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Antero Resources (AR) Surges 76% YTD: What's Driving It?
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Antero Resources Corporation (AR - Free Report) has gained 75.9% in the year-to-date period compared with 35.6% growth of the composite stocks belonging to the industry.
The company, with a Zacks Rank #3 (Hold), is likely to record earnings increases of 303.5% and 22% in 2022 and 2023, respectively.
Image Source: Zacks Investment Research
Factors Working in Favor
Natural gas is trading at more than $5 per MMBtu, marking a massive improvement in the past year. Being a leading natural gas producer, Antero Resources is well-positioned to capitalize on the skyrocketing commodity price.
In the prolific core Marcellus shale play, Antero Resources has roughly 1,542 undeveloped premium locations, depicting a bright production outlook. Also, in the core of the Utica play, the upstream player has roughly 925 premium undeveloped locations. Overall, AR has more than 20 years of premium core drilling inventory.
Looking at financial strength, Antero Resources has a strong and sustainable balance sheet. AR is targeting a capital return program of 25-50% of free cash flow per year, beginning with the implementation of the share repurchase program. The company increased its share repurchase program by $1 billion to $2 billion, reflecting strong initiatives of returning capital to shareholders.
AR expects to generate more than $2.5 billion of free cash flow in 2022 and more than $10 billion through 2022-2026. The metric suggests a significant improvement from the $849 million reported last year. This reflects the company’s strength in operations and makes it well-positioned to pay dividends, reduce debt and contribute to growth.
The firm emits lower greenhouse gases than other major fossil fuel players. Antero Resources is prioritizing reducing debt. From 2019 through August 2022, the company managed to lower the absolute debt load by $2.2 billion.
Risks
Antero Resources’ lack of geographic diversification is concerning since its entire asset base is located in the Appalachian region. As such, it is more vulnerable to basin-specific delays and interruptions in production from wells, which can potentially hamper growth.
Murphy USA Inc. (MUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States. MUSA’s third-quarter 2022 earnings per share of $9.28 beat the Zacks Consensus Estimate of $7.82.
Murphy USA is expected to see an earnings surge of 80.9% in 2022. In more good news for investors, MUSA’s board of directors recently declared a quarterly cash dividend of 35 cents per share to its common shareholders, marking a 9% sequential increase.
Oceaneering International, Inc. (OII - Free Report) is one of the leading suppliers of offshore equipment and technology solutions to the energy industry. OII’s third-quarter 2022 adjusted profit of 23 cents per share beat the Zacks Consensus Estimate of 13 cents.
OII is expected to see an earnings rise of 82.4% in 2022. For 2022, Oceaneering projects consolidated EBITDA of $215-$240 million and continued significant free cash flow generation of $25-$75 million.
Helmerich & Payne Inc. (HP - Free Report) is a major land and offshore drilling contractor in the western hemisphere, having the youngest and most-efficient drilling fleet. HP’s fiscal third-quarter 2022 adjusted profit of 27 cents per share beat the Zacks Consensus Estimate of 5 cents.
Helmerich & Payne is expected to see an earnings surge of 277.8% in 2022. HP boasts a strong balance sheet, carrying $542.3 million in long-term debt. The company’s debt-to-capitalization stands at just 16.6% compared with many of its peers that are hugely burdened with debts.
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Antero Resources (AR) Surges 76% YTD: What's Driving It?
Antero Resources Corporation (AR - Free Report) has gained 75.9% in the year-to-date period compared with 35.6% growth of the composite stocks belonging to the industry.
The company, with a Zacks Rank #3 (Hold), is likely to record earnings increases of 303.5% and 22% in 2022 and 2023, respectively.
Image Source: Zacks Investment Research
Factors Working in Favor
Natural gas is trading at more than $5 per MMBtu, marking a massive improvement in the past year. Being a leading natural gas producer, Antero Resources is well-positioned to capitalize on the skyrocketing commodity price.
In the prolific core Marcellus shale play, Antero Resources has roughly 1,542 undeveloped premium locations, depicting a bright production outlook. Also, in the core of the Utica play, the upstream player has roughly 925 premium undeveloped locations. Overall, AR has more than 20 years of premium core drilling inventory.
Looking at financial strength, Antero Resources has a strong and sustainable balance sheet. AR is targeting a capital return program of 25-50% of free cash flow per year, beginning with the implementation of the share repurchase program. The company increased its share repurchase program by $1 billion to $2 billion, reflecting strong initiatives of returning capital to shareholders.
AR expects to generate more than $2.5 billion of free cash flow in 2022 and more than $10 billion through 2022-2026. The metric suggests a significant improvement from the $849 million reported last year. This reflects the company’s strength in operations and makes it well-positioned to pay dividends, reduce debt and contribute to growth.
The firm emits lower greenhouse gases than other major fossil fuel players. Antero Resources is prioritizing reducing debt. From 2019 through August 2022, the company managed to lower the absolute debt load by $2.2 billion.
Risks
Antero Resources’ lack of geographic diversification is concerning since its entire asset base is located in the Appalachian region. As such, it is more vulnerable to basin-specific delays and interruptions in production from wells, which can potentially hamper growth.
Key Picks
Investors interested in the energy sector might look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA Inc. (MUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States. MUSA’s third-quarter 2022 earnings per share of $9.28 beat the Zacks Consensus Estimate of $7.82.
Murphy USA is expected to see an earnings surge of 80.9% in 2022. In more good news for investors, MUSA’s board of directors recently declared a quarterly cash dividend of 35 cents per share to its common shareholders, marking a 9% sequential increase.
Oceaneering International, Inc. (OII - Free Report) is one of the leading suppliers of offshore equipment and technology solutions to the energy industry. OII’s third-quarter 2022 adjusted profit of 23 cents per share beat the Zacks Consensus Estimate of 13 cents.
OII is expected to see an earnings rise of 82.4% in 2022. For 2022, Oceaneering projects consolidated EBITDA of $215-$240 million and continued significant free cash flow generation of $25-$75 million.
Helmerich & Payne Inc. (HP - Free Report) is a major land and offshore drilling contractor in the western hemisphere, having the youngest and most-efficient drilling fleet. HP’s fiscal third-quarter 2022 adjusted profit of 27 cents per share beat the Zacks Consensus Estimate of 5 cents.
Helmerich & Payne is expected to see an earnings surge of 277.8% in 2022. HP boasts a strong balance sheet, carrying $542.3 million in long-term debt. The company’s debt-to-capitalization stands at just 16.6% compared with many of its peers that are hugely burdened with debts.