Antero Resources Corporation · NYSE:AR
Antero Resources — Investor Presentation (June 2014)
42 slides from Antero Resources's investor presentation, Jun 4, 2014
Slide 1: Company Overview June 2014
Company Overview June 2014
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this presentation that addre
Slide 3: Antero: A Pure Play on the Marcellus / Utica
ANTERO: A “PURE PLAY” ON THE MARCELLUS / UTICA Marcellus is one of the largest gas fields in the world today Largest gas field in the U.S. currently producing over 14 Bcf/d Antero has 35 Tcfe of fully engineered and audited 3P reserves primarily in Marcellus and Utica Shales Critical Mass In Two Wor
Slide 4: Significant Momentum Since IPO
SIGNIFICANT MOMENTUM SINCE IPO 3 Net Production (MMcfe/d) Net Acres Liquids Production (Bbl/d) Note: “Current” denotes latest data per website presentation or Roadshow presentation where applicable. LQA = Latest Quarter Annualized LQA EBITDAX ($MM) 11% Bank Borrowing Base ($MM) 50% Firm Gas Takea
Slide 5: Premier Unconventional Resource Platform
UPPER DEVONIAN SHALE Net Proved Reserves 44 Bcfe Net 3P Reserves 4.2 Tcfe Pre-Tax 3P PV-10 NM Undrilled 3P Locations(2) 1,089 PREMIER UNCONVENTIONAL RESOURCE PLATFORM All net acres allocated to the Dry Gas Utica and Upper Devonian Shale are included among the net acres allocated to the Marcellus Sha
Slide 6: Large Midstream Footprint
LARGE MIDSTREAM FOOTPRINT 5 Ohio River Withdrawal System Completed Significant investment in infrastructure - estimated cumulative YE 2014 total capital investment in midstream ~$1.5 billion Includes gathering lines, compressor stations and fresh water distribution infrastructure Proprietary fresh w
Slide 7: Integrated Portfolio of Firm Gas & NGL Takeaway
INTEGRATED PORTFOLIO OF FIRM GAS & NGL TAKEAWAY 6 Odebrecht / Braskem Ascent Cracker (Pending Final Investment Decision) Antero Firm Takeaway Position in 2016 Mariner East II Pending Open Season
Slide 8: Strong Track Record of Growth
7 AVERAGE NET DAILY PRODUCTION (MMcfe/d) 58% CAGR NET PROVED SEC RESERVES (Bcfe) 33% CAGR 2012 and 2013 proved reserves in ethane rejection. Midpoint of production guidance of 925-975 MMcfe/d for 2014. Based on midpoint of 45-50% production growth target for 2015 and 2016. Per current First Call est
Slide 9: Multi-Year Drilling Inventory Supports Low Risk, High Return Growth
Marcellus Shale – SW Liquids-Rich Marcellus Shale – SW Dry Gas Utica Shale – Liquids-Rich Marcellus Shale – Super-Rich Utica Shale – Wet Gas MULTI-YEAR DRILLING INVENTORY SUPPORTS LOW RISK, HIGH RETURN GROWTH PROFILE Large Inventory of Low Breakeven Price Projects(2) Well economics based on current
Slide 10: Lowest Finding & Development Cost Among U.S. Producers
LOWEST FINDING & DEVELOPMENT COST AMONG U.S. PRODUCERS 9 3-Year All-In F&D Cost – Excluding Revisions ($/Mcfe) through 2013 Source: Credit Suisse research dated 4/28/2014. Antero ranks as the most efficient finder and developer of reserves, on a per Mcfe basis, based on a recent 2011-2013 average al
Slide 11: Integrated Firm Processing & Gas Takeaway
INTEGRATED FIRM PROCESSING & GAS TAKEAWAY Infrastructure and commitments in place to handle strong production growth Portfolio of firm gas takeaway and sales and West Virginia and Ohio location minimizes basis risk 10 Total Capacity 1,950 Marcellus Utica Sherwood 1 Sherwood 2 Sherwood 3 Seneca 1 Sen
Slide 12: Firm Transportation Reduces Appalachian Basis Exposure
All-in Firm Transportation Costs(1) FIRM TRANSPORTATION REDUCES APPALACHIAN BASIS EXPOSURE 2013 Firm Transportation – 647 MMcf/d Average All-in FT Cost $0.25/Mcf 2016 Firm Transportation – 2.6 Bcf/d Average All-in FT Cost $0.42/Mcf + $0.11/Mcf 11 Antero’s firm transportation (FT) portfolio increases
Slide 13: Significant Long-Term Commodity Hedge Position
SIGNIFICANT LONG-TERM COMMODITY HEDGE POSITION 12 % HEDGE VOLUMES BY INDEX Average Index Hedge Price(1) Hedged Volume Current NYMEX Strip NATURAL GAS HEDGE POSITION 1. Reflects weighted average index price per annum based on volumes hedged and 6:1 gas to oil ratio. Antero has hedged ~3,000 Bbl/d for
Slide 14: 1Q 2014 Realizations
1Q 2014 REALIZATIONS Ethane Propane Iso Butane Normal Butane Natural Gasoline 1Q 2014 NGL Y-GRADE (C3+) REALIZATIONS 1Q 2014 NATURAL GAS REALIZATIONS ($/MCF) $33.93 $6.79 $9.25 $10.49 $1.23 13 Gulf Coast differential represents contractual deduct to NYMEX-based sales. Includes firm sales. Includes n
Slide 15: Biggest Bang for the Buck
14 Includes realized hedge gains and losses only; unrealized hedge gains and losses excluded. Operating costs include lease operating expenses, production taxes, gathering processing and firm transport costs and general and administrative costs. 4-year proved reserve average all-in F&D from 2010-201
Slide 16: Positioned for Growth & Profitability
15 1Q 2014 Price Realizations ($/Mcfe)(2) 2014 Projected Growth (%)(1) Based on midpoint of 2014 production guidance for Antero Resources and large capitalization Appalachian peers (Cabot Oil & Gas, EQT Corp and Range Resources). Based on 3/31/2014 10-Qs for Antero and peers. Based on 2011-2013 aver
Slide 17: Asset Overview
ASSET OVERVIEW 16
Slide 18: World Class Marcellus Shale Development Project
WORLD CLASS MARCELLUS SHALE DEVELOPMENT PROJECT 100% operated 364,000 net acres in Southwestern Core 50% HBP with additional 19% not expiring for 5+ years 259 horizontal wells completed and online Laterals average 7,200’ 100% drilling success rate Net production of 704 MMcfe/d in 1Q 2014, including
Slide 19: Antero's Marcellus Shale Type Curve
Antero has over four years of production history to support its 1.5 Bcf/1,000’ Non-SSL type curve Antero’s SSL type curve is 1.7 Bcf/1,000’ with only 10% to 15% higher well costs vs. Non-SSL Lack of faulting and contiguous acreage position allows for drilling of long laterals ~ 7,200’ since inceptio
Slide 20: Marcellus ROR% and Gas Price Sensitivity
MARCELLUS ROR% AND GAS PRICE SENSITIVITY 19 Assumes current strip pricing, market differentials and relevant transportation cost. Large portfolio of Highly-Rich Gas to Dry Gas locations Focused on drilling highly economic rich gas locations – rig symbols represent current rig location by regime Assu
Slide 21: Marcellus Single Well Economics – In Ethane Rejection
MARCELLUS SINGLE WELL ECONOMICS – IN ETHANE REJECTION 20 DRY GAS LOCATIONS RICH GAS LOCATIONS HIGHLY RICH GAS LOCATIONS Assumptions Natural Gas – Current strip Oil – Current strip for 2014/2015, $90 flat thereafter NGLs – 55% of Oil Price NYMEX ($/MMBtu) WTI ($/Bbl) C3+ NGL(2) ($/Bbl) 2014 $4.41 $10
Slide 22: Utica Shale Core Rich Gas/Condensate Position
Source: Company presentations and press releases. Note: Antero acreage position reflects townships in which greater than 3,000 net acres are held. Note: Third party peak rates assume ethane recovery; Antero 30-day rates in ethane rejection. For non-Antero wells, Antero has converted rich gas rates w
Slide 23: Utica Shale Type Curves
UTICA SHALE TYPE CURVES Antero has 28 core area wells online and up to 9 months of production history to support EUR regime type curves More recent wells with shorter stage length (SSL) completions (<240’ stages) are producing at or above the type curves Expect to utilize SSL completions for all fut
Slide 24: Utica ROR% and Gas Price Sensitivity
UTICA ROR% AND GAS PRICE SENSITIVITY 23 NYMEX Price Sensitivity(1) 102 Locations ROR% at 3-Year NYMEX Gas Strip Condensate: 34% Highly-Rich Gas/Condensate: 127% Highly-Rich Gas: 183% Rich Gas: 117% Dry Gas: 72% Large portfolio of Highly-Rich Gas to Dry Gas locations Focused on drilling highly econom
Slide 25: Utica Single Well Economics – In Ethane Rejection
UTICA SINGLE WELL ECONOMICS – IN ETHANE REJECTION 24 DRY GAS LOCATIONS RICH GAS LOCATIONS HIGHLY RICH GAS LOCATIONS Utica Well Economics and Gross Locations(1) Classification Condensate Highly-Rich Gas/ Condensate Highly-Rich Gas Rich Gas Dry Gas Modeled BTU 1275 1235 1215 1175 1050 EUR (Bcfe): 7.4
Slide 26: Large Utica Shale Dry Gas Position
LARGE UTICA SHALE DRY GAS POSITION 25 28,000 net acres in Ohio with YE 2013 3P reserves of 1.7 Tcf 139,000 net acres in West Virginia and Pennsylvania 1,080 locations underlying current Marcellus Shale leasehold in West Virginia and Pennsylvania as of 3/31/2014 7 to 11 Tcf of net resource (not inclu
Slide 27: Keys to Execution
Keys to Execution Local Presence Antero has more than 4,500 contract personnel working full-time for Antero in West Virginia. 79% of these contract personnel are West Virginia residents. Land office in Ellenboro, WV Recently moved into new 50,000 square foot district office in Bridgeport, WV 139 of
Slide 28: Appendix
28 APPENDIX 28
Slide 29: Capitalization
CAPITALIZATION PRO FORMA CAPITALIZATION 29 ($ in millions) 3/31/2014 PF $600 MM Senior Notes 3/31/2014 (2),(3) Cash $13 $13 Senior Secured Revolving Credit Facility 745 431 7.25% Senior Notes Due 2019 260 0 6.00% Senior Notes Due 2020 525 525 5.375% Senior Notes Due 2021 1,000 1,000 5.125% Senior No
Slide 30: Antero – 2014 Guidance
ANTERO – 2014 GUIDANCE 30 Key Variable 2014 Guidance Range Natural Gas Realized Price Premium to NYMEX ($/Mcf)(2) $0.00 - $0.10 NGL Realized Price (% of WTI) 53% - 57% Oil Realized Price Differential to NYMEX ($/Bbl) $(10.00) - $(12.00) Net Production (MMcfe/d) 925 - 975 Net Natural Gas Production (
Slide 31: Outstanding Reserve Growth
OUTSTANDING RESERVE GROWTH 2012 and 2013 reserves in ethane rejection. 31 PROVED RESERVE GROWTH(1) 3P RESERVE GROWTH(1) Proved PV-10 increased 133% to $7.0 billion (including hedges) 3P PV-10 increased 82% to $21.4 billion (including hedges) Replaced 1,857% of 2013 production All-in finding cost of
Slide 32: Firm Transportation and Firm Sales Portfolio
FIRM TRANSPORTATION AND FIRM SALES PORTFOLIO 32 MMBtu/d Columbia 7/26/2009 – 9/30/2025 Firm Sales #1 10/1/2011– 10/31/2019 Firm Sales #2 10/1/2011 – 5/31/2017 Firm Sales #3 1/1/2013 – 5/31/2022 Momentum III 9/1/2012 – 12/31/2023 EQT 8/1/2012 – 6/30/2025 REX/MGT/ANR 7/1/2014 – 12/31/2034 Tennessee 11
Slide 33: Low Development Cost Drives Best in Class Recycle Ratios
3-Year Average Growth – Adjusted Recycle Ratio through 2013 LOW DEVELOPMENT COST DRIVES BEST IN CLASS RECYCLE RATIOS 33 Source: Proved developed F&D industry data based on company presentations, 10-Ks and press releases. Defined as total drilling and completion capital expenditures for the period di
Slide 34: Antero Utica Shale Wells – 30-Day Rates
Note: * Wells on restricted rate program. Gas Equivalent Rate = Shrunk Gas + (NGL + Condensate) converted at 6:1. Average of Antero’s core area wells per type curve regime, in ethane rejection. ANTERO UTICA SHALE WELLS – 30-DAY RATES 34 Antero’s wells produced against 1,100 psi line pressure until l
Slide 35: Antero Utica Shale Wells – 30-Day Rates
35 Condensate Highly-Rich Gas / Condensate Highly-Rich Gas Rich Gas ANTERO UTICA SHALE WELLS – 30-DAY RATES 37% Avg. Liquids 6,001’ Avg. Lateral 22% Avg. Liquids 7,108’ Avg. Lateral 15% Avg. Liquids 5,307’ Avg. Lateral Outstanding 30-day average rates with high liquids content Antero’s wells produce
Slide 36: Considerable Reserve Base with Ethane Optionality
CONSIDERABLE RESERVE BASE WITH ETHANE OPTIONALITY 40 year proved reserve life based on 2013 production Reserve base provides significant exposure to liquids-rich projects 3P reserves of over 2.2 BBbl of NGLs and condensate in ethane recovery mode; 33% liquids Ethane rejection occurs when ethane is l
Slide 37: Marcellus Shale Rich Gas – Liquids and Processing Upgrade
MARCELLUS SHALE RICH GAS – LIQUIDS AND PROCESSING UPGRADE Based on current strip pricing. Assumes $4.25/MMBtu NYMEX, $90.00/Bbl WTI and current NGL spot prices. 0.894, 1.972 and 2.630 (ethane rejection) GPMs used, all processing costs, shrink and fuel included. No NYMEX basis differential assumed. C
Slide 38: Antero 2014 Capital Budget
ANTERO 2014 CAPITAL BUDGET 2014E 38 $2.85 Billion $2.65 Billion 2014E 2013 2013
Slide 39: Positive Ratings Momentum
POSITIVE RATINGS MOMENTUM Moody’s / S&P Historical Credit Ratings “”The positive outlook reflects the potential for a positive rating action if the company is able to continue to increase reserves and production in the Marcellus and Utica shales, increase liquids production, while continuing to impr
Slide 40: Balance Sheet Positioned for Long-Term Growth
BALANCE SHEET POSITIONED FOR LONG-TERM GROWTH PRO FORMA DEBT MATURITY PROFILE (1) WEIGHTED AVERAGE INTEREST RATE AND MATURITY(1) 40 As of 3/31/2014, pro forma for the May senior notes offering and redemption of the remaining 7.25% senior notes and $315 million of senior secured debt. Current yields
Slide 41: U.S. Incremental Gas Supply Break-Even Price Curve
U.S. INCREMENTAL GAS SUPPLY BREAK-EVEN PRICE CURVE(1) 41 Low cost, liquids-rich Utica and Marcellus Shales will remain attractive in most commodity price environments Utica Shale SW (Rich) Marcellus Shale Source: Credit Suisse report dated January 2014 – Break even price for 15% after tax rate-of-re
Slide 42: Cautionary Note
CAUTIONARY NOTE The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserve estimates (collectively, “3P”). Antero has provided internally generated estimates for proved, probable and possible reserves in this presentation in accordanc