ANTERO RESOURCES Corp (AR)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered strong operational and financial execution: total revenue rose 33% YoY to $1.30B, GAAP diluted EPS improved to $0.50, and Free Cash Flow reached $262M, enabling $187M of debt reduction and ongoing buybacks .
• Management raised 2025 production guidance to 3.40–3.45 Bcfe/d and lowered D&C capital to $650–$675M, reflecting well performance and capital efficiency; NGL premium guidance was updated to $1.00–$2.00/bbl (full‑year), with 2H expected at $1.50–$2.50/bbl .
• S&P Global consensus comparisons: Q2 revenue beat ($1.30B vs $1.24B*), EBITDA beat ($414M vs $390M*), while Primary EPS was modestly below consensus ($0.35 vs $0.42*)—noting definitional differences versus GAAP diluted EPS ($0.50) .
• Strategic positioning remains a key catalyst: firm transport to Gulf Coast LNG corridors, widening regional power demand (AI/data centers), and opportunistic 2026 collars lowering FCF breakeven to ~$1.75/Mcf, while maintaining upside to $7/MMBtu .

What Went Well and What Went Wrong

What Went Well

• Capital efficiency drove guidance raise and capex cut: “For the second consecutive year we increased production guidance, while also reducing our drilling and completion capital budget” (CEO Paul Rady) .
• Elevated cash generation and deleveraging: Q2 Free Cash Flow $262M and net debt reduced by $187M in the quarter; YTD debt down ~$400M (≈30%) and buybacks totaled $4.4M shares ($152M) through July 30 (CFO Michael Kennedy) .
• Pricing advantages and LNG/power demand tailwinds: realized pre-hedge combined pricing $3.85/Mcfe (+$0.41 vs NYMEX), firm transport to LNG corridor, and rising regional power demand tied to data centers .

What Went Wrong

• Q2 natural gas realizations temporarily impacted by Gulf Coast pipeline maintenance, driving sales to a discount hub (gas price $3.39/Mcf, $0.05 below benchmark) .
• Mix trended “gassier” with lean pads turned to sales (lower liquids contribution), expected to revert in Q4 as higher‑BTU pads come online .
• Non‑GAAP adjustments remain material (derivative marks, contract/settlement items), underscoring volatility in reported-to-adjusted bridges .

Financial Results

KPIs and pricing/costs

Vs S&P Global consensus (Q2 2025)

Values retrieved from S&P Global.*

Segment breakdown: not applicable (single upstream segment).

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “For the second consecutive year we increased production guidance, while also reducing our drilling and completion capital budget.” — Paul Rady, CEO .
• “During the second quarter, we used this Free Cash Flow to pay down nearly $200 million of debt and purchase $85 million of stock… we plan to actively manage our return of capital strategy.” — Michael Kennedy, CFO .
• “Over the next 30 months LNG demand is expected to increase by another 8 Bcf a day... the natural gas market is expected to be materially undersupplied.” — Justin Fowler, SVP Gas Marketing .
• “New Gulf Coast export capacity… should de‑bottleneck us… dock premiums more modest, but overall higher benchmark, which is net‑net better for us.” — Dave Cannelongo, SVP Liquids .

Q&A Highlights

• Capital returns vs. deleveraging: with low debt and an undrawn revolver, mix between buybacks and debt paydown will remain opportunistic; potential to ramp buybacks if valuation dislocation persists .
• Hedging: unique 2026 call skew allowed collars with downside near ~$3.14 and upside to ~$6.31–$7; ~20% hedged with maintained upside exposure .
• Basis/premiums: Plaquemines ramp and correlated Gulf Coast delivery points (CGT Onshore/ANR SE) support higher basis premiums vs Henry Hub over next 1–2 years .
• In‑basin demand contracting: company preference for NYMEX‑linked deals vs local basis; will participate when economics are accretive, leveraging integrated upstream/midstream/water assets .
• Tax treatment: not subject to AMT; cash taxes expected minimal for ~3 years given legislative changes and attributes .

Estimates Context

• Q2 2025 vs S&P Global consensus: revenue slight beat ($1.30B vs $1.24B*), EBITDA beat ($414M vs $390M*), Primary EPS modest miss ($0.35 vs $0.42*). Differences between “Primary EPS” and GAAP diluted EPS ($0.50) reflect definitional adjustments (normalization) in S&P methodology . Values retrieved from S&P Global.*

Key Takeaways for Investors

• Capital efficiency is translating into tangible guidance raises and capex cuts—supporting stronger FCF conversion even with near‑term pricing volatility .
• Structural exposure to Gulf Coast LNG basis premia plus accelerating regional power demand creates multi‑year pricing/margin tailwinds; watch LNG ramps and data center announcements .
• Opportunistic 2026 collars reduce FCF breakeven to ~$1.75/Mcf while maintaining upside—positive risk‑adjusted profile without heavy hedge overhang .
• Near‑term mix skew to gas (lean pads) and pipeline maintenance weighed on Q2 gas realizations; expect premium realizations to improve H2 as maintenance clears and higher‑BTU pads come online .
• Non‑GAAP bridges (Adjusted EBITDAX, Adjusted Net Income) remain important to track; derivative marks and settlements can swing GAAP; focus on cash metrics and leverage trajectory .
• Trading implication (near term): guidance raise + debt paydown + buyback activity are supportive; monitor NGL benchmark strengthening vs dock premia and Plaquemines premium realization.
• Medium‑term thesis: integrated asset base, firm transport, and capital discipline position AR to capture LNG/data center demand growth with superior price realizations and FCF durability .

Notes:
- All non-GAAP metrics (Adjusted EBITDAX, Adjusted Net Income, Free Cash Flow) reconciliations and definitions provided by AR are cited above **[1433270_0001104659-25-072212_tm2521983d1_ex99-1.htm:5]** **[1433270_0001104659-25-072212_tm2521983d1_ex99-1.htm:7]** **[1433270_20250730LA41045:4]** **[1433270_20250730LA41045:6]**.
- S&P Global consensus/actual estimates marked with * and disclosed as “Values retrieved from S&P Global.”