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Antero Has Massive Inflation Beating Resources

May 03, 2022 1:06 PM ETAntero Resources Corporation (AR)62 Comments
James Hanshaw profile picture
James Hanshaw


  • We are bombarded with news about cost price inflation and the Fed's coming attempts to stifle it.
  • Antero Resources, AR, gives us other ways to beat that inflation - by outflating it with investment in AR shares.
  • In the 2 years since I bought into AR, my investment is up over 1,300%. US inflation is up around 8.5%.
  • I see many reasons why AR will be up another 75% by year-end. The FOMC forecast for US year-end inflation is 4.3%.
  • One reason being Europe's natural gas prices recently hitting a high equivalent to oil prices at $600 per barrel.

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Buying into Antero Resources (NYSE:AR) - as I did in April 2020 - during the pandemic crash entailed risk but the price then was so low and the potential so high for one of the best managed companies

This article was written by

James Hanshaw profile picture
I am retired apart from managing family investments - mostly equities. I live near Zürich, Switzerland. I keep physically fit by walking and mentally fit by writing on philosophy, economics and politics. My writing is published internationally. My hobby is art - pencil on paper drawing. For those interested in my kind of art and political ideas I can be contacted at jbhanshaw@gmail.com.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of AR either through stock ownership, options, or other derivatives. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (62)

Been in AR almost as long as you, averaging $ 5.11. IT IS SAVING MY PORTFOLIO!
James Hanshaw profile picture
@ARNOLDMUSCAT I has had a rough ride recently but I shall live with that as we keep going up,
Great pick. AR is heading north/above $60/share by end of this year, especially once NG1 prices break above $10 (should happen next week, or by the middle of June). Also, I think oil CL! is going over $125, and the BEST place to be in THIS market is oil and gas equities, because they are the GROWTH STOCKS for 2022 and 2023. AR over $60, CVE over $30, DVN over $80, MRO over $35 and OXY over $80 and PXD over $290. Ride the wave.
James Hanshaw profile picture
@jcolbyclark I agree about AR's price. I am not into oil but can see a good future for those too for some time to come.
Great reasoning. A Q: the main question I have is re the future strip and how much 2023 and 2024 prices should be discounted with my expectation of supply and demand continuing to be favorable.. i wonder if the backwardazation is too extreme. I assume most or even all European demand for Russian gas eliminated after mid year 2023–unless there is a surprising turn towards negotiated peace WITH BOTH the removal of oil and gas sanctions and the Europeans getting stupid again and buying Russian gas again. I think Europeans may never buy Russian gas again unless there is regime change in Russia with Putin AND all his like-minded cronies removed. I doubt the U.S. can increase both production AND transportation enough because of current restraints. JH, what do you think?
@bdf400 I think you are absolutely right on over backwardation. But who knows with natural gas? We will find out in time.
James Hanshaw profile picture
@bdf400 I don't follow backwardation as I do not understand those things. I look forward to see how global supply and demand situations might develop and see only positives for many months for top US gas producers like AR. It also has transportation out via AM.
@James Hanshaw usually commodity futures are higher as months go out in time, this is the normal condition. it allows for the uncertainties of 6 months out versus 3 months out in time. it is called contango. the opposite is backwardation, where close-in months trade at higher prices. suffice to say, it indicates VERY TIGHT MARKET CONDITIONS. it was evidenced numerous times in the '70's as commodities were soaring.
thanks for all your insightful comments. your fan the cooler
AnalogNomad profile picture
Yet another superb article, making for quite immersive late night reading. Will be taking a deep dive into AR's financials over the next day or two. Thank you again for your contributions, and, Cheers from Zug! :)
James Hanshaw profile picture
@AnalogNomad Thank you. I sent you a message about meeting up possibly one day. James
whoops I know, next thing you will say is think long term. that is the favorite phrase for those who got on the wrong side of a trade
James Hanshaw profile picture
@breaking even It certainly was awful timing. One solace is that many other natgas companies - such as EQT and RRC - all got smashed down the same way on that day.

I am not "on the wrong side of a trade” in the sense I think you mean. I am an investor, not a trader. Let’s see where AR is as an investment. My concluding words were: "If we go back to that peak price of $61.63 in June of 2014, and put the 7-year cycle theory into practice we would have seen another peak around June 2021. The pandemic lost year of 2020 pushed that out to this year. I see no reason why we will not equal that former price perhaps in June, and certainly by year end, meaning a gain of 75%."
Steelhead15 profile picture
@James Hanshaw I owned it long until today. I think it is the time of year to move to oil and get out of nat gas- at least for me. However, I loved your LNG call - many thanks!! Cheers
@James Hanshaw exactly... I think we see it, over $60 this summer, easy.
Steelhead15 profile picture
A very incisive article on Antero Resources (AR).
Steelhead15 profile picture
Love your work!
James Hanshaw profile picture
@Steelhead15 Thank you. Love your comment!
thb007 profile picture
WOW, congrats,....super.....
"Buying into Antero Resources (NYSE:AR) - as I did in April 2020 - during the pandemic crash entailed risk but the price then was so low and the potential so high for one of the best managed companies among US natural gas producers that I went ahead. I bought in at $2.43. At the time I am writing this the last closing price was $35.20 - a gain of 1348%."

Kudos on the call and the conviction. Two questions:
a) What downside risks do you see for AR or other natural gas producers?
b) Why AR vs other NG producers? I understand AR is not hedged, so it has more upside but just as much downside.
James Hanshaw profile picture
@Big Moose The risks I see I put at the end if the article. Some of the other NG producers are good too but AR is the only large one, that I know of, that has plenty of pipeline takeaway connections to LNG export hubs
@James Hanshaw Wonder if your thesis has altered by events of the last few months? Just curious. Thanks for sharing your perspective. Very helpful.
James Hanshaw profile picture
@Big Moose Not at all. The more I see reinforces my view. The biggest danger is governors in the north east US trying to restrict LNG exports. They have plenty of natgas on their doorstep in the Marcellus from AR and others but will not allow the short pipelines from there to be built!
maykiljil profile picture
Buying into Antero Resources (NYSE:AR) - as I did in April 2020 - during the pandemic crash entailed risk but the price then was so low and the potential so high for one of the best managed companies among US natural gas producers that I went ahead. I bought in at $2.43. At the time I am writing this the last closing price was $35.20 - a gain of 1348%.

Dear James ! You are really clever person... Congrats ... It is genious approach. Talent. Congrats.

IMHO Gas prices and OIL prices will go up more and more... AR will go up more)))
James Hanshaw profile picture
@maykiljil Thank you for the compliment. I hope my ideas work well for those that invest in them, as I do
smokyy profile picture
gas is going up and up nice call!
Why are they even in derivatives? They are already hedged.
James Hanshaw profile picture
Not sure if it was my article that caused this performance after it was published yesterday but I hope we get much more of the same:

Last Price % Chg
AR 37.24 5.92%
Pre 38.37 3.03%
Long AR wish I had more capital:) AR is holding my portfolio up
@James Hanshaw Hi James, another good AR article and I hope you are going well!
James Hanshaw profile picture
@nyc3053 Australia Thank you. I enjoy reading comments while sipping a glass of Hardy’s red wine.
@James Hanshaw The old Hardy's is always dependable, I have a couple of 1 litre reds in the rack, if you were here, we could enjoy a glass or two together!
Massive options action today in $AR. Presumably looking for for $55 by November. Assume that explains the excessive pop in the stock today, as those trades are 1% of shares.
I bought ar before march 2020 due to a convincing article by kci. Today i can say that i should have bought much more. But.. i bought at 2.70$ and it represents today my largest position. Currently nat gas price is breaking out to upside. Even with relative strength the equity is lagging the relative improvement via nat gas price. My target remains 100$ as i look for convergence between international prices with us paid price. The increasing export capacity will drive it.
jmoore13 profile picture
@Cornello long live KCI! I was also convinced by his arguments. I became a subscriber to the Contrarian. I recommend it highly!
@Cornello I bought primarily in April 2020 at an average of just over $1 per share, so as of now, up 31x heading for 32. AM has also been a very solid investment that I have dripped for nearly 3 years now, with great compounding effects and an effective yield today of over 23% even with higher prices paid for dripped shares in recent times. A once-in-a-lifetime investment for those who bought and held since 2020, however, even now, AR is still a bargain and with an aggressive buyback programme now in place by management, every share held gets augmented in terms of increasing value. IMO, this will be a triple-digit valued stock sometime over the next few years as free cash flow even if prices moderate on AR's NG and NGL production going forward, it will still be quite spectacular.
davenchop profile picture
@nyc3053 Australia ..thanks for telling us for the 1000th time...
When one of my div incomes crashed I found AR on Seeking Alpha.. Invested all my proceeds into AR @ $13.95. (sizable amount}. AR is now my largest position. Thx SE.
The big differentiator for Antero Resources is their licensed pipeline space to the LNG shipment HUBS along the U.S. Gulf of Mexico which will allow them to increase international LNG shipments to 75% of their total Gas production. Current space used is about 1/3 of contracted pipe space. Timing should work well, LNG terminals will be brought online and remaking hedges drop off at 1st part of 2023. EQT noted in their call that lack of pipe space is what is preventing them from expanding exports! AR is well positioned!!!! IMHO
@Lottawatta2013 very good point but another huge differentiator coming up between AR & other nat gas e&ps is the lack of hedges. Only 47% this year & 2% next year for AR.
@Lottawatta2013 The best firm transportation in the business, with absolutely no issues transporting production out of the basin. They are trimming this FT to an optimum level by 2025, again great forward thinking management that organised this FT years ago, during the very lean times. This flexibility has helped maximise pricing for AR as well. As they have looked after the pennies for a very long time, now the dollars are just rolling in big time now.
James Hanshaw profile picture
@Lottawatta2013 Thank you for expanding on that point. I can only put so many words in an article and so said that its 29% ownership of AM gives it the transportation pipelines out to LNG export hubs.

Your point "EQT noted in their call that lack of pipe space is what is preventing them from expanding exports" is not going to change soon given the problems getting approvals to build more pipelines in some parts of the US.
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