At the time of this post AR was trading at $36.48.
I have updated my forecast/valuation model for the company's Q3 results (below my forecast) and the midpoint of their Q4 guidance.
My valuation is now 6X annualized operating cash flow for 2022 & 2023
My valuation declines by $4 to $74.
AR's balance sheet is now in GREAT SHAPE
Production growth is only limited by pipeline access in Appalachia
If natural gas prices average $6.50 in 2023, Antero is going to report a BIG increase in free cash flow next year.
My updated model will be posted to the EPG website this afternoon.
Antero Resources (AR) Valuation Update - Oct 27
Antero Resources (AR) Valuation Update - Oct 27
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Antero Resources (AR) Valuation Update - Oct 27
A bunch of the miss is shares o/s. The diluted amount grows as they have a crap convertible debt open and as the price moves up more shares have to be issued. This is 17 m shares as of qtr end prices
Your model doesn't pick up that either. You had 309 m, they reported diluted share count at 326 m. Dan , shouldn't you model on diluted?
2. There are about 100 mcf hedge's per day, 3 b for the qtr at a relatively low price. Your model doesn't pick up on that either
(that's 3 b at 5.50 bucks) 16.5 m/326 = .05 nickel
One of the small Canadians had this issue with low priced warrants, I forget if it was HMNEF or IPOOF
Your model doesn't pick up that either. You had 309 m, they reported diluted share count at 326 m. Dan , shouldn't you model on diluted?
2. There are about 100 mcf hedge's per day, 3 b for the qtr at a relatively low price. Your model doesn't pick up on that either
(that's 3 b at 5.50 bucks) 16.5 m/326 = .05 nickel
One of the small Canadians had this issue with low priced warrants, I forget if it was HMNEF or IPOOF
Re: Antero Resources (AR) Valuation Update - Oct 27
I don't use diluted shares because (a) the events of dilution rarely happen and (b) you have to include the other stuff that goes with act of dilution, like the cash the company gets from exercised warrants or lower debt and interest expense if convertible debt is retired.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Antero Resources (AR) Valuation Update - Oct 27
I agree most of the time it doesn't matter but the convertible debt of 55m converts at 4 and change and with the price at 35 is a near certainty
The interest savings is immaterial at 2 m per year but the o/s has a big impact and you and other analysts will always be "too high" with the lower o/s count in the forecast. Then the stock gets slammed on the miss
Refer to slide 15 from the slide deck, extra 16 m shares for the convertible debt, with out that, they get much closer in meeting analyst eps forecast, ergo, I don't consider it a miss
They will make a ton of money if NG moves up, the other names won't due to crap hedges. CNX hedged 80 %
The interest savings is immaterial at 2 m per year but the o/s has a big impact and you and other analysts will always be "too high" with the lower o/s count in the forecast. Then the stock gets slammed on the miss
Refer to slide 15 from the slide deck, extra 16 m shares for the convertible debt, with out that, they get much closer in meeting analyst eps forecast, ergo, I don't consider it a miss
They will make a ton of money if NG moves up, the other names won't due to crap hedges. CNX hedged 80 %