Antero Resources Reports Third Quarter 2010 Results, Operating Update
Highlights:
- Net production averaged 143 MMcfed (including NGLs from 3rd party processing), up 45% qtr/qtr
- Consolidated EBITDAX was $50.4 million, up 3% qtr/qtr
- Net debt/proved developed reserves declined 34% to $1.29/Mcfe at end of 3rd qtr, pro forma for $270 million Arkoma midstream sale
- Liquidity rose to $609 million at end of 3rd qtr, pro forma for Arkoma midstream sale and $150 million bank borrowing base increase
- Current gross operated production is 156 MMcfed (142 MMcfed net)
- 4 Antero-operated drilling rigs running including 3 rigs in the Appalachian Basin and 1 rig in the Arkoma Basin
DENVER, Nov. 15, 2010 /PRNewswire/ -- Antero Resources today released its third quarter 2010 results. Those financial statements are included in Antero Resources Finance Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, which has been filed with the Securities and Exchange Commission.
Recent Developments
On November 4, 2010, Antero entered into a new credit facility with a 13-bank syndicate led by J.P. Morgan Securities, LLC and Wells Fargo Securities, LLC. The new $1 billion revolving credit facility replaced Antero's existing $400 million revolving credit facility, has an initial borrowing base of $550 million and expires in November 2015. Closing of the new bank credit facility resulted in a $150 million increase in Antero's bank borrowing base.
On November 5, 2010, Antero closed the previously announced sale of its midstream assets, located in the Woodford Shale area of the Arkoma Basin, to Cardinal Midstream, LLC for $270 million in cash. Pro forma for the midstream closing and application of proceeds for the repayment of bank debt, Antero had $532 million of available and undrawn borrowing capacity under its new bank credit facility and $77 million of cash on hand resulting in total liquidity of $609 million at September 30, 2010. At November 5, 2010, Antero had $532 million of available borrowing capacity under the new credit facility and $49 million of cash on hand resulting in total liquidity of $581 million.
At September 30, 2010 |
||||
($ in Millions) |
Latest twelve months(1) |
As adjusted for $150mm borrowing base increase |
As further adjusted for Arkoma midstream sale(2) |
|
Summary Operating Results |
||||
Production (Bcfe) |
44.6 |
44.6 |
42.2 |
|
EBITDAX |
$ 195 |
195 |
171 |
|
Proved developed reserves (Bcfe) (3) |
349 |
349 |
349 |
|
Capital Structure |
||||
Cash and cash equivalents |
$ 0 |
0 |
77 |
|
Bank credit facility |
156 |
156 |
0 |
|
Senior notes |
525 |
525 |
525 |
|
Net debt |
681 |
681 |
448 |
|
Credit Statistics |
||||
Net debt / EBITDAX |
3.5x |
3.5x |
2.6x |
|
EBITDAX / interest expense (4) |
4.2x |
4.2x |
4.1x |
|
Net debt / proved developed reserves ($/Mcfe) (3) |
$ 1.96 |
1.96 |
1.29 |
|
Liquidity |
||||
Current revolver commitment |
$ 400 |
550 |
550 |
|
Less: outstandings and letters of credit |
(174) |
(174) |
(18) |
|
Plus: cash and cash equivalents (5) |
0 |
0 |
77 |
|
Liquidity |
$ 226 |
376 |
609 |
|
(1) Latest twelve months calculated using fourth quarter 2009 and nine months ended September 30, 2010 EBITDAX. |
|||
(2) Removes 2.4 Bcfe of third party NGLs, $24 million of EBITDA derived from Arkoma midstream business and $10 million of credit facility interest expense. Includes realized gains and losses on commodity hedges. |
|||
(3) Reserves based on Antero estimated proved reserves at June 30, 2010. |
|||
(4) Excludes $4 million of interest rate swap losses and $7 million of amortization of deferred financing costs. |
|||
(5) $270 million Arkoma midstream business sale proceeds include deducts of $30 million and $7 million for tax distribution and other fees and expenses, respectively. |
|||
Financial Results
On a consolidated basis for the three months ended September 30, 2010, Antero realized net revenue of $75.0 million (including cash-settled derivatives but excluding unrealized derivative gains and losses), a 14% increase from the third quarter of 2009, primarily driven by increased production.
Reported GAAP earnings resulted in net income of $67.8 million which includes the following non-cash items:
- $11.0 million charge for impairment of unproved properties due to lease expirations.
- $108.4 million unrealized gain on commodity derivatives.
Driven by higher transportation costs and higher interest expense due to the issuance of the senior notes, as well as lower realized gas prices, cash flow from operations before changes in working capital, a non-GAAP measure, declined 4% from the prior-year quarter to $37.2 million. EBITDAX of $50.4 million for the third quarter of 2010 was 3% higher than the prior-year quarter due primarily to 50% higher natural gas production partially offset by higher transportation costs and 23% lower realized gas prices including hedges. See "Non-GAAP Financial Measures" below for the reconciliation of cash flow from operations before changes in working capital to net cash provided by operating activities and EBITDAX to net income.
Net Production for the quarter totaled 13.2 Bcfe, comprised of 12.3 Bcf of gas and 136,200 barrels of oil and natural gas liquids (NGLs), representing a 16% increase over the second quarter of 2010 and a 45% increase over the third quarter of 2009. Net daily production averaged 143 MMcfed for the quarter, a record high for Antero. While gas-equivalent realized prices before hedges increased 9% to $4.12 per Mcfe, wellhead gas-equivalent realized prices including cash-settled derivatives decreased 22% to $5.52 per Mcfe for third quarter 2010 compared to the third quarter of 2009. As a result of its commodity hedging program, Antero realized gains of $17.4 million during the third quarter of 2010, or $1.39 per Mcfe of production, from contracts hedging 100,000 MMBtud at a $6.29 NYMEX equivalent price. This represents a 37% decrease from the $27.9 million of realized hedging gains, $3.31 per Mcfe, in the prior year quarter.
Per unit cash production costs (lease operating, gathering, compression and transportation and production tax) for the third quarter 2010 were $1.56 per Mcfe, a 3% increase from the prior year quarter but a 12% improvement over the previous quarter. Per unit depreciation, depletion and amortization expense decreased 31% from the prior year quarter to $2.87 per Mcfe. On a per Mcfe basis, general and administrative expense for the third quarter 2010 was $0.42 per Mcfe, a 31% decrease from the third quarter of 2009, primarily due to a 45% increase in gas-equivalent production while G&A expense remained relatively flat.
As of today, for the last quarter of 2010 and through the end of 2014, Antero has hedged 198 Bcfe using fixed price swaps at an average NYMEX-equivalent price of $6.49 per MMBtu. Approximately 81% of our fourth quarter 2010 estimated production is hedged at a NYMEX-equivalent price of $6.54 per MMBtu. Over 75% of our 2011 estimated production is hedged at a NYMEX-equivalent price of $6.20 per MMBtu. Virtually all of Antero's financial hedges are tied to the local basin. For presentation purposes, these basin prices are converted by Antero to NYMEX-equivalent prices using current basis differentials in the over-the-counter futures market. Antero has seven different counterparties to its hedge contracts, all of which are lenders in the Company's bank credit facility.
Antero Operations
Antero's current gross operated production is 156 MMcfd (approximately 142 MMcfed net, including non-operated production). During the first nine months of 2010, Antero completed 29 gross operated wells (26 net wells) and currently has 28 gross operated wells (26 net wells) in various stages of drilling, completion, waiting on completion or pipeline.
Marcellus Shale—Antero is operating three drilling rigs in the Marcellus Shale play, all of which are drilling in northern West Virginia. The Company has 63 MMcfd of gross operated production from 17 horizontal wells and one vertical well online resulting in 45 MMcfd of net production. Antero has nine additional horizontal wells waiting on completion. All of these wells waiting on completion are scheduled for fracs between late November and the end of February. Antero has 127,000 net acres in the Appalachian Basin Marcellus Shale play.
Antero has secured 150 MMBtud of firm transportation capacity in Appalachia on Columbia Gas Transmission to move our gas to market. The Clarksburg Lateral, which moves gas through the heart of Antero's West Virginia acreage to Columbia, went into service in September 2010. Our 100 MMcfd firm transportation commitment on the Clarksburg Lateral increases to 150 MMcfd in early 2011 when a connecting pipeline header, the Jarvisville Lateral, is scheduled to go into service.
Woodford Shale—Antero is operating one drilling rig in the Arkoma Woodford Shale play. The Company has 47 MMcfd of gross operated production from 115 operated horizontal wells online and 54 MMcfd of net production including net non-operated production. Antero has three operated horizontal Woodford wells in the process of completing. In addition, we have 11 non-operated wells drilling with a combined 114% working interest on our Arkoma acreage. Antero has 76,000 net acres in the Arkoma Woodford Shale play.
Fayetteville Shale—Antero has four non-operated Fayetteville Shale wells drilling with a combined 14% working interest. The Company has 9 MMcfd of net production and 6,000 net acres in the Fayetteville Shale play.
Piceance Basin—Antero recently layed down its one operated drilling rig in the Piceance Basin while waiting on permitting and completion of a new compressor station to increase takeaway capacity. Our gross operated production in the Piceance is currently 46 MMcfed (34 MMcfed net including one MMcfed of non-operated production) from 168 operated wells online. Antero has one vertical Mesaverde well waiting on completion in its Battlement Mesa area, nine vertical Mesaverde wells waiting on completion in its Gravel Trend area and two Castle Springs wells in the process of completion. We plan to frac several of these wells in December. Antero has 68,000 net acres in the Piceance Basin.
Capital Expenditures
Antero's capital budget for 2010 is $381 million excluding acquisitions. The budget is expected to be funded internally from operating cash flow and through the use of the wholly undrawn capacity under our new credit facility. The 2010 capital program includes $320 million for drilling and completion, $47 million for leasehold acquisitions and $14 million for the construction of gathering pipelines and facilities. Approximately 55% of the budget is allocated to the Marcellus Shale, 26% is allocated to the Woodford Shale and 19% is allocated to the Piceance. Antero plans to continue operating four drilling rigs for the remainder of 2010.
2010 Outlook
The following table provides Antero's forward-looking guidance based on its updated forecasts for 2010:
2010 Outlook |
||
NYMEX Gas Price ($/MMBtu) |
$4.25/MMBtu |
|
Net Production (MMcfe/d) |
130 - 140 MMcfe/d |
|
EBITDAX ($MMs) |
$200 - $215 million |
|
Cash Production Costs ($/Mcfe) |
$1.60 - $1.70/Mcfe |
|
G&A ($/Mcfe) |
$0.50/Mcfe |
|
Non-GAAP Financial Measures
Cash flow from operations before changes in working capital as presented in this release represents net cash provided by operations before changes in working capital and exploration expense. Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company's ability to generate cash to internally fund exploration and development activities and to service debt. Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operations, investing, or financing activities, as an indicator of cash flows, or as a measure of liquidity. The following table reconciles net cash provided by operating activities to cash flow from operations before changes in working capital as used in this release:
Three Months Ended |
Nine Months Ended |
||||
2009 |
2010 |
2009 |
2010 |
||
Net cash provided by operating activities |
$25,653 |
45,607 |
118,231 |
106,511 |
|
Net change in working capital |
9,899 |
(12,045) |
(4,245) |
(10,055) |
|
Exploration expense |
3,094 |
3,644 |
8,440 |
7,043 |
|
Cash flow from operations before changes in working capital |
$38,646 |
37,206 |
122,426 |
103,499 |
|
EBITDAX is a non-GAAP financial measure that we define as net income before interest expense and other income or expense, taxes, impairments, depletion, depreciation, amortization, exploration expense, unrealized derivative gains or losses, franchise taxes, noncontrolling interest and stock compensation. EBITDAX, as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. EBITDAX should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. EBITDAX provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position. EBITDAX does not represent funds available for discretionary use because those funds are required for debt service, capital expenditures, working capital, and other commitments and obligations. However, our management team believes EBITDAX is useful to an investor in evaluating our operating performance because this measure is widely used by investors in the natural gas and oil industry to measure a company's operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating structure; and is used by our management team for various purposes, including as a measure of operating performance, in presentations to our board of directors, as a basis for strategic planning and forecasting and by our lenders pursuant to a covenant under our senior secured revolving credit facility. EBITDAX is also used as a measure of operating performance pursuant to a covenant under the indenture governing our outstanding 9.375% senior notes.
There are significant limitations to using EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies and the different methods of calculating EBITDAX reported by different companies. The following table represents a reconciliation of our net income to EBITDAX for the three and nine months ended September 30, 2010 and 2009:
Three Months Ended |
Nine Months Ended |
||||
2009 |
2010 |
2009 |
2010 |
||
Net income (loss) attributable to Antero members |
$(53,345) |
67,780 |
(86,838) |
138,979 |
|
Unrealized loss (gain) on commodity derivative contracts |
44,293 |
(108,439) |
70,742 |
(217,399) |
|
Interest expense and other |
9,215 |
15,281 |
27,266 |
44,363 |
|
Provision (benefit) for income taxes |
0 |
25,107 |
(3,029) |
39,287 |
|
Depreciation, depletion, amortization and accretion |
34,873 |
35,965 |
109,181 |
101,374 |
|
Impairment of unproved properties |
9,885 |
11,043 |
24,583 |
31,590 |
|
Exploration expense |
3,094 |
3,644 |
8,440 |
7,043 |
|
Other |
851 |
37 |
1,683 |
110 |
|
EBITDAX |
$48,866 |
50,418 |
152,008 |
145,347 |
|
The cash prices realized for oil and natural gas production including the amounts realized on cash settled derivatives is a critical component in the Company's performance tracked by investors and professional research analysts in valuing, comparing, rating and providing investment recommendations and forecasts of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Due to the GAAP disclosures of various hedging and derivative transactions, such information is now reported in various lines of the income statement.
Antero Resources is an independent oil and natural gas company engaged in the acquisition, development and production of unconventional natural gas properties primarily located in the Appalachian Basin in West Virginia and Pennsylvania, the Arkoma Basin in Oklahoma and the Piceance Basin in Colorado. Our website is www.anteroresources.com.
This release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Antero's control. All statements, other than historical facts included in this release, are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although Antero believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.
ANTERO RESOURCES LLC Consolidated Balance Sheets December 31, 2009 and September 30, 2010 (In thousands) (Unaudited) |
|||||||
December 31, |
September 30, |
||||||
2009 |
2010 |
||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
10,669 |
— |
||||
Accounts receivable — trade, net of allowance for doubtful accounts of $424 and $191, respectively |
35,897 |
22,636 |
|||||
Accrued revenue |
17,459 |
18,310 |
|||||
Prepaid expenses and drilling costs |
7,419 |
16,937 |
|||||
Derivative instruments |
22,105 |
87,496 |
|||||
Inventories |
1,295 |
2,064 |
|||||
Assets held for sale |
— |
160,294 |
|||||
Total current assets |
94,844 |
307,737 |
|||||
Property and equipment: |
|||||||
Natural gas properties, at cost (successful efforts method): |
|||||||
Unproved properties |
596,694 |
579,845 |
|||||
Producing properties |
1,340,827 |
1,614,397 |
|||||
Gathering systems and facilities |
185,688 |
30,886 |
|||||
Other property and equipment |
3,302 |
5,574 |
|||||
2,126,511 |
2,230,702 |
||||||
Less accumulated depletion, depreciation, and amortization |
(322,992) |
(399,061) |
|||||
Property and equipment, net |
1,803,519 |
1,831,641 |
|||||
Derivative instruments |
18,989 |
170,997 |
|||||
Other assets, net |
19,214 |
16,202 |
|||||
Total assets |
$ |
1,936,566 |
2,326,577 |
||||
ANTERO RESOURCES LLC Consolidated Balance Sheets December 31, 2009 and September 30, 2010 (In thousands) (Unaudited) |
|||||||
December 31, |
September 30, |
||||||
2009 |
2010 |
||||||
Liabilities and Equity |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
48,594 |
75,463 |
||||
Accrued expenses |
24,440 |
36,926 |
|||||
Revenue distributions payable |
29,304 |
20,004 |
|||||
Advances from joint interest owners |
1,400 |
1,847 |
|||||
Derivative instruments |
8,623 |
6,312 |
|||||
Capital leases — current |
132 |
152 |
|||||
Liabilities related to assets held for sale |
— |
19,231 |
|||||
Total current liabilities |
112,493 |
159,935 |
|||||
Long-term liabilities: |
|||||||
Bank credit facility |
142,080 |
155,994 |
|||||
Senior notes |
372,397 |
528,110 |
|||||
Derivative instruments |
2,464 |
— |
|||||
Asset retirement obligations |
3,487 |
3,934 |
|||||
Deferred tax payable |
424 |
38,082 |
|||||
Other long-term liabilities |
4,114 |
3,359 |
|||||
Total liabilities |
637,459 |
889,414 |
|||||
Equity: |
|||||||
Members' equity |
1,392,833 |
1,392,806 |
|||||
Accumulated earnings (deficit) |
(123,447) |
15,532 |
|||||
1,269,386 |
1,408,338 |
||||||
Noncontrolling interest in consolidated subsidiary |
29,721 |
28,825 |
|||||
Total equity |
1,299,107 |
1,437,163 |
|||||
Total liabilities and equity |
$ |
1,936,566 |
2,326,577 |
||||
ANTERO RESOURCES LLC Consolidated Statements of Operations Three months ended September 30, 2009 and 2010 (In thousands) (Unaudited) |
|||||||
2009 |
2010 |
||||||
Revenue: |
|||||||
Natural gas sales |
$ |
30,008 |
49,870 |
||||
Net realized and unrealized gains (losses) on commodity derivative instruments including unrealized gains (losses) of $(44,293) and $108,439, respectively |
(16,437) |
125,875 |
|||||
Oil sales |
1,664 |
1,684 |
|||||
Gathering and processing revenue |
6,209 |
5,973 |
|||||
Total revenue |
21,444 |
183,402 |
|||||
Operating expenses: |
|||||||
Lease operating expenses |
3,664 |
6,070 |
|||||
Gathering, compression, and transportation |
7,522 |
11,210 |
|||||
Production taxes |
1,565 |
2,187 |
|||||
Exploration expenses |
3,094 |
3,644 |
|||||
Impairment of unproved properties |
9,885 |
11,043 |
|||||
Depletion, depreciation, and amortization |
34,805 |
35,886 |
|||||
Accretion of asset retirement obligations |
68 |
79 |
|||||
General and administrative |
5,122 |
5,296 |
|||||
Total operating expenses |
65,725 |
75,415 |
|||||
Operating income (loss) |
(44,281) |
107,987 |
|||||
Other expense: |
|||||||
Interest expense, net |
(7,184) |
(14,526) |
|||||
Net realized and unrealized losses on interest rate derivative instruments including unrealized gains of $1,114 and $1,302, respectively |
(2,031) |
(755) |
|||||
Total other expense |
(9,215) |
(15,281) |
|||||
Income (loss) before income taxes |
(53,496) |
92,706 |
|||||
Deferred income tax expense |
— |
(25,107) |
|||||
Net income (loss) |
(53,496) |
67,599 |
|||||
Noncontrolling interest in net loss of consolidated subsidiary |
151 |
181 |
|||||
Net income (loss) attributable to Antero members |
$ |
(53,345) |
67,780 |
||||
ANTERO RESOURCES LLC Consolidated Statements of Operations Nine months ended September 30, 2009 and 2010 (In thousands) (Unaudited) |
|||||||
2009 |
2010 |
||||||
Revenue: |
|||||||
Natural gas sales |
$ |
91,603 |
146,709 |
||||
Net realized and unrealized gains on commodity derivative instruments including unrealized gains (losses) of $(70,742) and $217,399, respectively |
19,669 |
263,282 |
|||||
Oil sales |
4,251 |
6,101 |
|||||
Gathering and processing revenue |
15,902 |
18,462 |
|||||
Total revenue |
131,425 |
434,554 |
|||||
Operating expenses: |
|||||||
Lease operating expenses |
14,389 |
16,945 |
|||||
Gathering, compression, and transportation |
19,183 |
32,108 |
|||||
Production taxes |
4,393 |
6,789 |
|||||
Exploration expenses |
8,440 |
7,043 |
|||||
Impairment of unproved properties |
24,583 |
31,590 |
|||||
Depletion, depreciation, and amortization |
108,987 |
101,147 |
|||||
Accretion of asset retirement obligations |
194 |
227 |
|||||
General and administrative |
14,396 |
14,464 |
|||||
Total operating expenses |
194,565 |
210,313 |
|||||
Operating income (loss) |
(63,140) |
224,241 |
|||||
Other expense: |
|||||||
Interest expense, net |
(23,410) |
(41,783) |
|||||
Net realized and unrealized losses on interest rate derivative instruments including unrealized gains of $3,811 and $4,776, respectively |
(3,856) |
(2,580) |
|||||
Total other expense |
(27,266) |
(44,363) |
|||||
Income (loss) before income taxes |
(90,406) |
179,878 |
|||||
Deferred income tax benefit (expense) |
3,029 |
(39,287) |
|||||
Net income (loss) |
(87,377) |
140,591 |
|||||
Noncontrolling interest in net loss (income) of consolidated subsidiary |
539 |
(1,612) |
|||||
Net income (loss) attributable to Antero members |
$ |
(86,838) |
138,979 |
||||
ANTERO RESOURCES LLC Consolidated Statements of Cash Flows Nine months ended September 30, 2009 and 2010 (In thousands) (Unaudited) |
|||||||
2009 |
2010 |
||||||
Cash flows from operating activities: |
|||||||
Net income (loss) |
$ |
(87,377) |
140,591 |
||||
Adjustment to reconcile net income (loss) to net cash provided by operating activities: |
|||||||
Depletion, depreciation, and amortization |
108,987 |
101,147 |
|||||
Dry hole costs |
760 |
2,981 |
|||||
Impairment of unproved properties |
24,583 |
31,590 |
|||||
Accretion of asset retirement obligations |
194 |
227 |
|||||
Amortization of bond premium |
— |
(287) |
|||||
Amortization of deferred financing costs |
2,410 |
3,095 |
|||||
Stock compensation |
527 |
— |
|||||
Unrealized losses (gains) on derivative instruments, net |
66,931 |
(222,175) |
|||||
Deferred tax expense (benefit) |
(3,029) |
39,287 |
|||||
Changes in current assets and liabilities: |
|||||||
Accounts receivable |
22,262 |
951 |
|||||
Accrued revenue |
7,588 |
(850) |
|||||
Prepaid expenses and drilling costs |
187 |
(9,749) |
|||||
Inventories |
745 |
(830) |
|||||
Accounts payable |
(18,666) |
3,305 |
|||||
Accrued expenses |
(679) |
14,145 |
|||||
Revenue distributions payable |
(758) |
2,636 |
|||||
Advances from joint interest owners |
(6,434) |
447 |
|||||
Net cash provided by operating activities |
118,231 |
106,511 |
|||||
Cash flows from investing activities: |
|||||||
Additions to unproved properties |
(9,459) |
(27,997) |
|||||
Drilling costs |
(216,862) |
(239,257) |
|||||
Gathering systems and facilities |
(3,696) |
(8,825) |
|||||
Additions to other property and equipment |
(144) |
(2,391) |
|||||
Decrease (increase) in other assets |
159 |
(317) |
|||||
Net cash used in investing activities |
(230,002) |
(278,787) |
|||||
ANTERO RESOURCES LLC Consolidated Statements of Cash Flows Nine months ended September 30, 2009 and 2010 (In thousands) (Unaudited) |
|||||||
2009 |
2010 |
||||||
Cash flows from financing activities: |
|||||||
Issuance of senior notes |
$ |
— |
156,000 |
||||
Borrowings on bank credit facility |
15,000 |
170,994 |
|||||
Payments on bank credit facility |
(25,000) |
(157,080) |
|||||
Payments on capital lease obligations |
(93) |
(148) |
|||||
Financing costs |
(6,461) |
(3,788) |
|||||
Issuance of preferred stock |
105,000 |
— |
|||||
Other |
(220) |
443 |
|||||
Net cash from (to) noncontrolling interest |
766 |
(2,508) |
|||||
Net cash provided by financing activities |
88,992 |
163,913 |
|||||
Net decrease in cash and cash equivalents |
(22,779) |
(8,363) |
|||||
Cash classified as assets held for sale |
— |
(2,306) |
|||||
Cash and cash equivalents, beginning of period |
38,969 |
10,669 |
|||||
Cash and cash equivalents, end of period |
$ |
16,190 |
— |
||||
Supplemental disclosure of cash flow information: |
|||||||
Cash paid during the period for interest |
$ |
(27,654) |
(26,939) |
||||
Supplemental disclosure of noncash investing activities: |
|||||||
Net changes in accounts payable for additions to properties, systems, and facilities |
$ |
(85,688) |
23,819 |
||||
Results of Operations Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2010 |
|||||||||||||
Three Months Ended |
Amount of |
Percent |
|||||||||||
2009 |
2010 |
(Decrease) |
Change |
||||||||||
(in thousands, except per unit data) |
|||||||||||||
Operating revenues: |
|||||||||||||
Natural gas sales |
$ |
30,008 |
$ |
49,870 |
$ |
19,862 |
66% |
||||||
Oil sales |
1,664 |
1,684 |
20 |
1% |
|||||||||
Realized commodity derivative gains |
27,856 |
17,436 |
(10,420) |
(37)% |
|||||||||
Unrealized commodity derivative gains (losses) |
(44,293) |
108,439 |
152,732 |
* |
|||||||||
Gathering and processing |
6,209 |
5,973 |
(236) |
(4)% |
|||||||||
Total operating revenues |
21,444 |
183,402 |
161,958 |
755% |
|||||||||
Operating expenses: |
|||||||||||||
Lease operating expense |
3,664 |
6,070 |
2,406 |
66% |
|||||||||
Gathering, compression and transportation |
7,522 |
11,210 |
3,688 |
49% |
|||||||||
Production taxes |
1,565 |
2,187 |
622 |
40% |
|||||||||
Exploration expense |
3,094 |
3,644 |
550 |
18% |
|||||||||
Impairment of unproved properties |
9,885 |
11,043 |
1,158 |
12% |
|||||||||
Depletion depreciation and amortization |
34,805 |
35,886 |
1,081 |
3% |
|||||||||
Accretion of asset retirement obligations |
68 |
79 |
11 |
16% |
|||||||||
General and administrative |
5,122 |
5,296 |
174 |
3% |
|||||||||
Total operating expenses |
65,725 |
75,515 |
9,690 |
15% |
|||||||||
Operating income (loss) |
(44,281) |
107,987 |
152,268 |
||||||||||
Other income (expense): |
|||||||||||||
Interest expense |
(7,184) |
(14,526) |
(7,342) |
102% |
|||||||||
Realized interest rate derivative losses |
(3,145) |
(2,056) |
1,089 |
(35)% |
|||||||||
Unrealized interest rate derivative gains |
1,114 |
1,301 |
187 |
17% |
|||||||||
Total other expense |
(9,215) |
(15,281) |
(6,066) |
66% |
|||||||||
Income (loss) before income taxes |
(53,496) |
92,706 |
146,202 |
* |
|||||||||
Deferred income tax (expense) benefit |
— |
(25,107) |
(25,107) |
* |
|||||||||
Net income (loss) |
(53,496) |
67,599 |
121,095 |
* |
|||||||||
Non-controlling interest in net income of consolidated subsidiary |
151 |
181 |
30 |
20% |
|||||||||
Net income (loss) attributable to Antero members |
$ |
(53,345) |
$ |
67,780 |
$ |
121,245 |
* |
||||||
Production data: |
|||||||||||||
Natural gas (Bcf) |
8.2 |
12.3 |
4.1 |
50% |
|||||||||
Oil (MBbl) |
31.6 |
26.0 |
(5.6) |
(18)% |
|||||||||
NGLs (MBbl)(1) |
113.8 |
110.2 |
(3.6) |
(3)% |
|||||||||
Combined (Bcfe) |
9.1 |
13.2 |
4.1 |
45% |
|||||||||
Daily combined production (MMcfe/d) |
98.8 |
143.1 |
44.3 |
45% |
|||||||||
Average prices before effects of hedges(2): |
|||||||||||||
Natural gas (per Mcf) |
$ |
3.65 |
$ |
4.04 |
$ |
0.39 |
11% |
||||||
Oil (per Bbl) |
$ |
52.66 |
$ |
64.77 |
$ |
12.11 |
23% |
||||||
Combined (per Mcfe) |
$ |
3.77 |
$ |
4.12 |
$ |
0.35 |
9% |
||||||
Average realized prices after effects of hedges(2): |
|||||||||||||
Natural gas (per Mcf) |
$ |
7.04 |
$ |
5.45 |
$ |
(1.59) |
(23)% |
||||||
Oil (per Bbl) |
$ |
52.66 |
$ |
64.77 |
$ |
12.11 |
23% |
||||||
Combined (per Mcfe) |
$ |
7.08 |
$ |
5.52 |
$ |
(1.56) |
(22)% |
||||||
Average Costs (per Mcfe): |
|||||||||||||
Lease operating costs |
$ |
0.44 |
$ |
0.49 |
$ |
0.05 |
11% |
||||||
Gathering, compression and transportation |
$ |
0.89 |
$ |
0.90 |
$ |
0.01 |
1% |
||||||
Production taxes |
$ |
0.19 |
$ |
0.17 |
$ |
(0.02) |
(11)% |
||||||
Depletion, depreciation amortization and accretion |
$ |
4.14 |
$ |
2.88 |
$ |
(1.27) |
(31)% |
||||||
General and administrative |
$ |
0.61 |
$ |
0.42 |
$ |
(0.19) |
(31)% |
||||||
(1) Represents NGLs retained by our midstream business as compensation for processing third-party gas under long term contracts. These amounts are not reflected in the per Mcfe data in this table. |
|||
(2) Average prices shown in the table reflect both of the before-and-after effects of our realized commodity hedging transactions. Our calculation of such after-effects includes realized gains or losses on cash settlements for commodity derivatives, which do not qualify for hedge accounting because we do not designate or document them as hedges for accounting purposes. Oil production was converted at 6 Mcf per Bbl to calculate total Bcfe production and per Mcfe amounts. |
|||
* Not meaningful or applicable |
|||
Results of Operations Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2010 |
|||||||||||||
Nine Months Ended |
Amount of |
Percent |
|||||||||||
2009 |
2010 |
(Decrease) |
Change |
||||||||||
(in thousands, except per unit data) |
|||||||||||||
Operating revenues: |
|||||||||||||
Natural gas sales |
$ |
91,603 |
$ |
146,709 |
$ |
55,106 |
60% |
||||||
Oil sales |
4,251 |
6,101 |
1,850 |
44% |
|||||||||
Realized commodity derivative gains |
90,411 |
45,883 |
(44,528) |
(49)% |
|||||||||
Unrealized commodity derivative gains (losses) |
(70,742) |
217,399 |
288,141 |
* |
|||||||||
Gathering and processing |
15,902 |
18,462 |
2,560 |
16% |
|||||||||
Total operating revenues |
131,425 |
434,554 |
303,129 |
231% |
|||||||||
Operating expenses: |
|||||||||||||
Lease operating expense |
14,389 |
16,945 |
2,556 |
18% |
|||||||||
Gathering, compression and transportation |
19,183 |
32,108 |
12,925 |
67% |
|||||||||
Production taxes |
4,393 |
6,789 |
2,396 |
55% |
|||||||||
Exploration expense |
8,440 |
7,043 |
(1,397) |
(17)% |
|||||||||
Impairment of unproved properties |
24,583 |
31,590 |
7,007 |
29% |
|||||||||
Depletion depreciation and amortization |
108,987 |
101,147 |
(7,840) |
(7)% |
|||||||||
Accretion of asset retirement obligations |
194 |
227 |
33 |
17% |
|||||||||
General and administrative |
14,396 |
14,464 |
68 |
* |
|||||||||
Total operating expenses |
194,565 |
210,313 |
15,748 |
8% |
|||||||||
Operating income (loss) |
(63,140) |
224,241 |
287,381 |
* |
|||||||||
Other income (expense): |
|||||||||||||
Interest expense |
(23,410) |
(41,783) |
18,373 |
78% |
|||||||||
Realized interest rate derivative losses |
(7,667) |
(7,355) |
(312) |
(4)% |
|||||||||
Unrealized interest rate derivative gains |
3,811 |
4,775 |
(964) |
25% |
|||||||||
Total other expense |
(27,266) |
(44,363) |
17,097 |
63% |
|||||||||
Income (loss) before income taxes |
(90,406) |
179,878 |
270,284 |
* |
|||||||||
Deferred income tax (expense) benefit |
3,029 |
(39,287) |
(42,316) |
* |
|||||||||
Net income (loss) |
(87,377) |
140,591 |
227,968 |
* |
|||||||||
Non-controlling interest in net income of consolidated subsidiary |
539 |
(1,612) |
(2,151) |
* |
|||||||||
Net income (loss) attributable to Antero members |
$ |
(86,838) |
$ |
138,979 |
$ |
225,817 |
* |
||||||
Production data: |
|||||||||||||
Natural gas (Bcf) |
26.3 |
32.7 |
6.4 |
24% |
|||||||||
Oil (MBbl) |
92.1 |
94.3 |
2.2 |
2% |
|||||||||
NGLs (MBbl)(1) |
341.3 |
301.6 |
(39.7) |
(12)% |
|||||||||
Combined (Bcfe) |
28.9 |
35.1 |
6.2 |
21% |
|||||||||
Daily combined production (MMcfe/d) |
105.9 |
128.5 |
22.6 |
21% |
|||||||||
Average prices before effects of hedges(2): |
|||||||||||||
Natural gas (per Mcf) |
$ |
3.48 |
$ |
4.49 |
$ |
1.01 |
29% |
||||||
Oil (per Bbl) |
$ |
46.16 |
$ |
64.70 |
$ |
18.54 |
40% |
||||||
Combined (per Mcfe) |
$ |
3.57 |
$ |
4.59 |
$ |
1.02 |
29% |
||||||
Average realized prices after effects of hedges(2): |
|||||||||||||
Natural gas (per Mcf) |
$ |
6.92 |
$ |
5.89 |
$ |
(1.03) |
(15)% |
||||||
Oil (per Bbl) |
$ |
46.16 |
$ |
64.70 |
$ |
18.54 |
40% |
||||||
Combined (per Mcfe) |
$ |
6.93 |
$ |
5.97 |
$ |
(0.96) |
(14)% |
||||||
Average Costs (per Mcfe): |
|||||||||||||
Lease operating costs |
$ |
0.54 |
$ |
0.51 |
$ |
(0.03) |
(6)% |
||||||
Gathering, compression and transportation |
$ |
0.71 |
$ |
0.97 |
$ |
0.26 |
37% |
||||||
Production taxes |
$ |
0.16 |
$ |
0.20 |
$ |
0.04 |
25% |
||||||
Depletion, depreciation amortization and accretion |
$ |
4.06 |
$ |
3.04 |
$ |
(1.02) |
(25)% |
||||||
General and administrative |
$ |
0.54 |
$ |
0.43 |
$ |
(0.11) |
(20)% |
||||||
(1) Represents NGLs retained by our midstream business as compensation for processing third-party gas under long term contracts. These amounts are not reflected in the per Mcfe data in this table. |
|||
(2) Average prices shown in the table reflect both of the before-and-after effects of our realized commodity hedging transactions. Our calculation of such after-effects includes realized gains or losses on cash settlements for commodity derivatives, which do not qualify for hedge accounting because we do not designate or document them as hedges for accounting purposes. Oil production was converted at 6 Mcf per Bbl to calculate total Bcfe production and per Mcfe amounts. |
|||
* Not meaningful or applicable |
|||
SOURCE Antero Resources
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