Antero Resources Corporation · NYSE:AR
Antero Resources — Antero Midstream Partners — Merger or Acquisition (February 2019)
34 slides from Antero Resources's merger presentation, Feb 15, 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 February 2019 Presentation Market Cap . ........... Enterprise Value(1) . Corporate Debt Ratings Stand-alone Leverage(2) ..... 2019 Net Production Guidance Liquids................................ Proved Reserves .. ........... C2+ N
Slide 4: Antero's Integrated Strategy
Antero’s Integrated Strategy The Most Integrated Natural Gas and NGL Platform in the U.S. A World Class E&P Operator in Appalachia What’s new: Midstream simplification creating C-Corp and eliminating MLP and IDRs A Leading Northeast Infrastructure Platform 31%(1) $7 Billion Enterprise Value(1) Ba2 /
Slide 5: Recent Developments/Near-Term Catalysts
Recent Developments/Near-Term Catalysts Midstream Simplification (Expected to close in March 2019) Expected to provide AR with at least $300 million in cash depending on the cash election of public AM unitholders (subject to the approval of Antero Midstream unitholders and AMGP shareholders) AR will
Slide 6: Resilient and Flexible Development Plan
Resilient and Flexible Development Plan 7 Lower Prices Higher Prices Lower Prices: $50 Oil / $2.85 Gas 10% Production CAGR (2019-2023) <2x Stand-alone leverage by 2022 Free Cash Flow neutrality 100% hedged on 2019 production guidance and 55%-60% hedged on 2020 outlook Antero’s flexible development p
Slide 7: Disciplined Development Plan: Production Growth Scenarios
10% Production CAGR 8 Disciplined Development Plan Antero Resources February 2019 Presentation <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 mid
Slide 8: Antero Hedge Position
Antero Hedge Position 9 Antero Hedge Profile Realized $357 MM in proceeds from hedge restructuring while remaining 100% hedged on gas in 2019 and 55%-60% hedged in 2020 at ~$3.00/MMBtu Monetize + maintain upside to call price 30% Swaps 30% Swaps 30% Swaps 1) Based on 01/31/2018 strip pricing . $2.50
Slide 9: Antero's NGL Pricing Uplift from Mariner East
Antero’s NGL Pricing Uplift from Mariner East 2 31 Mont Belvieu Conway Europe Netback 2019 NWE Price ($/Gal) $0.80 Pipeline, Terminal & Shipping Cost (1) $(0.22) NWE Netback $0.58 Blended Conway / MB Netback $0.52 Uplift vs. YTD 2018 Average Differential +$0.06 Asia Netback 2019 FEI Price ($/Gal) $0
Slide 10: Antero's First Ethane Export – November 2018
Antero’s First Ethane Export – November 2018 11 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 Stenungsund, Sweden Expect to load ~1 ship per month
Slide 11: Firm Transportation Portfolio Provides Visibility
Firm Transportation Portfolio Provides Visibility 12 All of Antero Resources’ contracted firm capacity is now in service, providing visible production growth and premium pricing to NYMEX Antero Resources Firm Transportation Portfolio vs. Gross Gas Production (MMcf/d) Appalachia (M2/Dom S.) – 625 MMc
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 premium to NYMEX includes a ~$0.27/Mcf Btu upgrade. 2019E premium to NYMEX represent
Slide 13: Sustainable and De-risked Business Model
Sustainable and De-risked Business Model 14 Firm Transportation Portfolio Allows Antero Resources to achieve: Effectively Hedge NYMEX Index Allows Antero to directly hedge the absolute price Premium Price Certainty Eliminates basis risk by delivering to NYMEX-related markets Hedge Portfolio Supports
Slide 14: 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 15: Status Quo 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 16: Leading NGL Position & Integrated Strategy Drive Peer-Leading Margins
Leading NGL Position & Integrated Strategy Drive Peer-Leading Margins
Slide 17: Prolific Underlying Resource Underpins Growth
Prolific Underlying Resource Underpins Growth 18 Antero Resources holds 40% of the core undrilled liquids-rich locations in Appalachia with attractive economics and low breakeven prices Peers include Ascent, CHK, CNX, COG, CVX, EQT, GPOR, HG, RRC and SWN. Based on Antero analysis of undeveloped acre
Slide 18: Antero is the Largest NGL Producer in the U.S.
Antero is the Largest NGL Producer in the U.S. Undrilled Core Liquids-rich Inventory(2) Top U.S. C2+ NGL Producers - 2019E(1) Antero is the largest NGL producer in the U.S. and controls 40% of the core undrilled liquids-rich locations in Appalachia(2) Over 2.5x Inventory of closest Appalachian compe
Slide 19: Midstream Driving Value for AR Since Inception
Midstream Driving Value for AR Since Inception 20 Takeaway assurance and reliable project execution AM Infrastructure 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
Slide 20: Integration is Critical in Shale Development
Integration is Critical in Shale Development 21 Antero’s integrated strategy has resulted in peer-leading realized prices and margins for 6 straight years and consistent results through commodity cycles All-in Pricing Realizations ($/Mcfe) Stand-alone E&P Adjusted EBITDAX Margins ($/Mcfe) Source: SE
Slide 21: Antero: Not Just a Natural Gas Producer
Antero: Not Just a Natural Gas Producer Diversified Commodity Mix Enhances Value Proposition Top NGL producer in the U.S. Controlled Resource Development Mitigated Commodity Risk Just-in-time midstream Investment by AM 100% hedged on natural gas in 2019 @ $3.00/MMBtu floor on average Disciplined Foc
Slide 22: Antero: Not Just a Natural Gas Producer
») Antero: Not Just a Natural Gas Producer abitoseo Diversified Commodity Mix Enhances Value Proposition Shareholder Value 9.1 MM shares Top NGL producer repurchased in 4Q 2018 in the U.S. Liquids-Rich Resource and Scale Return of Capital Just-in-time Stand-alone midstream eee leverage of 2.2x at In
Slide 23: Capitalization and Liquidity as of December 31, 2018
As of December 31, 2018 ($MM) Antero Midstream Antero Resources (Stand-alone) Antero Resources (Consolidated) Cash $0 $0 $0 Debt Revolving Credit Facility $990 $405 $1,395 5.375% Senior Notes Due 2021 $1,000 $1,000 5.125% Senior Notes Due 2022 $1,100 $1,100 5.625% Senior Notes Due 2023 $750 $750 5.3
Slide 24: 2019 Guidance
Appendix 2019 Guidance 2019 Capital Plan and Guidance Stand-alone Consolidated Net Production (Bcfe/d) 3.15 – 3.25 Net Natural Gas Production (Bcf/d) 2.225 – 2.275 Net Liquids Production (Bbl/d) 154,000 – 164,000 Net Oil, C3+ and Ethane Production (Bbl/d) Oil: 8,500 – 9,500 C3+: 97,500 – 102,500 C2:
Slide 25: Antero Resources D&C Capital
Antero Resources D&C Capital 26 Antero Resources Stand-alone Marcellus Well Cost ($MM/1,000’ assuming 12,000’ Lateral) Through negotiating contracts and self sourcing sand, Antero was able to mitigate a majority of inflationary pressures on D&C capital for 2019 Drilling, water hauling, and productio
Slide 26: Drilling and Completion Efficiencies
27 Drilling and Completion Efficiencies Average Lateral Feet per Day Drilling Days Average Lateral Length per Well Completion Stages per Day Appendix cost efficiency drivers 8,206 78% Increase 24% Increase 286% Increase Note: Utica 4Q 2018 results reflect YTD results, as Antero did not operate any r
Slide 27: Debt Maturity Profile
12/31/2018 Debt Maturity Profile Liquidity & Debt Term Structure AR Credit Facility 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 28 Appendix consolidated liquidity and balance sheet No matur
Slide 28: Deleveraging is Driving Ratings Momentum
Deleveraging is Driving Ratings Momentum 29 Appendix Trending towards investment grade Corporate Credit Ratings History Credit Markets Have a Strong Appreciation for Antero Momentum Investment Grade Rating from Fitch (BBB-) and Upgrade from S&P (BB+) Stable Credit Ratings with Consistent Upgrades fr
Slide 29: Antero Non-GAAP Measures
31 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 30: Antero Non-GAAP Measures Continued
32 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 31: Antero Resources Stand-alone Adjusted EBITDAX Reconciliation
Antero Resources Stand-alone Adjusted EBITDAX Reconciliation Stand-alone LTM Adjusted EBITDAX Reconciliation Appendix disclosures & reconciliations 33 Stand-alone Twelve months ended (in thousands) December 31, 2018 Net (loss) and comprehensive (loss) attributable to Antero Resources Corporation $ (
Slide 32: Antero Resources Stand-alone Adjusted EBITDAX Per Mcfe
Antero Resources Stand-alone Adjusted EBITDAX Per Mcfe Appendix disclosures & reconciliations 34 Stand-alone Adjusted EBITDAX per Mcfe Reconciliation (Annual) 2013 2014 2015 2016 2017 1Q2018 2Q2018 3Q2018 4Q2018 ($/Mcfe) Natural Gas, Oil, Ethane and NGL sales $ 4.31 $ 4.74 $ 2.53 $ 2.60 $ 3.35 $ 3.5
Slide 33: Antero Midstream Non-GAAP Measures
Antero Midstream Non-GAAP Measures 35 The following table reconciles net income to Adjusted EBITDA for the twelve months ended December 31, 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 p
Slide 34: Antero Midstream Non-GAAP Measures
») Antero Midstream Non-GAAP Measur The following table reconciles consolidated total debt to consolidated net debt (“Net Debt") as used in this presentation (in thousands): Bank credit facility 5.375% AM senior notes due Net unamortized debt issuance costs Total debt Cash and cash equivalents Net d
Antero Midstream Partners — Merger or Acquisition (February 2019) on 6ix