Antero Resources Stock

Antero Resources Corporation (Antero) engages in the development, production, exploration, and acquisition of natural gas, NGLs and oil properties located in the Appalachian Basin. The company owns interests in properties located onshore in West Virginia, Ohio and Pennsylvania.

The company targets large, repeatable resource plays where horizontal drilling and advanced fracture stimulation technologies provide the means to economically develop and produce natural gas, NGLs and oil from unconventional formations. As of December 31, 2023, the company held approximately 515,000 net acres of natural gas, NGLs and oil properties located in the Appalachian Basin primarily in West Virginia and Ohio.

Antero Midstream is a growth-oriented midstream energy company formed to own, operate and develop midstream energy assets that primarily service the company’s completion and production activity in the Appalachian Basin. Antero Midstream’s assets consist of gathering systems and compression facilities, water handling and blending facilities, and interests in processing and fractionation plants, through which it provides services to the company under long-term contracts.

The company has an interest in Antero Midstream that provides significant influence, but not control, over Antero Midstream. As of December 31, 2023, the company owned 29.0% of Antero Midstream’s common stock.

The company operates in the following reportable segments: (i) the exploration, development and production of natural gas, NGLs and oil; (ii) marketing of excess firm transportation capacity; and (iii) midstream services through the company’s equity method investment in Antero Midstream.

Business Strategy

The company’s strategies include focused, long-lived asset base with sufficient takeaway capacity; integrated business platform; culture of continuous improvement and responsible stewardship; and utilizing a hedging program.

Asset Sales

Drilling Partnership

On February 17, 2021, the company announced the formation of a drilling partnership with QL Capital Partners (‘QL’), an affiliate of Quantum Energy Partners, for the company’s 2021 through 2024 drilling program. Under the terms of the arrangement, each year in which QL participates represents an annual tranche, and QL will be conveyed a working interest in any wells spud by the company during such tranche year. The company develops and manages the drilling program associated with each tranche, including the selection of wells.

Gathering and Compression

The substantial majority of the company’s exploration and development activities are supported by the natural gas gathering and compression assets of Antero Midstream. As a result, the company’s agreements with Antero Midstream allow the company to obtain the necessary gathering and compression capacity for its production, and the company has leveraged its relationship with Antero Midstream to support the company’s development. The company has dedicated to Antero Midstream substantially all of the company’s acreage in West Virginia and Ohio for gathering and compression services.

As of December 31, 2023, Antero Midstream’s gathering and compression systems included 631 miles of gas gathering pipelines and 4.5 Bcf/d of compression capacity in the Appalachian Basin. The company also has access to additional third-party low pressure and high pressure pipelines, and the company utilized three additional third-party compressor stations. The gathering, compression and dehydration services provided by third parties are contracted on a fixed-fee basis.

Natural Gas Processing

Many of the company’s wells in the Appalachian Basin allow the company to produce liquids-rich natural gas that contains a significant amount of NGLs.

The company contracts with MarkWest to provide cryogenic processing capacity for the company’s Appalachian Basin production. Antero Midstream owns a 50% interest in the Joint Venture to develop processing and fractionation assets in Appalachia.

Transportation and Takeaway Capacity

The company has entered into firm transportation agreements with various pipelines that enable the company to deliver natural gas to the Midwest, Gulf Coast, Eastern Regional, and Mid-Atlantic markets. The company’s primary firm transportation commitments include the following:

Midwest-Chicago Regional Markets

The company has several firm transportation contracts with pipelines that have capacity to deliver natural gas to the Chicago and Michigan markets. The Chicago directed pipelines include the Rockies Express Pipeline (‘REX’), the Midwestern Gas Transmission pipeline (‘MGT’), the Natural Gas Pipeline Company of America pipeline (‘NGPL’), and the ANR Pipeline Company pipeline (‘ANR Chicago’). The firm transportation contract on REX provides firm capacity for 400,000 MMBtu/d and delivers gas to downstream contracts on MGT, NGPL and ANR Chicago.

The company has 125,000, 75,000 and 200,000 MMBtu/d of firm transportation on MGT, NGPL and ANR Chicago, respectively. The MGT and NGPL contracts deliver gas to the Chicago city gate area and the ANR Chicago contract delivers natural gas to Chicago in the summer and Michigan in the winter. The Chicago and Michigan contracts expire at various dates from 2029 through 2033.

Gulf Coast, Atlantic Seaboard and International Markets

The company has firm transportation contracts with various pipelines to access the Gulf Coast, Atlantic Seaboard and international markets. These contracts include firm capacity on the following pipelines: (i) Columbia Gas Transmission Pipeline (‘TCO’), (ii) Columbia Gulf Transmission Pipeline (‘Columbia Gulf’), (iii) Stonewall Gas Gathering (‘SGG’), (iv) Tennessee Gas Pipeline (‘Tennessee’), (v) ANR Pipeline (‘ANR Gulf’), (vi) Rover Pipeline (‘Rover’), (vii) Texas Eastern Transmission Corp. - M2 Zone (‘TETCO M2’), (viii) Mountaineer Xpress Pipeline (‘MXP’), (ix) Columbia Gas Transmission IPP Pool (‘TCO IPP’), (x) Gulf Xpress Pipeline (‘GXP’), (xi) Enterprise Products Partners ATEX Pipeline (‘ATEX’) and (xii) Sunoco Pipeline (‘Mariner East 2’). The company’s diverse portfolio of firm capacity gives the company the flexibility to move natural gas to the local Appalachia market or other preferred markets with more favorable pricing. These firm capacity contracts include:

TCO firm capacity of approximately 453,000 MMBtu/d. Of the 453,000 MMBtu/d of firm capacity on TCO, the company has the ability to utilize 430,000 MMBtu/d on Columbia Gulf, which provides access to the Gulf Coast markets. These contracts expire at various dates from 2024 through 2028.

SGG firm capacity of 900,000 MMBtu/d, which increases to 940,000 MMBtu/d for a portion of 2024, that transports gas from various gathering system interconnection points and the MarkWest Sherwood plant complex to the TCO WB System. The company’s SGG firm capacity decreases to 600,000 MMBtu/d in 2027. Additionally, the company has firm transportation contracts with TCO for both the western and eastern directions on the pipeline. The company’s firm capacity of 720,000 MMBtu/d, which increases to 746,000 MMBtu/d in 2024 and 800,000 MMBtu/d in 2027, west bound on TCO (‘TCO WB’) provides the company access to the local Appalachia and the Gulf Coast markets via the Columbia Gulf or Tennessee pipelines. The company’s firm capacity of 330,000 MMBtu/d east bound on TCO delivers natural gas to the Cove Point LNG facility. These contracts expire at various dates from 2030 through 2038.

Tennessee firm capacity of 790,000 MMBtu/d, which decreases to 200,000 MMBtu/d in 2030, to deliver natural gas from the Broad Run interconnect on TCO WB to the Gulf Coast market. This contract expires at various dates from 2030 to 2033.

ANR Gulf firm capacity of 600,000 MMBtu/d to deliver natural gas from West Virginia and Ohio to the Gulf Coast market. This contract expires in 2045.

Rover Pipeline firm capacity of 840,000 MMBtu/d, which decreases to 800,000 MMBtu/d in 2025, that connects the Appalachian Basin to Midwest and Gulf Coast markets via the ANR Chicago and ANR Gulf segments. These contracts expire in 2025 and 2033.

MXP firm capacity of 700,000 MMBtu/d to deliver (i) approximately 517,000 MMBtu/d to TCO IPP, which continues to Leach, Kentucky and (ii) approximately 183,000 MMBtu/d to GXP, which continues to the Gulf Coast. These contracts expire at various dates from 2024 to 2058.

ATEX firm capacity of 20,000 Bbl/d to deliver ethane to Mont Belvieu, Texas. This contract expires in 2028.

Mariner East 2 firm capacity for ethane of 11,500 Bbl/d and propane and butane of 65,000 Bbl/d to deliver to Marcus Hook, Pennsylvania. These contracts expire in 2028 and 2029, respectively. Mariner East 2 provides access to international markets via trans-ocean LPG carriers.

Delivery Commitments

The company has entered into various firm sales contracts to deliver and sell gas and NGLs.

Water Handling Operations

The company’s agreements with Antero Midstream allow the company to obtain fresh water for use in the company’s drilling and completion operations, as well as services to the dispose of flowback and produced water resulting from the company’s operations.

Antero Midstream owns two independent fresh water distribution systems that distribute fresh water from the Ohio River and several regional water sources, for well completion operations in the Appalachian Basin. These systems consist of permanent buried pipelines, portable surface pipelines and water storage facilities, as well as pumping stations to transport the water throughout the pipeline networks. The surface pipelines are moved to well pads to service completion operations to the extent necessary and feasible. Through Antero Midstream, the company also recycles and reuses the majority of its flowback and produced water through blending.

As of December 31, 2023, Antero Midstream owned and operated 232 miles of buried water pipelines and 146 miles of portable surface water pipelines in the Appalachian Basin. Additionally, as of December 31, 2023, Antero Midstream had the ability to store 5.5 million barrels of fresh water in 36 impoundments equipped with transfer pumps located throughout the company’s leasehold acreage.

Regulation

The transportation and sale, or resale, of natural gas in interstate commerce are regulated by the FERC, under the Natural Gas Act of 1938 (‘NGA’), the Natural Gas Policy Act of 1978 (‘NGPA’), and regulations issued under those statutes. FERC regulates interstate natural gas transportation rates and service conditions, which affects the marketing of natural gas that the company produces, as well as the revenues the company receives for sales of its natural gas.

With regard to the company’s physical sales of these energy commodities and any related hedging activities that the company undertakes, the company is required to observe anti-market manipulation laws and related regulations enforced by the FERC, the U.S. Commodity Futures Trading Commission under the Commodity Exchange Act (‘CEA’) and the Federal Trade Commission (‘FTC’).

The company is also subject to the requirements of the federal Occupational Safety and Health Act, as amended (‘OSHA’), and comparable state laws that regulate the protection of the health and safety of employees. In addition, OSHA’s hazard communication standard, the Emergency Planning and Community Right to Know Act and implementing regulations and similar state statutes and regulations require that information be maintained about hazardous materials used or produced in the company’s operations and that this information be provided to employees, state and local government authorities, and citizens.

History

The company was founded in 2002. It was incorporated in 2002. The company was formerly known as Antero Resources Appalachian Corporation and changed its name to Antero Resources Corporation in 2013.