Energy Prospectus

Antero Resources (AR) is a candidate for promotion back to the Sweet 16 once natural gas prices move back to more rational territory. Antero Midstream (AM) remains in our High Yield Income Portfolio.

AR reported solid Q4 results that were in line with my forecast.

Fourth Quarter 2023 Highlights:

Net production averaged 3.4 Bcfe/d, an increase of 6% from the year ago period < Just a bit below my forecast.

Realized a pre-hedge natural gas equivalent price of $3.52 per Mcfe, a $0.64 per Mcfe premium to NYMEX pricing

Net income was $95 million, Adjusted Net Income was $71 million (Non-GAAP) < Close to my forecast of $73.6 million.

Adjusted EBITDAX was $322 million (Non-GAAP); net cash provided by operating activities was $312 million < Beat my forecast of $294.6 million.

Free Cash Flow was $90 million (Non-GAAP), before Changes in Working Capital < Very good.

Lateral lengths drilled averaged a quarterly Company record of more than 17,000 feet per well

Good numbers in light of current conditions. NGL prices certainly helped.Up almost 9 %

This is the name if you want gas exposure.

EIA a shocking -49

I listened to AR's CC this morning and I have updated my forecast valuation model. My "Current Valuation" is $23.00, but my 12-month target would be above TipRanks' updated price target of $27.60. Four analysts have submitted updated price targets since the Company announced Q4 results that are $25, $26, $26 and $28. They all rate it a BUY.

You should all listen to the replay of AR's Q4 conference call that I was on this morning. In their prepared presentation they give some details on where they see the U.S. natural gas and NGL markets heading. Two much different markets. The recent rise in NGL prices is helping a lot of our upstream companies.

Slides 5-8 shows why there has been a nice surge in demand for U.S. NGLs. One thing I learned is how the current situation in the Red Sea has increased demand for U.S. NGLs in Europe. AR sells a lot of NGLs and they export a high percentage to Europe.

Slide 9 is an update on the LNG export facilities under construction:
> Seven new projects and existing facilities expected to come online in 2024 and 2025 are not impacted by Team Biden's "pause" on approvals.
> Four are expected to come on line this year, taking U.S. LNG export capacity from 14.5 Bcfpd at YE 2023 to 18.6 Bcfpd by YE 2024
> Three more should come on line in 2025 pushing U.S. export capacity up to 20.6 Bcfpd day by YE 2025
> Three of six facilities expected to come on line in 2026 and 2027 are waiting on final approval, so they could be impacted by the Biden pause.
> If all six are approved, U.S. LNG export capacity could be 29.0 Bcfpd by YE 2027.
If Trump is elected, I expect him to fast-track all of the projects seeking approval.

Slide 11 shows a big increase in natural gas demand for power generation. This is why I have posted here many times that we need to look at natural gas storage levels based on Days of Demand coverage.

You can find more companies that sell a lot of high value NGLs on the new and improved Sweet 16 Summary Spreadsheet, which also has a 3rd tab that shows valuable information about our Small-Cap and High Yield Income portfolio companies. Log on the EPG website and click on the Sweet 16 tab.