Antero Resources(AR)2022-04-28 18:45Financial Data and Key Metrics Changes - Antero Resources expects to generate over $2.5 billion of free cash flow in 2022, with a similar level anticipated for 2023, bringing the five-year cumulative free cash flow target to approximately $10 billion, aligning with the current market cap [21][22][24] - The company has significantly reduced its absolute debt and leverage, with a leverage ratio expected to go below 0.5 this year [24][22] - Antero's share repurchase program authorized up to $1 billion, with approximately $100 million repurchased at an average price of $27.11 during Q1 [22][24] Business Line Data and Key Metrics Changes - Antero has not added any natural gas hedges since 2020, remaining less than 50% hedged on expected 2022 natural gas production and virtually unhedged on all commodities in 2023 [12][21] - The company is currently selling nearly 1 Bcf a day of natural gas to LNG facilities, with 2.3 Bcf a day of firm transportation to LNG fairways, representing about 75% of Antero's total natural gas production [8][17][18] Market Data and Key Metrics Changes - Natural gas prices have reached their highest levels since 2008, with monthly NYMEX prices touching 13-year highs, supported by global supply concerns and geopolitical tensions [14][17] - U.S. natural gas supplies averaged around 93.5 Bcf per day, resulting in a storage level of approximately 1.45 Tcf at the end of the withdrawal season [14][15] Company Strategy and Development Direction - Antero is focused on maintaining a strong balance sheet and generating free cash flow, transitioning from growth to a return of capital to shareholders [9][21] - The company aims to capture the upside from growing LNG and LPG export demand through its industry-leading firm transportation portfolio [13][20] Management's Comments on Operating Environment and Future Outlook - Management remains bullish on commodity prices due to limited capital access, supply chain constraints, and low global storage levels, which are expected to support higher prices moving forward [11][12] - The company does not plan to hedge any commodities in the foreseeable future, opting instead to remain unhedged to benefit from rising prices [35][55] Other Important Information - Antero has a significant ownership stake of approximately 29% in AM, which is considered a valuable asset in the LNG story [68] - The company has $2.3 billion of net operating losses (NOLs) that will delay cash tax payments until late 2023 [66] Q&A Session Summary Question: Potential cash returns to shareholders this year - Management indicated that with current commodity prices, they could efficiently repay approximately $800 million to $900 million of debt this year, allowing for significant share repurchases [28] Question: NGL and gas pricing dynamics - A one-time adjustment affected realized prices, but management expects future pricing to align closely with benchmarks [30][32] Question: Future hedging strategies - Management confirmed no plans to hedge, maintaining a bullish outlook on commodity prices [35] Question: LNG premium and market dynamics - Management noted that while there are no specific hubs to watch, they are pleased with their current delivery points and are studying potential opportunities [40] Question: Cash flow and dividend considerations - Management emphasized the focus on share buybacks due to the undervaluation of the stock, with dividends not currently prioritized [62] Question: Incremental LNG projects and transportation - Management stated that there are no significant pipeline expansions planned from Appalachia, but they are well-positioned with existing transportation capacity [64][65]