Antero Resources Corporation · NYSE:AR
Antero Resources — Antero Midstream Partners — Merger or Acquisition (January 2019)
32 slides from Antero Resources's merger presentation, Jan 9, 2019
Slide 1: Legal Disclaimer
Legal Disclaimer NO OFFER OR SOLICITATION This presentation includes a discussion of a proposed business combination transaction (the “Transaction”) between AM and AMGP. This presentation is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to b
Slide 2: Legal Disclaimer
Legal Disclaimer This presentation includes “forward-looking statements.” Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond AR’s control. All statements, except for statements of historical fact, made in this presentation regarding activitie
Slide 3: The Size and Scale to Capitalize on the Resource
The Size and Scale to Capitalize on the Resource 4 Antero Resources January 2019 presentation Market Cap . ........... Enterprise Value(1) . Corporate Debt Ratings Stand-alone Leverage(2) ..... 2019 Net Production Guidance Liquids................................ 3P Reserves .. ........... C2+ NGLs(3
Slide 4: Recent Developments/Near-Term Catalysts
Recent Developments/Near-Term Catalysts Antero Announces 2019 Capital Budget and Production Guidance (January 2019) Disciplined plan with reduced D&C capital spending relative to 2018, within cash flow(1), while targeting 17% - 20% year-over-year production growth Mariner East 2 In-service (December
Slide 5: Antero Resources 2019 Guidance
Antero resources 2019 guidance 2019 Capital Plan and Guidance Stand-alone Consolidated Net Production (Bcfe/d) 3.15 – 3.25 Net Natural Gas Production (Bcf/d) 2.225 – 2.275 Net Liquids Production (Bbl/d) 154,000 – 164,000 Net Oil, C3+ and Ethane Production (Bbl/d) Oil: 8,500 – 9,500 C3+: 97,500 – 102
Slide 6: Antero Resources Long-Term Outlook
10% Production CAGR 7 Long-Term Outlook Antero resources long-term outlook <2x Standalone Leverage by 2022 Free Cash Flow Neutrality $50 / $2.85 15% Production CAGR <1x Standalone Leverage by 2021 $2.5 - $3.0 Bn Free Cash Flow $65 / $3.15 Note: Production CAGR ranges apply to midpoint of 2019 produc
Slide 7: Antero's NGL Pricing Uplift from Mariner East
Antero’s NGL Pricing Uplift from Mariner East 2 31 Mont Belvieu Conway Europe Netback 2019 NWE Price ($/Gal) $0.75 Pipeline, Terminal & Shipping Cost (1) $(0.22) NWE Netback $0.53 Blended Conway / MB Netback $0.47 Uplift vs. YTD 2018 Average Differential +$0.06 Asia Netback 2019 FEI Price ($/Gal) $0
Slide 8: Antero's First Ethane Export – November 2018
Antero’s First Ethane Export – November 2018 9 Natural Gas Liquids Update leading position Antero’s 11,500 Bpd C2 sales contract with Borealis commenced on November 1, 2018 First ship departed Marcus Hook on November 26th with 337,000 barrels of ethane bound for Borealis’ steam cracker in Stenungsun
Slide 9: 2019 Hedge Restructuring
2019 Hedge Restructuring 10 Antero 2019 Natural Gas Hedge Profile Total hedged volume remains unchanged at 100% of expected natural gas production for 2019 Antero monetized 1.575 Bcf/d of swaps generating approximately $235 MM in proceeds April – December 2019 swaps monetized at attractive NYMEX lev
Slide 10: 2020 Hedge Restructuring
2020 Hedge Restructuring 11 Antero 2020 Natural Gas Hedge Profile Total hedged volume remains unchanged Antero reset 2020 swaps at slightly lower prices generating approximately $122 MM in proceeds NYMEX swap price reduced from $3.25/MMBtu to $3.00/MMBtu in 2020 No change to overall hedged volumes P
Slide 11: Rover Pipeline Uplift and Optionality
Rover Pipeline Uplift and Optionality 12 Creates further optionality for Marcellus gas to access Chicago & Gulf Coast Markets Rover Phase 2 Sherwood Lateral placed into service in November Rover Pipeline & Unhedged Volume Exposure Uplift Chicago via Rover ($/MMBtu) 2019 Chicago Price ($/MMBtu)(1) $2
Slide 12: Expected Natural Gas Price Realization Improvement
Note: Local index represents a blend of Dominion South and TETCO M2 pricing. Midwest index represents a blend of Chicago and MichCon pricing. Gulf Coast index represents a blend of Gulf and Nymex-based pricing. 2018 represents YTD actuals through November and projected volumes for December. 2018 pri
Slide 13: Simplification Transaction – A Near Term Catalyst
Simplification Transaction – A Near Term Catalyst Achieves a “Win-Win-Win” Transaction Across the Antero Family Simplifies the Organizational Structure and Unlocks Shareholder Value Maintains Antero’s Integrated Strategy & Long-Term Outlook Further Aligns the Interest of All Antero Equity Holders an
Slide 14: Status Quo Structure vs. Simplified Pro Forma Structure
Status Quo Structure Antero Simplified Pro Forma Structure Simplified Pro Forma Structure 53% 100% Incentive Distribution Rights (IDRs) Sponsors/ Management Public Public 23% 77% Sponsors/ Management Public 57% 43% 47% 23% 77% 31% Midstream simplification transaction results in one publicly traded m
Slide 15: Leading NGL Position & Integrated Strategy Drive Peer-Leading Margins
Leading NGL Position & Integrated Strategy Drive Peer-Leading Margins
Slide 16: Largest NGL Producer
Largest NGL Producer Undrilled Core Liquids-rich Inventory(1) Top U.S. C2+ NGL Producers - 2019E(2) Antero is the largest NGL producer in the U.S. and controls 40% of the core undrilled liquids-rich locations in Appalachia Over 2.5x Inventory of closest Appalachian competitor Most exposure to NGL pr
Slide 17: Midstream Driving Value for AR Since Inception
Midstream Driving Value for AR Since Inception 18 Takeaway assurance and reliable project execution AM Midstream Buildout Midstream Ownership Benefits Never missed a completion date with fresh water delivery system Unparalleled downstream visibility Attractive return on investment (4.2x ROI for AR)
Slide 18: Antero Midstream At A Glance – Status Quo
Antero Midstream At A Glance – Status Quo 19 Market Cap ....... Enterprise Value ......... . LTM Adjusted EBITDA(1) .. % Gathering/Compression % Water .. .. .. .. .. Net Debt/LTM Adj. EBITDA . Corporate Debt Rating . $4.6B $6.1B $665 MM 65% 35% 2.3x Ba2 / BB+ /BBB- Note: Equity market data as of 1/7
Slide 19: A Leader in Realized Pricing and Adj. EBITDAX Margins
A Leader in Realized Pricing and Adj. EBITDAX Margins Antero’s integrated strategy has resulted in peer-leading realized prices and margins for 6 straight years and consistent results through price cycles All-in Pricing Realizations ($/Mcfe) Standalone E&P Adj. EBITDAX Margins ($/Mcfe) Source: SEC f
Slide 20: Antero: Not Just a Natural Gas Producer
Antero: Not Just a Natural Gas Producer Liquids-Rich Resource and Scale Diversified Commodity Mix Enhances Shareholder Value Top NGL producer in the U.S. Control Resource Development Mitigate Commodity Risk Just-in-time midstream investment 100% hedged on natural gas in 2019 @ $3.00/MMBtu floor on a
Slide 21: Antero: Not Just a Natural Gas Producer
Antero: Not Just a Natural Gas Producer Diversified Commodity Mix Enhances Shareholder Value Shareholder Value $129MM of shares repurchased in 4Q 2018 Top NGL producer in the U.S. Liquids-Rich Resource and Scale Return of Capital Just-in-time midstream investment <2.2x Pro Forma Maintain 9/30/18 Net
Slide 22: Drilling and Completion Efficiencies
23 Drilling and Completion Efficiencies Average Lateral Feet per Day Drilling Days Average Lateral Length per Well Completion Stages per Day Liquids resource + capital efficiency = free cash flow cost efficiency drivers 8,206 72% Increase 28% Increase 228% Increase Note: Utica 3Q 2018 results reflec
Slide 23: Antero Pro Forma Hedge Position
Antero Pro Forma Hedge Position 24 Antero Hedge Profile Total proceeds from hedge restructuring of $357 MM in proceeds Monetize + maintain upside to call price 30% Swaps 30% Swaps 30% Swaps 1) Based on 12/31/2018 strip pricing . $2.50 $3.44 appendix pro forma hedge position (MMcf/d) ($/MMBtu) 1,149
Slide 24: 9/30/2018 Debt Maturity Profile
9/30/2018 Debt Maturity Profile Liquidity & Debt Term Structure AR Credit Facility(1) AM Credit Facility AR Senior Notes AM Senior Notes New credit facilities for AR and AM have allowed Antero to extend its average debt maturity out to 2022 25 Appendix consolidated liquidity and balance sheet No mat
Slide 25: Delevering is Driving Ratings Momentum
Delevering is Driving Ratings Momentum 26 Appendix Trending towards investment grade Corporate Credit Ratings History Corporate Credit Rating (Moody’s / S&P / Fitch) Ba3 / BB- B1 / B+ B2 / B B3 / B- Ba2 / BB Ba1 / BB+ Caa1 / CCC+ / CCC Baa3 / BBB- 2010 Investment Grade Rating: BBB- Fitch Jan. 2018 S
Slide 26: Appendix Disclosures & Reconciliations
27 Appendix disclosures & reconciliations Antero Definitions Consolidated Adjusted EBITDAX: Represents net income or loss from continuing operations, including noncontrolling interests, before interest expense, interest income, derivative fair value gains or losses (excluding net cash receipts or pa
Slide 27: Antero Non-GAAP Measures
28 Antero Non-GAAP Measures Stand-alone Adjusted Operating Cash Flow and Free Cash Flow Free Cash Flow as presented in this release and defined by the Company represents Stand-alone Adjusted Operating Cash Flow, less Stand-alone Drilling and Completion capital, less Land Maintenance Capital. Stand-a
Slide 28: Antero Non-GAAP Measures Continued
29 Antero Non-GAAP Measures Continued Adjusted EBITDAX and Stand-alone Adjusted EBITDAX Adjusted EBITDAX as defined by the Company represents net income or loss, including noncontrolling interests, before interest expense, interest income, derivative fair value gains or losses, but including net cas
Slide 29: Antero Resources Standalone Adjusted EBITDAX Reconciliation
Antero Resources Standalone Adjusted EBITDAX Reconciliation Stand-alone LTM Adjusted EBITDAX Reconciliation Appendix disclosures & reconciliations 30 Stand-alone Twelve months ended September 30, (in thousands) 2018 Net income attributable to Antero Resources Corporation $ 210,898 Commodity derivati
Slide 30: Antero Resources Stand-alone Adjusted EBITDAX Per Mcfe
Antero Resources Stand-alone Adjusted EBITDAX Per Mcfe Appendix disclosures & reconciliations 31 Stand-alone Adjusted EBITDAX per Mcfe Reconciliation (Annual) 2013 2014 2015 2016 2017 1Q2018 2Q2018 3Q2018 ($/Mcfe) Natural Gas, Oil, Ethane and NGL sales 4.31 $ 4.74 $ 2.53 $ 2.60 $ 3.35 $ 3.56 $ 3.35
Slide 31: Antero Midstream Non-GAAP Measures
Antero Midstream Non-GAAP Measures 32 The following table reconciles net income to Adjusted EBITDA for the twelve months ended September 30, 2018 as used in this presentation (in thousands): The following table reconciles consolidated total debt to consolidated net debt (“Net Debt”) as used in this
Slide 32: Antero Midstream Non-GAAP Measures
» Antero Midstream Non The following table reconcil {in thousands): Bank credit facility 5.375% AM senior notes due 2024 Net unamortized debt issuance costs Consolidated total debt ‘Cash and cash equivalents Consolidated net debt GAAP Measures : ‘4] 9's consolidated total debt to consolidated net de
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