Antero Resources (AR) Update - Jan 10
Posted: Sun Jan 10, 2021 4:01 pm
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.
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.