Antero Resources(US:AR)2024-10-31 17:40Financial Data and Key Metrics Changes - Antero Resources reported a reduction in drilling and completion capital budget to $650 million for 2024, a 28% decrease from 2023 while maintaining production levels [9][28] - The company achieved a free cash flow breakeven level of approximately $2.20, benefiting from low maintenance capital requirements and high exposure to liquids [23][24] - Total capital budget is expected to decrease by over $300 million in 2024 compared to the previous year while maintaining production [28] Business Line Data and Key Metrics Changes - The company set a new quarterly record for completion stages, averaging 12.1 stages per day, a 51% increase compared to 2022 [7][8] - Total well costs have decreased by 8% since last year, reaching the lowest level since 2021 [8] - Antero's maintenance capital per Mcfe is $0.52, which is 41% below the peer average of $0.88 [26] Market Data and Key Metrics Changes - U.S. propane demand exceeded 3 million barrels a day recently, driven by seasonal crop drying and heating demand [16] - Antero realized an average propane export premium of $0.22 per gallon in Q3, up from $0.08 to $0.09 per gallon at the start of the year [17] - Natural gas power burn demand is averaging 1.4 Bcf higher than last year, with expectations for continued growth driven by AI data centers and electric vehicles [19][20] Company Strategy and Industry Competition - Antero plans to continue focusing on improving operational efficiencies and has switched to an e-fleet for completion activities, potentially saving $150,000 to $200,000 per well [10] - The company is well-positioned to benefit from robust export premiums due to its unconstrained access at the Marcus Hook terminal [18] - Antero's firm transportation portfolio delivers 75% of its natural gas to the LNG corridor, providing direct exposure to growing LNG demand [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to maintain production levels while deferring completions based on natural gas prices [27][44] - The company anticipates that low rig counts and increased demand will support a tightening of inventories and lead to higher prices in 2025 and beyond [22] - Management highlighted the importance of maintaining a flexible capital program to adapt to market conditions [26] Other Important Information - Antero has built two DUC pads with 12 wells that are not being completed this year, with completion timing dependent on natural gas prices [31] - The company plans to use the first $600 million of free cash flow to reduce debt before considering buybacks [33] Q&A Session Summary Question: Guidance on DUCs and future completions - Management confirmed they have two DUC pads with 12 wells that are not being completed this year, with future completions dependent on natural gas prices [31][32] Question: Buyback strategy and free cash flow - The first $600 million of free cash flow will be used to reduce debt, with buybacks considered afterward [33] Question: Northeast LPG export advantage and premium sustainability - Management expects strong premiums to continue until new export capacity comes online in mid to late 2025 [35][36] Question: Conditions for completing DUCs - Completion of DUCs will depend on achieving a natural gas price of $2.50 or higher [39][40] Question: Maintenance capital and production levels - Maintenance capital is expected to be around $700 million to maintain production levels of 3.3 to 3.4 Bcfe per day [44][59] Question: Hedging strategy and future pricing - Management is monitoring the market for potential hedging opportunities but remains unhedged for now [51] Question: Impact of efficiencies on 2025 budget - The 2025 budget includes efficiencies and is expected to be lower due to improved operational performance [55]