WVONGA SPRING MEETING
May 16, 2017
Company Overview
May 2017
Alvyn A. Schopp
Sr. Regional Vice President &
Chief Administrative Officer
Antero Resources Corporation
FORWARD-LOOKING STATEMENTS
This presentation contains 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. All statements, other than statements of historical facts, included in this presentation that address activities,
events or developments that Antero Resources Corporation and its subsidiaries (collectively, the “Company” or “Antero”) expects, believes or
anticipates will or may occur in the future are forward-looking statements. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,”
“project,” “foresee,” “should,” “would,” “could,” or other similar expressions are intended to identify forward-looking statements. However, the
absence of these words does not mean that the statements are not forward-looking. Without limiting the generality of the foregoing, forwardlooking statements contained in this presentation specifically include estimates of the Company’s reserves, expectations of plans, strategies,
objectives and anticipated financial and operating results of the Company, including as to the Company’s drilling program, production, hedging
activities, capital expenditure levels and other guidance included in this presentation. These statements are based on certain assumptions made
by the Company based on management’s experience and perception of historical trends, current conditions, anticipated future developments and
other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are
beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking
statements. These include the factors discussed or referenced under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for
the year ended December 31, 2016 and in the Company’s subsequent filings with the SEC.
The Company cautions 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 “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in the Company’s
subsequent filings with the SEC.
Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct
or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
Antero Resources Corporation is denoted as “AR” and Antero Midstream Partners LP is denoted as “AM”
in the presentation, which are their respective New York Stock Exchange ticker symbols.
1
2016 HSSE PERFORMANCE REVIEW
Safety&Environmental
•
•
•
•
•
•
TotalRecordable(.702)– *AnteroRecordLow*
TotalLostTimeIncident(.144- ContractorsIncluded)
NoLostTimeIncidentsover3.25yearswhichequatesto(4,394,000manhours)
foranAnteroResourceEmployees
IntegratedProcesses:SafetySystems,FieldSafetyCommittee,SafeWork
Practices,ShortServiceEmployees,In-VehicleMonitoringSystems
52Fulltimeand102ContractstaffsolelydedicatedtoHSSE
AlltimerecordlowonEnvironmentalNoticeofViolations(NOV’s)
Security
•
IncorporatedCorporateWideSecurityPlan- ImplementedOfficeandField
SecurityAssessments- EnhancedOfficeandFieldSecuritySystems- Performed
CorporateWide“ActiveShooterTraining”
2
17 BCF/D OF INCREMENTAL GAS DEMAND BY 2020
= Significant demand growth expected for U.S.
natural gas
= More than 70% of the ~17 Bcf/d in incremental
gas demand forecast by 2020 is expected to be
generated from exports:
of incremental demand is
expected to come from
LNG exports
17
16.0
LNG
12.0
= Of the 8.9 Bcf/d of expected incremental
demand from LNG export projects, over 70% of
the projects have secured the necessary DOE
and FERC permits
Incremental Demand Growth Through 2020 by Category
Mexico
Export
18%
20.0
13
− LNG: 8.9 Bcf/d (~53%)
− Mexico: 3.2 Bcf/d (~19%)
Industrial
5%
Projected Incremental Natural Gas Demand Through 2020
(Bcf/d) 8.9 Bcf/d of the 16.8 Bcf/d
Sherwood 7
9
8.0
Exports
4
4.0
4
Power Gen
3
Industrial
0.0
-4.0
2015
2016E
2017E
2018E
2019E
2020E
-8.0
LNG
Export
50%
Residential/Commercial
Power
LNG Export
Industrial
Mexico Export
Total Yearly Change
Power
27%
3
Source: Tudor, Pickering & Holt Research updated 11/25/2016.
APPALACHIA WILL SUPPLY NATURAL GAS DEMAND GROWTH
= As LNG exports, Mexico exports and power generation drive demand, gas supply growth through 2020 is expected to be primarily
driven by the Marcellus and Utica shales, given their low full cycle cost position and increasing takeaway capacity from the northeast
– Appalachia represents 93% of the forecasted 12.9 Bcf/d supply growth from 2015 to 2020
US Gas Production Growth by Basin 2015-2020E (Bcf/d)
Other/Associated Gas
Barnett
Pinedale
Fayetteville
Haynesville
Piceance
Marcellus
Utica
Utica 7.1
100.0
90.0
80.0
70.0
Utica
3.0
Marcellus 24.3
16.4
60.0
Utica: 137% Growth
Appalachia market
share increases from
25% to 34% by 2020
Marcellus: 48% Growth
50.0
40.0
30.0
20.0
Other/Associated Gas
10.0
0.0
2015
2016E
2017E
2018E
2019E
2020E
Total Incremental US Natural Gas Demand Growth of 16.8 Bcf/d Forecast for 2015-2020E
10.00
8.00
6.00
8.9
Demand from LNG Exports, Power
& exports to Mexico drive annual
demand growth of 3.4% through 2020
Cove Point
Gulf
Coast
4.8
4.00
3.2
2.00
1.0
0.00
(2.00)
LNG Export
Power
Mexico Export
Industrial
(1.1)
Residential/Commercial
4
Source: Tudor, Pickering & Holt Research updated 11/25/2016. LNG demand sourced from Natural Gas Intelligence article dated December 23, 2016.
ANTERO PROFILE
Market Cap(1)……….…….... $7.2 billion
Enterprise Value(1)…......…... $12.0 billion
LTM EBITDAX………...…… $1.5 billion
Corporate Debt Ratings…… Ba2 / BB
Net Debt/LTM EBITDAX….. 3.1x
Net Production (1Q 2017)… 2,144 MMcfe/d
% Liquids......................... 28%
3P Reserves(2)………..….... 46.4 Tcfe
% Natural Gas………...... 71%
Net Acres(3)………….…...… 634,000
1. Based on market cap as of 3/31/2017 plus net debt excluding minority interest ($0.6 billion) on a consolidated basis as of 3/31/2017.
2. 3P reserves as of 12/31/2016, assuming ethane rejection of which 96% represent 2P reserves.
3. Net acres as of 3/31/2017, pro forma for additional leasing and acquisitions.
5
DELIVERING ON OCTOBER 2013 IPO PROMISE
At IPO (October 2013)
Acreage:
431,000 Net Acres
Current
634,000 Net Acres (5)
Change
+47%
Leading consolidator
since AR IPO adding
203,000 net acres
Net Production (1):
458 MMcfe/d
2,144 MMcfe/d
+368%
LTM EBITDAX (2):
$457 Million
$1,546 Million
+239%
3P Reserves (3):
27.7 Tcfe
46.4 Tcfe
+68%
Public Float (4):
14%
68%
+386%
1. Represents 2Q 2013 and 4Q 2016 net production, respectively.
2. Represents LTM EBITDAX as of 6/30/2013 and 12/31/2016, respectively.
3. 3P reserves as of 6/30/2013 and 12/31/2016, respectively, assuming ethane rejection.
4. Public float defined as portion of shares outstanding that are freely tradable divided by total shares
outstanding. Non-public shares include 57 million shares held by Warburg Pincus Funds, 16 million
shares held by Yorktown Energy Funds and 26 million shares held by Antero NEOs.
5. Net acres as of 3/31/2017 pro forma for additional leasing and acquisitions.
6
2017 GUIDANCE AND LONG TERM OUTLOOK
(Bcfe/d)
Production Growth:
3.9
4.0
Guidance
Long-Term Targets
Hedged Volume (Bcfe)
$ Hedged Price ($/Mcfe)
Net Daily Production
3.5
3.2
3.0
2.7
2.5
2.0
2.2
1.8
$3.70
$3.47
1.5
$3.91
1.0
$3.66
0.5
0.0
2016A
D&C Capital:
Consolidated Cash Flow
from Operations(1):
Leverage(1):
Hedging:
2017E
2018E
(2)
2019E
(2)
2020E
(2)
2017 Guidance
2018 - 2020 Long Term Targets
$1.3 Billion
Flat with prior year
Modest annual increases within
Cash Flow from Operations
In line with D&C capital
Doubling by 2020
3.0x to 3.5x
Declining to mid-2s by 2018
98% Hedged at $3.51/Mcfe
58% Hedged at $3.76/Mcfe
7
1. Assuming 12/31/2016 4-year strip pricing averaging $3.12/MMBtu for natural gas and $56.23/Bbl for oil. Consolidated cash flow from operations includes realized hedge gains.
2. Represents midpoint of 20% - 22% long-term production growth targets.
DRILLING INVENTORY – MULTI-YEAR GROWTH ENGINE
Antero plans to develop over 800 horizontal locations in the Marcellus and Ohio Utica
by the end of the decade while utilizing less than 25% of its current 3P drilling inventory
Planned Antero Well Completions by Year
300
Marcellus Rich Gas
Average Lateral
Length ~8,998 feet
Marcellus Dry Gas
Ohio Utica Dry Gas
255
250
170
200
Utica Rich Gas
190
190
Ohio Utica Dry Gas
Ohio Utica Rich Gas
150
Marcellus Dry Gas
100
Marcellus Rich Gas
50
9,000’
0
2017E
2018E
CURRENT UNDRILLED 3P LOCATIONS BY BTU REGIME(1)
2019E
ESTIMATED YE 2020 UNDRILLED 3P LOCATIONS
7%
Ohio Utica Dry Gas
253 Locations
13%
Utica Rich Gas
469 Locations
15%
Marcellus Dry Gas
572 Locations
2020E
11%
Utica Rich Gas
303 Locations
Expect to place >800 new
Marcellus and Ohio Utica
wells to sales by YE 2020
65%
Marcellus Rich Gas
2,410 Locations
3,704 Locations
1. Marcellus and Utica 3P locations as of 12/31/2016 pro forma for recent acreage acquisitions. Excludes WV/PA Utica Dry locations.
6%
Ohio Utica Dry Gas
172 Locations
19%
Marcellus Dry Gas
64%
562 Locations Marcellus Rich Gas
1,862 Locations
2,899 Locations
8
CAPITAL EFFICIENCY – CONTINUOUS OPERATING
IMPROVEMENT
Driving drilling and completion efficiencies which continues to lower well costs
Dramatic Decrease in Drilling Days
Drilling longer laterals while
reducing drilling days by 59%
45
40
35
29
30
6.0
31
29
25
20
15
18
17
12
15
9
10
4.0
3.5 3.7
3.2 3.2
4.0
4.8
4.0
3.0
2.0
1.0
5
0.0
0
2014
2015
2016
Q1 2017
2014
Record
Record
Drilling Longer Laterals
12,000
10,000
8,000
9,196
8,543 8,910
9,250
8,052
8,575
2015
2016
Q1 2017
Record
Declining Well Costs per 1,000’
14,014
10,51510,293
6,000
4,000
2,000
2.0
Processed EUR per 1,000' of
Lateral (Bcfe)
Continuing to be an industry leader in
drilling longer laterals
Lateral Length (feet)
4.8
5.0
24
10.0
More efficient completions (“zipper
fracs”) are increasing stages per day
7.0
Days
Drilling Days
Increasing Completion Stages per Day
1.5
Reducing well costs by ~35% since 2014
$1.55
$1.34
$1.36
$1.18
1.0
$1.05
$0.90
$1.01
$0.87
2016
Q1 2017
0.5
0.0
0
2014
2015
2016
Q1 2017
Record
Record
2014
2015
9
RAPIDLY GROWING NGL PRODUCTION…
Antero is the largest NGL producer in the Northeast
NGL Production Growth by Purity Product (Bbl/d)
(Bbl/d)
Ethane (C2)
160,000
C3+ Production
Propane (C3)
140,000
Normal Butane (nC4)
IsoButane (iC4)
120,000
Natural Gasoline (C5+)
100,000
20–22% Y-O-Y
Long-Term
Growth Target
86,500
80,000
73,000
60,000
C2 Ethane
17,476
C2
Ethane
19,000
C3
42,500
40,000
nC4
19,500
iC4
20,000
C5+
0
2014
2015
2016
(1)
2017
Guidance
2018E
Target
(2)
2019E
Target
1. Excludes condensate.
2. Assumes midpoint of 20 – 22% year-over-year equivalent production growth in 2018-2020. For illustrative purposes C3+ production growth assumed at same rate.
(2)
2020E
Target
(2)
10
CAPTURING MIDSTREAM VALUE CHAIN
• Participating in the full value chain diversifies and sustains Antero’s integrated business model
• $5.0 billion organic project backlog and $1.0 billion downstream investment opportunity set
Upstream
Downstream
AM Assets
Potential AM Opportunities
AM/MPLX JV Assets
~$800 Million JV
Project Backlog
FRACTIONATION
NGL
PRODUCT
PIPELINES
TERMINALS
& STORAGE
(ETHANE, PROPANE,
BUTANE)
WELL
PAD
GAS
PROCESSING
COMPRESSION
LOW
PRESSURE
GATHERING
HIGH
PRESSURE
GATHERING
Y-GRADE
PIPELINE
>$1.0 Billion
Downstream
Investment
Opportunity Set
END
USERS
(50% INTEREST)
~$4.2 Billion Organic Project
Backlog
PDH PLANT
REGIONAL
GATHERING
PIPELINE
(15% INTEREST)
LONG HAUL
PIPELINE
INTERCONNECT
Note: Third party logos denote company operator of respective asset.
11
PROCESSING AND FRACTIONATION JV
Antero Midstream (NYSE: AM) and MPLX (NYSE: MPLX) formed a joint venture for processing and
fractionation infrastructure in the core of the liquids-rich Marcellus and Utica Shales in February 2017
Strategic Rationale
•
Further aligns the largest core liquids-rich
resource base with the largest processing and
fractionation footprint in Appalachia
MarkWest / Antero Midstream Hopedale Fractionation Complex
C3+ Fractionation 1 & 2: 120 MBbl/d In Service
C3+ Fractionation 3: 60 MBbl/d In Service
20 MBbl/d In Service JV
‒ Up to 11 additional processing plants
‒ 20,000 Bbl/d of capacity at Hopedale 3
fractionation facility with option to invest in
future fractionation capacity
‒ Over $800 million project backlog through
2020 (net to AM), including ~$155 million
contribution upfront for processing and
fractionation infrastructure
•
Fits with AM’s “full value chain organic growth”
strategy
‒ Long-term 100% fixed-fee revenues
‒ Significant MVCs on processing
‒ 15% – 18% unlevered IRR
•
Improved visibility throughout vertical value
chain and ability to deploy “just-in-time”
capital supporting Antero Resources’ rich
gas development
Note: RigData as of 04/14/17. Rigs drilling in rich gas areas only.
1. New West Virginia site location still to be determined.
Future Processing Complex
TBD 1 – 6 – Potential – 1,200 MMcf/d (1)
MarkWest / Antero Midstream Sherwood Complex: 11 x 200 MMcf/d
Sherwood 1 – 6: 1.2 Bcf/d In Service
Sherwood 7: 200 MMcf/d In Service
Sherwood 8: 200 MMcf/d 3Q 2017
Sherwood 9: 200 MMcf/d 1Q 2018
Sherwood 10: 200 MMcf/d 3Q 2018
Sherwood 11: 200 MMcf/d 4Q 2018
De-ethanization: 40 MBbl/d In Service
12
ANTERO MIDSTREAM ADVANCED WASTEWATER TREATMENT
13
ANTERO MIDSTREAM ADVANCED WASTEWATER TREATMENT
ASSET OVERVIEW
•Antero has contracted with Veolia to build the largest advanced wastewater treatment complex in the world for oil and gas produced water
Antero Produced Water Services and Freshwater Delivery Business
Freshwater delivery system
Antero Advanced
Wastewater Treatment
Well Pad
Flowback and
produced
Well Pad
Freshwater
Water
Salt
Marketable byproduct
Calcium Chloride
Marketable byproduct used in oil
and gas operations
Completion
Operations
Producing
Integrated Water Business
14
2017 – 2020 OUTLOOK
Macro
•
Significant natural gas demand growth through 2020
•
Continued oil and NGL price recovery
•
20% to 25% production growth guidance for 2017
•
20% to 22% production growth CAGR targets for 2018 – 2020
‒
Forecast a $0.05 to $0.15/Mcf premium to NYMEX natural gas
prices through 2020
‒
58% of production targets hedged through 2020 at $3.76/MMBtu
•
24% to 26% liquids contribution to production
•
Maintaining D&C spending within consolidated cash flow from
operations through 2020
•
Declining leverage profile to “mid – 2s”
•
Strong commitment to health, safety and environment
•
Investing $5.0 billion in midstream project inventory with AM
through 2026, with upside exposure to full value chain
opportunities
15
WVONGA SPRING MEETING
May 16, 2017
Thank You!