Antero Resources (AR) Update - Jan 8

[dan_s]

This confirms my forecast/valuation model. My valuation of AR is $29.00/share. AR is currently trading for less than 2X my 2019 operating CFPS estimate, which is actually lower than First Call's 2019 CFPS estimate. With 100% of AR's natural gas production hedged and the ME2 pipeline now in service there is very little risk of operating cash flow not covering their 2019 CapEx budget .

DENVER, Jan. 8, 2019 /PRNewswire/ -- Antero Resources Corporation (AR) ("Antero Resources" or the "Company") today announced its 2019 capital budget and production guidance, reflecting a disciplined plan with Stand-alone drilling and completion capital spending at Stand-alone Adjusted Operating Cash Flow levels assuming $50 per barrel WTI oil and $3.00 per MMBtu NYMEX natural gas, while generating double digit production growth.

Guidance Highlights:
•In response to recent oil and NGL price declines, the Company has reduced its 2019 drilling and completion capital budget relative to 2018 to a range of $1.1 to $1.25 billion on a consolidated basis and a range of $1.3 to $1.45 billion on a Stand-alone basis
•Full year 2019 production is expected to average 3,150 MMcfe/d to 3,250 MMcfe/d, a 17% to 20% increase over 2018 production guidance
•Liquids volumes, including NGLs and oil are expected to average 154,000 to 164,000 Bbl/d, 18% to 26% over 2018 liquids guidance, including 9,000 Bbl/d of oil, 100,000 Bbl/d of C3+ NGLs and 50,000 Bbl/d of recovered ethane, at the midpoint
•Plan to operate an average of 5 drilling rigs and 4 completion crews, down 1 to 2 crews from 2018
•Includes 115 to 125 well completions in 2019 with an average lateral length of 10,200 feet and 120 to 130 wells drilled with an average lateral length of 11,900 feet
•Forecasting Antero natural gas price realizations before hedges at a $0.15-$0.20/Mcf premium to Henry Hub and C3+ NGL realizations at 60-65% of WTI oil prices
•Mariner East 2 recently placed in-service enabling the first exports of C3+ NGLs on Antero's 50,000 Bbl/d firm commitment
•Natural gas production guidance is 100% hedged in 2019

Paul Rady, Chairman and Chief Executive Officer of Antero Resources commented, "Our 2019 drilling and completion plan reflects the impacts from efficiencies that continue to improve our development program. These efficiencies allow us to forecast attractive, double digit production growth despite fewer completion crews budgeted for 2019. We remain focused on capital discipline and have the operational and financial flexibility to adjust our development plan with changing commodity prices. Our diversified production mix along with our industry-leading hedge book and firm transportation portfolio have enabled us to effectively reduce commodity price risk including local basis risk. We believe these attributes will continue to provide Antero with a competitive advantage moving forward. To the extent that commodity prices strengthen, we expect capital allocation to reflect an appropriate mix of growth and return of capital to shareholders while continuing to maintain a strong balance sheet."

Commenting on the 2019 outlook, Glen Warren, President, and Chief Financial Officer of Antero Resources said, "The strength of our balance sheet gives us flexibility with respect to our 2019 and future development plans, which is critical given the recent commodity price volatility. Going forward, our strategy will be focused on low leverage, prudent capital spending and a mix of production growth and return of capital to shareholders. If commodity prices deteriorate further, we have built in the flexibility to adjust our development plan accordingly. Long-term, we remain committed to a strategy of spending within cash flow, maintaining a strong balance sheet that includes an appropriate amount of commodity price hedging and returning the majority of free cash flow to shareholders."

More details here: https://finance.yahoo.com/news/antero-r ... 00019.html