Antero Resources Corporation · NYSE:AR
Antero Resources — Antero Midstream Partners — Baird Global Industrial Conference (November 2018)
26 slides from Antero Resources's conference presentation, Nov 6, 2018
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: Antero at a Glance
Antero at a Glance The Most Integrated Natural Gas Liquids Platform in the U.S. Marcellus ~ 484,000 Acres ~2,751 Core Drilling Locations Utica ~136,000 Acres ~544 Core Drilling Locations Antero Assets A World Class E&P Operator in Appalachia What’s new: $600MM share repurchase program 4Q18 inflectio
Slide 4: Antero: Not Just a Natural Gas Producer
Antero: Not Just a Natural Gas Producer Liquids-Rich Resource and Scale Differentiated Liquids Focused Strategy for Delivering Shareholder Value #1 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.
Slide 5: Largest Liquids Drilling Inventory and Producer
Largest Liquids Drilling Inventory and Producer Undrilled Core Liquids-rich Inventory(1) Top U.S. C2+ NGL Producers - 2018E(2) Antero controls 40% of the core undrilled liquids-rich locations in Appalachia and is the largest NGL producer in the U.S. Over 2.5x inventory of closest competitor Most exp
Slide 6: Midstream Driving Value for AR Since Inception
Midstream Driving Value for AR Since Inception 7 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 (4.7x ROI for AR) J
Slide 7: A Paired Trade – Hedges Support FT Commitments
A Paired Trade – Hedges Support FT Commitments Firm Transportation Portfolio Allows Antero to achieve: Effectively Hedge NYMEX Index A key advantage as our product is delivered to NYMEX-related markets Premium Price Certainty Less volatility and greater surety in realized prices Hedge Portfolio Supp
Slide 8: Capital Efficiency Drives Peer Leading Growth
Capital Efficiency Drives Peer Leading Growth Antero’s capital efficiency and attractive economics drives peer-leading debt-adjusted production per share growth 9 BAIRD GLOBAL INDUSTRIAL CONFERENCE ANTERO Debt-Adjusted Production Per Share Growth(2) Development Plan Details Measured capital budgets
Slide 9: A Leader in Realized Pricing and EBITDAX Margins
A Leader in Realized Pricing and 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 Driven by hedges, firm transport to premium markets and liquids contribution All-in Pricing Realizat
Slide 10: Free Cash Flow Inflection Point
Free Cash Flow Inflection Point 11 Stand-Alone Cash Flow(1) For additional information regarding Non-GAAP Measures please see the Appendix.. Estimates based on 12/31/2017 strip pricing. Cash Outspend Free Cash Flow Generation Q4 2018 represents a free cash flow inflection point 2019E – 2022E Q3 2018
Slide 11: Market Premium for Free Cash Flow Yield
12 Market Premium for Free Cash Flow Yield Industry Leading Free Cash Flow Yield in 2019 Free Cash Flow is a “Prove It” story and has been rewarded by the market 29% 4% Leading E&P for FCF Yield Note: 1H18 used as a proxy for proven free cash flow story. Cash flow yield defined as free cash flow div
Slide 12: Financially Disciplined Repurchase Program
Financially Disciplined Repurchase Program Disciplined share repurchase plan maintains financial flexibility and balance sheet strength with leverage < 2.25x in 4Q 2018 and < 2.0x by YE 2019 AR Standalone Net Debt / LTM EBITDAX(1) Based on 12/31/2017 strip pricing and the long-term plan announced at
Slide 13: Antero Profile Should Drive Multiple Expansion
14 Antero Profile Should Drive Multiple Expansion Source: Bloomberg & Antero Estimates as of 10/31/18. Adjusted EBITDAX and Adjusted Operating Cash Flow are non-GAAP measures. AR EV/EBITDAX multiple also reflects an enterprise value that excludes AR ownership of AM, and EBITDAX excludes AM distribut
Slide 14: Profile Should Drive Multiple Expansion
Profile Should Drive Multiple Expansion alirsrero Median Debt). Median EV/ #of Adjusted 2019 Adj. ARDOIGE] Companies EBITDAX EBITDAX uinhedged U.S. Publicly Traded E&Ps eax ‘Multiple: 3.5% 52 2.1x 4.8x re 38 1.7K 4.9x Premium forz Enterprise Value > $10B Production Growth Growth >15% Leverage Low Le
Slide 15: Why Invest in Energy? Growth & Capital Discipline Driving ROCE
Why Invest in Energy? Growth & Capital Discipline Driving ROCE Antero Resources october 2018 Presentation Energy Sector Offers Attractive Combination of FCF Yield, EBITDA Growth and Corporate Level Returns on Capital Efficiency Gains E&P Average Return on Capital Employed (2) Sector FCF Yield and EB
Slide 16: Energy: A Value Investment Opportunity
7.3x Energy: A Value Investment Opportunity Antero Resources october 2018 Presentation Consumer Discretionary Telecom. Services Materials Real Estate Utilities Energy Consumer Staples Industrials Financials Healthcare Information Technology Energy Offers a Value Investment Opportunity Coupled with A
Slide 17: Status Quo Structure vs Antero 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 27% 73% Sponsors/ Management Public 59% 41% 47% 27% 73% 31% Midstream simplification transaction results in one publicly traded m
Slide 18: Compelling Full Cycle Well Economics
Compelling Full Cycle Well Economics 19 Single Well Economics Bridge to Corporate Level Returns Fully Burdened Corporate Level Well Economics are Outstanding Note: See company presentation on Antero Resources investor relations website for further detail behind full cycle and half cycle single well
Slide 19: Appendix II Disclosures & Reconciliations: Antero Definitions
20 Appendix II disclosures & reconciliations Antero Definitions Consolidated Drilling & Completion Capital: Represents drilling and completion capital as reported in AR’s consolidated cash flow statements (i.e., fees paid to AM for water handling and treatment are eliminated upon consolidation and o
Slide 20: Antero Non-GAAP Measures
21 Antero Non-GAAP Measures Stand-Alone Adjusted EBITDAX, Stand-Alone Adjusted Operating Cash Flow and Free Cash Flow are financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The non-GAAP financial measures used by the company may not
Slide 21: Antero Non-GAAP Measures
Appendix disclosures & reconciliations Antero Non-GAAP Measures Antero has not included a reconciliation of Stand-Alone Adjusted EBITDAX to the nearest GAAP financial measures for 2018 because it cannot do so without unreasonable effort and any attempt to do so would be inherently imprecise. Antero
Slide 22: Stand-alone Adjusted EBITDAX Reconciliation
Antero Resources Stand-alone Adjusted EBITDAX Reconciliation Appendix disclosures & reconciliations 23 Stand-Alone Three months ended September 30, (in thousands) 2017 2018 Net (loss) attributable to Antero Resources Corporation $ (135,063) (154,419) Net Income attributable to noncontrolling interes
Slide 23: Adjusted EBITDAX Margin Reconciliation
Antero Resources Adjusted EBITDAX Margin Reconciliation Appendix disclosures & reconciliations AR Stand-Alone Adjusted EBITDAX Margin Reconciliation 24 (1)Includes cash payments for settled marketing derivative losses of $0.06 per Mcfe in 2018. Includes marketing revenues of $89.6 million and market
Slide 24: Stand-alone Adjusted EBITDAX Per Mcfe
Antero Resources Stand-alone Adjusted EBITDAX Per Mcfe Appendix disclosures & reconciliations 25 Standalone Adjusted EBITDAX per Mcfe Reconciliation (Annual) 2013 2014 2015 2016 2017 1Q2018 2Q2018 3Q2018 ($/Mcfe) Natural Gas, Oil, Ethane and NGL sales 4.31 $ 4.74 $ 2.53 $ 2.60 $ 3.35 $ 3.56 $ 3.35 $
Slide 25: Standalone LTM Adjusted EBITDAX Reconciliation
Antero Resources Standalone Adjusted EBITDAX Reconciliation Standalone LTM Adjusted EBITDAX Reconciliation Appendix disclosures & reconciliations 26 Stand-Alone Twelve months ended September 30, (in thousands) 2018 Net income attributable to Antero Resources Corporation $ 210,898 Commodity derivativ
Slide 26: Standalone LTM Adjusted EBITDAX Reconciliation
TTDAX Reconciliation Miosiero Standalone LTM Adjusted EBITDAX Reconciliation Gn thousands) Net income attributable to Antero Resources Corporation 5 DORR ‘Commodity derivative fair value gains 634617) Gains on setled commodity derivatives 344917 Marketing derivative fair value gains (72.687) Gains o
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