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Why Is Antero Resources (AR) Up 19.8% Since Last Earnings Report?

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It has been about a month since the last earnings report for Antero Resources (AR). Shares have added about 19.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Antero Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Antero Resources Beats Q1 Earnings Estimates

Antero Resources reported first-quarter 2022 adjusted earnings of $1.15 per share, beating the Zacks Consensus Estimate of $1.07.  The bottom line improved from the year-ago quarter’s earnings of 62 cents.

Total quarterly revenues of $787 million missed the Zacks Consensus Estimate of $1,558 million. The top line also declined from the year-ago quarter’s $1,204 million.

Strong quarterly earnings can be attributed to higher realizations of commodity prices, partially offset by lower production.

Overall Production

Total production through the March-end quarter was recorded at 285 billion cubic feet equivalent (Bcfe), which declined 5% from 299 Bcfe a year ago. Natural gas production (accounting for 69.8% of the total output) fell 4% year over year to 199 Bcf.

Oil production in the first quarter was 724 thousand barrels (MBbls), down 25% from 960 MBbls in the prior-year period. Its production of 4,005 MBbls of C2 Ethane was 9% lower than 4,405 MBbls in the year-ago quarter. The company’s output of 9,638 MBbls of C3+ NGLs for the quarter was 3% lower than 9,926 MBbls a year ago.

Realized Prices (Excluding Derivative Settlements)

Weighted natural-gas-equivalent price realization for the quarter was $6.04 per thousand cubic feet equivalent (Mcfe), higher than the year-earlier figure of $4.03. Realized prices for natural gas rose 44% to $5.01 per Mcf from $3.48 a year ago.

The company’s oil price realization for the quarter was $87.45 per barrel (Bbl), up 88% from $46.55 a year ago. Its realized price for C3+ NGLs improved to $61.55 per Bbl from $40.72 in the prior-year quarter. Realized price for C2 Ethane increased 104% to $16.74 per Bbl from $8.20 a year ago.

Operating Expenses

Total operating expenses for the quarter under review declined to $991.4 million from $1,109.7 million in the year-ago period.

Average lease operating costs for the quarter were 6 cents per Mcfe, down 25% year over year. The same for gathering and compression declined 4% year over year to 71 cents per Mcfe.

Transportation expenses rose 4% from the prior-year quarter to 70 cents per Mcfe. Processing costs increased 8% year over year to 67 cents.

Capex & Financials

In first-quarter 2022, Antero Resources spent $175 million on drilling and completion operations. As of Mar 31, 2022, Antero had no cash and cash equivalents. It had long-term debt of $2 billion, with a debt to capitalization of 26.4%.

Guidance

For 2022, Antero Resources reiterated its net daily natural gas-equivalent production guidance at 3.2-3.3 Bcfe/d. Also, net daily natural gas production is expected to be 2.2-2.25 Bcf/d.

The company expects to generate more than $2.5 billion of free cash flow in 2022.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Antero Resources has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Antero Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Antero Resources is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Matador Resources (MTDR), a stock from the same industry, has gained 15.2%. The company reported its results for the quarter ended March 2022 more than a month ago.

Matador reported revenues of $565.69 million in the last reported quarter, representing a year-over-year change of +112%. EPS of $2.32 for the same period compares with $0.71 a year ago.

For the current quarter, Matador is expected to post earnings of $3.04 per share, indicating a change of +198% from the year-ago quarter. The Zacks Consensus Estimate has changed +8.6% over the last 30 days.

Matador has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.


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