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Antero Resources (AR) Up 6.4%, Eyes $2B in FCF Through 2025
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Antero Resources Corporation’s (AR - Free Report) shares have increased 6.4% since it presented at the J.P. Morgan 2021 Energy, Power and Renewables Conference on Jun 22. The fourth largest natural gas producer in the United States — just behind EQT Corporation (EQT - Free Report) , Exxon Mobil Corporation (XOM - Free Report) and Southwestern Energy Company (SWN - Free Report) — highlighted its reduced cost structure in the conference.
The company expects to reduce well costs by 22% to $635 per lateral foot in the second half of this year from the initial 2020 AFE budget. As such, lower costs will boost the bottom line. Antero Resources reiterated 2021 net drilling and completion capital estimate at $590 million, indicating a 20% decline from 2020 levels. This upside will be supported by the company’s increasing operating efficiency. Moreover, it expects to generate more than $600 million in free cash flow (FCF) this year. Moreover, through 2025, the company expects to generate $2 billion FCF.
Antero Resources has more than 2,000 premium undeveloped core locations. It boasts a breakeven natural gas price of $1.84 per million British thermal units (MMBtu). Importantly, the U.S. Energy Information Administration expects Henry Hub spot natural gas price in 2021 to average $3.07 per MMBtu, supported by increased liquefied natural gas demand. Therefore, with a low breakeven cost, Antero Resources is well equipped for generating massive profits.
Importantly, in February, it formed a drilling partnership with QL Capital Partners worth $500-$550 million, which will fund 60 incremental wells starting from 2021 till 2024. The move is expected to enable the company to fill unutilized transportation capacity, reducing any wastage of capacity.
Debt Reduction
As of Mar 31, 2021, Antero Resources had no cash and cash equivalents. Although it had adjusted available liquidity of $1.8 billion, the company’s long-term debt stood at $2.6 billion. Currently, it has $1.6 billion in liquidity. Throughout 2021, it is expected to reduce absolute debt amount by $700 million, which will improve financial flexibility. Last year, Antero Resources reduced absolute debt by $800 million.
ESG
The company’s ESG metrics are also praiseworthy. With no flaring, it has a methane leak loss rate of 0.046%. Antero Resources is expected to become a net-zero carbon emitter by 2025, well ahead of most of its peers. Notably, the company reused 83% of its produced water last year.
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Antero Resources (AR) Up 6.4%, Eyes $2B in FCF Through 2025
Antero Resources Corporation’s (AR - Free Report) shares have increased 6.4% since it presented at the J.P. Morgan 2021 Energy, Power and Renewables Conference on Jun 22. The fourth largest natural gas producer in the United States — just behind EQT Corporation (EQT - Free Report) , Exxon Mobil Corporation (XOM - Free Report) and Southwestern Energy Company (SWN - Free Report) — highlighted its reduced cost structure in the conference.
The company expects to reduce well costs by 22% to $635 per lateral foot in the second half of this year from the initial 2020 AFE budget. As such, lower costs will boost the bottom line. Antero Resources reiterated 2021 net drilling and completion capital estimate at $590 million, indicating a 20% decline from 2020 levels. This upside will be supported by the company’s increasing operating efficiency. Moreover, it expects to generate more than $600 million in free cash flow (FCF) this year. Moreover, through 2025, the company expects to generate $2 billion FCF.
Antero Resources has more than 2,000 premium undeveloped core locations. It boasts a breakeven natural gas price of $1.84 per million British thermal units (MMBtu). Importantly, the U.S. Energy Information Administration expects Henry Hub spot natural gas price in 2021 to average $3.07 per MMBtu, supported by increased liquefied natural gas demand. Therefore, with a low breakeven cost, Antero Resources is well equipped for generating massive profits.
Importantly, in February, it formed a drilling partnership with QL Capital Partners worth $500-$550 million, which will fund 60 incremental wells starting from 2021 till 2024. The move is expected to enable the company to fill unutilized transportation capacity, reducing any wastage of capacity.
Debt Reduction
As of Mar 31, 2021, Antero Resources had no cash and cash equivalents. Although it had adjusted available liquidity of $1.8 billion, the company’s long-term debt stood at $2.6 billion. Currently, it has $1.6 billion in liquidity. Throughout 2021, it is expected to reduce absolute debt amount by $700 million, which will improve financial flexibility. Last year, Antero Resources reduced absolute debt by $800 million.
ESG
The company’s ESG metrics are also praiseworthy. With no flaring, it has a methane leak loss rate of 0.046%. Antero Resources is expected to become a net-zero carbon emitter by 2025, well ahead of most of its peers. Notably, the company reused 83% of its produced water last year.
Price Performance & Zacks Rank
Antero Resources’ shares have gained 40.2% in the past three months compared with 24.2% rise of the industry it belongs to. Currently, it has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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