Antero Resources (AR) Q1 Results - April 28
Posted: Fri Apr 28, 2023 10:33 am
I am updating my forecast/valuation model today. Note that AR is still generating significant free cash flow.
Note from Raymond James
Antero Resources Corporation
Capex Commentary Paints Optimistic 2024 Outlook
John Freeman , CFA (RJA)
Market Perform 3 | NM target
While AR’s 1Q results were underwhelming (slightly better production on outsized capital
spend), the company’s call provided plenty of optimism — specifically surrounding long-
term capex trajectory. Noting cost deflation (raw materials) and a slightly lower well count y/
y (thanks to AR’s steadily decreasing base decline), Antero expects 2024 capital spend to fall
~10% y/y (and expectations for 2025 to be ~15% below this year’s spending) — this without
accounting for possible service cost deflation. After refreshing our model, 2024 capex stands
at ~$943M (D&C + Land), reflecting a ~10% decrease y/y. This reduction, coupled with
Martica’s 1Q23 conclusion, nets 2024 FCF of ~$1.3B (~21% yield at current strip), over 3-times
that of this year’s projected total. Still, given AR’s in-line peer valuation and our bearish,
near-term natural gas outlook , we remain on the sidelines for now and reiterate our Market
Perform rating.
Note from Raymond James
Antero Resources Corporation
Capex Commentary Paints Optimistic 2024 Outlook
John Freeman , CFA (RJA)
Market Perform 3 | NM target
While AR’s 1Q results were underwhelming (slightly better production on outsized capital
spend), the company’s call provided plenty of optimism — specifically surrounding long-
term capex trajectory. Noting cost deflation (raw materials) and a slightly lower well count y/
y (thanks to AR’s steadily decreasing base decline), Antero expects 2024 capital spend to fall
~10% y/y (and expectations for 2025 to be ~15% below this year’s spending) — this without
accounting for possible service cost deflation. After refreshing our model, 2024 capex stands
at ~$943M (D&C + Land), reflecting a ~10% decrease y/y. This reduction, coupled with
Martica’s 1Q23 conclusion, nets 2024 FCF of ~$1.3B (~21% yield at current strip), over 3-times
that of this year’s projected total. Still, given AR’s in-line peer valuation and our bearish,
near-term natural gas outlook , we remain on the sidelines for now and reiterate our Market
Perform rating.