Antero Resources (AR) 1 Aug 242024 Q2 Earnings call transcript

Greetings, and welcome to the Antero Resources Second Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brendan Krueger, Vice President of Finance. Thank you.

You may begin.

Yes. morning. Good joining Second for Conference XXXX for Call. us you Quarter Antero's Investor Thank few the Q&A. going highlights, spend minutes We'll a through we'll it and open financial up for then operating and to I like non-GAAP may at where reviewed presentation have would we contain during financial call of a earnings will to you certain www.anteroresources.com, separate also provided that our the direct today's website homepage measures. be call call. Today's the measures, most earnings press release important including Please reconciliations such to GAAP refer our to comparable disclosures for measures. financial regarding

the me over Chairman, Marketing Natural Liquids Senior Joining Paul. to Vice Justin are CEO Cannelongo, and call of call of on today Fowler, and Paul Transportation. I President; Gas President CFO; Dave President Rady, Marketing; will and Michael now Kennedy, Vice the Senior turn

I'm Efficiencies." to We #X start morning, Brendan, comments my good gains. Slide continue Completion Thank you, efficiency titled and and operational going to "Drilling impressive everyone. realize on

our just the had we of we record left-hand quarter, that second side of quarter on first year, the last the the this year. Starting top exceeded During chart performance with that's and XXXX. in our XX,XXX slide, well feet continue our longer XX% this averaged longer prior This record. than during XXXX. quarter is lateral second of per of record our to a quarterly and quarterly wells over get in

pad in built quarter, laterals have reflects long these averaged During acreage per completed nearly that ability Virginia. X-well we the drill to well. that the a we XX,XXX The lateral feet West position concentrated

blocks benefit our that instrumental development also are in filling We our around in acreage organic from efforts leasing program.

an of year point we've the days X.X days during half last first to improvement side, spud the X kickoff drilling the averaged from On year, which is XXXX. the from

efficiently, from day averaging as drilling XX.X a stages shorter day performance increase but we operational wells XXXX. completion faster cycle the improvements bottom stages quarter. in second be more per is we impressive. This per the once side, On an are These times, and quarterly these the during continues page. Not to shown only the in the set record, our again on result of XX.X well

second per well During XX company highlights XX day the with recorded the second well XXXX, history quarter, production pad we productivity versus #X well outperformed drive that wells feet our over X in per averaging have days. Slide well Antero's rate improving cumulative outperformance million equivalent peers. liquids performance over highest cubic Since productivity liquids peer our has Antero's XX%, average in the time. been this helping trend by per

our depicts is and performance. capital $X.XX to group the titled peer Capital benefits per tangible Slide average from efficiency XX% per $X.XX let's its the the This below Mcfe. Now This #X operational strong "Antero gains of Mcf equivalent slide peer Mcfe. lowest turn Versus just well per of maintenance Efficiency Peers." at has Antero

provides flexibility us efficiency capital plan. Our development in with our important

pricing, gas increase of to as of natural this payout until gains. able Despite to quarter XXXX guidance current we able and were deferral, the the end a efficiency defer this productivity are still Given a we production strong third result from annual our the year.

liquids Vice current comments. going it our to Liquids to over fundamentals, President and the touch Now his Dave? Senior Transportation; NGL and on to for Cannelongo, Marketing I'm Dave of turn

Paul. Thanks,

U.S. continue observed to to the of year, in the the set liquids day. record propane quarter according million EIA shows propane historical the since #X start X.XX rising Propane export strong continuation of weekly second CX+ XXXX. In demand COVID and a saw providing drive data XXXX improved the a fundamentals first become U.S. have the price major NGL observed tailwind in and we exports quarter second for a realizations quarter, this export The barrels XXXX. Slide a to premiums market we increases highlights of began at consistent that the Antero's for year. a in exports in weekly have pandemic new the

market have Looking than quarter the a the propane quarterly in to move day barrels expect in we threshold XXXX. The area the start U.S. maximum export quarters this annual million yellow the has existing LPG the on quarter in numbers we LPG average seeing due X.X particularly high remainder basis export the the in on higher #X docs as Coast Gulf recover The the we previous in broader since year. the of actual year, a of capacity, in volumes averaged export exports of of been this Coast above Gulf Hurricane black and trend, illustrates doc line. third capacity to the through is export Beryl the impact but last export the are lower Gulf are which surpass at U.S. Coast. Slide of levels the testing fourth July, and

of very to of spot XXXX turn, saw these Looking waterborne in and cargoes. XXXX. period This, high Belvieu XXXX alleviated docs a back by led to at cargoes. Several to high Mont XXXX, pricing tightness for in utilization rates constraints and we and spot the availability expansions reflected low premiums terminal LPG

believe to major continue several NGL are environment mid-XXXX starting capacity once we will high U.S. tight in global now increase this come until and LPG However, again XXXX. expansions production into and a extremely period turmoil online steadily demand have likely continued dock premiums. and of and We

towards over Hook exports skewed production directly Antero Pennsylvania. propane XX% the in of terminal reminder, heavily our of CX+ out a Marcus As

the not Coast. by capacity As Gulf constraints volumes are impacted a Antero's any result, export in

premiums loading observed Belvieu. since a Turning observed XX of January of days the participants recent per $X.XX to for to reached This the graph levels highest FOB versus XX This XXXX. for market the high shows by at gallon, waterborne cargoes in Slide actual #X. cargoes July premiums pricing Mont

recently in call, in our international of on indices barrels. of liquids This shown transacting been export our noted receiving into price in link a quarter's market entering sell spot deals. Therefore, increase similar we Belvieu has for vast longer over to last healthier majority a elected guidance rates in approximately a PDH extremely against X of utilization propane over take estimated current in China advantage XX% as CX+ market. to we increased levels instead to day more the and Antero realized NGL portion in online propane resulted dynamics As the our well capacity last have stronger capacity year, this spot NGL rates positioned led Antero to we this of waterborne above market, the PDH as the to uplift returned new announced. In term and to as have highlights, market million just XXXX weeks other Mont consultants barrels as in has and premium the those significant prices, even our and the PDH graph XXX,XXX end to pricing compared China this utilization project greater is well supporting barrels years. Current of continues. build-out to at barrels X.X demand have the utilization XX% over day comes strong. To to conclude, is the grow by per particularly remains recent

now strategy added Our those continue allowed at leaving Coast this Hook a spot to in and expect and NGL mid-XXXX the and available export is President in largely further per Senior the to to Fowler, turn our barrels over capture increase and values of premium Justin marketing market. unconstrained to Natural position XXXX. more guidance allowed Vice gas for our Gulf we capacity of These export -- premiums, it pricing Mont barrel unprecedented strong Marketing, $X have Gas us to $X Marcus market have XXXX. I'll to Antero until to discuss tailwinds Belvieu more year natural

most high occurring despite pricing recent is are storage The gas that over in with our forecast. optimistic burn average. With relatively from that power levels gas record that LNG by even imports unchanged. Bcf XXX combined natural March, Bcf the storage are the softness Canada still nearly Dave. constructive outlook exceeded XXX in resulted full XXXX at above in said, Higher downtime X-year at Thanks, inventory for natural summer since has high over and extended has historically facilities where has levels surplus remains shrunk the

low lead continue prices a and to combined rig of believe counts XXXX higher in tightening support in upward change inventories with We an continued and demand will to step beyond.

is it helpful quarters look in has pricing at let's all our Transport Gulf update. #X be Slide update since slide "Not to I've provide how an thought this prior changed to Coast Equal." U.S. last on Now but would the titled, highlighted

to As expected exceeding ago, service were we seen TGP which $X.XX Henry pricing approach startup MMBtu. When Hub month, Calendar the per per back $X.XX at have under we show facility, premiums be of year premiums the is MMBtu. in Global increase further. Plaquemine forward you XXXX Venture premiums curve pricing LNG to X through XXXX look even this XXXL

TGP XX% the Evangeline of XXX,XXX to As per MMBtu a the delivery pool the Kinder Phase feed LNG reminder, Morgan that day facility. project holds XXXL X supply will Plaquemine the or capacity to of Pass Antero firm

LNG of all while our of LNG our of substantially basin, their gas to including sell the XX% on natural approximately corridor. the into out corridor, we than average less gas Additionally, saw natural peers XX%

points a facilities. With transportation expect Coast the LNG spread sales the premium outside of into in firm to major near between Gulf pricing over vicinity and Henry and along importantly, several X new us exposure to the we portfolio see LNG Hub this Our LNG facilities demand the with points widening the market. growing provides sales next up year, points direct Tier of starting

in Burn." LNG continues In titled, addition the of demand topical. XX electric chart the demand to of Bcf Next, ramp to highly to "U.S. the end let's turn be the #XX anticipated generation power on decade, by highly Power Slide

day of During has natural X.X burn a year. the Bcf to the last first half period increased same gas power XXXX, approximately compared

is seen growth in driven Bcf another going decade, crypto and vehicles. Factors, of While AI of growth CFO. data higher demand could I gas to met Antero's year mining We XXXX and power demand. higher the by natural needs. With plant affordable believe of by over we've energy this ultimately forward, that, per day. demand this available averaged future trend Mike continue last to Kennedy, electric will share market and including will lead gas that burn reliable, centers, fill gas over annual the to beginning wave resource retirements the each demand these meaningful natural Natural accessible from coal is increases X.X it today most turn domain

add levels Slide pricing our I'd just in even NGL free #XX to To level titled, Flow Thanks, our start Free This natural million free our what in XXXX cash our XXXX Breakeven." peer unhedged to like compares with and to breakeven gas Cash the "Lowest Dave slide flow group. cash highlighted, flow across an incremental lower. guidance adds $XX increase breakeven pushes Justin.

X Our benefits drivers. Mcf level from primary breakeven $X.XX

low detailed $XXX over by production. able million our efficiency Paul our capital maintenance flat by capital earlier, reduce year completion First, this gains that to we maintaining budget and were annual requirements. the Driven drilling while

sustainable be to We forward. this million going expect capital around level in and maintenance $XXX

to gas The exposure second price, in averaged CX+ weakness the NGL first just which of strong have our price that $X.XX uplift drivers are $X.XX the high during through natural Despite liquids. provided prices per to period. XXXX, Mcf half Mcf the equivalent realizations per

chart free slide the low of side throughout cash protection illustrates this cash unhedged first Importantly, breakeven cycles. on free the flow. right-hand provides XXXX flow downside The half

just the rate levels to have is investment-grade year-to-date, protect $X testament achieved since show reinvestment and to we the upgrade have program determine breakeven bottom upside that peers believe Essential debt began unsustainable to to outspends. We billion Henry who economics our best further the second true we breakeven low capital outspend small pricing. A down exposure higher The with during the a strength XXXX. positioned quarter. capture this the we peer rating the comes with While lowest company's development achieved an maintenance the reduction of was we reduction is low best greatest with our price debt of gas this to a to the in program. the way credit analysis was and and Hub downside to line this upgrade

Turning to Slide #XX.

see rating this momentum can credit You we the time. had during that

I savings for will new million $XXX we this operator additional realized entered questions. Following call this of and week $XX over annual in a upgrade, now expect interest to the liquidity. With turn credit facility over earlier the unsecured million have into and that, that closed

first our And Instructions] from Truist with Bert [Operator Securities. question comes Donnes

Or stone I logistically, then on and the off does renegotiate just already is when a the price in that improve a you in? maybe year-end? for wait disclosed. service situation? for set wanted you if Or to prices pad? pad have deferred you complete to see that go how that Did Is start And you work cost? timing that locked that will

the of prices in try into is the to season. Bert, turn to But winter determined Kennedy. to really line Mike course, beginning prices. end of and deferred are it natural We dynamic that No, just natural of still gas to year, be pricing at the basically get next, just gas of fluid.

spot change, and we have and that commodity so those around pricing kind if we pricing that followed. prices further even a So the general crew, gets mechanism confer of a have

it is crew. pricing well spot a So the completion as for

next then to with per productivity just your the in To two around one short XX,XXX-foot the there? be Could honest, laterals, can about looked were kind if you to some go that, Perfect. a there? foot, you And talk sort it XX,XXX of on one, some XX,XXX-foot of longer Okay. on numbers But just savings the I laterals. these just cost drill of you laterals put maybe expecting you dip instead anything when feet. of line was laterals. If

exact know don't I Yes. numbers. those

quite some well We time. in haven't a drilled XX,XXX-foot

know our per low longer on don't what but numbers laterals in are, foot. the those I So those $XXX

Arun question next & Chase from Jayaram with Company. JPMorgan comes Our

question first completion the efficiency some regarding My of is gains.

you've that could at what technologies you're producers a XX of are shed stages doing your some if that on maybe day. wondering per mentioned light I lot averaged There's you was simul-frac, You process, trimul-frac. different Antero. using

that? that a mix if see But on you I today? to you're love And pumping that you can using more some your think continuous for it's of shed are what technique percentage using. light

Yes.

on about we between forth on talked manifold the modernized perfected, back think a call, fracs didn't our as but I system elaborate pad. earnings the we and last but laterals it zipper concept, switch certain the we doing in have but

disconnecting fairly we used whereas a a see to and iron -- them lot iron, in and you'd us of swing wellheads manifold. banging reconnecting So elaborate

and can quite Now back on computerized forth more it's and switch we off and quickly. shift and

our to kudos manifold readily. switch give group forth automatic quite to back I can develop system So and operating this that

are on you And Paul, that process today? your wells, what percentage of using

XXX%.

XXX%.

Okay.

only one. have We

and the the Justin. Understood. the gas incremental really And talk get the I higher. And some -- higher gas know Understood. than to week. was pricing natural was for looks on take wanted if results the because wondering this I it anticipating I have much about could auction on to that dispatchable was forces, earlier get talking implications from a PJM follow-up your you results in Street we Justin of the were to to didn't is for give so to electric it your going you advantages to natural but like some i.e., some gas-fired increase to see I on expect market our generation, utility that, gas. Do team peakers speak, move perhaps wanted thoughts capacity see curve that? --

we been the When of and as about Justin. Bcf a it's Arun, additions gas CERC, have towards at end out PJM, decade. demand we then that natural of the of MISO look thinking

categorizing the draw the auctions data that center your it growth when PJM locations. have the with projects other being day then up So we been power growth Virginia have area, the the from Bcf with it the ends that around as total that XXXX. To those then been by maybe and in X we per point on and and up, the West announced Carolinas, data all PJM center pricing AI AI

move as forward. start grow So natural And chatted forward, expected will to higher. particular, seems we've us, it several if projects in trading potentially the groups, West these one need those Virginia to that projects that, power PJM but near continue in gas to then continue

with comes question Next from Sachs. Goldman Ati Modak

shareholder was of last you the that So for the first call, returns mentioned year. potential next half in maybe

then change macro return you around developments now? how gas of timing the your capital? does about trajectory thinking With prices then, how the around since that the of are And expectations

X it's million pay I a said, of shareholder be which we free of to holds paydown. And returns That out and it further 'XX, credit think -- coupon, so $XXX likely we which XX-XX our take first get where reiterate under facility stuff note then leave outstanding. still X would true debt debt at have still million-ish form and actually share million $XXX million. XXXX credit to what to and $XXX is to that's buybacks our facility then we then goes out flow, cash outstanding probably $XXX still it's around And we'll X/X Yes, just there, then would got from most that they're in down. the just and down

once those majority fine vast So the then -- you be would would in to through 'XX, get shareholder buyback. it go

still that lower. it. So holds. prices commodity It's quarter a trended since prices. It's you on hit last bit dependent obviously, on Commodity

definitely occur 'XX, look today's to doesn't going but commodity it it So prices, in like occur that's in sometime at 'XX.

helpful. then color system. for manifold And the automated very That's on the thanks

to components on. zipper-frac the automated process be here curious the other driven of well Is going thinking is terms you're on from here? there construction Just in incremental of? that Or something efficiencies of the top continued of that by

-- innovation. I'd base is say, This the

crew, we least the quarter, for that's And just using the system said, main so we've moment. the we at X As innovation think been but had frac -- internally at manifold our I the developed. last

add And one then I'd other.

out going e-fleets. on are to spot fleets, the test We

now, using the have So we'll work. generally e-fleets see how we're vibration. dual fuel -- those Right and have less a

maybe will going but next the downtime we're that the even to innovation kind lower So further, of pilot. that's

with question David comes TD next Our Cowen. Deckelbaum from

Or ask just should guess, deferred about those the just we quarter, still included quarter they're I on in confirm, going that the to into fourth completed in wanted that think So are to contingent as I program they TILs gas the pricing? be so to one anyway?

to pricing it's determined. for natural be basically David, are winter gas. the They still on No.

'XX? e-fleet. beginning last And about deployed program? just the then the Is the into the that is being you guess, I appreciate question that that. I at of in mentioned When recently,

about. talking are we fleet spot that's No,

current that above may if fuel So e-fleet at -- the fuel e-fleet the performs actually or for end performance. out we up our dual swapping

spot base forward. going now, it's fleet. become right our So the main But fleet that may

the one just Mike, then, for last And me.

perhaps the that the this next improves $XXX efficiency liquids-rich Does years the all performance given couple of that longer with decline D&C year, along in while window. a that maintenance of lengths improving view bit also well Just in even of more declines of a million with improvements as base lot times? challenge in little for lateral capital the cycle obviously, gains hub is this your of times cycle and kind

No.

and Paul XX.X to was with All those of that that of that based then decline was averaged stages and assume stack. that Same none the lower at and ability projections. projections in that down the future of XXX We've long-term coming around be close per put you years first outlining, trend rates day. records Really our more incorporated was XX into this to more in the maintenance capital just completion half. on just as

driving what projections, in the lower, improvements declines, I we them comfortable to get with just So you incorporating efficiencies. also of these If of think because continue that's really that see was but and that. a future could see trend because not these

with question from Research. next Abbott John comes Our Wolfe

I'm Doug on for Leggate.

to #XX. Our #X, around questions and are really going Slide Slide set Slide #X

premiums here export going offset in could from to first But differentials is 'XX. which Hub, gas some XXXX breakeven comes for XXXX? And how Henry #X, for for then do And what your and as online. be flow Slide sort second show more you premiums on this cash you're think of and and capacity you the 'XX the your towards go Henry gave potentially the about prices then as question us we propane you like you on Hub get XXXX. the as So into higher various question, for premium head versus

time? breakeven think trending period X-year So of you a about how do over your

how online. the years slide, that exposure of That should just #X just questions. because it increases our over corridor. good the demand That X all coming trend referenced next of that's in favor Yes, because Slide you shows to our LNG

accrues So prices right market that Hub. it putting to 'XX look estimates to us. When Henry for now, at $X.XX premium all just versus we these in $X.XX

Next $X.XX. $X.XX the years, to $X.XX, to year, it's like it'd be following and more $X.XX

in X-for-X ticks a breakevens, each years. And almost those of that on up a dime lower that. would about it obviously amount So our

frame. forward, going definitely in over is that Antero free our models and that's to cash has increasing So flow something that exposed time

question next from Roberts with TPH & Company. Jacob our And comes

to if the you current able And portfolio? wondering Just Again, wanted the to then frame there dedicated of opportunity laterals. the touch in inventory the to for capital land XX,XXX you're on a portion plus. is the extending longer in that's if point to, could laterals the

We go see a we if to we them Yes. control so when but opportunity we of a more the much beat just the units, go physical we tie up can of to And we bit little definitely Yes, leasehold. -- that's lot is it an have up -- spent. where opportunity those when longer. so longer, being

of is So capital we're wells where land that is or prospects nearby. and longer spending more our

the run just Okay. little you bit be frame the here then ethane seemed what from Could Perfect. on And quarter Shell, to rate on you volumes expect going to lumpy. a please? the

got Yes. on guide production, guidance than We just don't and Shell, quarter. kept we performance good ethane that. but it's We around Shell, had more in second we flat the so around our

the to a rest of maintain XX,XXX that plays that out to barrels So guidance barrels we'll see the production continue ethane year, to we but day. continue of XX,XXX how

And our Raymond Trafford from James. next Lamar question with comes

at of confirm XX completion that I stage is rate a run Slide per looking the first guess production #X, day? based the updated just on want one, to guidance,

because the half that half, schedule. it's but it is realized into we well, -- the that No, not that first in second incorporating

lowered really a that's Bcf the outperformance And drift guidance X.XXX of at Bcf to of for year. just gets down production annual That amount. X.XXX year. the rest averaged new of to So We throughout day. looking first production the in half the the Bcf us that our X.XXX that around

Is acquire all locations as are per what you a a favorable? the discount more you the to Okay. land that spread noticed seeing first to on with all material in to were Perfect. all floor incremental at XQ -- location basis. then quarter? purchased one And second Is on ground spend. I acreage you becoming is able that really comparable

lower commodity prices. prices gas Obviously, is it and comparable, is and more it'll becoming low favorable. It

direction, generally go. prices So way which commodity trends in acreage that

So prices lower acreage values comes generally. lower if

MacCurdy Pickering Kevin next question from our comes And Energy Partners. with

prepared the details We of kind the appreciate details on you're markets. you how uplift what pricing ethane your and give on color if all some could there? your being I priced CX+ wonder getting in the international on is remarks more and strong

past Kevin, we've gas more Yes, pricing. the We've migrating Dave in been is towards linked that this Cannelongo. alluded to

So I we're today, it, a then would maybe trends here say Mont that and gas, for recover. gas into tied 'XX to, linked Mont in closer probably we X/X to And we at balance as call XXXX. in the really in X/X barrels Belvieu uplift down 'XX move range Belvieu XX% and ethane that the fixing

that you. gas plus at Got And be local NYMEX price price? a price or would a plus

years. really Yes. the we've how over our NYMEX formed is program

questions are There remarks. Brendan I'll Krueger no closing back to floor the further time. turn this for at

on questions. joining out Thank call. you. you Thank for today's any reach further us Please Yes. with

This may Have conference. a parties concludes disconnect. today's All good day.