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Antero Resources (AR) to Post Q1 Earnings: What's in Store?

Zacks Equity Research

Antero Resources Corporation AR is expected to report first-quarter 2019 results on May 1, after the market closes.

The Denver-based company’s earnings surprise history is unimpressive. The company missed the Zacks Consensus Estimate in two of the trailing four quarters, reporting average negative earnings surprise of 14.8%.

Antero Resources Corporation Price and EPS Surprise

Antero Resources Corporation Price and EPS Surprise | Antero Resources Corporation Quote

Let’s see how things are shaping up for this announcement.

Which Way are Estimates Treading?

Let’s take a look at estimate revisions to get a clear picture of what analysts are thinking about the company before the earnings release.

The Zacks Consensus Estimate of 45 cents for first-quarter earnings has seen two upward and four downward revisions by firms in the past 30 days. This figure indicates year-over-year growth of 2.3%.

The Zacks Consensus Estimate for revenues is pegged at $1,160 million for the to-be-reported quarter, indicating a rise of 13% year over year.

Factors at Play

Antero, which is among the fast-growing natural gas producers in the United States, boasts 486,000 and 126,000 net acres in Marcellus and Utica, respectively, which positions it well to report strong production in first-quarter 2019.

The Zacks Consensus Estimate for first-quarter average daily net production is pegged at 3,161 million cubic feet equivalent per day (MMcfe/d), suggesting a rise from 2,376MMcfe/d in the year-ago quarter but a decline from 3,213MMcfe/d in the last reported quarter.

The Zacks Consensus Estimate for average net oil production is pegged at 11,900 barrels per day (Bbls/d), indicating a fall from 12,229Bbls/d in the last reported quarter but a surge from 5,887Bbls/d in the prior-year period.

Moreover, the Zacks Consensus Estimate for average net natural gas volumes is 2,173 million cubic feet per day (MMcf/d), indicating a fall from 2,240MMcf/d in the last reported quarter but a rise from 1,759MMcf/d in the year-ago period.  

The Zacks Consensus Estimate for average natural gas price realizations after the impact of hedging is $3.87 per thousand cubic feet (Mcf), showing a rise from $3.73 per Mcf in the last reported quarter and $3.85 in the year-ago period. 

Additionally, the Zacks Consensus Estimate for average oil price realizations after the impact of hedging is at $54 per barrel, implying a rise from $51 per barrel in the last reported quarter. However, it indicates a fall from $57 per barrel in the year-ago quarter.  

As we can see, production of oil and gas is expected to surge on a year-over-year basis. Although natural gas price realization is anticipated to rise, thereby boosting the upcoming earnings, oil price is expected to take a dip in first-quarter 2019 and affect the results partially.

What Our Model Unveils

Our proven model does not conclusively show that Antero Resources is likely to beat the Zacks Consensus Estimate in the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Antero Resources has an Earnings ESP of 0.00% as the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at 45 cents.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Antero Resources currently carries a Zacks Rank #3. Though a Zacks Rank of 3 increases the predictive power of ESP, a 0.00% ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Energy Stocks With Favorable Combination

Here are some companies from the energy space which, according to our model, have the right combination of elements to post an earnings beat in the upcoming quarterly reports.

Houston, TX-based Apache Corporation APA has a Zacks Rank #2 and an Earnings ESP of +6.67%. The company is scheduled to report quarterly earnings on May 1.

San Antonio, TX-based Abraxas Petroleum Corporation AXAS has a Zacks Rank #3 and an Earnings ESP of +133.33%. The company is slated to report first-quarter earnings on May 6.

Oklahoma City, OK-based Chaparral Energy, Inc. CHAP has a Zacks Rank #2 and an Earnings ESP of +110.00%. The company is set to report first-quarter earnings on May 9.

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