Antero Resources (AR) Update - Oct 26

[dan_s]

Both of these analysts upgraded AR on October 21st:
> Raymond James analyst John Freeman upgraded Antero Resources to Market Perform from Underperform based on the current commodity strip with both oil and gas "firmly on the upswing." Appalachian drillers have benefited from a nice uptick in gas prices over the last several weeks and "stand to reap further rewards," the analyst said.
> Northland Capital Markets analyst Subash Chandra raised the price target on Antero Resources (NYSE: AR) to $7.25 (from $6.90) while maintaining an Outperform rating.

In the last 3 months, 7 ranked analysts set 12-month price targets for AR. The average price target among the analysts is $4.25. < All five of the other analysts reports are dated before mid-September when ngas was trading for less than $2.00/MMBtu.

AR is the 3rd largest producer of natural gas in the U.S. (behind EQT and XOM)
AR is the 2nd largest producer of NGLs in the U.S. (behind OXY)

Using asset sales of $750 million and debt buybacks at a discount, AR's balance sheet is now in much better shape than it was just a few months ago. Free cash flow from operations will easily cover the $317 million of senior notes that are due in November, 2021. The Company should report FCF in Q3 2020 and a lot more in Q4 2020.

AR will be announcing Q3 results on Wednesday, October 28. If their results and guidance confirm my forecast model, AR will be added back to our Sweet 16 and AM will be a "Screaming Buy" for those of you interested in High Yield. AM's annual dividend yield is more than 18%.

My updated forecast/valuation model (pre Q3 announcement) has been posted to the EPG website.