Based in Denver Colorado, Antero Resources Corp (NYSE:AR) is an independent oil and natural gas company, which is engaged in the exploitation, development, and acquisition of natural gas, NGLs and oil properties in the Appalachian Basin. The company intends to have its IPO on 10/11/2013 and the expected price range for the shares are estimated to be anywhere from $38.00 to $42.00. The number of shares being offered are 30,000,000 with a total offer amount of $1,449,000,000. The following will assess whether Antero Resources is worth investing in upon its IPO.
With more than 4,576 identified potential horizontal well locations--64% of which are liquid-rich drilling opportunities--Antero's current reserves appear to be extremely lucrative. Antero Resources currently owns around 329,000 net acres in the southwestern core of the Marcellus Shale and approximately 102,000 net acres in the core area of the Utica Shale. The company currently estimates that their prospective proved, probable, and possible reserves are 6.3 Tcfe, 14.0 Tcfe, and 7.4 Tcfe respectively and has reserves that are 23% proved developed and 91% natural gas, assuming ethane rejection. Currently, the company maintains over 450 horizontal wells in the Barnett, Woodford, Marcellus, and Utica Shales. In total, the company has successfully developed, drilled and completed 199 horizontal wells in the Marcellus Shale, which all produce in commercially viable quantities. Additionally, according to information cataloged by RigData, Antero Resources is the most active driller in the Marcellus Shale with over 15 rigs presently running.
Antero Resources net daily production in the second quarter of 2013 averaged at around 458 MMcfe/d, including 4,160 Bbls/d of NGLs and oil. Furthermore, the company estimates that the average net daily production for the month of August 2013 was 594 MMcfe/d, which included 8,630 Bbls/d of NGLs and oil. Meaning that daily production is increasing, which in turn, could be represented through future earnings reports. In addition, the company has grown its proved reserves at a compounded annual growth rate of 96% between 2006-2012. Between January 1st 2012, and June 30th 2013 the company has also substantially grown its Appalachian proved reserves by nearly 47% to 6.3 Tcfe.
With regards to financials, Antero Resources will most likely have a relatively healthy balance sheet going into 2014. Currently their total liabilities are $3,068,215,000 while their total assets are $4,825,148,000. The company is expecting to generate approximately $1.14 billion of net proceeds from the sale of the common stock offering and intends to utilize these proceeds as a means to repay outstanding borrowings of approximately $1.49 billion, which mature in May of 2016. After their offering, Antero Resources will likely have repaid creditors and substantially reduced their debt incurred from the purchases of drilling equipment.
With regards to revenue, the company reported revenues of $448,598,000 and a net income of $83,196,000 in their most recent S-1/A filing. Meaning that upon their IPO, the company will not only be profitable, but also will have significantly fewer liabilities. By having less debt and yielding high annual profits, the company will in turn be capable of allocating assets towards increasing their acreage in the Marcellus Shale. Overall, Antero Resources Corp is displaying signs of developing into a major independent natural gas and oil player in the United States. Though share prices may at first appear high, this is definitely a position to consider for investors who are interested in the U.S. natural gas and oil boom.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.