Antero Resources Corporation (NYSE:AR), a Denver, Colorado-based oil and natural gas firm with operations in the Appalachian Basin in West Virginia, Ohio, and Pennsylvania, plans to raise $1.2 billion in its upcoming IPO on Thursday, October 10th. The firm plans to offer 38 million shares at an expected price range of $38.00-42.00. At the midpoint of that range at $40.00 per share, the firm would command a market value of $10.2 billion.
AR filed on June 13, 2013
Joint Managers: Barclays, Citi, J.P. Morgan, Credit Suisse, Jefferies & Co., Wells Fargo Securities
Co-Managers: Morgan Stanley, TD Securities, Tudor, Pickering, Holt & Co, Baird, BMO Capital Markets, Capital One Securities, Raymond James, Scotiabank/Howard Weil, Credit Agricole CIB, KeyBanc Capital Markets, Mitsubishi UFJ securities, BB&T Capital Markets, Comerica Securities
Founded in 2002, Antero Resources is an independent oil and natural gas company focused on development, acquisition, and exploitation of natural gas, natural gas liquids, and oil properties in the Appalachian Basin. The firm has significant holdings in two of the United States' premier shale plays: approximately 329,000 net acres in the Marcellus Shale and approximately 102,000 net acres in the Utica Shale. Some 170,000 net acres of AR's Marcellus Shale leasehold are also prospective for the slightly shallower Upper Devonian Shale. AR hold deep rights on a portion of our Marcellus Shale territory that is prospective for the dry gas Utica Shale.
The firm was amongst the quickest to take advantage of innovative hydraulic fracturing and completion techniques, with over 450 horizontal wells in the Barnett, Woodford, Marcellus and Utica Shales.
AR offers the following figures in its S-1 balance sheet for the six months ended June 30, 2013:
Net income attributable to Antero equity owners : $83,196,000
Total Assets: $4,825,148,000
Total Liabilities and Equity: $4,825,148,000
AR looks to be an aggressive buy in the $38 to $40 range assuming oil prices stay firm. The company is profitable and seems to be ahead of the game in shale exploitations, and its willingness to spend the bulk of its IPO proceeds to pay down debt should help the firm maintain stability.
Like all fossil fuels firms, Antero is subject to fluctuations in oil prices over which it has no influence. The firm's profitability will always be dependent upon the factors that influence oil price, especially stability (or lack thereof) in the Middle East. The firm's heavy investment in shale could also be endangered by environmental legislation, though this seems unlikely in the current political climate. Much of the proceeds from the IPO (approximately 1.14 billion) will go towards paying down debt, which will go a long way towards the firm's long-term stability and profitability.
AR faces substantial competition from numerous other firms focused on fossil fuels in shale. Some of its competitors include Pennant Midstream (PEN), MarkWest Utica EMG (NYSE:MWE) and Crosstex Energy (XTEX).
CEO and Chairman Paul Rady has served Antero and its predecessor company, Antero Resources Corporation, in those roles since 2002. Mr. Rady also has served as President, CEO and Chairman of Pennaco Energy and as CEO of Barrett Resources. Mr. Rady holds a B.A. in Geology from Western State College of Colorado and M.Sc. in Geology from Western Washington University.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AR over 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.
Additional disclosure: This article is neither a recommendation to buy or sell shares, and investors should always do their own research. Investors should read the S-1 which was prepared by the company and their lawyers and should discuss potential investments with their financial advisers.