Antero Earnings: Realized Natural Gas Prices Slightly Weaker Than Expected

In the first quarter of 2023, Antero AR delivered production of 3,274 million cubic feet equivalent per day, of which 2,152 mmcf/d was natural gas. That’s 2% higher sequentially and almost exactly in line with the firm’s guidance for full-year volumes. And that guidance—along with the $1.05 billion capital budget—was unchanged. But realized natural gas pricing was slightly softer than expected, with a premium of just $0.03/thousand cubic feet over the Nymex benchmark (Antero sells all of its gas outside the Marcellus region where it is produced, giving it a structural pricing advantage). Management shaved off $0.05/mcf from its full-year guidance for this natural gas price premium, with no adjustment to its liquids pricing estimates. Given slightly disappointing gas realizations the firm’s first-quarter financials were a little lower than FactSet consensus estimates.

In an otherwise quiet quarter, the release focused on incremental operating milestones, including what management claims is a world record for drilling (12,340 lateral feet drilled in 24 hours) and a company record for completion stages per day. The firm also highlighted its low base decline rate. However, as guidance for completion activity and drilling capital were both unchanged we do not see these as needle movers for incremental capital efficiency.

We intend to incorporate these results shortly, but after this first look our fair value estimate is unchanged, making the stock look more or less fairly valued.