Antero Resources(AR) - 2025 Q2 - Quarterly Results

Report Highlights and Management Commentary Antero reported strong Q2 2025 results, increasing full-year production guidance while lowering capital expenditure forecasts, highlighting strong well performance, significant debt reduction, and opportunistic share buybacks, positioning the company to benefit from future growth in LNG exports and power demand driven by AI data centers Q2 2025 Key Metrics and Full-Year Guidance Updates | Metric | Q2 2025 Result / FY 2025 Guidance | | :--- | :--- | | Q2 2025 Highlights | | | Net Production | 3.4 Bcfe/d | | Net Income | $157 million | | Adjusted EBITDAX | $379 million (+151% YoY) | | Free Cash Flow | $262 million | | Debt Reduction (Quarter) | $187 million | | Share Purchases (Apr 1 - Jul 30) | 3.6 million shares for ~$126 million | | Full-Year 2025 Guidance Updates | | | Production Guidance | Increased to 3.4 - 3.45 Bcfe/d | | Drilling & Completion Capital | Decreased to $650 - $675 million | - CEO Paul Rady emphasized that strong well performance and capital efficiency allowed for increased production guidance with a reduced capital budget, highlighting Antero's strategic position to benefit from expected natural gas demand growth from LNG exports and AI Data Centers[3] - CFO Michael Kennedy stated that strong Free Cash Flow was used to pay down nearly $200 million in debt and buy back $85 million in stock during Q2, with year-to-date debt reduced by approximately $400 million (30% of total) and $152 million of stock purchased[3] 2025 Guidance Update The company increased its full-year 2025 production guidance to 3.4-3.45 Bcfe/d due to strong well performance and simultaneously decreased its drilling and completion capital budget to $650-$675 million, citing continued capital efficiency gains, with C3+ NGL realized price premium guidance also updated Revised Full Year 2025 Guidance | Full Year 2025 Guidance | Low | High | | :--- | :--- | :--- | | Net Daily Natural Gas Equivalent Production (Bcfe/d) | 3.4 | 3.45 | | Drilling and Completion Capital Budget ($MM) | $650 | $675 | | C3+ NGL Realized Price Premium vs Mont Belvieu ($/Bbl) | $1.00 | $2.00 | - The increase in production guidance is attributed to stronger than expected well performance[5] - The decrease in the drilling and completion capital budget is a result of continued capital efficiency gains[5] Capital Management and Shareholder Returns Antero generated $262 million in Free Cash Flow in Q2 2025, which was primarily allocated towards significant debt reduction and opportunistic share repurchases, reducing total debt by $187 million during the quarter and repurchasing $126 million in stock between April and July, demonstrating a balanced approach to capital allocation Free Cash Flow The company generated $262 million in Free Cash Flow during Q2 2025, a significant turnaround from a negative $68 million in the same period last year, driven by a 243% year-over-year increase in net cash from operating activities Free Cash Flow (in thousands) | | Three Months Ended June 30, | | :--- | :--- | | | 2024 | 2025 | | Net cash provided by operating activities | $143,499 | $492,358 | | Less: Capital expenditures | ($192,385) | ($208,409) | | Less: Distributions to non-controlling interests in Martica | ($19,282) | ($21,512) | | Free Cash Flow | ($68,168) | $262,437 | Share Purchase Program From April 1 to July 30, 2025, Antero repurchased 3.6 million shares for $126 million at an average price of $34.49 per share, representing an 8% discount to the volume-weighted average price during that period, with approximately $900 million remaining available under the current buyback authorization - Purchased 3.6 million shares for an aggregate of $126 million between April 1, 2025, and July 30, 2025[10] - The company has approximately $900 million of capacity remaining on its current share purchase program[10] Debt Reduction Total debt was reduced to $1.1 billion as of June 30, 2025, reflecting a $187 million reduction during the second quarter, with year-to-date debt lowered by approximately $400 million, or 30% of the total, and the company's Net Debt to trailing twelve-month Adjusted EBITDAX ratio standing at a healthy 0.8x - Total debt was reduced by $187 million during Q2 2025, bringing the total to $1.1 billion[11] - Year-to-date debt reduction as of Q2 end was approximately $400 million, or 30% of total debt[11] - Net Debt to trailing twelve-month Adjusted EBITDAX was 0.8x[11] Hedging and Financial Results Antero reported net income of $157 million for Q2 2025, with production averaging 3.4 Bcfe/d, realizing strong pre-hedge natural gas equivalent prices at a premium to NYMEX, and adding new costless collars for 2026 to manage future price risk, while all-in cash expenses increased year-over-year primarily due to higher fuel costs associated with rising natural gas prices Natural Gas Hedge Program Antero added new natural gas costless collars for 2026, covering 500,000 MMBtu/d (21% of estimated production), with these hedges having a floor price of $3.14/MMBtu and a ceiling of $6.31/MMBtu, locking in attractive returns, and no new hedges added for 2025 Natural Gas Hedge Position | Period | Type | Volume (MMBtu/d) | Floor/Swap Price ($/MMBtu) | Ceiling Price ($/MMBtu) | % of Est. Production | | :--- | :--- | :--- | :--- | :--- | :--- | | 2025 | NYMEX Henry Hub Swap | 100,000 | $3.12 | N/A | 4% | | 2026 | NYMEX Henry Hub Costless Collars | 500,000 | $3.14 | $6.31 | 21% | Second Quarter 2025 Financial Results In Q2 2025, net production averaged 3.4 Bcfe/d, including 200 MBbl/d of liquids, with the company achieving a pre-hedge natural gas equivalent price of $3.85/Mcfe, and all-in cash expense increasing to $2.48/Mcfe from $2.36/Mcfe in Q2 2024, mainly due to higher gathering, compression, processing, and transportation costs linked to increased fuel costs Q2 2025 Average Net Production and Realized Prices (Pre-Hedge) | Category | Average Net Production | Average Realized Price | | :--- | :--- | :--- | | Natural Gas | 2,230 MMcf/d | $3.39 /Mcf | | Oil | 7,385 Bbl/d | $50.15 /Bbl | | C3+ NGLs | 116,571 Bbl/d | $37.92 /Bbl | | Ethane | 76,088 Bbl/d | $11.34 /Bbl | | Total Equivalent | 3,430 MMcfe/d | $3.85 /Mcfe | - All-in cash expense increased to $2.48 per Mcfe in Q2 2025 from $2.36 per Mcfe in Q2 2024, primarily due to higher gathering, compression, processing, and transportation costs from increased fuel costs[16] Operating and ESG Performance Operationally, Antero placed 18 new high-performing Marcellus wells online in Q2, with drilling and completion capital expenditures totaling $171 million, and also published its 2024 ESG report, highlighting significant progress in emissions reduction, with a 77% decrease in absolute methane emissions since 2019, and an 89% water recycling rate Second Quarter 2025 Operating Results During the second quarter, Antero placed 18 horizontal Marcellus wells to sales, which featured an average lateral length of 13,500 feet and demonstrated strong initial performance, with a subset averaging 24 MMcfe/d per well after 60 days online - Placed 18 horizontal Marcellus wells to sales in Q2 with an average lateral length of 13,500 feet[17] - Eleven of these wells, online for approximately 60 days, showed an average rate per well of 24 MMcfe/d, including 1,200 Bbl/d of liquids[17] Second Quarter 2025 Capital Investment Drilling and completion capital expenditures were $171 million in Q2 2025, with an additional $26 million invested in land leasing, which added approximately 5,000 net acres and 20 incremental drilling locations, effectively replenishing the inventory used during the quarter - Drilling and completion capital expenditures for Q2 2025 were $171 million[18] - The company leased an additional 5,000 net acres for $26 million, adding 20 incremental drilling locations[18] 2024 ESG Report Highlights Antero's 8th annual ESG report showcased significant environmental achievements, including a 77% reduction in absolute methane emissions and a 79% reduction in methane intensity since 2019, also reporting an 89% water recycling rate and remaining on track for its 2025 Net Zero Scope 1 emission goal - Decreased absolute methane emissions by 77% and methane intensity by 79% since 2019[23] - Recycled 89% of wastewater during the year[23] - The company is on track to achieve its 2025 Net Zero Scope 1 GHG emission goal[23] Non-GAAP Financial Measures This section provides definitions and detailed reconciliations for key non-GAAP metrics used by management to evaluate performance, including Adjusted Net Income, Net Debt, Free Cash Flow, and Adjusted EBITDAX, which adjust for items such as unrealized derivative gains/losses, impairments, and equity-based compensation to provide what management believes is a clearer view of operational trends Adjusted Net Income Adjusted Net Income for Q2 2025 was $110.0 million, a substantial improvement from an Adjusted Net Loss of $74.4 million in Q2 2024, with the reconciliation from GAAP Net Income primarily adjusting for non-cash items like unrealized derivative gains/losses, as well as items like equity in earnings of unconsolidated affiliates and equity-based compensation Reconciliation of Net Income to Adjusted Net Income (in thousands) | | Three Months Ended June 30, | | :--- | :--- | | | 2024 | 2025 | | Net income (loss) attributable to Antero | ($79,806) | $156,585 | | Adjustments (Unrealized derivatives, impairments, etc.) | 5,359 | (48,592) | | Adjusted Net Income (Loss) | ($74,447) | $110,005 | Net Debt Net Debt, calculated as total long-term debt less cash, stood at $1.1 billion as of June 30, 2025, representing a significant decrease from $1.49 billion at the end of 2024, reflecting the company's focus on strengthening its balance sheet Net Debt Calculation (in thousands) | | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Total long-term debt | $1,489,230 | $1,098,669 | | Less: Cash and cash equivalents | — | — | | Net Debt | $1,489,230 | $1,098,669 | Adjusted EBITDAX Adjusted EBITDAX for Q2 2025 was $379.5 million, marking a 151% increase from $151.4 million in Q2 2024, with the trailing twelve months ending June 30, 2025, Adjusted EBITDAX at approximately $1.45 billion, and the report providing detailed reconciliations from both GAAP Net Income and to Net Cash Provided by Operating Activities Reconciliation of Net Income to Adjusted EBITDAX (in thousands) | | Three Months Ended June 30, | | :--- | :--- | | | 2024 | 2025 | | Net income (loss) including noncontrolling interests | ($74,598) | $166,573 | | Adjustments (Interest, taxes, D&A, etc.) | 241,058 | 229,067 | | Martica related adjustments | (15,058) | (16,176) | | Adjusted EBITDAX | $151,402 | $379,464 | - For the twelve months ended June 30, 2025, Adjusted EBITDAX was $1,447,728 thousand[36] Condensed Consolidated Financial Statements The condensed consolidated financial statements provide a detailed view of Antero's financial health, with the balance sheet as of June 30, 2025, showing total assets of $12.8 billion and a reduced total liability of $5.3 billion, and the income statement reflecting a significant turnaround with a net income of $156.6 million in Q2 2025 compared to a net loss of $79.8 million in Q2 2024, primarily driven by an 84% increase in natural gas sales revenue Condensed Consolidated Balance Sheets As of June 30, 2025, Antero reported total assets of $12.77 billion, a decrease from $13.01 billion at year-end 2024, driven by a reduction in total liabilities to $5.28 billion from $5.79 billion mainly due to lower long-term debt, consequently increasing total equity from $7.22 billion to $7.48 billion Balance Sheet Summary (in thousands) | | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Total current assets | $507,546 | $427,534 | | Property and equipment, net | $9,687,550 | $9,655,880 | | Total assets | $13,010,050 | $12,766,073 | | Total current liabilities | $1,445,927 | $1,404,729 | | Long-term debt | $1,489,230 | $1,098,669 | | Total liabilities | $5,793,517 | $5,281,566 | | Total equity | $7,216,533 | $7,484,507 | Condensed Consolidated Statements of Operations For Q2 2025, Antero reported total revenues of $1.30 billion and a net income attributable to the company of $156.6 million, or $0.50 per diluted share, marking a significant improvement from a net loss of $79.8 million, or ($0.26) per share, in Q2 2024, largely due to an 84% increase in natural gas sales revenue, which rose to $688.8 million Statement of Operations Summary (in thousands) | | Three Months Ended June 30, | | :--- | :--- | | | 2024 | 2025 | | Total revenue | $978,654 | $1,297,493 | | Total operating expenses | $1,058,740 | $1,092,610 | | Operating income (loss) | ($80,086) | $204,883 | | Net income (loss) attributable to Antero | ($79,806) | $156,585 | | Net income (loss) per common share—diluted | ($0.26) | $0.50 | Condensed Consolidated Statements of Cash Flows For the first six months of 2025, net cash from operating activities more than doubled to $950.1 million from $405.1 million in the prior-year period, with net cash used in investing activities stable at $405.4 million, and financing activities resulting in a cash outflow of $544.7 million, a reversal from a small inflow in 2024, driven by $141.7 million in senior note repayments and $85.0 million in common stock repurchases Statement of Cash Flows Summary (in thousands) | | Six Months Ended June 30, | | :--- | :--- | | | 2024 | 2025 | | Net cash provided by operating activities | $405,109 | $950,097 | | Net cash used in investing activities | ($414,125) | ($405,380) | | Net cash provided by (used in) financing activities | $9,016 | ($544,717) | | Net increase in cash and cash equivalents | $— | $— | Selected Financial and Operating Data This section provides a year-over-year comparison of key financial and operational metrics for the second quarter, with key improvements including an 84% increase in natural gas sales revenue and a 151% growth in Adjusted EBITDAX to $379.5 million, and on a per-unit basis, the average realized natural gas price rising 77% to $3.39/Mcf before hedges, while average costs saw modest increases Q2 Year-over-Year Production and Price Comparison | Metric | Q2 2024 | Q2 2025 | % Change | | :--- | :--- | :--- | :--- | | Daily combined production (MMcfe/d) | 3,420 | 3,430 | * | | Avg. Natural Gas Price (per Mcf, pre-hedge) | $1.92 | $3.39 | 77% | | Avg. C3+ NGLs Price (per Bbl, pre-hedge) | $40.27 | $37.92 | (6)% | | Avg. Oil Price (per Bbl, pre-hedge) | $66.66 | $50.15 | (25)% | | Weighted Avg. Combined Price (per Mcfe, pre-hedge) | $2.98 | $3.85 | 29% | Q2 Year-over-Year Average Costs (per Mcfe) | Cost Category | Q2 2024 | Q2 2025 | % Change | | :--- | :--- | :--- | :--- | | Lease operating | $0.10 | $0.12 | 20% | | Gathering and compression | $0.71 | $0.76 | 7% | | Processing | $0.87 | $0.91 | 5% | | Transportation | $0.55 | $0.58 | 5% |