AR and AM
Posted: Thu Aug 01, 2019 9:29 am
Comments below are from Stifel
Antero Resources Corporation (AR, $4.61, Buy; Target $12.00) - In-line Quarter; Lower Cost Structure, a Prerequisite to Higher Valuation, Is Under Way - Jane
Trotsenko -
We view yesterday's press release as net neutral. Contrary to investors'
expectations, unhedged NGL pricing came in quite strong, declining only 10% q/
q compared to MtB barrel down 15% q/q. Relative outperformance should improve
investors' comfort level with AR's NGL price realizations on a going forward basis.
While their cost structure remains one of the highest among the peers, the company is
pro-actively implementing initiatives to reduce well costs by 10-14% and LOE by over
20% y/y in 2020. Marketing expense should also decline as Antero continues to grow
production and gradually fills up the remaining unutilized capacity. Strong hedges and
cash injection from inorganic sources allow the company to pursue strong production
growth in 2020, despite broad-based slow down of activity levels in Appalachia. We
believe the stock will continue to be driven by broader macro trends and sentiment
overshadowing the positive operational momentum on a company level.
Antero Midstream Corporation (AM, $9.12, Buy; Target $14.00) - AM: 2Q19 Initial Take – Light - Timothy D. Howard -
Antero Midstream Corporation (AM, $9.12, Buy) reported 2Q19 earnings light of our estimates. AM reported Adjusted EBITDA of $206
million, compared to our estimate of $212 million and consensus of $213 million.
The partnership reported distributable cash flow (DCF) of $156 million, compared to
$166 million the prior quarter and light of our estimate of $162 million. AM declared a
distribution per unit (DPU) of $0.308, an increase of 1.7% from the previous quarter's
distribution of $0.303. We estimate distribution coverage of 1.00x
I will be taking a hard look at both companies this afternoon. If you own AM just remember that as long as AR is growing, AM is growing. DCF is the key number.
Antero Resources Corporation (AR, $4.61, Buy; Target $12.00) - In-line Quarter; Lower Cost Structure, a Prerequisite to Higher Valuation, Is Under Way - Jane
Trotsenko -
We view yesterday's press release as net neutral. Contrary to investors'
expectations, unhedged NGL pricing came in quite strong, declining only 10% q/
q compared to MtB barrel down 15% q/q. Relative outperformance should improve
investors' comfort level with AR's NGL price realizations on a going forward basis.
While their cost structure remains one of the highest among the peers, the company is
pro-actively implementing initiatives to reduce well costs by 10-14% and LOE by over
20% y/y in 2020. Marketing expense should also decline as Antero continues to grow
production and gradually fills up the remaining unutilized capacity. Strong hedges and
cash injection from inorganic sources allow the company to pursue strong production
growth in 2020, despite broad-based slow down of activity levels in Appalachia. We
believe the stock will continue to be driven by broader macro trends and sentiment
overshadowing the positive operational momentum on a company level.
Antero Midstream Corporation (AM, $9.12, Buy; Target $14.00) - AM: 2Q19 Initial Take – Light - Timothy D. Howard -
Antero Midstream Corporation (AM, $9.12, Buy) reported 2Q19 earnings light of our estimates. AM reported Adjusted EBITDA of $206
million, compared to our estimate of $212 million and consensus of $213 million.
The partnership reported distributable cash flow (DCF) of $156 million, compared to
$166 million the prior quarter and light of our estimate of $162 million. AM declared a
distribution per unit (DPU) of $0.308, an increase of 1.7% from the previous quarter's
distribution of $0.303. We estimate distribution coverage of 1.00x
I will be taking a hard look at both companies this afternoon. If you own AM just remember that as long as AR is growing, AM is growing. DCF is the key number.