Energy Prospectus

DENVER, Jan. 4, 2017 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero" or the "Company") today announced its 2017 capital budget and guidance and provided a long-term outlook through 2020.

AR is one of three "gassers" in the Sweet 16. It was wise enough to hedge a very high percentage of production through 2017, so it has strong + predictable cash flows locked in.

Highlights Include:
•Drilling and completion capital budget of $1.3 billion and land budget of $200 million for 2017
•Plan to operate an average of seven drilling rigs between the Marcellus and Utica Shale plays
•Plan to complete 170 horizontal wells in 2017 and exit the year with 30 drilled but uncompleted wells
•Net daily production is expected to average 2,160 to 2,250 MMcfe/d in 2017, 20% to 25% higher than 2016 guidance
•Net daily liquids production is projected to grow 21% to 32% over the prior year guidance to 88,500 to 96,500 Bbl/d
•Targeting a compound annual growth rate of 20% to 22% for net production from 2018 through 2020
•Targeting drilling and completion spend within consolidated cash flow from operations through 2020, resulting in a declining leverage profile to mid 2.0-times by 2018
•Forecasting a positive per Mcf differential to Nymex for natural gas price realizations, before hedges, for 2017 to 2020 period

Antero's capital budget for 2017 is $1.5 billion, including $1.3 billion for drilling and completion and $200 million for core leasehold additions and extensions. Net production is expected to average 2,160 to 2,250 MMcfe/d in 2017, representing year-over-year growth of 20% to 25% relative to 2016 guidance. Approximately 70% of the drilling and completion budget for 2017 is allocated to the Marcellus Shale and the remaining 30% is allocated to the Ohio Utica Shale.

Antero's 2017 capital budget excludes Antero Midstream's (NYSE: AM) $525 million capital budget relating to low and high pressure gathering pipelines, compressor stations, fresh water and advanced wastewater treatment infrastructure. Antero Midstream announced its 2017 capital budget and guidance today in a separate news release, which can be found at www.anteromidstream.com.

Antero plans to operate an average of four drilling rigs in the Marcellus Shale in West Virginia in 2017 and expects to complete 135 wells with an average lateral length of 9,200 feet. Forty of the 135 completions are previously drilled but uncompleted wells carried over from 2016. The development plan in the Marcellus averages nine wells per pad in 2017, up from six wells per pad in 2016, as the Company continues to drive well efficiencies. Antero is currently drilling and completing wells at an average budgeted cost of $0.84 million per 1,000' of lateral in the Marcellus, a 30% decrease from 2015 completed well costs. During the fourth quarter of 2016, Antero averaged 12 drilling days per well in the Marcellus, a 52% improvement compared to the average drilling days per well for the 2015 development program. Additionally, Antero averaged 4.0 completion stages per day in the fourth quarter of 2016, a 15% increase over the 2015 completion program average while increasing proppant concentration per stage. The significant drilling improvements were driven by multiple enhancements, including rotary steerable drilling and increased mud pump circulation rates. Additionally, completion improvements were the result of more efficient completion stage sequencing ("zipper fracs") and proppant placement.

Antero plans to operate an average of three drilling rigs in the Ohio Utica Shale in 2017 and expects to complete 35 wells with an average lateral length of 9,700 feet. The development plan in the Utica averages six wells per pad in 2017. Antero is currently drilling and completing wells at an average budgeted cost of $0.99 million per 1,000' of lateral in the Utica, a 28% improvement over 2015 well costs. During the fourth quarter of 2016, Antero averaged 13 drilling days per well, a 58% improvement compared to the average drilling days per well of the 2015 development program. Additionally, Antero averaged 6.0 completion stages per day during the fourth quarter of 2016, a 62% increase over the 2015 completion program average while increasing proppant concentration per stage. The Marcellus operational improvements have also been applied in the Ohio Utica Shale, generating similar efficiency gains. Antero expects further improvements in drilling and completion efficiencies in the Ohio Utica in 2017 as Antero plans to be more active in the play than it was in 2016. The Company's activity in the Ohio Utica is contingent on the construction timetable for the Rover Pipeline for which Antero is an anchor shipper. If the Rover Pipeline project is delayed beyond the second half of 2017 planned in-service date, Antero intends to shift the appropriate amount of budgeted drilling and completion activity from the Ohio Utica to the Marcellus. The Company has additional firm transportation capacity to current favorably priced markets in the Marcellus beyond the 2017 forecasted growth.

Commenting on the 2017 capital budget and guidance, Glen Warren, Antero's President and CFO, said, "While we plan to live within cash flow from a drilling and completion capital standpoint in 2017, we are forecasting a more than 50% increase in consolidated cash flow from operations in 2018. This significant cash flow step-up is driven by targeted production growth in 2018 of 20% to 22%, assuming current strip pricing, with over 70% of production hedged in 2018 at $3.91 per MMBtu. Combined with an expected moderate increase in drilling and completion capital spend in 2018, we forecast a significant decrease in leverage ratios to the mid 2.0-times net debt to EBITDAX on both a stand-alone and a consolidated basis by year-end 2018."

As a follow-up to the material expansion of our Marcellus footprint in 2016, Antero plans to continue consolidating acreage in the core of its Marcellus and Ohio Utica leasehold positions in 2017. Antero has budgeted $200 million for core leasehold additions and extensions. Consistent with historical practices, the Company does not budget for acquisitions.

Antero projects that substantially all natural gas production in 2017 will be sold at current favorably priced indices, resulting in natural gas price realizations at a premium compared to Nymex.

Driven by improved local differentials, Antero is forecasting an average realized price for C3+ NGLs of 45% to 50% of WTI oil prices in 2017 compared to a 40% of WTI oil price realization for the first nine months of 2016. Once the Mariner East 2 pipeline is placed in service, Antero will have the ability to market 61,500 Bbl/d of ethane, propane and normal butane volumes to international buyers at netback prices that are currently superior to the aforementioned 2017 guidance, based on today's strip pricing and international shipping rates. Antero is also forecasting an improvement to its oil price realizations, from approximately a $10.00 differential to WTI oil in 2016 to a $7.00 to $9.00 differential to WTI oil in 2017. Combining the expected improvement in pricing for NGLs and oil results in an overall increase in expected EBITDA of approximately $85 million in 2017, before the impact of hedging.

Antero expects a modest increase in cash production expense entirely driven by an increase in expected production taxes and fuel costs due to higher commodity prices. Net marketing expense is expected to decline to $0.075 to $0.125 per Mcfe due to a reduction in unutilized firm transportation capacity in 2017.