Energy Prospectus

Any idea why AM is being run down? Ex Div is neat week and yet share price is collapsing. Reflection of
hostility to AR and gassers? NGL price slump? Anxiety about future quarters?

NGL price slump is big negative for AR, but NGL prices should rebound a bit in Q4. AR's Reported Net Income for Q2 will be way above the First Call EPS estimate.

I am finishing up GPOR now and will look at AR's forecast/valuation model next.

On July 18 Biju Perincheril at Susquehanna issued a fresh report on Antero Resources (AR). He rates it a Buy with a $9.50 price target. On 6/24/2019 Stifel issued a new report on AR with a valuation of $14.00.

Q2 will be the first quarter where AM's results are not reported by AR on a consolidated basis. The "de-consolidation" is a bit confusing to model and it may be causing some of the analysts to hold off on updating their models. There are 20 analysts' reports included in the First Call price target of $10.84, but half of them are dated before the company released Q1 results. Some don't include Q4 2018 results.

I updated my forecast, primarily to lower NGL prices in future periods based on Gulfport's realized commodity prices. By "magic" my revised operating cash flow per share forecast of $4.45 for 2019 came to exactly the current First Call CFPS estimate.

100% of AR's natural gas is hedged at good prices for 2019. They are now generating more than enough cash flow from operations to fully fund their capital program for this year. All of the "gassers" are going to report big increases in GAAP Net Income from Q1 to Q2 thanks to BIG mark-to-market non-cash gains on their hedges. Just ignore the reported earnings and focus on operating cash flow per share.

AR generated 20.4% production growth in 2018 and, base on their guidance, they should generate 17% to 18% production growth in 2019. As long as AR is growing, AM is growing. On July 16 Christopher Tillett at Barclays issued a fresh report on AM. He lowered his valuation by $3.00 to $13.00 and rates it a HOLD. My guess is that most analysts are just waiting to see the Q2 results, the first full quarter that AM is a C-Corp, before updating their models.