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Why Shares of Antero Resources Fell 15.8% in June

John Bromels, The Motley Fool

What happened

Shares of natural gas producer Antero Resources (NYSE: AR) fell 15.8% in June, according to data provided by S&P Global Market Intelligence. Together with earlier declines, that brought the stock's total year-to-date drop to 41.1%. This, unfortunately, is par for the course for Antero: Its shares have seen a 91.6% loss over the last five years. 

So what

Because Antero is primarily a producer of natural gas, natural gas prices have an outsize effect on its performance. And June was a bad month for natural gas prices. The Henry Hub spot price -- the benchmark for the North American gas market -- suffered a big drop over the last few days of May and the first few days of June. Prices continued to sag throughout the month. A bump on the last weekday in June (Friday, June 28) helped limit the damage, but prices fell 13.8% between the last Thursday in May and the last Thursday in June.

Pipeline pipes with a refinery in silhouette at sunset.

Energy company Antero Resources is a top natural gas producer in Appalachia. Image source: Getty Images.

It didn't help that Antero was coming off of a quarterly operating loss of $33.7 million in Q1 2019 compared to a quarterly operating profit of $146.5 million in Q1 2018. And although the company's adjusted earnings per share of $0.35 was positive and in line with analysts' expectations, there are concerns around rising expenses linked to some new gas pipeline capacity the company has secured.

Finally, the market couldn't have been too pleased that two of Antero's board members abruptly resigned when the private equity firm at which they worked completely exited its position in Antero. Put together, it was enough to sink the company's shares.

Now what

Antero is a bit different from other big natural gas producers. Its focus on the Marcellus and Utica shales in Appalachia has immunized it from the chaos in the Permian Basin. Its focus on natural gas liquids -- which command higher prices than ordinary natural gas -- and its new access to export terminals could help the company dramatically improve over the long haul.

Still, as June showed, the company is dependent on natural gas prices, which may or may not cooperate. If you're convinced that natural gas is a good long-term investment, now might be a decent time to consider picking up shares.

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John Bromels has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.