Antero Resources Corporation · NYSE:AR

Antero Resources — Investor Presentation (December 2014)

51 slides from Antero Resources's investor presentation, December 2014

  1. Slide 1: Company Overview December 2014

    Company Overview December 2014

  2. 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

  3. Slide 3: Changes Since November 2014 Presentation

    CHANGES SINCE NOVEMBER 2014 PRESENTATION New and updated overview slides highlighting Antero’s Slides 3 – 14 integrated business model Substantial value in Antero Midstream Partners Slide 10 (NYSE: AM) Updated firm transportation map for 330 MMcf/d of firm Slide 11 sales for LNG through Cove Point t

  4. Slide 4: Leading Unconventional Business Model

    LEADING UNCONVENTIONAL BUSINESS MODEL Most Active Highest Growth Land Organization Large Cap E&P in Appalachia 2 3 Growth Land Largest Liquids-Rich Most Active Operator 1 4 Core Position in in Appalachia Liquids-Rich Appalachia Drilling Premier Appalachian E&P Company Highest Realizations MLP (NYSE:

  5. Slide 5: Catalysts

    CATALYSTS 1 Substantial low cost core Marcellus and Utica natural gas drilling Sustainability of inventory with associated liquids generates attractive returns supported Antero’s Integrated by long-term natural gas hedges, takeaway portfolio and downstream Business Model LNG and NGL sales agreements

  6. Slide 6: Drilling – Most Active Operator in Appalachia

    DRILLING – MOST ACTIVE OPERATOR IN APPALACHIA COMBINED TOTAL – 6/30/14 RESERVES Assumes Ethane Rejection Net Proved Reserves 9.1 Tcfe Net 3P Reserves 37.5 Tcfe Pre-Tax 3P PV-10 $25.9 Bn SW Marcellus + Utica Rigs(3) Net 3P Reserves & Resource 47.0 Tcfe 25 Net 3P Liquids 966 MMBbls 20 Rig Count % Liqu

  7. Slide 7: Growth – Highest Growth Large Cap E&P

    GROWTH – HIGHEST GROWTH LARGE CAP E&P  Antero’s 45%-50% production growth target for 2015 leads the U.S. large cap E&P industry(1) 50% 47.5% 40% 30.0% 30% 26.8% 25.7% 25.4% 25.0% 24.9% 22.0% 19.5% 20% 17.2% 10.0% 10% 8.4% 8.4% 7.9% 6.1% 2.9% 1.8% (2.8%) 0% (2) Appalachian Peers Source: Represents m

  8. Slide 8: Growth – Strong Track Record

    GROWTH – STRONG TRACK RECORD NET PROVED SEC RESERVES (Bcfe) AVERAGE NET DAILY PRODUCTION (MMcfe/d) Marcellus Utica Marcellus Utica Guidance 10,000 2,400 9,107 2,200 8,000 7,632 1,800 1,500 6,000 1,237 4,283 1,200 1,080 4,000 838 2,844 600 522 2,000 677 239 30 124 0 0 2010 2011 2012(1) 2013 (1) 6/30/

  9. Slide 9: Land – Most Active Land Organization in Appalachia

    LAND – MOST ACTIVE LAND ORGANIZATION IN APPALACHIA  Assembled a 524,000 net acre position in the core of the Marcellus and Utica shale plays over the past 6 years Dec 2008 Dec 2011 Dec 2014 December 2008 December 2011(1) December 2014(1) Net Acreage 118,000 Net Acreage 214,000 Net Acreage 524,000 N

  10. Slide 10: Liquids-Rich – Largest Core Position

    LIQUIDS-RICH – LARGEST CORE POSITION  Antero has the largest liquids-rich core position in Appalachia ≈366,000 net acres (1) Source: Core outlines and peer net acreage positions based on peer presentations, news releases and 10-K/10-Qs. 1. Pending Southwestern Energy acquisition of Chesapeake south

  11. Slide 11: Midstream – MLP Highlights Substantial Value

    MIDSTREAM – MLP (NYSE: AM) HIGHLIGHTS SUBSTANTIAL VALUE IN MIDSTREAM BUSINESS Corporate Structure Overview(1) Antero Resources Corporation (NYSE: AR) $13.4 Billion Enterprise Value(1) Ba3/BB Corporate Rating 70% Limited Partner Interest $2.7 Billion Market Valuation(1) $1.5 Billion Derived Valuation

  12. Slide 12: Takeaway – Largest Firm Transportation and Processing Portfolio

    TAKEAWAY – LARGEST FIRM TRANSPORTATION AND PROCESSING PORTFOLIO IN APPALACHIA Antero Long Term Firm Processing & Takeaway Position (2018) – Accessing Favorable Markets Mariner East II 4 Bcf/d Chicago(1) 62 MBbl/d Commitment(2) +$0.18 / Firm Gas $(0.04) Marcus Hook Export Takeaway Dom South(1) $(1.32

  13. Slide 13: Liquidity – Largest Gas Hedge Position + Strong Financial Liquidity

    LIQUIDITY – LARGEST GAS HEDGE POSITION IN U.S. E&P + STRONG FINANCIAL LIQUIDITY  ~$1,109 million mark-to-market unrealized gain based on current prices  1.8 Tcfe hedged from October 1, 2014 through year-end 2019 and 256 Bcf of TCO basis hedges from 2015 to 2017 COMMODITY HEDGE POSITION BBtu/d Hedg

  14. Slide 14: Realizations – Highest Realizations & Margins Among Large-Cap Peers

    REALIZATIONS – HIGHEST REALIZATIONS & MARGINS AMONG LARGE-CAP APPALACHIAN PEERS 3Q 2014 Natural Gas Realizations ($/Mcf) Average 3Q 2014 Average Average Average Hedge Average 3Q 2014 Premium/ Region % Sales NYMEX Price Differential(2) BTU Upgrade Effect Realized Gas Price(3) Discount TCO 39% $4.06 $

  15. Slide 15: Realizations – Realized Price Road Map

    REALIZATIONS – REALIZED PRICE “ROAD MAP”  Antero is forecasting realized gas prices including hedges at a premium to NYMEX strip prices for Q4 2014 through 2016, assuming current strip prices and basis, existing firm transportation and hedges, and targeted 2015 and 2016 production figures $0.67/Mcf

  16. Slide 16: Asset Overview

    ASSET OVERVIEW 15

  17. Slide 17: Multi-Year Drilling Inventory Supports Low Risk, High Return Growth

    MULTI-YEAR DRILLING INVENTORY SUPPORTS LOW RISK, HIGH RETURN GROWTH PROFILE MARCELLUS SSL WELL ECONOMICS(1) UTICA WELL ECONOMICS(1)(2) 100% 896 875 1000 1,000 100% 265 300 248 76% 254 727 800 250 Total 3PLlocations Total 3P Locations 75% 633 75% 57% 600 50% 200 45% ROR ROR 50% 37% 50% 150 55% 400 14

  18. Slide 18: World Class Marcellus Shale Development Project

    WORLD CLASS MARCELLUS SHALE DEVELOPMENT PROJECT 100% operated BEE LEWIS PAD Operating 14 drilling rigs 30-Day Rate including 5 intermediate rigs 4-well combined MHR COLLINS UNIT 30-Day Rate of 389,000 net acres in 30-Day Rate 67 MMcfe/d Southwestern Core (73% 4-well average (26% liquids) 9.3 MMcf

  19. Slide 19: Antero's Marcellus Shale Type Curve

    ANTERO’S MARCELLUS SHALE TYPE CURVE  Antero has five years of production history to support its Non-SSL type curve  Antero has over one year of production history to support its SSL type curve: 1.7 Bcf/1,000’ with only 10% to 15% higher well costs vs. Non-SSL  Lack of faulting and contiguous acre

  20. Slide 20: Marcellus ROR% and Gas Price Sensitivity

    MARCELLUS ROR% AND GAS PRICE SENSITIVITY  Large portfolio of Highly-Rich Gas/Condensate to Dry Gas locations  Focused on drilling highly economic rich gas locations – rig symbols represent current rig location by Btu regime  Assumes 11/28/2014 WTI strip pricing for 2014-2019, flat thereafter; NGL

  21. Slide 21: Leading Utica Shale Core Position Delivers Condensate and NGLs

    LEADING UTICA SHALE CORE POSITION DELIVERS CONDENSATE AND NGLS Utica Shale Industry Activity(1)  100% operated Cadiz  Operating 7 rigs including 2 intermediate rigs GULFPORT Processing 24-Hour IP Plant  135,000 net acres in the core rich gas/ Wagner 1-28H, Shugert 1-1H, 1-12H condensate window (7

  22. Slide 22: Utica ROR% and Gas Price Sensitivity

    UTICA ROR% AND GAS PRICE SENSITIVITY  Large portfolio of Condensate to Dry Gas locations  Focused on drilling highly economic rich gas locations – rig symbols represent current rig location by Btu regime  Assumes 11/28/2014 WTI strip pricing for 2014-2019, flat thereafter; NGL price of 55% of WTI

  23. Slide 23: Large Utica Shale Dry Gas Position

    LARGE UTICA SHALE DRY GAS POSITION Utica Shale Dry Gas Acreage in OH/WV/PA(1)  Antero has ≈200,000 net acres of exposure to Utica dry gas Rice Hess Chesapeake play Hubbard BRK #3H Range Bigfoot 9H Porterfield 1H-17 Utica Well 3,550’ Lateral − 32,000 net acres in Ohio with net 3P reserves of 1.9 Tcf

  24. Slide 24: Fresh Water Distribution Systems

    FRESH WATER DISTRIBUTION SYSTEMS Projected Midstream Infrastructure(1) Marcellus Utica Shale Shale Total YE 2014E Cumulative Fresh Water System Capex ($MM) $300 $100 $400 Water Pipelines (Miles) 107 48 155 Water Storage Facilities 26 8 34 Marcellus Fresh Water Distribution System • Provides fresh wa

  25. Slide 25: Firm Transportation and Firm Sales Portfolio

    FIRM TRANSPORTATION AND FIRM SALES PORTFOLIO Columbia Tennessee Momentum III EQT REX/MGT/ANR 7/26/2009 – 9/30/2025 11/1/2015– 9/30/2030 9/1/2012 – 12/31/2023 8/1/2012 – 6/30/2025 7/1/2014 – 12/31/2034 ANR Local Distribution Firm Sales #1 Firm Sales #2 Firm Sales #3 3/1/2015– 2/28/2045 11/1/2015 – 9/

  26. Slide 26: Firm Transportation Reduces Appalachian Basis Exposure

    FIRM TRANSPORTATION REDUCES APPALACHIAN BASIS EXPOSURE  Antero’s firm transportation (FT) portfolio increases visibility on production growth and increases exposure to Gulf Coast and Midwest pricing, with little incremental cost per Mcf  Reduces weighted average basis by $0.27 per MMBtu compared t

  27. Slide 27: Firm Transportation Designed to Accommodate Growth

    ANTERO FIRM TRANSPORTATION APPROPRIATELY DESIGNED TO ACCOMMODATE GROWTH % FT Utilization % FT Utilization % FT Utilization (BBtu/d) (including (including (including • Antero’s firm transport (FT) is marketable FT): marketable FT): marketable FT): well utilized during the 3,500 92% 88% 87% forecast p

  28. Slide 28: Health, Safety, Environment & Community

    HEALTH, SAFETY, ENVIRONMENT & COMMUNITY Antero Core Values: Protect Our People, Communities And The Environment Strong West Virginia Keys to Execution Presence  Antero has more than 4,500 employees and contract personnel working full-time  79% of all Antero Marcellus for Antero in West Virginia. 7

  29. Slide 29: Clean Fleet & CNG Technology Leader

    CLEAN FLEET & CNG TECHNOLOGY LEADER ● Antero has contracted for two clean completion fleets to enhance the economics of its completion operations and reduce the environmental impact ● Replaces diesel engines (for pressure pumping) with electric motors powered by natural gas-fired electric generators

  30. Slide 30: Antero Midstream Asset Overview

    Antero Midstream (NYSE: AM) Asset Overview 29

  31. Slide 31: Substantial Investment in Midstream MLP

    SUBSTANTIAL INVESTMENT IN MIDSTREAM MLP (NYSE: AM) Midstream Assets Utica • Gathering and compression assets in core of rapidly Shale growing Marcellus and Utica Shale plays – Acreage dedication of ~390,000 net leasehold acres for gathering and compression services – 100% fixed fee long term contrac

  32. Slide 32: Antero Midstream Assets – Rich Gas Marcellus

    ANTERO MIDSTREAM ASSETS – RICH GAS MARCELLUS Marcellus Gathering & Compression • Provides Marcellus gathering and compression services − Liquids-rich gas is delivered to MWE’s Sherwood Complex for processing • Significant growth projected over the next twelve months as set out below: YE 2014 9/30/20

  33. Slide 33: Antero Midstream Assets – Rich & Dry Gas Utica

    ANTERO MIDSTREAM ASSETS – RICH & DRY GAS UTICA Utica Gathering • Provides Utica natural gas and condensate gathering services − Liquids-rich gas delivered into MWE’s Seneca Complex for processing − Condensate delivered to centralized stabilization and truck loading facilities • Significant growth pr

  34. Slide 34: Appendix

    APPENDIX 33

  35. Slide 35: Pro Forma Capitalization

    PRO FORMA CAPITALIZATION ($ in millions) 9/30/2014 Pro Forma $1.15 Bn AM IPO(4) 9/30/2014 Cash $6 $256 Senior Secured Revolving Credit Facility 1,505 662 6.00% Senior Notes Due 2020 525 525 5.375% Senior Notes Due 2021 1,000 1,000 5.125% Senior Notes Due 2022 1,100 1,100 Net Unamortized Premium 8 8

  36. Slide 36: Antero Resources – 2014 Guidance

    ANTERO RESOURCES – 2014 GUIDANCE Key 2014 Operating & Financial Assumptions(1) Key Variable 2014 Guidance Range Natural Gas Realized Price Differential to NYMEX ($/Mcf)(2) $(0.15) – $(0.25) Oil Realized Price Differential to WTI ($/Bbl) $(10.00) – $(12.00) NGL Realized Price (% of WTI) 53% – 57% Net

  37. Slide 37: AR NAV Growth

    AR “NAV” GROWTH (MMcfe/d)  Land acquisitions and drill bit drive NAV growth (# of Gross Wells) 1,000 325 20 Rigs Added 35,000 net acres in 300 900 1H 2014 for ~$240 million, which resulted in 2.0 Tcfe 275 of 3P reserves and $1.5 800 billion of PV-10 value (1) 250 700 225 Initial Antero 485 Utica We

  38. Slide 38: Lowest Finding & Development Cost Among U.S. Producers

    LOWEST FINDING & DEVELOPMENT COST AMONG U.S. PRODUCERS  Antero ranks as the most efficient finder and developer of reserves, on a per Mcfe basis, based on a 2011-2013 average all-in F&D cost analysis prepared by Credit Suisse 3-Year All-In F&D Cost – Excluding Revisions ($/Mcfe) through 2013 AR $0.

  39. Slide 39: Marcellus Single Well Economics – In Ethane Rejection

    MARCELLUS SINGLE WELL ECONOMICS – IN ETHANE REJECTION Assumptions Marcellus SSL Well Economics and Total Gross Locations(1)  Natural Gas – 11/28/2014 strip 100% 896 1,000  Oil – 11/28/2014 strip 875  NGLs – 55% of Oil Price 727 800 Total 3P Locations 75% 633 NYMEX WTI C3+ NGL(2) 600 ROR ($/MMBtu)

  40. Slide 40: Utica Single Well Economics – In Ethane Rejection

    UTICA SINGLE WELL ECONOMICS – IN ETHANE REJECTION Assumptions Utica Well Economics and Gross Locations(1)  Natural Gas – 11/28/2014 strip 100% 300 248 265 254  Oil – 11/28/2014 strip 76% Total 3P Locations 80% 250  NGLs – 55% of Oil Price 57% 50% 200 60% 45% ROR 150 NYMEX WTI C3+ NGL(2) 40% 143 (

  41. Slide 41: Low Development Cost Drives Best in Class Recycle Ratios

    LOW DEVELOPMENT COST DRIVES BEST IN CLASS RECYCLE RATIOS 3-Year Proved Development Costs ($/Mcfe) through 2013 $/Mcfe $6.00 Antero Appalachia-Focused Peers Other Peers $5.00 $4.00 $3.00 $2.00 $1.60 $1.15 $1.18 $1.21 $1.00 $0.00 Source: Proved developed F&D industry data based on company presentation

  42. Slide 42: Antero Utica Shale Wells – 30-Day Rates

    ANTERO UTICA SHALE WELLS – 30-DAY RATES Outstanding 30-day average rates with high liquids content – Antero’s wells produced against 1,100 psi line pressure until late January 2014 due to lack of compression facilities – First 120 MMcf/d compressor station started up in late January 2014, a second

  43. Slide 43: Considerable Reserve Base with Ethane Optionality

    CONSIDERABLE RESERVE BASE WITH ETHANE OPTIONALITY  30 year proved reserve life based on 1H 2014 production annualized  Reserve base provides significant exposure to liquids-rich projects – 3P reserves of over 2.3 BBbl of NGLs and condensate in ethane recovery mode; 33% liquids ETHANE REJECTION(1)

  44. Slide 44: Positive Ratings Momentum

    POSITIVE RATINGS MOMENTUM Moody’s / S&P Historical Corporate Credit Ratings Moody’s Upgrade Criteria S&P Upgrade Criteria “An upgrade could be considered if debt / average daily production is “We could raise the ratings due to our assessment of an improvement in sustained below $20,000 per boe and d

  45. Slide 45: Pro Forma Offering – Balance Sheet Positioned for Long-Term Growth

    PRO FORMA OFFERING – BALANCE SHEET POSITIONED FOR LONG-TERM GROWTH  The recent bond offerings, at progressively lower coupons, have allowed Antero to reduce its cost of debt to approximately 5.0% and enhance liquidity while extending the pro forma average debt maturity to June 2021  Current cost o

  46. Slide 46: Marcellus & Utica – Advantaged Economics

    MARCELLUS & UTICA – ADVANTAGED ECONOMICS  Low cost, liquids-rich Utica and Marcellus Shales will remain attractive in most commodity price environments U.S. INCREMENTAL GAS SUPPLY BREAK-EVEN PRICE CURVE(1) 3,000 Antero Drilling Locations Needed to make up NE (Dry) for base declines in Marcellus Eag

  47. Slide 47: Marcellus/Utica Has Driven Gas Supply Growth

    MARCELLUS/UTICA HAS DRIVEN GAS SUPPLY GROWTH Lower 48 Gas Supply by Area  Of the 23 Bcf/d of expected incremental gas (MMcf/d) supply from 2009 to 2015, ~18 Bcf/d, or 78%, is expected to be generated from Marcellus 18,000 and Utica production Nov-12 Nov-13 Nov-14  Marcellus and Utica gross gas pro

  48. Slide 48: 20 Bcf/d of Incremental Gas Demand by 2020

    20 Bcf/d OF INCREMENTAL GAS DEMAND BY 2020 Projected Incremental Gas Demand Through 2020  More than 65% of the 20 Bcf/d in incremental (Bcf/d) 9.5 Bcf/d of the 20 Bcf/d of gas demand forecast by 2020 is expected to 20 incremental demand is 20 be generated from exports: expected to come from LNG exp

  49. Slide 49: LNG Exports by Project – Expected Start Up

    LNG EXPORTS BY PROJECT – EXPECTED START UP LNG Exports by Project Through 2020  Assuming 9.5 Bcf/d of LNG exports by 2020, (in Bcf/d) the U.S. would be the world’s 3rd largest LNG 2015 2016 2017 2018 2019 2020 exporter (behind Qatar and Australia) Sabine Pass 1 - 0.6 - - - - Sabine Pass 2 - 0.6 - -

  50. Slide 50: LNG Exports by Project – Current Status

    LNG EXPORTS BY PROJECT – CURRENT STATUS LNG Exports by Project – Current Status Dates of Key Milestones Send Out Non- DOE Non-FTA FERC FTA Permit Underlying Permit Construction Capacity Gas Demand Project Awarded Approval (Bcf/d) (Bcf/d) Contracts Offtakers Sabine Pass 1-4 05/20/11 04/16/12 2.20 2.4

  51. Slide 51: Cautionary Note

    CAUTIONARY NOTE Regarding Hydrocarbon Quantities 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

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