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Antero Resources (AR) Q1 Earnings Miss Estimates, Flat Y/Y

Zacks Equity Research
Although total rig count in the United States increases through the week till May 31, the tally may fall in the coming weeks owing to declining capital spending by U.S. explorers and a drop in oil prices.

Antero Resources Corporation AR reported adjusted first-quarter 2019 earnings per share of 39 cents, missing the Zacks Consensus Estimate of 40 cents. The bottom line, however, was flat with the year-ago profit.

Total operating revenues amounted to $1,212 million, beating the Zacks Consensus Estimate of $1,162 million. Moreover, the top line improved from the year-ago quarter’s $1,028 million.

The quarterly results were backed by higher natural gas equivalent production and prices. This was offset partially by a surge in lease operating expenses.

Production Rises

Total production through first-quarter 2019 was recorded at 279 billion cubic feet equivalent (Bcfe) — almost 71.3% natural gas — which is 30% higher than 214 Bcfe a year ago. Natural gas production increased to 199 billion cubic feet (Bcf) from 158 Bcf in the March quarter of 2018.

Production of oil in first-quarter 2019 was reported at 1,017 thousand barrel (MBbl), up 92% from 530 MBbl in the prior-year quarter. Its production of 3,509 MBbl of C2 Ethane was 16% higher than 3,029 MBbl in the year-ago quarter. The company’s output of 8,794 MBbl of C3+ NGLs in the March quarter of 2019 was 54% higher than 5,693 MBbl a year ago.

Realized Prices (Excluding Derivatives Settlements)

Natural gas-equivalent price realization in the quarter was $3.65 per thousand cubic feet equivalent (Mcfe), up 3% from $3.56 in the year-earlier quarter. The realized prices for natural gas increased 5% to $3.30 per thousand cubic feet from $3.14 a year ago.

The company’s oil price realization in the quarter was reported at $47.23 per Bbl, down 17% from $57.14 a year ago. The company’s realized price for C3+ NGLs declined to $31.63 per Bbl from $36.38 in the prior-year quarter. However, the realized price for C2 Ethane jumped 13% to $10.12 per Bbl from $8.94 a year ago.

Operating Expenses Surge

Total expenses in the quarter under review skyrocketed to $1,071.1 million from $881.6 million in the year-ago quarter. This was supported by a 56.2% jump in lease operating expenses to roughly $42 million.

The increase in gathering, compression, processing and transportation expenses of 45.4% drove total operating costs.

Financials & Capital Spending

As of Mar 31, 2019, the company reported no cash and cash equivalents. It had long-term debt of $3,476 million, with a debt-to-capitalization ratio of 29.5%. 

For drilling and completion operations, the company spent $368.7 million through the first quarter of 2019.

Guidance

The company projects net natural gas equivalent production through 2019 in the range of 3.15-3.25 (Bcfe/D).

Zacks Rank and Key Picks

Antero Resources currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space are ProPetro Holding Corp. PUMP, Parsley Energy PE and TransCanada Corp. TRP, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.   

The Zacks Consensus Estimate for Midland, TX-based ProPetro’s 2019 earnings is pegged at $2.42, indicating 21% growth over the year-ago reported figure. Next year’s forecast is $2.70, hinting at 11.5% growth.

The Zacks Consensus Estimate for Austin, TX-based Parsley’s 2019 earnings stands at $1.53, implying an 8.5% improvement over the prior-year reported number. Next year’s projection is $2.47, calling for 61.8% growth.

TransCanada has beaten estimates in the last four quarters, the average being 19%.

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TransCanada Corporation (TRP) : Free Stock Analysis Report
 
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