Antero Resources Corporation · NYSE:AR
Antero Resources — Antero Midstream Partners — Merger or Acquisition (November 2018)
20 slides from Antero Resources's merger presentation, Nov 1, 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: Drilling and Completion Efficiencies
4 Drilling and Completion Efficiencies Average Lateral Feet per Day Drilling Days Average Lateral Length per Well Completion Stages per Day 3q 2018 earnings call operational execution 8,206 72% Increase 28% Increase 228% Increase (1) Reflects YTD results, as Antero is not operating any rigs in the U
Slide 4: Largest Liquids-rich Drilling Inventory in Appalachia
Largest Liquids-rich Drilling Inventory in Appalachia 5 Holds 40% of Core Undrilled Liquids-Rich Locations Based on Antero analysis of undeveloped acreage in the core of the Marcellus and Utica plays. Peers include Ascent, CHK, CNX, CVX, EQT, GPOR, HG, RRC and SWN. Largest core undeveloped liquids-r
Slide 5: Summary Simplification Transaction Benefits
Summary Simplification Transaction Benefits AR will remain the largest shareholder of Antero Midstream with a ~31% pro forma ownership Maintains Antero’s integrated strategy and long-term outlook Continued visibility into infrastructure buildout and full midstream value chain participation Unique mi
Slide 6: 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 27% 73% Sponsors/ Management Public 59% 41% 47% 27% 73% 31% Midstream simplification transaction results in one publicly traded m
Slide 7: Compounding Leverage to Improving NGL Prices
Compounding Leverage to Improving NGL Prices From 2015 - 2018 C3+ NGL prices have increased 74% while AR’s production has increased by 84% Production growth combined with pricing improvement drives compounding exposure to improving NGL prices Antero C3+ NGL Production vs Price ($/Bbl) (Bbl/d) ($/Bbl
Slide 8: A Top U.S. Producer
Top U.S. Natural Gas Producers (MMcfe/d) – 3Q18 Top Appalachian Producers (MMcfe/d) – 3Q18 Top U.S. C2+ NGL Producers (MBbl/d) – 3Q18(1) A Top U.S. Producer 9 Excludes international NGL production where applicable. 5th Largest Natural Gas Producer in the U.S. Largest C2+ NGL Producer in the U.S. 2nd
Slide 9: Consistent results through the price cycles
Consistent results through the price cycles Antero’s integrated strategy has resulted in peer-leading all-in realized prices amongst the peer group Source: Public data from company 10-Ks and 10-Qs. Peers include CNX, COG, EQT, RRC and SWN. All-in realized natural gas equivalent pricing includes liqu
Slide 10: Consistent Leader in EBITDAX Margin
EBITDAX Margin ($/Mcfe) 11 Consistent Leader in EBITDAX Margin On a Stand-Alone EBITDAX Margin Basis, Antero has Consistently Outperformed its Appalachian Peers Through Up and Down Commodity Cycles Source: SEC filings and company press releases. AR 2017 margins exclude $0.10/Mcfe negative impact fro
Slide 11: Free Cash Flow Inflection Point
Free Cash Flow Inflection Point 12 Stand-Alone Cash Flow(1) Antero Is Approaching a Free Cash Flow Inflection Point For additional information regarding Non-GAAP Measures please see the Appendix.. Estimates based on 12/31/2017 strip pricing. Capital discipline focused with substantial decrease in D&
Slide 12: Market Premium for Free Cash Flow Yield
13 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 13: Market Premium for Free Cash Flow Yield
Market Premium for Free Cash Flow Yield aMbsriero Industry Leading Free Cash Flow Yield in 2019 169 Egis0 BE a0 8 E120 EE 120 E110 . $35 100 1 +* | ; 2% 00 5 L EaP's with estabisned | |< = 10% 2 FOF yield tend totraae | |E5 2 8% inthe 5% 10.8% range | 5% 7 onaFcFyieliBass | |e POET SSITI SISSY RN Fe
Slide 14: Appendix II disclosures & reconciliations: Antero Definitions
15 Appendix II 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
Slide 15: Antero Non-GAAP Measures
16 Antero Non-GAAP Measures Consolidated Adjusted EBITDAX, Stand-Alone Adjusted EBITDAX, Consolidated Adjusted Operating Cash Flow, 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 princip
Slide 16: Antero Non-GAAP Measures
Appendix disclosures & reconciliations Antero Non-GAAP Measures Antero has not included a reconciliation of Consolidated Adjusted EBITDAX or Stand-Alone Adjusted EBITDAX to their nearest GAAP financial measures for 2018 because it cannot do so without unreasonable effort and any attempt to do so wou
Slide 17: Antero Resources Adjusted EBITDAX Reconciliation
Antero Resources Adjusted EBITDAX Reconciliation Appendix disclosures & reconciliations AR Stand-Alone and Consolidated Adjusted EBITDAX Reconciliation 18 Stand-Alone Consolidated Three months ended September 30, Three months ended September 30, (in thousands) 2017 2018 2017 2018 Net (loss) attribut
Slide 18: Antero Resources Adjusted EBITDAX Margin Reconciliation
Antero Resources Adjusted EBITDAX Margin Reconciliation Appendix disclosures & reconciliations AR Stand-Alone and Consolidated Adjusted EBITDAX Margin Reconciliation 19 Stand-Alone Consolidated Three months ended September 30, Three months ended September 30, 2017 2018 2017 2018 Adjusted EBITDAX mar
Slide 19: Antero Resources Standalone Adjusted EBITDAX Reconciliation
Antero Resources Standalone Adjusted EBITDAX Reconciliation Standalone LTM Adjusted EBITDAX Reconciliation Appendix disclosures & reconciliations 20 Stand-Alone Twelve months ended September 30, (in thousands) 2018 Net income attributable to Antero Resources Corporation $ 210,898 Commodity derivativ
Slide 20: Standalone LTM Adjusted EBITDAX Reconciliation
TDAX Reconciliation _—-létantero Standalone LTM Adjusted EBITDAX Reconciliation Stand-Alone ‘Twelve months ended. Gn thousands) Net income attributable to Antero Resources Corporation| 5 DION98 Commodity derivative fair value gains 634617) Gains on setled commodity derivatives 344917 Marketing deriv
Antero Midstream Partners — Merger or Acquisition (November 2018) on 6ix