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8-K - 8-K - Antero Resources LLCa12-26575_18k.htm

EXHIBIT 99.1

 

 

Antero Resources Reports Third Quarter 2012 Results and Delivers Operating Update

 

Highlights:

 

·                  Net production averaged 308 MMcfed, up 57% over the prior-year quarter, pro forma for Arkoma sale

·                  Consolidated EBITDAX was $95 million, up 47% over the prior-year quarter, pro forma for Arkoma sale

·                  Current net production of 371 MMcfed — 314 MMcfd net from the Marcellus alone

·                  13 Antero-operated drilling rigs currently running in Marcellus and Utica Shale core areas

·                  Announced start-up of Sherwood I processing plant in Marcellus — currently producing 1,300 Bbl/d of NGLs

·                  Announced gas processing agreement with MarkWest in the Utica Shale play

·                  Announced Piceance upstream and pipeline asset sale for $325 million plus $100 million hedge monetization

·                  Increased borrowing base to $1.65 billion and lender commitments to $950 million

 

Denver, Colorado, November 8, 2012—Antero Resources today released its third quarter 2012 results. Those financial statements are included in Antero Resources LLC’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, which has been filed with the Securities and Exchange Commission.

 

Recent Developments

 

On October 26, 2012, Antero announced that the borrowing base under its bank credit facility had been increased by $300 million to the $1.65 billion level.  Lender commitments under the facility were raised to $950 million, a $200 million increase.  The $950 million commitment can be expanded to the full $1.65 billion borrowing base upon bank approval.

 

On October 31, 2012, Antero and MarkWest Energy Partners, L.P. (MarkWest) jointly announced the completion of certain gas processing and pipeline infrastructure in Doddridge County, West Virginia.  The first phase of this infrastructure was completed and includes Sherwood I, which is a 200 MMcfd cryogenic gas processing plant, as well as plant inlet compression.  Antero is currently delivering 110 MMcfd of liquids rich gas to the Sherwood I plant inlet.  Antero will not recover ethane from the rich gas stream but will extract the heavier products (“C3+”) until ethane takeaway is available.  Antero is an anchor shipper on Enterprise Products Partners L.P.’s Appalachia to Texas ATEX pipeline (ATEX Express) enabling Antero to ship up to 20,000 Bbl/d of ethane, with the option to expand to 40,000 Bbl/d.  The ATEX Express is expected to begin service in the first quarter of 2014.  MarkWest will initially truck Sherwood NGL products until completion of a 6-inch NGL pipeline from Sherwood to MarkWest NGL fractionation facilities in Houston, Pennsylvania.  The NGL pipeline is expected to be in service by the second quarter of 2013.  Current NGL yield from the 110 MMcfd of throughput at Sherwood I is approximately 1,300 Bbld of C3+ y-grade product.

 

On November 5, 2012, Antero announced that it had entered into an agreement to sell all of its natural gas properties and pipeline assets in the Piceance Basin to a private company for $325 million in cash plus the assumption of all of its Rocky Mountain firm transportation obligations.   The transaction is expected to close in December 2012, subject to the satisfaction of customary closing conditions, with an effective date of October 1, 2012.  Antero has also monetized approximately 80% of its 78 Bcf of Rockies hedges for $80 million and plans to monetize the remaining 20% in the fourth quarter of 2012 resulting in $100 million of hedge proceeds.

 

On November 6, 2012, Antero and MarkWest Utica EMG, L.L.C. (MarkWest Utica) jointly announced the completion of definitive agreements for MarkWest to provide processing, fractionation and marketing services in the liquids-rich corridor of the Utica Shale play.  Under the terms of the agreements, MarkWest Utica will develop natural gas processing infrastructure in Noble County, Ohio to process Antero’s rich gas Utica Shale production.  MarkWest Utica will initially bring online an interim 45 MMcfd refrigeration natural gas processing plant with an expected second quarter 2013 completion date.  This interim facility will be followed by Seneca I, a 200 MMcfd cryogenic gas processing facility, which is expected to begin operations in the third quarter of 2013.  The definitive agreements also provide for the construction of an additional facility, Seneca II, a 200 MMcfd cryogenic processing facility, which may be installed as soon as the end of 2013.

 

1



 

On November 7, 2012, Antero announced a 33% increase in the company’s 2012 capital budget to $1.6 billion, which includes $838 million for drilling and completion, $639 million for leasehold acquisitions and $123 million for the construction of gathering pipelines and facilities.  The budget was revised primarily to fund the acquisition of additional leasehold in Appalachia and the construction of gathering infrastructure which will gather rich gas in Doddridge County, West Virginia and deliver gas to MarkWest’s Sherwood I gas processing plant.

 

In this release, Antero’s results are presented two ways: (1) in accordance with GAAP, where the results of operations of the Arkoma Basin assets and the loss on the sale are presented in one line as discontinued operations and (2) in a non-GAAP manner, where the results of operations of the Arkoma Basin assets (prior to the June 29, 2012 closing) and the loss on the sale are aggregated with the Company’s results from continuing operations.  Investors should be cautioned that this non-GAAP presentation is not representative of Antero’s future operations, which will no longer include Arkoma Basin assets and earnings.  See “Non-GAAP Financial Measures” for reconciliation between these two presentations.

 

Financial Results for the Third Quarter

 

Production for the third quarter of 2012 increased by 17% to 28 Bcfe relative to the third quarter of 2011, including third quarter 2011 production from the Arkoma Basin assets sold in June 2012.  Excluding the Arkoma Basin assets that were sold in June 2012, net production increased 57% from the third quarter of 2011. The net production increase was primarily driven by new wells brought online in the Marcellus Shale.  Net production of 28 Bcfe for the quarter was comprised of 27 Bcf of natural gas, 203,000 barrels of NGLs and 78,000 barrels of oil.  Net daily production averaged 308 MMcfed for the third quarter, and was comprised of 289 MMcfd of natural gas (94%), 2,209 Bbl/d of NGLs (4%) and 850 Bbl/d of crude oil (2%).

 

GAAP revenues for the third quarter of 2012 decreased by 139% compared to the third quarter of 2011 to a negative $88 million, primarily due to a $237 million unrealized loss on commodity derivatives in third quarter of 2012 compared to a $125 million unrealized gain on commodity derivatives in the prior year quarter.  Reported GAAP earnings resulted in a net loss of $128 million for the three months ended September 30, 2012, including a $237 million unrealized loss on commodity derivatives as natural gas prices increased from the prior quarter, and an $84 million deferred income tax benefit.  EBITDAX from continuing operations of $95 million for the third quarter of 2012 was 47% higher than the prior-year quarter, primarily due to increased production.  For a description of EBITDAX, and reconciliation to the nearest comparable GAAP measures, please read “Non-GAAP Financial Measures”.

 

(The non-GAAP amounts presented below combine the Arkoma Basin operations with the Company’s other operations.  See “Non-GAAP Financial Measures” for a definition of each of these non-GAAP financial measures and tables that reconcile each of these non-GAAP measures to their most directly comparable GAAP financial measure.)

 

Following the sale of the Arkoma in the second quarter of 2012, Non-GAAP adjusted net revenues for the third quarter 2012 increased 10% to $148 million compared to the third quarter of 2011 (including cash-settled derivatives but excluding unrealized derivative gains and losses).  For a reconciliation of adjusted net revenues to revenues from operations (GAAP), please read “Non-GAAP Financial Measures”.  Liquids production (NGLs and oil) contributed 14% of adjusted net revenues before commodity hedges during the third quarter of 2012 compared to 12% in the prior year quarter.  Average natural gas prices before hedges decreased 31% from the prior-year quarter to $2.90 per Mcf and average natural gas-equivalent prices before hedges decreased 30% to $3.17 per Mcfe.  Additionally, average realized gas prices including hedges decreased by 4% to $5.10 per Mcf.  Average realized NGL prices decreased by 32% to $31.28 per barrel, while average realized oil prices including hedges increased by 2% to $78.60 per barrel.  Gas-equivalent prices, after adjusting for all realized gains on commodity derivatives, declined by 5% to $5.24 per Mcfe for the third quarter of 2012.

 

For the third quarter of 2012, Antero realized natural gas hedging gains of $59 million, or $2.07 per Mcfe.  However, due to the fact that expiring financial hedges are settled and realized on a monthly basis while long-term non-expiring hedges are marked to market at the end of the quarter, we realized gains on hedges that settled during the quarter while we recognized an unrealized loss on long-term hedges as natural gas prices rose during the third quarter of 2012.

 

Excluding the unrealized loss on commodity derivatives and deferred income tax benefit, adjusted net income, a non-GAAP measure, was $25 million for the quarter.  Cash flow from operations before changes in working capital, a non-GAAP measure, decreased 8% from the prior-year quarter to $65 million, excluding cash tax installment payments made during the quarter for alternative minimum taxes due on the gain on sale of Antero’s Appalachian midstream assets divested in March 2012.  EBITDAX of $95 million for the third quarter of 2012 was 4% higher than the prior-year quarter, primarily due to increased production.   For a description of EBITDAX, adjusted net income and cash flow from operations before changes in working capital and reconciliation to the nearest comparable GAAP measures, please read “Non-GAAP Financial Measures”.

 

2



 

Per unit cash production costs (lease operating, gathering, compression and transportation, and production tax) for the third quarter of 2012 were $1.49 per Mcfe, a 2% increase from the prior year quarter.  This increase was primarily driven by increased costs on firm transportation commitments executed to facilitate future production growth.  Per unit lease operating expenses decreased by 55% to $0.14 per Mcfe driven by a decrease in workover expense in the Piceance, the elimination of higher operating cost Arkoma production and the addition of high rate new Marcellus wells brought online during the third quarter of 2012.  Per unit depreciation, depletion and amortization expense decreased 21% from the prior year quarter to $1.45 per Mcfe, driven by low cost reserve increases.  On a per unit basis, general and administrative expense for the third quarter 2012 was $0.42 per Mcfe, a 40% increase from the third quarter of 2011, primarily driven by an increase in staffing levels commensurate with our growth in production levels and development activities and the elimination of Arkoma production due to the second quarter 2012 divestiture.

 

Antero Operations

 

Antero’s current gross operated production is 461 MMcfd and estimated net production is 371 MMcfed, including 3,600 Bbl/d of NGLs and 1,000 Bbl/d of oil.  Antero has an additional estimated 40 MMcfed of net production in the Marcellus and Utica Shales that is either shut-in or constrained waiting on pipeline, compression or processing facilities.   During the third quarter of 2012, Antero completed 28 gross operated wells (27 net wells) and currently has 37 gross operated wells (36 net wells) in various stages of drilling, completion or waiting on completion.

 

Marcellus Shale — Antero is operating 12 drilling rigs in the Marcellus Shale play, all of which are drilling in northern West Virginia.  The Company plans to add a 13th drilling rig in December 2012 and a 14th drilling rig in January 2013.  Antero has 405 MMcfd of gross operated production in the play of which 99% is coming from 105 horizontal Marcellus Shale wells, resulting in 314 MMcfd of net production.  The 314 MMcfed net is comprised of approximately 307 MMcfd of tailgate gas, 1,100 Bbls/d of NGLs and 100 Bbls/d of light oil.  Antero has 24 horizontal wells either completing or waiting on completion and has two fully-dedicated frac crews currently working in West Virginia along with several spot crews as needed.   The 105 horizontal Marcellus wells that Antero has completed and placed online to date have an average lateral length of 6,699 feet.  In the third quarter of 2012, Antero completed 14 horizontal Marcellus Shale wells with an average 24-hour peak rate of 15.1 MMcfd and an average lateral length of approximately 7,631 feet.

 

In addition to the Sherwood I plant, Antero has committed to a second 200 MMcfd gas processing plant, Sherwood II, to be located on the same site as Sherwood I.  Sherwood II is expected to go in service in the second quarter of 2013.  Antero has also committed to the fabrication of a third 200 MMcfd gas processing plant, Sherwood III, which is expected to go online in the fourth quarter of 2013, giving Antero access to a total of 600 MMcfd of Marcellus gas processing capacity by the end of 2013.

 

MarkWest is building the Pike Fork high pressure lateral and has completed the Zinnia high pressure pipeline lateral, both of which will transport rich gas production from western Harrison and eastern Doddridge Counties to the Sherwood processing complex.  The Pike Fork lateral is expected to be completed in December 2012 and will bring approximately 40 MMcfd of rich gas to the Sherwood processing complex.  These high pressure laterals will also move rich gas gathered by Crestwood Midstream Partners, in the area of dedication, in order to be processed.

 

Antero is continuing to build out the 17-mile Canton low pressure pipeline lateral which will gather rich gas in northern Doddridge County and deliver the gas to the Sherwood I plant.  The southern section of the Canton low pressure lateral is in service and currently delivering rich gas to Sherwood I, with the remainder of the pipeline expected to go in service in December 2012.  MarkWest has also constructed inlet compression facilities located at the Sherwood I plant to serve the Canton low pressure lateral.  The first inlet compressor unit is online while the remaining units are awaiting hookup to the electric grid.  Antero is building the 20 mile White Oak high pressure lateral which will transport rich gas production from western Doddridge and eastern Ritchie Counties to the Sherwood processing facilities.  The White Oak lateral is expected to be in service in the fourth quarter of 2012.  White Oak compression facilities are expected to be in-service in the first quarter of 2013.

 

Antero has 277,000 net acres in the Marcellus Shale play of which only 15% was associated with proved reserves at mid-year 2012.  Approximately 78% of Antero’s Marcellus leasehold contains processable rich gas.  The Company has increased its Marcellus Shale leasehold position by 67,000 net acres in 2012 to date.

 

Utica Shale Antero has assembled over 60,000 net acres of leasehold in the Utica Shale play of eastern Ohio and is currently operating one drilling rig.  Antero plans to add a second drilling rig in the second quarter of 2013.  Almost all of the acreage is located in the rich gas/condensate window of the Utica Shale play.  Antero has completed three horizontal wells in the Utica play with strong results.  All three completed wells are shut-in, waiting on pipeline and processing infrastructure.

 

3



 

Antero plans to put its first Utica Shale well online in December 2012 without access to processing followed by several additional wells by the second quarter of 2013 when the initial firm processing capacity becomes available.   Antero is in the process of laying both low and high pressure gathering pipeline to transport its initial Utica production.

 

Piceance Basin — Antero is no longer operating a drilling rig in the Piceance Basin as of late July 2012 when its drilling contract expired. The Company’s gross operated production in the Piceance is currently 56 MMcfd and 57 MMcfed net including 2 MMcfed of non-operated production from 284 wells online.  The 57 MMcfed net is comprised of approximately 37 MMcfd of tailgate gas, 2,400 Bbls/d of NGLs and 900 Bbls/d of light oil.

 

Antero has 61,000 net acres in the Piceance.

 

4



 

Non-GAAP Financial Measures

 

The table below reconciles the Company’s GAAP results from continuing operations to Non-GAAP results including operations of the Arkoma Basin assets (prior to the sale) and the loss on the sale.  Antero is including this presentation in order to more clearly illustrate its results of operations during the period:

 

ANTERO RESOURCES LLC

Statements of Operations and Additional Data

Based on GAAP reported earnings with additional

Details of items included in each line in Form 10-Q

 

 

 

Three Months Ended September 30, 2011

 

Three Months Ended September 30, 2012

 

 

 

 

 

Arkoma

 

Including

 

 

 

Arkoma

 

Including

 

 

 

As

 

Discontinued

 

Arkoma

 

As

 

Discontinued

 

Arkoma

 

 

 

Reported

 

Operations

 

Operations

 

Reported

 

Operations

 

Operations

 

 

 

(in thousands, except per unit and production data)

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas sales

 

$

71,836

 

24,133

 

95,969

 

77,212

 

 

77,212

 

NGL sales

 

5,886

 

2,618

 

8,504

 

6,357

 

 

6,357

 

Oil sales

 

4,775

 

100

 

4,875

 

6,202

 

 

6,202

 

Realized commodity derivative gains

 

16,547

 

8,682

 

25,229

 

58,652

 

 

58,652

 

Unrealized commodity derivative gains (losses)

 

124,567

 

15,628

 

140,195

 

(236,536

)

 

(236,536

)

Gain (loss) on sale of assets

 

 

 

 

(115

)

 

(115

)

Total operating revenues

 

223,611

 

51,161

 

274,772

 

(88,228

)

 

(88,228

)

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

6,087

 

1,485

 

7,572

 

3,943

 

 

3,943

 

Gathering, compression and transportation

 

15,439

 

7,076

 

22,515

 

32,976

 

 

32,976

 

Production taxes

 

5,473

 

(123

)

5,350

 

5,397

 

 

5,397

 

Exploration expenses

 

968

 

137

 

1,105

 

3,251

 

 

3,251

 

Impairment of unproved properties

 

4,652

 

182

 

4,834

 

2,407

 

 

2,407

 

Depletion, depreciation and amortization

 

29,117

 

15,500

 

44,617

 

41,055

 

 

41,055

 

Accretion of asset retirement obligations

 

86

 

25

 

111

 

116

 

 

116

 

General and administrative

 

7,404

 

 

 

7,404

 

11,938

 

 

11,938

 

Total operating expenses

 

69,226

 

24,282

 

93,508

 

101,083

 

 

101,083

 

Operating income

 

154,385

 

26,879

 

181,264

 

(189,311

)

 

(189,311

)

Interest expense and loss on interest rate derivatives

 

(20,608

)

 

(20,608

)

(22,453

)

 

(22,453

)

Income (loss) before income taxes

 

133,777

 

26,879

 

160,656

 

(211,764

)

 

(211,764

)

Income tax benefit (expense)

 

(49,578

)

 

(49,578

)

84,086

 

 

84,086

 

Income from continuing operations

 

84,199

 

26,879

 

111,078

 

(127,678

)

 

(127,678

)

Income (loss) from discontinued operations and sale of discontinued operations

 

26,879

 

(26,879

)

 

 

 

 

Net income (loss) attributable to Antero members

 

$

111,078

 

 

111,078

 

(127,678

)

 

(127,678

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (Bcf)

 

17

 

6

 

23

 

27

 

 

27

 

NGLs (MBbl)

 

138

 

47

 

185

 

203

 

 

203

 

Oil (MBbl)

 

62

 

1

 

63

 

78

 

 

78

 

Combined (Bcfe)

 

18

 

6

 

24

 

28

 

 

28

 

Daily combined production (MMcfe/d)

 

196

 

68

 

264

 

308

 

 

308

 

Average prices before effects of hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

4.26

 

$

4.04

 

$

4.20

 

$

2.90

 

$

 

$

2.90

 

NGLs (per Bbl)

 

$

42.78

 

$

55.75

 

$

45.97

 

$

31.28

 

$

 

$

31.28

 

Oil (per Bbl)

 

$

77.63

 

$

85.47

 

$

77.38

 

$

79.30

 

$

 

$

79.30

 

Combined (per Mcfe)

 

$

4.57

 

$

4.28

 

$

4.50

 

$

3.17

 

$

 

$

3.17

 

Average realized prices after effects of hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

5.24

 

$

5.49

 

$

5.31

 

$

5.10

 

$

 

$

5.10

 

NGLs (per Bbl)

 

$

42.78

 

$

55.75

 

$

45.97

 

$

31.28

 

$

 

$

31.28

 

Oil (per Bbl)

 

$

77.16

 

$

85.47

 

$

76.92

 

$

78.60

 

$

 

$

78.60

 

Combined (per Mcfe)

 

$

5.49

 

$

5.67

 

$

5.53

 

$

5.24

 

$

 

$

5.24

 

Average Costs (per Mcfe):

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating costs

 

$

0.34

 

$

0.24

 

$

0.31

 

$

0.14

 

$

 

$

0.14

 

Gathering, compression, and transportation

 

$

0.86

 

$

1.13

 

$

0.93

 

$

1.16

 

$

 

$

1.16

 

Production taxes

 

$

0.30

 

$

(0.02

)

$

0.22

 

$

0.19

 

$

 

$

0.19

 

Depletion, depreciation, amortization and accretion

 

$

1.58

 

$

2.47

 

$

1.83

 

$

1.45

 

$

 

$

1.45

 

General and administrative

 

$

0.41

 

$

0

 

$

0.30

 

$

0.42

 

$

 

$

0.42

 

 

5



 

ANTERO RESOURCES LLC

Statements of Operations and Additional Data

Based on GAAP reported earnings with additional

Details of items included in each line in Form 10-Q

 

 

 

Nine Months Ended September 30, 2011

 

Nine Months Ended September 30, 2012

 

 

 

 

 

Arkoma

 

Including

 

 

 

Arkoma

 

Including

 

 

 

As

 

Discontinued

 

Arkoma

 

As

 

Discontinued

 

Arkoma

 

 

 

Reported

 

Operations

 

Operations

 

Reported

 

Operations

 

Operations

 

 

 

(in thousands, except per unit and production data)

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas sales

 

$

168,797

 

74,725

 

243,522

 

184,493

 

31,432

 

215,925

 

NGL sales

 

14,224

 

7,841

 

22,065

 

21,602

 

4,913

 

26,515

 

Oil sales

 

9,224

 

1,067

 

10,291

 

19,527

 

357

 

19,884

 

Realized commodity derivative gains

 

48,282

 

25,505

 

73,787

 

187,561

 

33,681

 

221,242

 

Unrealized commodity derivative gains (losses)

 

151,520

 

9,224

 

160,744

 

(111,649

)

(11,025

)

(122,674

)

Gain on sale of assets

 

 

 

 

291,190

 

 

291,190

 

Total operating revenues

 

392,047

 

118,362

 

510,409

 

592,724

 

59,358

 

652,082

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

17,487

 

5,069

 

22,556

 

16,123

 

4,344

 

20,467

 

Gathering, compression and transportation

 

37,331

 

22,141

 

59,472

 

78,888

 

16,267

 

95,155

 

Production taxes

 

12,141

 

446

 

12,587

 

15,191

 

417

 

15,608

 

Exploration expenses

 

5,902

 

636

 

6,538

 

8,150

 

269

 

8,419

 

Impairment of unproved properties

 

6,828

 

1,106

 

7,934

 

4,572

 

409

 

4,981

 

Depletion, depreciation and amortization

 

67,865

 

49,400

 

117,265

 

106,733

 

35,900

 

142,633

 

Accretion of asset retirement obligations

 

242

 

74

 

316

 

325

 

56

 

381

 

General and administrative

 

21,972

 

 

21,972

 

31,584

 

 

31,584

 

Loss on sale of compressor station

 

8,700

 

 

8,700

 

 

 

 

Total operating expenses

 

178,468

 

78,872

 

257,340

 

261,566

 

57,662

 

319,228

 

Operating income

 

213,579

 

39,490

 

253,069

 

331,158

 

1,696

 

332,854

 

Interest expense and loss on interest rate derivatives

 

(51,362

)

 

(51,362

)

(71,046

)

 

(71,046

)

Income (loss) before income taxes

 

162,217

 

39,490

 

201,707

 

260,112

 

1,696

 

261,808

 

Income tax benefit (expense)

 

(74,941

)

 

(74,941

)

(112,610

)

 

(112,610

)

Income from continuing operations

 

87,276

 

39,490

 

126,766

 

147,502

 

1,696

 

149,198

 

Income (loss) from discontinued operations and sale of discontinued operations

 

39,490

 

(39,490

)

 

(425,536

)

(1,696

)

(427,232

)

Net income (loss) attributable to Antero members

 

$

126,766

 

 

126,766

 

(278,034

)

 

(278,034

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (Bcf)

 

38

 

18

 

56

 

69

 

14

 

83

 

NGLs (MBbl)

 

315

 

146

 

461

 

618

 

123

 

741

 

Oil (MBbl)

 

115

 

13

 

128

 

235

 

4

 

239

 

Combined (Bcfe)

 

41

 

19

 

60

 

74

 

14

 

88

 

Daily combined production (MMcfe/d)

 

150

 

70

 

220

 

272

 

79

 

351

 

Average prices before effects of hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

4.40

 

$

4.15

 

$

4.31

 

$

2.66

 

$

2.31

 

$

2.61

 

NGLs (per Bbl)

 

$

45.21

 

$

53.71

 

$

47.86

 

$

34.95

 

$

39.93

 

$

35.78

 

Oil (per Bbl)

 

$

80.17

 

$

82.18

 

$

80.40

 

$

82.93

 

$

93.95

 

$

83.20

 

Combined (per Mcfe)

 

$

4.70

 

$

4.40

 

$

4.60

 

$

3.03

 

$

2.56

 

$

2.96

 

Average realized prices after effects of hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

5.67

 

$

5.57

 

$

5.63

 

$

5.38

 

$

4.79

 

$

5.28

 

NGLs (per Bbl)

 

$

45.21

 

$

53.71

 

$

47.86

 

$

34.95

 

$

39.93

 

$

35.78

 

Oil (per Bbl)

 

$

75.36

 

$

82.18

 

$

76.07

 

$

80.83

 

$

93.95

 

$

81.14

 

Combined (per Mcfe)

 

$

5.88

 

$

5.74

 

$

5.85

 

$

5.55

 

$

4.90

 

$

5.45

 

Average Costs (per Mcfe):

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating costs

 

$

0.43

 

$

0.27

 

$

0.38

 

$

0.22

 

$

0.30

 

$

0.23

 

Gathering, compression, and transportation

 

$

0.91

 

$

1.17

 

$

0.99

 

$

1.06

 

$

1.13

 

$

1.07

 

Production taxes

 

$

0.30

 

$

0.02

 

$

0.21

 

$

0.20

 

$

0.03

 

$

0.18

 

Depletion, depreciation, amortization and accretion

 

$

1.64

 

$

2.60

 

$

1.97

 

$

1.43

 

$

2.51

 

$

1.61

 

General and administrative

 

$

0.54

 

$

 

$

0.37

 

$

0.42

 

$

 

$

0.36

 

 

Adjusted net revenue as set forth in this release represents total operating revenues adjusted for certain non-cash items including unrealized derivative gains and losses and gains and losses on asset sales.  We believe that adjusted net revenue is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Adjusted net revenue is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for total operating revenues as an indicator of financial performance.  The following table reconciles total operating revenues to total adjusted net revenues:

 

6



 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Total revenues from continuing operations

 

$

(88,228

)

$

223,611

 

$

592,724

 

$

392,047

 

Total revenues from discontinued operations

 

 

51,161

 

59,358

 

118,362

 

Total revenues

 

$

(88,228

)

$

274,772

 

$

652,082

 

$

510,409

 

(Gain) loss on sale of assets

 

115

 

 

(291,190

)

 

Unrealized commodity derivative (gains) losses

 

236,536

 

(140,195

)

122,674

 

(160,744

)

Adjusted net revenues

 

$

148,423

 

$

134,577

 

$

483,566

 

$

349,665

 

 

Adjusted net income as set forth in this release represents income from operations before deferred income taxes, adjusted for certain non-cash items from operations and discontinued operations.  We believe that adjusted net income is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Adjusted net income is not a measure of financial performance in accordance with GAAP and should not be considered in isolation or as a substitute for net income (loss) as an indicator of financial performance.  The following table reconciles income from operations to adjusted net income:

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(127,678

)

$

111,078

 

$

(278,034

)

$

126,766

 

Unrealized commodity derivative (gains) losses

 

236,536

 

(140,195

)

122,674

 

(160,744

)

Loss on sale of Arkoma Basin assets

 

 

 

427,232

 

 

(Gain) loss on sale of Marcellus gathering assets

 

115

 

 

(291,190

)

 

(Gain) loss on sale of compressor station

 

 

 

 

8,700

 

Income tax expense (benefit)

 

(84,086

)

49,578

 

112,610

 

74,941

 

Adjusted net income

 

$

24,887

 

$

20,461

 

$

93,292

 

$

49,663

 

 

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. 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
September 30,

 

Nine months ended
September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

64,416

 

$

86,543

 

$

225,400

 

$

198,446

 

Net change in working capital

 

(5,470

)

(15,256

)

(9,510

)

(21,707

)

Cash flow from operations before changes in working capital

 

$

58,946

 

$

71,287

 

$

215,890

 

$

176,739

 

 

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 hedge gains or losses, gain or loss on sale of assets, franchise taxes and expenses related to business acquisitions.  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

 

7



 

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 9.375% and 7.25% 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, 2011 and 2012:

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Net income (loss)

 

$

(127,678

)

$

84,199

 

$

147,502

 

$

87,276

 

Unrealized loss (gain) on commodity derivative contracts

 

236,536

 

(124,567

)

111,649

 

(151,520

)

Interest expense and other

 

22,453

 

20,608

 

71,046

 

51,362

 

Provision (benefit) for income taxes

 

(84,086

)

49,578

 

112,610

 

74,941

 

Depreciation, depletion, amortization and accretion

 

41,171

 

29,203

 

107,058

 

68,107

 

Impairment of unproved properties

 

2,407

 

4,652

 

4,572

 

6,828

 

Exploration expense

 

3,251

 

968

 

8,150

 

5,902

 

(Gain) loss on sale of gathering systems

 

115

 

 

(291,190

)

 

(Gain) loss on sale of compressor station

 

 

 

 

8,700

 

Other

 

996

 

185

 

2,992

 

708

 

EBITDAX from continuing operations

 

$

95,165

 

$

64,826

 

$

274,389

 

$

152,304

 

 

 

 

 

 

 

 

 

 

 

EBITDAX from discontinued operations

 

 

27,095

 

49,355

 

81,482

 

 

 

 

 

 

 

 

 

 

 

EBITDAX

 

$

95,165

 

$

91,921

 

$

323,744

 

$

233,786

 

 

The cash prices realized for oil, NGLs and natural gas production including the amounts realized on cash settled derivatives are 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 oil and liquids-rich natural gas properties primarily located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania, and in the Piceance Basin in Colorado. Our website is located at 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.

 

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, gathering and sale of natural gas and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011.

 

For more information, contact Chad Green, Finance Director, at (303) 357-7339 or cgreen@anteroresources.com.

 

8



 

ANTERO RESOURCES LLC

Condensed Consolidated Balance Sheets

December 31, 2011 and September 30, 2012

(Unaudited)

(In thousands)

 

 

 

2011

 

2012

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

3,343

 

16,555

 

Accounts receivable — net of allowance for doubtful accounts of $182 and $174 in 2011 and 2012, respectively

 

25,117

 

39,487

 

Notes receivable - short-term portion

 

7,000

 

6,222

 

Accrued revenue

 

35,986

 

18,609

 

Derivative instruments

 

248,550

 

172,123

 

Other

 

13,646

 

13,860

 

Total current assets

 

333,642

 

266,856

 

Property and equipment:

 

 

 

 

 

Natural gas properties, at cost (successful efforts method):

 

 

 

 

 

Unproved properties

 

834,255

 

1,134,725

 

Producing properties

 

2,497,306

 

2,196,746

 

Gathering systems and facilities

 

142,241

 

133,411

 

Other property and equipment

 

8,314

 

11,100

 

 

 

3,482,116

 

3,475,982

 

Less accumulated depletion, depreciation, and amortization

 

(601,702

)

(391,227

)

Property and equipment, net

 

2,880,414

 

3,084,755

 

Derivative instruments

 

541,423

 

386,957

 

Notes receivable - long-term portion

 

5,111

 

2,667

 

Other assets, net

 

28,210

 

25,034

 

Total assets

 

$

3,788,800

 

3,766,269

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

107,027

 

176,888

 

Accrued liabilities

 

35,011

 

42,867

 

Revenue distributions payable

 

34,768

 

34,748

 

Advances from joint interest owners

 

2,944

 

113

 

Current income tax liability

 

 

15,000

 

Deferred income tax liability

 

75,308

 

62,739

 

Total current liabilities

 

255,058

 

332,355

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

Long-term debt

 

1,317,330

 

1,399,091

 

Deferred income tax liability

 

245,327

 

341,506

 

Other long-term liabilities

 

12,279

 

12,545

 

Total liabilities

 

1,829,994

 

2,085,497

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Members’ equity

 

1,460,947

 

1,460,947

 

Accumulated earnings

 

497,859

 

219,825

 

Total equity

 

1,958,806

 

1,680,772

 

Total liabilities and equity

 

$

3,788,800

 

3,766,269

 

 

9



 

ANTERO RESOURCES LLC

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Nine Months Ended September 30, 2011 and 2012

(Unaudited)

(In thousands)

 

 

 

2011

 

2012

 

Revenue:

 

 

 

 

 

Natural gas sales

 

$

168,797

 

184,493

 

Natural gas liquids sales

 

14,224

 

21,602

 

Oil sales

 

9,224

 

19,527

 

Realized and unrealized gain on commodity derivative instruments (including unrealized gains (losses) of $151,520 and $(111,649) in 2011 and 2012, respectively)

 

199,802

 

75,912

 

Gain on sale of gathering system

 

 

291,190

 

Total revenue

 

392,047

 

592,724

 

Operating expenses:

 

 

 

 

 

Lease operating expenses

 

17,487

 

16,123

 

Gathering, compression and transportation

 

37,331

 

78,888

 

Production taxes

 

12,141

 

15,191

 

Exploration expenses

 

5,902

 

8,150

 

Impairment of unproved properties

 

6,828

 

4,572

 

Depletion, depreciation and amortization

 

67,865

 

106,733

 

Accretion of asset retirement obligations

 

242

 

325

 

General and administrative

 

21,972

 

31,584

 

Loss on sale of assets

 

8,700

 

 

Total operating expenses

 

178,468

 

261,566

 

Operating income

 

213,579

 

331,158

 

Other expense:

 

 

 

 

 

Interest expense

 

(51,268

)

(71,046

)

Realized and unrealized losses on interest derivative instruments, net (including unrealized gains of $4,212 in 2011)

 

(94

)

 

Total other expense

 

(51,362

)

(71,046

)

Income from continuing operations before income taxes and discontinued operations

 

162,217

 

260,112

 

 

 

 

 

 

 

Income tax expense

 

(74,941

)

(112,610

)

 

 

 

 

 

 

Income from continuing operations

 

87,276

 

147,502

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

Income (loss) from results of operations and sale of discontinued operations

 

39,490

 

(425,536

)

 

 

 

 

 

 

Net income (loss) and comprehensive income (loss) attributable to Antero equity owners

 

$

126,766

 

(278,034

)

 

10



 

ANTERO RESOURCES LLC

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Three Months Ended September 30, 2011 and 2012

(Unaudited)

(In thousands)

 

 

 

2011

 

2012

 

Revenue:

 

 

 

 

 

Natural gas sales

 

$

71,836

 

77,212

 

Natural gas liquids sales

 

5,886

 

6,357

 

Oil sales

 

4,775

 

6,202

 

Realized and unrealized gain (loss) on commodity derivative instruments (including unrealized gains (losses) of $124,567 and $(236,536) in 2011 and 2012, respectively)

 

141,114

 

(177,884

)

Loss on sale of gathering system

 

 

(115

)

Total revenue

 

223,611

 

(88,228

)

Operating expenses:

 

 

 

 

 

Lease operating expenses

 

6,087

 

3,943

 

Gathering, compression and transportation

 

15,439

 

32,976

 

Production taxes

 

5,473

 

5,397

 

Exploration expenses

 

968

 

3,251

 

Impairment of unproved properties

 

4,652

 

2,407

 

Depletion, depreciation and amortization

 

29,117

 

41,055

 

Accretion of asset retirement obligations

 

86

 

116

 

General and administrative

 

7,404

 

11,938

 

Total operating expenses

 

69,226

 

101,083

 

Operating income (loss)

 

154,385

 

(189,311

)

 

 

 

 

 

 

Interest expense

 

(20,608

)

(22,453

)

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes and discontinued operations

 

133,777

 

(211,764

)

 

 

 

 

 

 

Income tax (expense) benefit

 

(49,578

)

84,086

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

84,199

 

(127,678

)

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

Income from results of operations and sale of discontinued operations

 

26,879

 

 

 

 

 

 

 

 

Net income (loss) and comprehensive income (loss) attributable to Antero equity owners

 

$

111,078

 

(127,678

)

 

11



 

ANTERO RESOURCES LLC

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2011 and 2012

Unaudited

(In thousands)

 

 

 

2011

 

2012

 

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

 

$

126,766

 

(278,034

)

Adjustment to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depletion, depreciation, amortization, and accretion

 

68,107

 

107,058

 

Impairment of unproved properties

 

6,828

 

4,572

 

Unrealized gains (losses) on derivative instruments, net

 

(151,520

)

111,649

 

Loss on sale of discontinued operations

 

 

427,232

 

Loss (gain) on sale of assets

 

8,700

 

(291,190

)

Depletion, depreciation, accretion, amortization and impairment of unproved properties - discontinued operations

 

50,580

 

36,365

 

Unrealized losses on derivative instruments, net - discontinued operations

 

(9,224

)

11,025

 

Deferred taxes

 

74,941

 

83,610

 

Other

 

1,561

 

3,603

 

Changes in current assets and liabilities:

 

 

 

 

 

Accounts receivable

 

3,736

 

(16,811

)

Accrued revenue

 

(11,840

)

17,378

 

Other current assets

 

957

 

(3,112

)

Accounts payable

 

(4,505

)

(9,812

)

Accrued liabilities

 

21,292

 

7,281

 

Revenue distributions payable

 

10,420

 

2,369

 

Advances from joint interest owners

 

1,647

 

(2,783

)

Current income taxes payable

 

 

15,000

 

Net cash provided by operating activities

 

198,446

 

225,400

 

Cash flows from investing activities:

 

 

 

 

 

Additions to proved properties

 

(105,405

)

(4,451

)

Additions to unproved properties

 

(145,200

)

(428,574

)

Drilling costs

 

(383,958

)

(619,344

)

Additions to gathering systems and facilities

 

(63,110

)

(58,748

)

Additions to other property and equipment

 

(2,083

)

(2,786

)

Proceeds from asset sales

 

15,379

 

816,167

 

Changes in other assets

 

(3,105

)

2,556

 

Net cash used in investing activities

 

(687,482

)

(295,180

)

Cash flows from financing activities:

 

 

 

 

 

Issuance of senior notes

 

400,000

 

 

Borrowings on bank credit facility, net

 

120,000

 

82,000

 

Payments of deferred financing costs

 

(6,800

)

 

Distribution to members

 

(28,858

)

 

Other

 

(114

)

992

 

Net cash provided by financing activities

 

484,228

 

82,992

 

Net increase (decrease) in cash and cash equivalents

 

(4,808

)

13,212

 

Cash and cash equivalents, beginning of period

 

8,988

 

3,343

 

Cash and cash equivalents, end of period

 

$

4,180

 

16,555

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid during the period for interest

 

$

(39,930

)

(61,930

)

Supplemental disclosure of noncash investing activities:

 

 

 

 

 

Increase in accounts payable for additions to properties, gathering systems and facilities

 

$

6,235

 

73,430

 

 

12



 

OPERATING DATA

 

The following table sets forth selected operating data for the three months ended September 30, 2011 compared to the three months ended September 30, 2012:

 

 

 

Three Months Ended
September 30,

 

Amount of
Increase

 

Percent

 

 

 

2011

 

2012

 

(Decrease)

 

Change

 

 

 

(in thousands, except per unit and production data)

 

Operating revenues:

 

 

 

 

 

 

 

 

 

Natural gas sales

 

$

71,836

 

77,212

 

5,376

 

7

%

NGL sales

 

5,886

 

6,357

 

471

 

8

%

Oil sales

 

4,775

 

6,202

 

1,427

 

30

%

Realized commodity derivative gains

 

16,547

 

58,652

 

42,105

 

254

%

Unrealized commodity derivative gains (losses)

 

124,567

 

(236,536

)

(361,103

)

*

 

Loss on sale of assets

 

 

 

(115

)

(115

)

*

 

Total operating revenues

 

223,611

 

(88,228

)

(311,839

)

*

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Lease operating expense

 

6,087

 

3,943

 

(2,144

)

(35

)%

Gathering, compression and transportation

 

15,439

 

32,976

 

17,537

 

114

%

Production taxes

 

5,473

 

5,397

 

(76

)

(1

)%

Exploration expenses

 

968

 

3,251

 

2,283

 

236

%

Impairment of unproved properties

 

4,652

 

2,407

 

(2,245

)

(48

)%

Depletion, depreciation and amortization

 

29,117

 

41,055

 

11,938

 

41

%

Accretion of asset retirement obligations

 

86

 

116

 

30

 

35

%

General and administrative

 

7,404

 

11,938

 

4,534

 

61

%

Total operating expenses

 

69,226

 

101,083

 

31,857

 

44

%

Operating income (loss)

 

154,385

 

(189,311

)

(343,696

)

*

 

Interest expense

 

(20,608

)

(22,453

)

(1,845

)

9

%

Income (loss) before income taxes

 

133,777

 

(211,764

)

(345,541

)

*

 

Income tax benefit (expense)

 

(49,578

)

84,086

 

133,664

 

*

 

Income (loss) from continuing operations

 

84,199

 

(127,678

)

(211,877

)

*

 

Income from discontinued operations and sale of discontinued operations

 

26,879

 

 

(26,879

)

(100

)%

Net income (loss) attributable to Antero members

 

$

111,078

 

(127,678

)

(238,756

)

*

 

 

 

 

 

 

 

 

 

 

 

EBITDAX

 

$

91,921

 

95,165

 

3,244

 

4

%

 

 

 

 

 

 

 

 

 

 

Production data:

 

 

 

 

 

 

 

 

 

Natural gas (Bcf)

 

17

 

27

 

10

 

57

%

NGLs (MBbl)

 

138

 

203

 

65

 

48

%

Oil (MBbl)

 

62

 

78

 

16

 

28

%

Combined (Bcfe)

 

18

 

28

 

10

 

57

%

Daily combined production (MMcfe/d)

 

196

 

308

 

112

 

57

%

Average prices before effects of hedges:

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

4.26

 

$

2.90

 

$

(1.36

)

(32

)%

NGLs (per Bbl)

 

$

42.78

 

$

31.28

 

$

(11.50

)

(27

)%

Oil (per Bbl)

 

$

77.63

 

$

79.30

 

$

1.67

 

2

%

Combined (per Mcfe)

 

$

4.57

 

$

3.17

 

$

(1.40

)

(31

)%

Average realized prices after effects of hedges:

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

5.24

 

$

5.10

 

$

(0.14

)

(3

)%

NGLs (per Bbl)

 

$

42.78

 

$

31.28

 

$

(11.50

)

(27

)%

Oil (per Bbl)

 

$

77.16

 

$

78.60

 

$

1.40

 

2

%

Combined (per Mcfe)

 

$

5.49

 

$

5.24

 

$

(0.25

)

(5

)%

Average Costs (per Mcfe):

 

 

 

 

 

 

 

 

 

Lease operating costs

 

$

0.34

 

$

0.14

 

$

(0.20

)

(59

)%

Gathering, compression and transportation

 

$

0.86

 

$

1.16

 

$

0.30

 

35

%

Production taxes

 

$

0.30

 

$

0.19

 

$

(0.11

)

(37

)%

Depletion, depreciation, amortization and accretion

 

$

1.61

 

$

1.45

 

$

(0.16

)

(10

)%

General and administrative

 

$

0.41

 

$

0.42

 

$

0.01

 

2

%

 

13



 

OPERATING DATA

 

The following table sets forth selected operating data for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2012:

 

 

 

Nine months Ended
September 30,

 

Amount of
Increase

 

Percent

 

 

 

2011

 

2012

 

(Decrease)

 

Change

 

 

 

(in thousands, except per unit and production data)

 

Operating revenues:

 

 

 

 

 

 

 

 

 

Natural gas sales

 

$

168,797

 

184,493

 

15,696

 

9

%

NGL sales

 

14,224

 

21,602

 

7,378

 

52

%

Oil sales

 

9,224

 

19,527

 

10,303

 

112

%

Realized commodity derivative gains

 

48,282

 

187,561

 

139,279

 

288

%

Unrealized commodity derivative gains (losses)

 

151,520

 

(111,649

)

(263,169

)

(174

)%

Gain on sale of assets

 

 

291,190

 

291,190

 

*

 

Total operating revenues

 

392,047

 

592,724

 

200,677

 

51

%

Operating expenses:

 

 

 

 

 

 

 

 

 

Lease operating expense

 

17,487

 

16,123

 

(1,364

)

(8

)%

Gathering, compression and transportation

 

37,331

 

78,888

 

41,557

 

111

%

Production taxes

 

12,141

 

15,191

 

3,050

 

25

%

Exploration expenses

 

5,902

 

8,150

 

2,248

 

38

%

Impairment of unproved properties

 

6,828

 

4,572

 

(2,256

)

(33

)%

Depletion, depreciation and amortization

 

67,865

 

106,733

 

38,868

 

57

%

Accretion of asset retirement obligations

 

242

 

325

 

83

 

34

%

General and administrative

 

21,972

 

31,584

 

9,612

 

44

%

Loss on sale of compressor station

 

8,700

 

 

(8,700

)

(100

)%

Total operating expenses

 

178,468

 

261,566

 

83,098

 

47

%

Operating income

 

213,579

 

331,158

 

117,579

 

55

%

Interest expense and loss on interest rate derivatives

 

(51,362

)

(71,046

)

(19,684

)

38

%

Income before income taxes

 

162,217

 

260,112

 

97,895

 

60

%

Income tax expense

 

(74,941

)

(112,610

)

(37,669

)

50

%

Income from continuing operations

 

87,226

 

147,502

 

60,226

 

69

%

Income (loss) from discontinued operations and sale of discontinued operations

 

39,940

 

(425,536

)

(464,422

)

*

 

Net income (loss) attributable to Antero members

 

$

126,766

 

(278,034

)

(404,800

)

*

 

 

 

 

 

 

 

 

 

 

 

EBITDAX

 

$

233,786

 

323,744

 

89,958

 

38

%

 

 

 

 

 

 

 

 

 

 

Production data:

 

 

 

 

 

 

 

 

 

Natural gas (Bcf)

 

38

 

69

 

31

 

81

%

NGLs (MBbl)

 

315

 

618

 

303

 

96

%

Oil (MBbl)

 

115

 

235

 

120

 

104

%

Combined (Bcfe)

 

41

 

74

 

33

 

82

%

Daily combined production (MMcfe/d)

 

150

 

272

 

122

 

82

%

Average prices before effects of hedges:

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

4.40

 

$

2.66

 

$

(1.74

)

(40

)%

NGLs (per Bbl)

 

$

45.21

 

$

34.95

 

$

(10.26

)

(23

)%

Oil (per Bbl)

 

$

80.17

 

$

82.93

 

$

2.76

 

3

%

Combined (per Mcfe)

 

$

4.70

 

$

3.03

 

$

(1.67

)

(36

)%

Average realized prices after effects of hedges:

 

 

 

 

 

 

 

 

 

Natural gas (per Mcf)

 

$

5.67

 

$

5.38

 

$

(0.29

)

(5

)%

NGls (per Bbl)

 

$

45.21

 

$

34.95

 

$

(10.26

)

(23

)%

Oil (per Bbl)

 

$

75.36

 

$

80.83

 

$

5.47

 

7

%

Combined (per Mcfe)

 

$

5.88

 

$

5.55

 

$

(0.33

)

(6

)%

Average Costs (per Mcfe):

 

 

 

 

 

 

 

 

 

Lease operating costs

 

$

0.43

 

$

0.22

 

$

(0.21

)

(49

)%

Gathering, compression and transportation

 

$

0.91

 

$

1.06

 

$

0.15

 

16

%

Production taxes

 

$

0.30

 

$

0.20

 

$

(0.10

)

(33

)%

Depletion, depreciation, amortization and accretion

 

$

1.66

 

$

1.43

 

$

(0.23

)

(14

)%

General and administrative

 

$

0.54

 

$

0.42

 

$

(0.12

)

(22

)%

 

14