expense (MM) $287 -$228 -$200 -$182 -$125 -$110
Depreciation & Amort. (MM) $972 $915 $862 $742 $681 $684
Earnings Per Share -$1.26 -$1.11 -$4.65 -$0.61 $5.78 $2.74
EPS Growth n/a 11.9% -318.92% 86.88% 1047.54% -52.6%
Diluted Shares (MM) 316 306 272 308 329 312
Free Cash Flow (MM) -$129 -$319 -$139 $944 $2,107 $78
Capital Expenditures (MM) $2,211 $1,422 $874 $716 $944 $1,079
Current Ratio 0.95 0.89 0.58 0.33 0.44 0.29

Antero Resources has exceptional EPS growth, generally positive cash flows, and rapidly growing revenues and decreasing reinvestment in the business. However, the firm has not enough current assets to cover current liabilities because its current ratio is 0.29. Finally, we note that Antero Resources has weak operating margins with a positive growth rate.

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