Here's Why You Should Hold Antero Resources (AR) Stock Now
Antero Resources Corporation AR has witnessed upward earnings estimate revisions for 2024 in the past 30 days.
The Zacks Consensus Estimate for AR’s 2023 and 2024 earnings per share is pegged at $1.27 and $3.21, respectively.
Factors Working in Favor
Natural gas is trading at more than $2.32 per MMBtu, highlighting a handsome commodity pricing environment. Being a leading natural gas producer, Antero Resources is well-positioned to capitalize on the favorable commodity price.
In the prolific core Marcellus shale play, Antero Resources has roughly 1,877 undeveloped premium locations, depicting a bright production outlook. Also, in the core of the Utica play, the upstream player has roughly 180 premium drilling locations. Overall, AR has more than 20 years of premium core drilling inventory.
For 2023, Antero Resources has guided its net daily natural gas-equivalent production at 3.25-3.3 Bcfe/d, indicating an increase from 3.20 Bcfe/d reported in 2022. Higher production will boost the company’s bottom line.
Looking at financial strength, Antero Resources has a strong and sustainable balance sheet. AR is targeting a capital return program of 25-50% of free cash flow per year, beginning with the implementation of share repurchase program. The company increased its share repurchase program by $1 billion to $2 billion, reflecting strong initiatives of returning capital to shareholders.
The firm emits lower greenhouse gases than other major fossil fuel players. AR is prioritizing debt reduction. From 2019 through August 2022, the company managed to lower the absolute debt load by $2.2 billion.
Thus, Antero Resources, the fast-growing natural gas producers in the United States, is poised for an upside in the coming days.
Risks Responsible to Limit Growth
Antero Resources’ lack of geographic diversification is concerning since its entire asset base is located in the Appalachian region. As such, it is more vulnerable to basin-specific delays and interruptions in production from wells, which can potentially hamper growth.
Zacks Rank & Key Picks
Antero Resources currently carries a Zack Rank #3 (Hold).
Some better-ranked players in the energy space are Eni SPA E and Seadrill Limited SDRL, each currently sporting a Zacks Rank #1 (Strong Buy), and Enterprise Products Partners LP EPD, presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Eni reported first-quarter adjusted earnings from continuing operations of $1.85 per American Depository Receipt, beating the Zacks Consensus Estimate of $1.39. Better-than-expected quarterly earnings resulted from an increase in refinery throughput volumes.
For 2023, Eni reiterated its total hydrocarbon production guidance of 1.63-1.67 MBoe/d, indicating an increase from 1.61 MBoe/d reported in 2022. E expects to discover exploration resources of 700 MBoe this year.
Seadrill is a market-leading international driller with strong exposure in key strategic basins like the U.S. Gulf of Mexico, Brazil and Angola. SDRL reported first-quarter 2023 earnings of 83 cents per share, outpacing the Zacks Consensus Estimate of 55 cents.
Seadrill has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The Zacks Consensus Estimate for SDRL’s 2023 and 2024 earnings per share is pegged at $2.93 and $4.01, respectively.
Enterprise Products reported first-quarter 2023 adjusted earnings per limited partner unit of 64 cents, which outperformed the Zacks Consensus Estimate of 62 cents. This was primarily due to higher contributions from the Natural Gas Pipelines & Services business.
In the first quarter, Enterprise Products generated an adjusted free cash flow of $1,347 million against a negative free cash flow of $1,618 million in the year-ago quarter. EPD recorded a distributable cash flow of $863 million in the same time frame.
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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
Eni SpA (E) : Free Stock Analysis Report
Seadrill Limited (SDRL) : Free Stock Analysis Report
Antero Resources Corporation (AR) : Free Stock Analysis Report
