Antero Resources (AR) Up 2.8% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Antero Resources (AR). Shares have added about 2.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Antero Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Antero’s Q2 Earnings Miss Estimates on Lower Gas Price

Antero Resources Corporation reported second-quarter 2023 adjusted loss of 28 cents per share, which missed the Zacks Consensus Estimate of a loss of 27 cents.  The figure declined significantly from the year-ago quarter’s reported earnings of $1.69 per share.

Total quarterly revenues of $953 million missed the Zacks Consensus Estimate of $970 million. Also, the top line decreased significantly from the year-ago quarter’s $2202 million.

Such weak quarterly results can be primarily attributed to a substantial decline in natural-gas-equivalent price realization.

Overall Production

Total production through the second quarter was 309 billion cubic feet equivalent (Bcfe), up 5% from 294 Bcfe a year ago. The reported figure came in higher than our estimate of 295 Bcfe. Natural gas production (accounting for 66% of the total output) totaled 204 Bcf, higher than our estimate of 197 Bcf.

Oil production in the reported quarter amounted to 971 thousand barrels (MBbls), up 7% from 906 MBbls in the year-ago period. Our estimate for the same was pinned at 920 MBbls.

AR reported production of 6,414 MBbls of C2 Ethane, up 59% from 4,025 MBbls in the year-ago quarter. The company’s output of 10,175 MBbls of C3+ NGLs was slightly higher than 10,156 MBbls a year ago.

Realized Prices (Excluding Derivative Settlements)

Weighted natural-gas-equivalent price realization in the quarter was $2.89 per thousand cubic feet equivalent (Mcfe), lower than the year-ago quarter’s figure of $8.00. Our estimate for the same was pegged at $2.74 Mcfe. Realized prices for natural gas declined 72% to $2.14 per Mcf from $7.67 a year ago. The figure was also lower than our estimate of $2.42 per Mcf.

The company’s oil price realization in the quarter was $59.69 per barrel (Bbl), down 39% from $98.49 a year ago. The figure was also lower than our estimate of $63.35 per Bbl. The realized price for C3+ NGLs declined to $34.16 per Bbl from $60.28. The realized price for C2 Ethane decreased 65% to $7.82 per Bbl from $22.42 a year ago. The figure was lower than our estimate of $15.47 per Bbl.

Operating Expenses

Total operating expenses decreased to $1,042.2 million from $1,140.2 million in the year-ago period.

Average lease operating cost was 9 cents per Mcfe. The gathering and compression costs decreased 11% to 68 cents per Mcfe.

Transportation expenses declined 16% from the prior-year quarter’s level to 61 cents per Mcfe, while processing costs increased 13% year over year to 85 cents per Mcfe.

Capex & Financials

In the second quarter, Antero spent $247 million on drilling and completion operations. As of Jun 30, 2023, it had no cash and cash equivalents. It had long-term debt of $1.5 billion as of the same date.

Guidance

For 2023, Antero raised its guidance for net daily natural gas-equivalent production by 3%. It now expects the same in the range of 3.35-3.4 Bcfe/d. The company also projected a decline in realized natural gas price premium to NYMEX Henry Hub by $0.05 per Mcf to $0.00-$0.10 per Mcf.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 17.54% due to these changes.

VGM Scores

At this time, Antero Resources has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Antero Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Antero Resources belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Matador Resources (MTDR), has gained 12.6% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.

Matador reported revenues of $638.08 million in the last reported quarter, representing a year-over-year change of -32.4%. EPS of $1.42 for the same period compares with $3.47 a year ago.

For the current quarter, Matador is expected to post earnings of $1.49 per share, indicating a change of -44.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Matador. Also, the stock has a VGM Score of A.

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