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Antero Resources (AR) Beats on Q4 Earnings, Reserves Grow

Zacks Equity Research
Corbus Pharmaceuticals (CRBP) has been upgraded to a Zacks Rank 1 (Strong Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.

Antero Resources Corporation AR recently reported adjusted fourth-quarter 2018 earnings per share of 46 cents, beating the Zacks Consensus Estimate of 38 cents and improving from the year-ago quarter’s 23 cents on an increase in natural gas and oil production. The positives were, however, partially offset by a surge in lease operating expenses. Following the outperformance, the stock gained roughly 3% in after-hour trading.

The upstream energy player’s total operating revenues in the fourth quarter amounted to $1,237.4 million, missing the Zacks Consensus Estimate of $1,286 million.

However, the top line improved from the year-ago quarter’s $919.8 million on an increase in oil and natural gas realized prices.

Production Rises

Total production through fourth-quarter 2018 was recorded at 296 billion cubic feet equivalent (Bcfe) — comprising almost 70% natural gas — which is 37% higher than 216 Bcfe a year ago. Natural gas production increased to 206 billion cubic feet (Bcf) from 157 Bcf in the December quarter of 2017.

Production of oil in fourth-quarter 2018 was reported at 1,125 thousand barrel (MBbl), up 97% from 571 MBbl in the prior-year quarter. Its production of 4,323 MBbl of C2 Ethane was 50% higher than 2,891 MBbl in the year-ago quarter. The company’s output of 9,463 MBbl of C3+ NGLs in the December quarter of 2018 was 47% higher than 6,422 MBbl in the year-earlier quarter.

Realized Prices (Excluding Derivatives Settlements)

Natural gas-equivalent price realization in the quarter was $4.05 per thousand cubic feet equivalent (Mcfe), up 17% from $3.46 in the year-earlier quarter. The realized prices for natural gas increased 37% to $3.83 per thousand cubic feet from $2.80 a year ago.

The company’s oil price realization in the quarter was reported at $51.83 per Bbl, up 5% from $49.37 a year ago. The realized price for C2 Ethane jumped 31% to $13.12 per Bbl from $10.02 in the year-ago quarter. However, the company’s realized price for C3+ NGLs declined to $30.92 per Bbl from $39.16 in the prior-year quarter.

Operating Expenses Surge

Total expenses in the quarter under review skyrocketed to $1,092.3 million from $834.7 million in the year-ago quarter. This was supported by a 30% jump in lease operating expenses to roughly $43 million.

The increase in gathering, compression, processing and transportation expenses of 48% also drove total operating costs.

Financials & Capital Spending

As of Dec 31, 2018, the company reported no cash and cash equivalents. It had a long-term debt of $5,461.7 million, with a debt-to-capitalization ratio of 39.2%. 

For drilling and completion operations, the company spent $273 million through the fourth quarter of 2018.

Proved Reserves Grow

Through 2018, the company’s proved reserves grew 4% to 18 trillion cubic feet equivalent (Tcfe).

Guidance

The company projects net natural gas equivalent production through 2019 in the range of 3.15-3.25 (Bcfe/D). For drilling and completion activities, Antero Resources expects consolidated capital spending between $1,100 million and $1,250 million.

Zacks Rank and Key Picks

Currently, Antero Resources carries a Zacks Rank #3 (Hold). Meanwhile, better-ranked players in the energy space include Jones Energy Inc. JONE, Golar LNG Partners LP GMLP and Sunoco LP SUN. Jones and Sunoco carry a Zacks Rank #2 (Buy), while Golar LNG sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Jones Energy expects 2019 earnings growth of 19% year over year.

Golar LNG delivered average positive earnings surprise of 92.8% in the preceding four quarters.

Sunoco LP pulled off average positive earnings surprise of 18.39% in the trailing four quarters.

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