A month has gone by since the last earnings report for Antero Resources (AR). Shares have added about 3.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Antero Resources due for a pullback? 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 drivers.
Antero’s Q1 Earnings Miss Estimates on Lower Gas Price
Antero Resources reported first-quarter adjusted earnings of 48 cents per share, missing the Zacks Consensus Estimate of 54 cents. The bottom line declined from the year-ago quarter’s earnings of $1.14 per share.
Total quarterly revenues of $1,408 million beat the Zacks Consensus Estimate of $1,206 million. Also, the top line increased from the year-ago quarter’s $787 million.
Weak quarterly earnings can be attributed to a decline in natural-gas-equivalent price realization. This was partially offset by higher production.
Total production through the March quarter was 295 billion cubic feet equivalent (Bcfe), which increased 4% from 285 Bcfe a year ago. Natural gas production (accounting for 65.8% of the total output) fell 3% year over year to 194 Bcf.
Oil production in the first quarter was 831 thousand barrels (MBbls), up 15% from 724 MBbls. Its production of 6,141 MBbls of C2 Ethane was 53% higher than 4,005 MBbls in the year-ago quarter. The company’s output of 9,857 MBbls of C3+ NGLs in the quarter was 2% higher than 9,638 MBbls a year ago.
Realized Prices (Excluding Derivative Settlements)
Weighted natural-gas-equivalent price realization in the quarter was $4.13 per thousand cubic feet equivalent (Mcfe), lower than the year-earlier figure of $6.04. Realized prices for natural gas declined 31% to $3.45 per Mcf from $5.01 a year ago.
The company’s oil price realization in the quarter was $62.35 per barrel (Bbl), down 29% from $87.45 a year ago. Its realized price for C3+ NGLs declined to $42.95 per Bbl from $61.55. Realized price for C2 Ethane decreased 30% to $11.73 per Bbl from $16.74 a year ago.
Total operating expenses increased to $1,076.9 million from $991.4 million in the year-ago period.
Average lease operating costs were 10 cents per Mcfe, up 67% year over year. The same for gathering and compression increased 1% to 72 cents per Mcfe.
Transportation expenses declined 6% from the prior-year quarter to 66 cents per Mcfe. Processing costs increased 21% year over year to 81 cents.
Capex & Financials
In first-quarter 2023, Antero Resources spent $267 million on drilling and completion operations. As of Mar 31, 2023, it had no cash and cash equivalents. It had long-term debt of $1.3 billion.
For 2023, Antero Resources has guided its net daily natural gas-equivalent production at 3.25-3.3 Bcfe/d. Of the total, 185-195 MBbl/d will likely be liquids. Also, AR projects its net daily natural gas production at 2.1-2.15 Bcf/d.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -109.55% due to these changes.
Currently, Antero Resources has a nice Growth Score of B, 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 top 40% 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Antero Resources has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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