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

Zacks Equity Research

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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