AR closed at $5.98 on Friday, January 8
DENVER, Jan. 7, 2021 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources") announced today the pricing of a registered direct offering of 31.4 million shares of its common stock at a price of $6.35 per share to certain holders of its 4.25% Convertible Senior Notes due 2026. Antero Resources plans to use the proceeds from the share offering and approximately $63 million of borrowings under its revolving credit facility to repurchase from such holders $150 million aggregate principal amount of its Convertible Notes in privately negotiated transactions.
On a net basis, Antero Resources will not receive any proceeds from these transactions. Following the note repurchase, $137.5 million aggregate principal amount of the Convertible Notes will be outstanding.
Based on conversations with the holders of the Convertible Notes purchasing shares in the share offering, Antero Resources believes certain holders have open short positions in Antero Resources' common stock, which serve as hedges against their Convertible Note holdings, and will use the shares being purchased to close out and cover a portion or all of their short positions.
The share offering is expected to close on January 12, 2021, subject to customary closing conditions. The note repurchases are expected to close promptly following the closing of the share offering, subject to customary closing conditions.
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Antero has been doing a lot of balance sheet restructuring over the last year that lowers debt and pushes out maturities. They are generating free cash flow from operations and should continuing to use it to reduce their debt. That is a good thing for equity owners.
I have updated the AR forecast/valuation model. Since ~97% of their 2021 natural gas is hedged at $2.80/mcf, the recent natural gas price fluctuations don't have much of an impact on their revenues. Since I have added 2022 to my valuation, it increases by $0.50 to $9.50.
Wall Street's opinions of this stock are all over the map. Per TipRanks: In the last 3 months, 6 ranked analysts set 12-month price targets for AR that range from $3.00 to $7.25. The average price target among the analysts is $5.45.
AR is the top producer of NGLs in the U.S. and I believe NGL prices are going back to the mid-$20s. Per my forecast model, their operating cash flow per share should be ~$4.35 in 2021.
Antero Resources (AR) Update - Jan 10
Antero Resources (AR) Update - Jan 10
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Antero Resources (AR) Update - Jan 10
Good news for AR and even better news for Antero Midstream (AM), which is one of my Top Picks in our High Yield Income Portfolio. AM is a midstream C-Corp that is currently paying annual dividends of $1.23 for annual yield of better than 14.7%. I am expecting AM to raise their quarterly dividends in 2H 2021.
New York, January 11, 2021 -- Moody's Investors Service, ("Moody's") upgraded Antero Resources Corporation's (AR) Corporate Family Rating (CFR) to B1 from B2, Probability of Default Rating (PDR) to B1-PD from B2-PD, senior unsecured notes to B2 from B3, and Speculative Grade Liquidity Rating to SGL-2 from SGL-3. The rating outlook is stable.
Moody's concurrently assigned a B2 rating to Antero's proposed senior unsecured notes due 2029. Net proceeds from the proposed debt offering will be used to redeem Antero's 2022 notes and partially reduce revolver borrowings.
"The upgrade reflects Antero's substantially reduced refinancing risks as well as its improved free cash flow generation and debt reduction prospects following a recovery in commodity prices," said Sajjad Alam, Moody's Senior Analyst.
New York, January 11, 2021 -- Moody's Investors Service, ("Moody's") upgraded Antero Midstream Partners LP's (AM) Corporate Family Rating (CFR) to B1 from B2, Probability of Default Rating (PDR) to B1-PD from B2-PD, and senior unsecured notes to B2 from B3. The Speculative Grade Liquidity rating was unchanged at SGL-3. The rating outlook remains stable.
"The upgrades reflect significant improvements in the credit profile of AM's principal customer Antero Resources Corporation (Antero Resources, B1 stable) that will bring stability in AM's operations and cash flow," said Sajjad Alam, Moody's Senior Analyst.
New York, January 11, 2021 -- Moody's Investors Service, ("Moody's") upgraded Antero Resources Corporation's (AR) Corporate Family Rating (CFR) to B1 from B2, Probability of Default Rating (PDR) to B1-PD from B2-PD, senior unsecured notes to B2 from B3, and Speculative Grade Liquidity Rating to SGL-2 from SGL-3. The rating outlook is stable.
Moody's concurrently assigned a B2 rating to Antero's proposed senior unsecured notes due 2029. Net proceeds from the proposed debt offering will be used to redeem Antero's 2022 notes and partially reduce revolver borrowings.
"The upgrade reflects Antero's substantially reduced refinancing risks as well as its improved free cash flow generation and debt reduction prospects following a recovery in commodity prices," said Sajjad Alam, Moody's Senior Analyst.
New York, January 11, 2021 -- Moody's Investors Service, ("Moody's") upgraded Antero Midstream Partners LP's (AM) Corporate Family Rating (CFR) to B1 from B2, Probability of Default Rating (PDR) to B1-PD from B2-PD, and senior unsecured notes to B2 from B3. The Speculative Grade Liquidity rating was unchanged at SGL-3. The rating outlook remains stable.
"The upgrades reflect significant improvements in the credit profile of AM's principal customer Antero Resources Corporation (Antero Resources, B1 stable) that will bring stability in AM's operations and cash flow," said Sajjad Alam, Moody's Senior Analyst.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group