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AR

ANTERO RESOURCES Corp (AR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered a clean rebound to profitability with net income of $150M and diluted EPS of $0.48, underpinned by strong liquids realizations and lower capital, while Adjusted EBITDAX rose to ~$332M .
  • 2025 outlook tightened positively: maintenance production target raised by 50 MMcfe/d to 3.35–3.45 Bcfe/d, D&C capex trimmed by $25M at the midpoint to $650–$700M, and price realizations guided at premiums versus NYMEX/Mont Belvieu; cash production costs guided to $2.45–$2.55/Mcfe .
  • Strategic catalysts: 75% of gas delivered to the LNG corridor with specific exposure to TGP 500L/Plaquemines ramp, driving higher gas differentials (premium vs NYMEX) in 2025 and potentially more in 2026; record C3+ NGL premium supports liquids uplift .
  • Estimates comparison: S&P Global consensus data were unavailable at the time of this analysis due to API limits; beats/misses vs Street cannot be assessed at this time (S&P Global).

What Went Well and What Went Wrong

  • What Went Well

    • Liquids pricing strength and marketing strategy: Q4 pre-hedge combined price $3.64/Mcfe (+$0.85 vs index); C3+ NGL premium $3.09/bbl vs Mont Belvieu, the strongest quarter of 2024; management expects sustained export premiums and locked attractive domestic contracts for 2025 .
    • Capital efficiency: D&C capex down to $120M in Q4 (-27% YoY), record completions cadence (13.2 stages/day); 2025 D&C budget reduced to $650–$700M while raising maintenance production target .
    • LNG corridor uplift: 570,000 MMBtu/d firm delivery into TGP 500L tied to Plaquemines LNG ramp; 2025 premium guided to $0.10–$0.20 vs NYMEX with potential step-up in 2026 as more LNG capacity starts .

  • What Went Wrong

    • Cash costs edged up: all-in cash expense rose to $2.45/Mcfe vs $2.32/Mcfe in Q4’23 on CPI-linked GP&T and higher ad valorem taxes .
    • Marketing net expense ticked up to $0.06/Mcfe (vs $0.05 in Q4’23), modestly pressuring unit cash flows .
    • Limited near-term volume growth optionality: with FT fully utilized, AR cannot easily grow volumes beyond maintenance absent local-basin opportunities; management emphasized focus on maintenance program efficiency .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Revenue ($MM)$1,194.1 $978.7 $1,055.9 $1,168.8
Net Income Attrib. to AR ($MM)$81.8 $(65.7) $(20.4) $149.6
Diluted EPS ($)$0.26 $(0.21) $(0.07) $0.48
Adjusted EBITDAX ($MM)$322.4 $151.4 $186.9 $331.9
Net Cash from Ops ($MM)$312.2 $143.5 $166.2 $278.0
Free Cash Flow ($MM)$67.8 (after WC) / $97.0 (pre-WC) $(63.2) $(30.8) $134.0 (after WC) / $158.9 (pre-WC)
All-in Cash Expense ($/Mcfe)$2.32 $2.36 $2.42 $2.45

Notes: Free Cash Flow presented both after working capital (company “FCF $”) and before WC where disclosed .

Key operating and pricing KPIs

KPIQ4 2023Q2 2024Q3 2024Q4 2024
Net Production (Bcfe/d)3.420 3.420 3.406 3.431
Natural Gas (Bcf/d)2.10 (calc from 210 Bcf/quarter) 2.149 2.170 2.131
Liquids (MBbl/d total)18.5 (C2 5,406; C3+ 10,918; Oil 1,154 ≈ 17.5k? see note) 212 206 217
Combined Realized Price (pre-hedge, $/Mcfe)$3.52 $2.98 $3.14 $3.64
Gas Realized vs Index ($/Mcf)+$0.00 to +$0.03 (varies by period) $0.03 $(0.03) $(0.02)
C3+ NGL Price ($/Bbl)$37.72 $40.27 $41.30 $44.29
C3+ NGL Premium to Mont Belvieu ($/Bbl)n/a in doc$0.63 $2.29 $3.09
Net Marketing Expense ($/Mcfe)$0.05 $0.07 $0.05 $0.06

Notes: Q4’23 liquids detail is provided as components; total liquids daily average of 217 MBbl/d is explicitly stated for Q4’24 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Daily Production (Bcfe/d)2025Previously communicated maintenance target (numeric not disclosed) 3.35–3.45 Raised by 50 MMcfe/d vs prior communication
D&C Capital ($MM)2025Previously communicated maintenance program (midpoint not disclosed) $650–$700 Lowered by $25M at midpoint
Natural Gas Realized vs NYMEX ($/Mcf)2025n/a+$0.10 to +$0.20 Initiated
C3+ NGL Premium vs Mont Belvieu ($/Bbl)2025n/a+$1.50 to +$2.50 Initiated
Ethane Premium vs Mont Belvieu ($/Bbl)2025n/a+$1.00 to +$2.00 Initiated
Oil Diff. vs WTI ($/Bbl)2025n/a($12) to ($16) Initiated
Cash Production Expense ($/Mcfe)2025n/a$2.45–$2.55 Initiated
Net Marketing Exp. ($/Mcfe)2025n/a$0.04–$0.06 Initiated
G&A (cash) ($/Mcfe)2025n/a$0.12–$0.14 (ex. SBC) Initiated
Hedges (Gas)2025–2026n/a2025: 100,000 MMBtu/d swap at $3.12 (4% of gas); 2026: 30,000 MMBtu/d collars $3.25–$4.27 (1%) Initiated

Additional 2024 change (for context): 2024 D&C capital revised to $640–$660MM in Q3 from $650–$700MM (efficiency + deferrals) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Liquids premiums vs Mont BelvieuRaised FY24 C3+ premium guide to $1–$2/bbl; international exposure at Marcus Hook Record $2.29/bbl premium in Q3; expect several quarters of strong premiums Q4 premium $3.09/bbl; 2025 guide +$1.50–$2.50/bbl; domestic contracts re-priced favorably (butane) Improving
LNG corridor and gas differentialsn/an/aPlaquemines LNG ramp lifting TGP 500L; 75% of gas delivered to LNG corridor; gas premium to NYMEX guided +$0.10–$0.20 in 2025; higher in 2026 Positive
Capital efficiency and cycle timesRecord completions, reduced cycle times (~140 days) Continued efficiencies; reduced 2024 capex Record 13.2 stages/day Q4; 10-day wells; 2025 D&C budget cut with higher maintenance volumes Sustained strength
HedgesNo new hedges No new hedges Added targeted 2025/26 hedges for two lean gas DUC pads to lock IRRs; consider wide collars in 2026 Selective, tactical
JV/Partnern/an/aNew drilling JV continues with disproportionate carry; supports running 2 rigs/1+ frac crew efficiently Efficiency enabler
Return of capital, leveragen/an/aPlan to use 2025 FCF first to repay ~$500M (R/C + 2026s), then 50/50 debt (2029s) and buybacks; 2030s likely remain Near-term de-lever + buybacks
Tariffs/supply chainn/an/aSteel tariff risk immaterial ($5–$10M in 2025); more modest potential impact in 2026 Managed risk
Ethane executionn/an/a4Q de-ethanizer ~97–98% utilized; expiring contract tailwind to 2025 ethane differentials Tailwind

Management Commentary

  • “Our 2024 development program delivered production that was 2% above the midpoint of the initial guidance range and capital that was 8% below the midpoint... Our 2025 budget reflects an increase to our maintenance production targets driven by our liquids.” – Paul Rady, CEO .
  • “We realized a $1.41/bbl premium over Mont Belvieu in 2024; Q4 was our strongest quarter at a $3.09/bbl premium. For 2025, we guide to a $1.50–$2.50/bbl premium.” – Dave Cannelongo, SVP Liquids Marketing .
  • “Plaquemines LNG startup has lifted TGP 500L basis; Antero holds 570,000 MMBtu/d of firm delivery into 500L (about 25% of AR gas), a primary driver of higher premium to NYMEX in 2025.” – Justin Fowler, SVP Gas Marketing .
  • “Despite being unhedged at a $2.27 gas price, we generated positive FCF of $73M in 2024. Based on today’s strip, 2025 FCF could exceed $1.6B, implying ~12% FCF yield; first use is to retire ~$500M of debt, then 50/50 debt reduction and buybacks.” – Michael Kennedy, CFO .

Q&A Highlights

  • Growth optionality: With FT fully utilized, AR does not plan to grow beyond maintenance unless local-basin demand warrants; strategy remains to keep FT full and avoid local weak pricing .
  • Drilling JV: Continuation of drilling JV with disproportionate carry (~15% WI partner funding slightly more than its share, ~$100M scale); supports 2-rig, 1+ crew consistency and water handling efficiency .
  • Near-term activity cadence: 16 wells turned to sales in late January; production to be around guidance in Q1 and tick up modestly in Q2; relatively even capex with a second-quarter spot frac crew .
  • Cost outlook: 2025 well costs trending low $900/ft (vs ~$925/ft in 2024), reflecting contract resets and efficiency gains; tariff impacts would be immaterial to the plan .
  • Differentials: Expect 2026 gas premiums to exceed 2025 as LNG adds (Corpus Christi III, Golden Pass) ramp; AR retains optionality, avoids firm sales to capture basis upside .

Estimates Context

  • Comparison to Street: S&P Global consensus for Q4’24 EPS/Revenue/EBITDA was unavailable at time of writing due to request limits; accordingly, we cannot classify beats/misses versus consensus (Values from S&P Global unavailable at this time).

Key Takeaways for Investors

  • Positive inflection in Q4 fundamentals: return to profitability, stronger realizations, and higher Adjusted EBITDAX with disciplined capex .
  • 2025 setup is constructive: higher maintenance production target, lower D&C capex, and premium price realizations in both gas (LNG corridor) and liquids (export and domestic contracts) .
  • Differentials are a multi-quarter catalyst: TGP 500L uplift from Plaquemines and other LNG ramps should support rising premiums through 2026, enhancing cash margins .
  • Balance sheet and capital return path clear: prioritize ~$500M near-term debt reduction, then 50/50 between additional debt paydown (2029s) and buybacks; low absolute debt enables high torque to price upside .
  • Tactical hedging: minimal hedges preserved upside; selective protection on lean gas pads locks attractive returns while maintaining wide-collar upside potential .
  • Watch costs: CPI-linked GP&T and taxes lifted cash costs to $2.45/Mcfe; maintaining completion/drilling efficiency and contract resets help offset .
  • Trading lens: Stock narrative likely keyed to LNG-driven basis uplift, sustained NGL premiums, and execution on FCF (> $1.6B potential under strip) and buyback ramp post-deleveraging .

Citations:

  • Q4’24 and 2025 guidance press release/8-K: .
  • Q3’24 press release/8-K: .
  • Q2’24 press release: .
  • Q4’24 earnings call transcript: .