Antero Resources: Robust 2015 Guidance Will Take The Stock Higher
- Antero Resources has provided a production growth guidance of 40% for 2015 amidst a challenging environment in the energy sector.
- With 94% of estimated natural gas production hedged for 2015, Antero Resources expects an EBITDAX of $1.4 billion in 2015 as compared to an EBITDAX of $1.1 billion in 2014.
- The company's low-cost assets make the stock an attractive buy even from a long-term perspective.
- A 70% stake in Antero Midstream Partners is likely to be a long-term value creator. In 2015, Antero Resources is likely to have a cash flow of $100 million from AM.
Antero Resources Will Lead The E&P Charge When Nat Gas Pricing Turns
- AR shares are way oversold but should drift lower into capitulation as natural gas pricing still has at least 4 weeks before reaching a bottom.
- AR has infrastructural advantages over peers, better hedging than peers, and a well structured debt balance that make this the name to own in the E&P space.
- I estimate that AR shares can double in 9 months after reaching capitulation in mid to late January.
- Antero Resources provided Q3 operations update.
- Strong production growth in contributing to a natural gas market headed to oversupply.
- The stock isn't likely to hold up in an environment of lower energy prices.
- The correction brings Antero’s shares 33% below their 52-week high, substantially reducing the stock’s overvaluation relative to fundamentals.
- While Antero continues to trade at a premium to many peer stocks, the valuation can be rationalized, particularly under a bullish scenario for natural gas.
- The company continues to execute very well on its business plan, although leverage will likely increase, as spending remains above internally generated cash flow.
Antero Resources: Rich Valuation Represents A Risk
- Antero’s strong stock performance has resulted in trading multiples that are among the highest among large-capitalization E&P stocks and among its Marcellus and Utica peers.
- While the company's production growth guidance is impressive, it is to some degree a result of significant outspending of internal cash flow and does not represent an organic growth rate.
- The risk to natural gas price realizations is elevated and may contribute to the stock's price correction.
Antero Resources - Maintain $87 Per Share Target - 40% Upside Still Left
- E&P execution tracking well.
- Waiting for midstream IPO.
- Previous forecasts were on target.
Antero Resources' Quiet Period Provides A Long Opportunity
Tue, Jan. 20, 4:38 PM
- Antero Resources (NYSE:AR) says it plans a 2015 capital budget of $1.8B, a 41% reduction from 2014's $3.05B capital budget, with a 2015 dilling and completion budget of $1.6B, down 33% Y/Y.
- AR plans to operate an average of 14 drilling rigs between the Marcellus and Utica Shale plays in 2015, down from 21 at year-end 2014, but forecasts a 40% increase in net daily production to 1.4B cfe/day.
- Antero Midstream Partners (NYSE:AM) plans a 2015 capital budget of $425M-$450M, which includes $250M-$260M on gathering infrastructure in the Marcellus and Utica shale plays; estimates distributable cash flow of $135M-$145M with a 1.1x to 1.2x DCF coverage ratio.
Wed, Jan. 14, 4:46 PM
- Antero Resources (NYSE:AR) reports Q4 average net daily gas equiv. production was 1.265B cfe/day, up 87% over the prior year quarter and 17% higher than Q3.
- FY 2014 production averaged just above 1B cfe/day, up 93% Y/Y (86% natural gas and 12% natural gas liquids).
- AR says it has hedged 1.8T cfe of future natural gas equiv. production using fixed price swaps covering 2015-2020 at an average index price of $4.43/MMBtu.
Wed, Jan. 14, 2:35 PM
- Barclays downgrades the large-cap E&P sector to Negative from Neutral and the small- and mid-cap E&P group to Negative from Positive, arguing that downside risk outweigh potential gains even if oil prices recover.
- Equity investors are pricing in WTI crude assumptions of close to $75/bbl in 2016 compared to current strip prices of ~$57, Barclays says, also noting that an abundance of relatively cheap oil supply from U.S. producers could further delay a price recovery.
- Among specific names, the firm downgrades CHK, SD, REN and HK to Underweight; DVN, CLR, KOS, MRO, RSPP and WLL are cut to equal weight.
- At the same time, Barclays picked a few favorites, upgrading Range Resources (NYSE:RRC) to Overweight from Equal Weight, and maintained Overweight ratings on large-cap E&P companies CNQ, EOG and NBL; among small- and mid-cap E&P names, the firm favors AR, CXO and XEC.
- ETFs: XOP, IEO, PXE
Wed, Jan. 7, 7:05 PM
- U.S. oil producers will keep pumping, even at sub-$50 crude oil, because they have to pay off debt, but they are having trouble keeping up with debt payments in the wake of raising their borrowing 55% since 2010 to nearly $200B, WSJ reports.
- Energy analysts warn defaults could be coming: “The group is not positioned for this downturn... There are too many ugly balance sheets,” says Baird's Daniel Katzenberg.
- Lenders are already doling out tough love to companies, MLV amalyst Chad Mabry says, with some lenders wanting to see producer plans for handling further price drops while others are urging asset sales.
- The 10 highest ratios of net debt/EBITDA from the last 12 months, according to S&P Capital IQ, belong to KWK, AR, WRES, GDP, REN, HK, XCO, REXX, MPO, EPE.
Dec. 22, 2014, 10:45 AM
- Natural gas prices fall 9.5% to near two-year lows at $3.133/mmBtu, in the biggest one-day percentage loss since February and the lowest intraday price since January 2013, on mild weather forecasts and inventory that is above year-ago levels.
- Prices are now down more than 15% in three straight losing sessions and are 30% lower than the six-month high closing price of $4.489/mmBtu it hit just a month ago.
- Weather has been unseasonably warm for December, limiting demand for home heating and allowing relatively low stockpiles to catch up to where they were a year ago and encouraging traders to sell based on the belief that supply is relatively healthy.
- Gas producers are among the biggest early decliners: XOM -1.1%, CHK -7.3%, APC -2.6%, SWN -6%, DVN -2.2%, COP -2.3%, BP -1.5%, COG -4%, BHP -1.9%, CVX -1.3%, ECA -5.1%, EQT -4.3%, RDS.A -1.7%, UPL -12%, WPX -6.9%, EOG -1%, OXY -1.1%, RRC -6.1%, APA -2.3%, AR -3.2%, CNX -3%, QEP -4.8%, LINE -4.9%, NBL -1.6%, SM -2.6%, XEC -4.2%, PXD -2.9%, NFX -5.1%.
- ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, FCG, GASL, KOLD, UNL, NAGS, DCNG
Dec. 17, 2014, 2:20 PM
- New York Gov. Cuomo's administration says it will ban fracking statewide, citing health concerns and what it considers as limited economic benefits to drilling.
- NY's acting health commissioner said at a cabinet meeting in Albany today that studies on fracking’s effects on water, air and soil are inconsistent, incomplete and raise too many “red flags” for the state to allow it; the state Department of Environmental Conservation will now issue a legally-binding recommendation prohibiting fracking.
- The state has had a de facto moratorium on fracking for more than six years, so nothing really changes with today's decision.
- Parts of New York sit atop the gas-rich Marcellus shale formation, whose top producers include CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN, AR.
Dec. 8, 2014, 3:37 PM
- Energy stocks are hammered again as oil prices tumble to fresh five-year lows, and Oasis Petroleum (OAS -16.1%), Emerald Oil (EOX -12.7%), Cobalt International Energy (CIE -10.1%) and Canadian Natural Resource (CNQ -4.8%) are slammed more than most as they suffered analyst downgrades today.
- SunTrust's Ryan Otaman cuts OAS and EOX to Neutral from Buy to account for their large debt loads, while Citi's Robert Morris lowers CIE and CNQ to Neutral from Buy.
- However, Morris thinks at least some stocks warrant upgrades after precipitous declines, raising Antero Resources (AR -9.1%), Apache (APA -6.1%) and Newfield Exploration (NFX -8.3%) even while acknowledging they probably will not bottom until oil does - a common view among analysts such as Raymond James' Marshall Adkins, who writes that "trying to figure out appropriate oilfield service valuations under a collapsing oil price environments is an exercise in futility."
Nov. 5, 2014, 4:45 PM| Comment!
Nov. 5, 2014, 12:58 PM
- Antero Midstream Partners (AM +16.5%), the partnership formed by Antero Resources (AR +1.4%), is trading near $30/unit in its trading debut after pricing its IPO at $25 yesterday, well above the $19-$21 expected price range and raising $1B in total gross proceeds.
- The IPO comes just a week after Shell Midstream Partners raised $1.06B, making it the largest MLP IPO on record, but the Antero deal would surpass the figure as underwriters exercise an option to sell additional shares.
- AM owns pipelines and compressor stations in the core of the Marcellus Shale in northwest Virginia and Utica Shale in southern Ohio, and provides services to AR under long-term, fixed-fee contracts.
Nov. 4, 2014, 5:35 PM
- ABTL, ACAS, ACLS, ALNY, ALSK, ANDE, AR, AREX, ASH, ATO, ATSG, AVG, AWK, BALT, BCOR, BIOS, BKD, BREW, BWC, CBS, CDE, CF, CLR, CODI, CPE, CSOD, CTL, CVG, CXO, DATA, DEPO, DK, DPM, DRYS, DVR, DYN, ECOL, ECYT, EFC, ENS, ENSG, ETE, ETP, EXAR, EXXI, FMI, FNV, G, GNW, GPOR, GSM, HOLX, HTCH, IL, INWK, IO, JCOM, KGC, KW, LBTYA, LHCG, LPSN, MBI, MCHX, MCP, MDR, MDWD, MED, MHLD, MIDD, MRIN, MTDR, MTRX, MUSA, MWE, NDLS, NLY, NVAX, NWSA, OILT, ORA, ORIG, OSUR, PAA, PLNR, PMT, PODD, POWR, PPO, PRGN, PRU, PTC, QCOM, QEP, QUAD, RGP, RNDY, RUTH, SB, SBY, SCTY, SD, SKUL, SLF, SSNI, SSRI, STMP, SUSP, SWIR, SWM, SXL, SYMC, SZYM, TCAP, TEAR, TEG, TERP, THOR, TNGO, TPC, TRAK, TROX, TRUE, TS, TSLA, TSRO, TTEC, TXTR, UHAL, VVUS, WBMD, WFM, WMC, WMGI, WR, WTI, WWWW, XPO, Z
Oct. 22, 2014, 5:19 PM
- EnLink Midstream Partners (NYSE:ENLK) agrees to acquire equity interests in E2 Appalachian Compression and E2 Energy Services from EnLink Midstream (NYSE:ENLC) for ~$193M.
- ENLK says the E2 entities will provide condensate stabilization and gas compression services for growing production in the Utica shale play.
- The E2 assets are supported by a long-term, fee-based contract with Antero Resources (NYSE:AR); once all E2 stabilization and compression facilities are complete in H1 2015, they are expected to generate $20M-$25M/year of adjusted EBITDA.
- The deal marks the first drop down from ENLC to ENLK as part of the partnership's strategic growth plan.
Oct. 17, 2014, 5:40 PM
Oct. 15, 2014, 2:52 PM
- Antero Resources (AR +6.1%) is higher after reporting a 91% Y/Y jump in Q3 natural gas production volume, while net daily liquids production more than tripled from the same quarter last year.
- AR says it averaged 1.08B cfe/day during Q3, up 21% Y/Y, with net daily liquids production spiking 217% Y/Y and 24% Q/Q to 25K bbl/day.
- AR also says it now has 361 horizontal wells in the Marcellus and Utica shale formations since beginning its Appalachian operations in 2009.
Aug. 28, 2014, 10:58 AM
- The Marcellus region is now the world's biggest natural gas shale play, and there’s still $90B to be made by tapping the area’s reserves, according to a study by Wood Mackenzie.
- The energy consultant predicts that the top 20 operators in the Marcellus will earn nearly $86B over the life of the play after the costs of reaching the reserves; for comparison, it estimates ~$118B to be made by extracting the resources in North Dakota’s Bakken region, but most production there is higher-priced oil.
- Major Marcellus shale producers include CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN, AR.
Aug. 26, 2014, 4:38 PM
- Antero Resources (NYSE:AR) raises its FY 2014 production guidance to 990M-1.01B cfe/day, up 5% from the midpoint of previously announced guidance.
- AR estimates H2 production will average 1.16B cfe/day, up 9% from the midpoint of previously estimated H2 production; also, AR raises its 2015 production target to 1.5B cfe/day from 1.4B previously and raises its 2016 target to 2.2B cfe/day from a previous 2.1B.
- Also increases its 2014 capital budget to $3.7B, which includes $2.4B for drilling and completion, and anticipates averaging 21 rigs in 2015 with plans to maintain a stable drilling and completion budget of $2.3B-$2.5B.
Aug. 6, 2014, 4:49 PM| Comment!
AR vs. ETF Alternatives
Antero Resources Corp is an independent oil and natural gas company. The Company is engaged in the exploration, development and acquisition of natural gas, NGLs, and oil properties located in the Appalachian Basin.
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