Energy Prospectus

I added Antero to the Sweet 16 because they have:
> Double digit production growth locked in for several years.
> 100% of their natural gas production is hedged for 2016 and 2017 at $3.92 and $3.63 respectively
> HUGE 3P reserve potential
Check out their low F&D costs below.
I am updating their forecast model now.
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On January 27, 2016, Antero announced that proved reserves at December 31, 2015 were 13.2 Tcfe, a 4% increase compared to proved reserves at December 31, 2014. Finding and development cost for proved reserve additions was $0.80 per Mcfe. This finding and development cost includes drilling and completion capital as well as costs incurred for well pads, roads, certain wellhead facilities, acquisitions, land additions and gives effect to performance and price revisions.

Proved developed reserves increased by 54% from year-end 2014 to 5.8 Tcfe at December 31, 2015. Additionally, the percentage of proved reserves classified as proved developed increased to 44% at December 31, 2015 as compared to 30% at year-end 2014.

The Company's proved, probable and possible ("3P") reserves at year-end 2015 totaled 37.1 Tcfe, which represents a 9% decrease compared to the previous year. Both proved and 3P reserves as of December 31, 2015 excluded 366 million barrels and 1,237 million barrels of ethane, respectively, that is expected to remain in the natural gas stream until such time that pricing supports full ethane recovery. Antero's Marcellus and Utica 3P drilling inventory totaled 3,719 locations at year-end 2015, of which approximately 78% were in the Marcellus.

I have updated my forecast model for AR and it will be posted to the EPG website this afternoon.

My valuation increases to $36.85/share, compared to First Call's price target of $27.90.

Since Antero is so over-hedged during the first half of this year their realized gas price should be over $4.00/mcf. Their all-in cash costs of production are ~$1.50/mcf.

Their realized gas price that included derivative settlements was $4.40/mcf in Q4.

I've had people e-mail me saying to ignore the hedges in evaluation these companies. IMO that is a ridiculous statement. Antero was paid cash of $856.6 million on their hedge settlements in 2015 and, if gas prices stay where they are today, hedge settlements in 2016 will be over a $Billion.