Antero Earnings: Large Strides on Capital Efficiency Mask Negative Free Cash Swing

Antero shares rocketed higher after the firm announced its second-quarter results, advancing around 6% even though natural prices collapsed on the same day. The company is on track to deliver 5% production growth in 2023, while keeping spending within what management thought was a maintenance budget ($3.3 billion). And the provisional plan for 2024 is to target flat production again, which management now believes it can achieve (at the level it now expects for 2023, incorporating the guidance raise) with a 10% year-on-year decrease in capital spending. The firm went even further, speculating that lower base declines would enable it to lower the maintenance budget yet again in 2025, while continuing to maintain output near 3.4 billion of cubic feet equivalent/day. Investors were evidently impressed with the doing-more-with-less projection, especially as the new outlook was purely based on improving capital efficiency and did not incorporate lower service costs (which could be an additional tailwind).