A month has gone by since the last earnings report for Antero Resources (AR). Shares have lost about 18.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Antero Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Antero’s Q4 Earnings & Revenues Beat Estimates
Antero Resources reported fourth-quarter adjusted earnings of $1.04 per share, beating the Zacks Consensus Estimate of 83 cents. The bottom line significantly improved from the year-ago quarter’s earnings of 46 cents.
Total quarterly revenues of $2,085 million beat the Zacks Consensus Estimate of $1,562 million. However, the top line declined from the year-ago quarter’s $2,394 million.
Strong quarterly earnings can be attributed to an increase in natural-gas-equivalent production volumes.
Total production through the December-end quarter was 297 billion cubic feet equivalent (Bcfe), which increased 1% from 294 Bcfe a year ago. Natural gas production (accounting for 66% of the total output) fell 4% year over year to 196 Bcf.
Oil production in the fourth quarter was 790 thousand barrels (MBbls), up 15% from 689 MBbls. Its production of 5,778 MBbls of C2 Ethane was 40% higher than 4,130 MBbls in the year-ago quarter. The company’s output of 10,170 MBbls of C3+ NGLs in the quarter was 3% higher than 9,872 MBbls a year ago.
Realized Prices (Excluding Derivative Settlements)
Weighted natural-gas-equivalent price realization in the quarter was $6.07 per thousand cubic feet equivalent (Mcfe), lower than the year-earlier figure of $6.48. Realized prices for natural gas rose 6% to $6.27 per Mcf from $5.89 a year ago.
The company’s oil price realization in the quarter was $71.08 per barrel (Bbl), up 2% from $69.53 a year ago. Its realized price for C3+ NGLs declined to $39.88 per Bbl from $58.25. Realized price for C2 Ethane increased 13% to $18.96 per Bbl from $16.81 a year ago.
Total operating expenses in the quarter under review increased marginally to $1,142.5 million from $1,137.9 million in the year-ago period.
Average lease operating costs were 10 cents per Mcfe, up 11% year over year. The same for gathering and compression increased 7% to 77 cents per Mcfe.
Transportation expenses declined 13% from the prior-year quarter to 66 cents per Mcfe. Processing costs increased 14% year over year to 74 cents.
Capex & Financials
In fourth-quarter 2022, Antero Resources spent $191.6 million on drilling and completion operations. As of Dec 31, 2022, it had no cash and cash equivalents. It had long-term debt of $1.2 billion, with a debt-to-capitalization of 14.4%.
For 2023, Antero Resources has guided its net daily natural gas-equivalent production at 3.25-3.3 Bcfe/d. Of the total, 184-195 MBbl/d will likely be liquids. Also, net daily natural gas production is expected to be 2.1-2.15 Bcf/d.
The company revealed its total exploration and production capital budget of $1,025-$1,075 million for the year, including a drilling and completion capital budget of $875-$925 million.
Antero Resources targets to return 50% of free cash flow this year to its shareholders.
How Have Estimates Been Moving Since Then?
Estimates review followed a downward path over the past two months.
The consensus estimate has shifted -20.07% due to these changes.
Currently, Antero Resources has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Antero Resources has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report