Antero Resources(US:AR)2019-10-30 21:53Financial Data and Key Metrics Changes - Antero Resources reduced its full year 2019 D&C CapEx budget to a range of $1.275 billion to $1.3 billion, a nearly $100 million reduction from the midpoint of the original guidance [9] - The company achieved a third quarter D&C CapEx of $290 million, the lowest quarterly spend since its IPO in 2013 [9] - The annual production guidance was increased to the high end of the prior range, reflecting a 2% increase at the midpoint [9] Business Line Data and Key Metrics Changes - The all-in well costs decreased from $970 per foot in January 2019 to $895 per foot, equating to savings of nearly $1 million per well [10] - The company set new records for average lateral feet drilled per day, averaging 6,000 feet, and achieved a new one-well world record of drilling 10,067 lateral feet in a day [13] - The third quarter LOE was $36 million, down 17% sequentially, with expectations for further reductions in the fourth quarter [15] Market Data and Key Metrics Changes - Antero is now 91% hedged on natural gas in 2020 at an average price of $2.87 per MMBtu and 89% hedged in 2021 at an average price of $2.80 per MMBtu [21] - The company shipped 54% of total C3+ net volume on Mariner East 2 for export in the third quarter, realizing a $0.12 per gallon premium to Mont Belvieu prices [25] Company Strategy and Development Direction - The company is focused on reducing its overall cost structure, targeting a removal of $250 million from its cost structure in 2020 [8] - Antero aims to blend 100% of its flowback and produced water, which is expected to lead to significant LOE savings [16] - The company plans to maintain flexibility in its capital program depending on NGL prices, with a preliminary target for D&C CapEx under $1.2 billion in 2020 while delivering production growth of 8% to 10% [20] Management's Comments on Operating Environment and Future Outlook - Management noted that the current commodity price environment is challenging, but the company is well-positioned to navigate it due to its strong balance sheet and liquidity [27] - The management expressed optimism about the potential for improved NGL prices in 2020, driven by export capacity expansion and strong international demand [26] - The company highlighted that it can afford to be patient regarding its bond maturities, with ample time to address them [68] Other Important Information - Antero has reduced its absolute debt by approximately $700 million over the past few years, resulting in a mid-2x leverage today [27] - The company has $1.2 billion of value in its AM ownership, providing over $200 million per year of steady cash flow in the form of dividends [28] Q&A Session Summary Question: How do you see the development of Dom South and M2 hubs going forward? - Management expects continued volatility through year-end 2020 due to constraints in regional pipeline systems [34] Question: Can you discuss the increase in NGLs as a percent of total production? - The increase is attributed to focusing on highly liquids-rich locations, and this trend is expected to remain steady [40] Question: What is the cash production expense outlook for 2020? - The cash production expense is expected to be between $215 million to $225 million [47] Question: How much more can you press on water handling? - Management believes that 100% blending of flowback and produced water is achievable, which could lead to significant LOE savings [49] Question: What are the opportunities to reduce GP&T costs? - Discussions are ongoing with all service providers and midstream transport partners to explore cost reductions [80]