Antero Resources (AR) Update - Dec 27

[dan_s]

This morning AR is trading for $18.50. I have adjusted my forecast/valuation to base it on HH gas prices of $4.25/MMBtu for Q4 2021 and $3.50/MMBtu for 2022. I have also lowered AR's realized NGL prices to $31/bbl for Q4 2021 and $30/bbl for 2022.

My valuation declines by $2.50 to $29.50/share.

TipRanks: Since AR released Q3 results, six analysts have adjusted their price targets to an average of $30.33. The six price targets range from $28 to $32.

None of AR's liquids are hedged beyond 2021. They are the 2nd largest producer of NGLs in the U.S. (~165,000 bpd). There has been a significant increase in AR's NGL prices this year ($18.53/bbl in Q3 2020 to $31.11/bbl in Q3 2021) and I expect their NGL prices to stay high. A very tight propane market is supporting higher NGL prices.

AR's Reported Net Income for Q4 will include a large mark-to-market gain on their hedges. AR is also going to report a lot of FCF from operations in Q4, which should please the Wall Street Gang. A large increase in AR's P1 reserves should lower the DD&A rate going forward, which will have a positive impact on net income.

My updated forecast model for AR will be posted to the EPG website later today.