Antero Resources (AR)

[dan_s]

AR is one of my Top Picks for natural gas. Their 2nd quarter production exceeded my forecast. More than 100% of AR's natural gas is hedged at over $3.85/mmbtu for the remainder of 2016 and all of 2017. Cash settlements on their hedges are included in "realized" natural gas revenues, which explains the high average price per Mcf highlighted below. - Dan

Highlights Include:
•Average net daily gas equivalent production was 1,762 MMcfe/d (26% liquids), a 19% increase over the prior year quarter and flat sequentially
•Average net daily liquids production was a record 75,041 Bbl/d, a 63% increase over the prior year quarter and a 10% increase sequentially
•Realized natural gas price before hedging averaged $1.93 per Mcf, a $0.02 differential to Nymex
•Realized natural gas price after hedging averaged $4.31 per Mcf, a $2.36 premium to Nymex
•Realized C3+ NGL price before hedging averaged $17.08 per barrel, 38% of WTI
•Realized natural gas equivalent price including NGLs, oil and hedges averaged $3.95 per Mcfe
•Current drilling and completion costs have declined to $0.9 million per 1,000 feet of lateral in the Marcellus and $1.04 million per 1,000 feet of lateral in the Utica, both for a 9,000 foot lateral, each representing a 24% reduction from 2015
•Drilled an Antero record 7,274 feet of lateral in 24 hours
•Signed definitive agreement to acquire approximately 55,000 net acres in the core of the Marcellus Shale for $450 million and received notice from a third party regarding intention to exercise tag-along rights for an additional 13,000 net acres
•Successfully executed an underwritten public offering of 26.75 million common shares for net proceeds of $753 million
•Initiating second half 2016 net marketing expense guidance of $0.10 to $0.15 per Mcfe

[dan_s]

July 21: Robert W. Baird upgrades AR to Outperform from Neutral and sets target price at $37. Firm notes shares of this well-run Appalachian producer have become too inexpensive to ignore.