Antero Resources slips on sliding natural gas prices, analyst downgrade
Dec. 01, 2022 3:37 PM ETAntero Resources Corporation (AR), AMEQT, CTRA, NG1:COMBy: Carl Surran, SA News Editor18 Comments
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Antero Resources (NYSE:AR) -3.1% in Thursday's trading as U.S. natural gas futures fell for the second straight day and Tudor Pickering Holt downgraded shares to Hold from Buy with a $47 price target.
Tudor Pickering Holt cut its ratings for Antero (AR) as well as EQT (EQT) and Coterra Energy (CTRA) to more closely align with its macro outlook that calls for significantly weaker natural gas prices for H2 2023 and H1 2024, as supply far outstrips demand until H2 2024 when new LNG capacity starts to ramp.
"With forecast supply growth of 4B cf/day off current production of 101B cf/day, H1 2023 relatively flat with a big ramp in Q3 2023 as infrastructure debottlenecks, our model continues to see end of injection balances in October pushing north of 4T cf likely pushing gas towards $3/MMBtu to cut production growth in 2024," the analysts wrote.
Front-month Nymex natural gas (NG1:COM) for January delivery settled -2.7% on Thursday and down 6.8% through two sessions to $6.738/MMBtu.
In an investor presentation, Antero (AR) reaffirmed full-year production of 3.2B-3.3B cfe/day.
In its own investor presentation, Antero Midstream (NYSE:AM) forecast an adjusted EBITDA compound annual growth rate of 3%-5% and $700M-$800M free cash flow after dividends through 2026 while capital spending declines; Antero Resources (AR) owns 29% of the midstream company.
Antero Midstream's (AM) "thinly covered dividend is backed by one of the lowest debt ratios in the midstream industry," Long Player writes in an analysis published on Seeking Alpha.