Antero Midstream (AM) Q2 Results - July 31
Posted: Fri Jul 31, 2020 11:55 am
In order to evaluate AM I first have to update my forecast model of Antero Resources (AR).
AR's Q2 Highlights Include:
Net production averaged 3,521 MMcfe/d (67% natural gas by volume) during the second quarter, a 9% increase over the prior year period < My forecast was 3,390 MMcfe/day.
Realized natural gas equivalent price including hedges averaged $2.81 per Mcfe during the second quarter < My forecast was $2.60/mcf for ngas and $2.70/mcfe.
Drilling and completion capital spend was $180 million, the lowest quarterly spend since Antero's IPO in 2013
Monetized 100 MMBtu/d of 2021 natural gas hedges in July for $29 million to align hedges and 2021 projected net volumes, adjusting for the volumes associated with the previously announced ORRI transaction.
Asset sales announced to date total $531 million, relative to the $750 to $1 billion asset sale target for 2020
Repurchased an additional $279 million notional amount of senior notes through July 24th at an 18% weighted average discount
Liquidity was $1.0 billion as of June 30, 2020 pro forma for the hedge monetization and senior note repurchases
Paul Rady , Chairman and Chief Executive Officer of Antero Resources commented, "We have made considerable progress towards our $750 to $1 billion asset sale target having closed $531 million of transactions to date. The asset sale proceeds received to date have enabled Antero to reduce total debt by $365 million since the start of the bond repurchase program in the fourth quarter of 2019, capturing a meaningful discount on our outstanding senior notes and significantly addressing our upcoming debt maturities. On the operating front, we continue to see momentum on well cost savings, setting a new quarterly record with an average of 8.7 completion stages per day. We also set a U.S. horizontal well record during the quarter, drilling 11,253 lateral feet in a 24-hour period. These well cost savings helped to deliver our lowest quarterly drilling and completion capital spend since the company's IPO in 2013 and drove well costs to below $700 per lateral foot in May and June. We are incredibly proud of all of our employees who have safely delivered these results despite the ongoing uncertainty and challenges surrounding the COVID-19 pandemic. The combination of a successful asset sale program with repurchasing debt at a discount and significant capital efficiencies have materially improved Antero's credit profile and outlook."
Glen Warren , CFO and President of Antero Resources said, "Over the last nine months we have delivered on our commitment to reduce debt through a combination of asset sales and debt repurchased at a discount. This successful debt repurchase program has resulted in an $888 million reduction in near-term maturities. Further, we have completed 69 of our 105 projected wells for the year and expect drilling and completion capital spend to be substantially lower during the second half of the year. The low capital spend projected for the second half of 2020 is expected to result in over $175 million in Free Cash Flow based on today's strip prices, providing additional liquidity for debt retirement. Longer term, we are committed to maximizing Free Cash Flow and further reducing total debt."
Asset Sale Program Update
Since the announcement of the Company's $750 million to $1 billion asset sale target in December 2019, Antero has closed $531 million of transactions. This total includes the sale of $100 million of Antero Midstream common stock in December 2019, the $402 million ORRI transaction announced in June 2020, which includes $102 million of contingent payments that may be earned based on volume thresholds in the third quarter of 2020 and the first quarter of 2021, and the $29 million hedge monetization announced today. Proceeds received to date have been used to repurchase debt at a discount. Pro forma for the hedge monetization and senior note repurchases, Antero had $1.0 billion in liquidity as of June 30, 2020 .
AR's Q2 Highlights Include:
Net production averaged 3,521 MMcfe/d (67% natural gas by volume) during the second quarter, a 9% increase over the prior year period < My forecast was 3,390 MMcfe/day.
Realized natural gas equivalent price including hedges averaged $2.81 per Mcfe during the second quarter < My forecast was $2.60/mcf for ngas and $2.70/mcfe.
Drilling and completion capital spend was $180 million, the lowest quarterly spend since Antero's IPO in 2013
Monetized 100 MMBtu/d of 2021 natural gas hedges in July for $29 million to align hedges and 2021 projected net volumes, adjusting for the volumes associated with the previously announced ORRI transaction.
Asset sales announced to date total $531 million, relative to the $750 to $1 billion asset sale target for 2020
Repurchased an additional $279 million notional amount of senior notes through July 24th at an 18% weighted average discount
Liquidity was $1.0 billion as of June 30, 2020 pro forma for the hedge monetization and senior note repurchases
Paul Rady , Chairman and Chief Executive Officer of Antero Resources commented, "We have made considerable progress towards our $750 to $1 billion asset sale target having closed $531 million of transactions to date. The asset sale proceeds received to date have enabled Antero to reduce total debt by $365 million since the start of the bond repurchase program in the fourth quarter of 2019, capturing a meaningful discount on our outstanding senior notes and significantly addressing our upcoming debt maturities. On the operating front, we continue to see momentum on well cost savings, setting a new quarterly record with an average of 8.7 completion stages per day. We also set a U.S. horizontal well record during the quarter, drilling 11,253 lateral feet in a 24-hour period. These well cost savings helped to deliver our lowest quarterly drilling and completion capital spend since the company's IPO in 2013 and drove well costs to below $700 per lateral foot in May and June. We are incredibly proud of all of our employees who have safely delivered these results despite the ongoing uncertainty and challenges surrounding the COVID-19 pandemic. The combination of a successful asset sale program with repurchasing debt at a discount and significant capital efficiencies have materially improved Antero's credit profile and outlook."
Glen Warren , CFO and President of Antero Resources said, "Over the last nine months we have delivered on our commitment to reduce debt through a combination of asset sales and debt repurchased at a discount. This successful debt repurchase program has resulted in an $888 million reduction in near-term maturities. Further, we have completed 69 of our 105 projected wells for the year and expect drilling and completion capital spend to be substantially lower during the second half of the year. The low capital spend projected for the second half of 2020 is expected to result in over $175 million in Free Cash Flow based on today's strip prices, providing additional liquidity for debt retirement. Longer term, we are committed to maximizing Free Cash Flow and further reducing total debt."
Asset Sale Program Update
Since the announcement of the Company's $750 million to $1 billion asset sale target in December 2019, Antero has closed $531 million of transactions. This total includes the sale of $100 million of Antero Midstream common stock in December 2019, the $402 million ORRI transaction announced in June 2020, which includes $102 million of contingent payments that may be earned based on volume thresholds in the third quarter of 2020 and the first quarter of 2021, and the $29 million hedge monetization announced today. Proceeds received to date have been used to repurchase debt at a discount. Pro forma for the hedge monetization and senior note repurchases, Antero had $1.0 billion in liquidity as of June 30, 2020 .