Antero Resources (AR) Update - Jan 17

[dan_s]

I have updated my forecast/valuation model for AR. My valuation increases by $0.50 to $30.00/share.
AR closed on January 14 at $20.03.

TipRanks: "In the last 3 months, 8 ranked analysts set 12-month price targets for AR. The average price target among the analysts is $28.75."
Four analysts have adjusted their price targets in January:
> Neal Dingmann at Truist Financial rated AR a Hold on 01/14/22 with a price target of $21.00
> Phillip Jungwirth at BMO Capital rated AR a Buy on 01/10/22 with a price target of $28.00
> Nitin Kumar at Wells Fargo rated AR a Buy on 1/05/22 with a price target of $32.00
> Vincent Lovaglio at Mizuho Securities rated AR a Buy on 01/03/22 with a price target of $28.00
--------------------------
AR is close to a "pure gasser" because ~98% of the Company's production on a Boe bases is natural gas and NGLs. They have high BTU gas that sells at a $0.25/mcf premium to HH prices and they are the second largest producer of NGLs in the U.S., which also sell at very good prices (31.11/bbl in Q3).
AR's balance sheet is in MUCH BETTER shape than it was a year ago and they now generate a lot of free cash flow from operations. I do expect them to announce a dividend and stock repurchase program this year, but near-term FCF will paydown debt.
AR should report a BIG increase in the PV10 value of their proven reserves in February. Today's share prices is a discount to net asset value just based on their P1 reserves.
I see 50% upside just to get to a reasonable P1 NAV per share. Plus, the Company has a lot of low-risk / high-return development drilling locations.