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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2018

 

OR

 

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                    to                   

 

Commission file number: 001-36120

 

ANTERO RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware

 

80-0162034

(State or other jurisdiction of
incorporation or organization)

 

(IRS Employer Identification No.)

 

 

 

1615 Wynkoop Street
Denver, Colorado

 

80202

(Address of principal executive offices)

 

(Zip Code)

 

(303) 357-7310

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

Large accelerated filer ☒

 

Accelerated filer ☐

Non-accelerated filer ☐

 

Smaller reporting company ☐

Emerging growth company ☐

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  ☐ Yes  ☒ No

The registrant had 317,114,931 shares of common stock outstanding as of October 26, 2018.

 

 

 


 

Table of Contents

TABLE OF CONTENTS

 

 

 

 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 

    

2

PART I—FINANCIAL INFORMATION 

 

4

Item 1. 

    

Financial Statements (Unaudited)

 

4

Item 2. 

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

43

Item 3. 

 

Quantitative and Qualitative Disclosures about Market Risk

 

66

Item 4. 

 

Controls and Procedures

 

68

PART II—OTHER INFORMATION 

 

68

Item 1. 

 

Legal Proceedings

 

68

Item 1A. 

 

Risk Factors

 

70

Item 2. 

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

71

Item 6. 

 

Exhibits

 

71

SIGNATURES 

 

72

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the information in this Quarterly Report on Form 10-Q may contain forward-looking statements. Forward-looking statements give our current expectations, contain projections of results of operations or of financial condition, or forecasts of future events. Words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this Quarterly Report on Form 10-Q. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:

·

business strategy;

·

reserves;

·

financial strategy, liquidity, and capital required for our development program;

·

natural gas, natural gas liquids (“NGLs”), and oil prices;

·

timing and amount of future production of natural gas, NGLs, and oil;

·

hedging strategy and results;

·

the Company’s ability to successfully complete its share repurchase program;

·

the possibility that the proposed simplification and related transactions described elsewhere in this Quarterly Report on Form 10-Q (the “Transactions”) are not consummated in a timely manner or at all;

·

the diversion of management in connection with the Transactions and the ability of the resulting entity of the Transactions to realize the anticipated benefits of the Transactions;

·

ability to meet minimum volume commitments and to utilize or monetize our firm transportation commitments;

·

future drilling plans;

·

competition and government regulations;

·

pending legal or environmental matters;

·

marketing of natural gas, NGLs, and oil;

·

leasehold or business acquisitions;

·

costs of developing our properties;

·

operations of Antero Midstream Partners LP (“Antero Midstream”), including the operations of its unconsolidated affiliates;

·

general economic conditions;

·

credit markets;

·

uncertainty regarding our future operating results; and

·

plans, objectives, expectations, and intentions.

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We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incidental to our business. These risks include, but are not limited to, commodity price volatility, inflation, availability of drilling, completion, and production equipment and services, environmental risks, drilling and completion and other operating risks, marketing and transportation risks, regulatory changes, the uncertainty inherent in estimating natural gas, NGLs, and oil reserves and in projecting future rates of production, cash flows and access to capital, the timing of development expenditures, conflicts of interest among our stockholders, and the other risks described under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”) on file with the Securities and Exchange Commission (“SEC”).

Reserve engineering is a process of estimating underground accumulations of natural gas, NGLs, and oil that cannot be measured in an exact manner. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data, and the price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing, and production activities, or changes in commodity prices, may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of natural gas, NGLs, and oil that are ultimately recovered.

Should one or more of the risks or uncertainties described in this report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

 

 

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PART I—FINANCIAL INFORMATION

ANTERO RESOURCES CORPORATION

Condensed Consolidated Balance Sheets

December 31, 2017 and September 30, 2018

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

    

December 31, 2017

    

September 30, 2018

 

Assets

 

Current assets:

 

 

 

 

  

 

 

Cash and cash equivalents

 

$

28,441

 

 

 —

 

Accounts receivable, net of allowance for doubtful accounts of $1,320 at December 31, 2017 and $1,195 at September 30, 2018, respectively

 

 

34,896

 

 

46,604

 

Accrued revenue

 

 

300,122

 

 

354,010

 

Derivative instruments

 

 

460,685

 

 

493,354

 

Other current assets

 

 

8,943

 

 

12,664

 

Total current assets

 

 

833,087

 

 

906,632

 

Property and equipment:

 

 

 

 

 

 

 

Natural gas properties, at cost (successful efforts method):

 

 

 

 

 

 

 

Unproved properties

 

 

2,266,673

 

 

1,928,990

 

Proved properties

 

 

11,096,462

 

 

12,306,198

 

Water handling and treatment systems

 

 

946,670

 

 

993,285

 

Gathering systems and facilities

 

 

2,050,490

 

 

2,384,041

 

Other property and equipment

 

 

57,429

 

 

62,739

 

 

 

 

16,417,724

 

 

17,675,253

 

Less accumulated depletion, depreciation, and amortization

 

 

(3,182,171)

 

 

(3,890,834)

 

Property and equipment, net

 

 

13,235,553

 

 

13,784,419

 

Derivative instruments

 

 

841,257

 

 

672,768

 

Investments in unconsolidated affiliates

 

 

303,302

 

 

392,893

 

Other assets

 

 

48,291

 

 

45,823

 

Total assets

 

$

15,261,490

 

 

15,802,535

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

Current liabilities:

 

 

 

 

  

 

 

Accounts payable

 

$

62,982

 

 

91,940

 

Accrued liabilities

 

 

443,225

 

 

457,216

 

Revenue distributions payable

 

 

209,617

 

 

245,832

 

Derivative instruments

 

 

28,476

 

 

10,456

 

Other current liabilities

 

 

17,796

 

 

8,427

 

Total current liabilities

 

 

762,096

 

 

813,871

 

Long-term liabilities:

 

 

 

 

 

 

 

Long-term debt

 

 

4,800,090

 

 

5,487,004

 

Deferred income tax liability

 

 

779,645

 

 

782,145

 

Derivative instruments

 

 

207

 

 

 —

 

Other liabilities

 

 

43,316

 

 

48,363

 

Total liabilities

 

 

6,385,354

 

 

7,131,383

 

Commitments and contingencies (notes 12 and 13)

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; authorized - 50,000 shares; none issued

 

 

 —

 

 

 —

 

Common stock, $0.01 par value; authorized - 1,000,000 shares; 316,379 shares and 317,086 shares issued and outstanding at December 31, 2017 and September 30, 2018, respectively

 

 

3,164

 

 

3,171

 

Additional paid-in capital

 

 

6,570,952

 

 

6,611,348

 

Accumulated earnings

 

 

1,575,065

 

 

1,299,094

 

Total stockholders' equity

 

 

8,149,181

 

 

7,913,613

 

Noncontrolling interests in consolidated subsidiary

 

 

726,955

 

 

757,539

 

Total equity

 

 

8,876,136

 

 

8,671,152

 

Total liabilities and equity

 

$

15,261,490

 

 

15,802,535

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended September 30, 2017 and 2018

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

    

2017

    

2018

 

Revenue:

 

 

 

 

 

 

 

Natural gas sales

 

$

409,141

 

 

527,122

 

Natural gas liquids sales

 

 

224,533

 

 

338,269

 

Oil sales

 

 

26,527

 

 

59,722

 

Commodity derivative fair value gains (losses)

 

 

(65,957)

 

 

57,019

 

Gathering, compression, water handling and treatment

 

 

2,869

 

 

4,844

 

Marketing

 

 

50,767

 

 

89,598

 

Marketing derivative fair value losses

 

 

 —

 

 

(42)

 

Total revenue

 

 

647,880

 

 

1,076,532

 

Operating expenses:

 

 

 

 

 

 

 

Lease operating

 

 

23,491

 

 

36,269

 

Gathering, compression, processing, and transportation

 

 

282,134

 

 

326,504

 

Production and ad valorem taxes

 

 

22,995

 

 

30,518

 

Marketing

 

 

78,884

 

 

151,764

 

Exploration

 

 

1,599

 

 

666

 

Impairment of unproved properties

 

 

41,000

 

 

221,094

 

Impairment of gathering systems and facilities

 

 

                        —

 

 

1,157

 

Depletion, depreciation, and amortization

 

 

206,968

 

 

243,186

 

Accretion of asset retirement obligations

 

 

658

 

 

710

 

General and administrative (including equity-based compensation expense of $26,447 and $16,202 in 2017 and 2018, respectively)

 

 

62,203

 

 

59,860

 

Total operating expenses

 

 

719,932

 

 

1,071,728

 

Operating income (loss)

 

 

(72,052)

 

 

4,804

 

Other income (expenses):

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates

 

 

7,033

 

 

10,705

 

Interest

 

 

(70,059)

 

 

(74,528)

 

Total other expenses

 

 

(63,026)

 

 

(63,823)

 

Loss before income taxes

 

 

(135,078)

 

 

(59,019)

 

Provision for income tax (expense) benefit

 

 

45,078

 

 

(18,953)

 

Net loss and comprehensive loss including noncontrolling interests

 

 

(90,000)

 

 

(77,972)

 

Net income and comprehensive income attributable to noncontrolling interests

 

 

45,063

 

 

76,447

 

Net loss and comprehensive loss attributable to Antero Resources Corporation

 

$

(135,063)

 

 

(154,419)

 

 

 

 

 

 

 

 

 

Loss per common share—basic and diluted

 

$

(0.43)

 

 

(0.49)

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic and diluted

 

 

315,463

 

 

317,082

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income

Nine Months Ended September 30, 2017 and 2018

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

    

2017

    

2018

 

Revenue and other:

 

 

 

 

 

 

 

Natural gas sales

 

$

1,330,062

 

 

1,498,324

 

Natural gas liquids sales

 

 

590,004

 

 

828,424

 

Oil sales

 

 

79,999

 

 

128,869

 

Commodity derivative fair value gains

 

 

458,459

 

 

134,793

 

Gathering, compression, water handling and treatment

 

 

8,665

 

 

15,298

 

Marketing

 

 

166,659

 

 

394,189

 

Marketing derivative fair value gains

 

 

 —

 

 

94,081

 

Total revenue and other

 

 

2,633,848

 

 

3,093,978

 

Operating expenses:

 

 

 

 

 

 

 

Lease operating

 

 

56,034

 

 

93,155

 

Gathering, compression, processing, and transportation

 

 

815,710

 

 

926,228

 

Production and ad valorem taxes

 

 

70,341

 

 

82,232

 

Marketing

 

 

246,298

 

 

560,924

 

Exploration

 

 

5,510

 

 

4,022

 

Impairment of unproved properties

 

 

83,098

 

 

406,068

 

Impairment of gathering systems and facilities

 

 

 —

 

 

9,658

 

Depletion, depreciation, and amortization

 

 

610,879

 

 

709,480

 

Accretion of asset retirement obligations

 

 

1,944

 

 

2,101

 

General and administrative (including equity-based compensation expense of $78,925 and $56,429 in 2017 and 2018, respectively)

 

 

191,000

 

 

181,576

 

Total operating expenses

 

 

2,080,814

 

 

2,975,444

 

Operating income

 

 

553,034

 

 

118,534

 

Other income (expenses):

 

 

 

 

 

 

 

Equity in earnings of unconsolidated affiliates

 

 

12,887

 

 

27,832

 

Interest

 

 

(205,311)

 

 

(208,303)

 

Total other expenses

 

 

(192,424)

 

 

(180,471)

 

Income (loss) before income taxes

 

 

360,610

 

 

(61,937)

 

Provision for income tax expense

 

 

(105,087)

 

 

(2,500)

 

Net income (loss) and comprehensive income (loss) including noncontrolling interests

 

 

255,523

 

 

(64,437)

 

Net income and comprehensive income attributable to noncontrolling interests

 

 

127,322

 

 

211,534

 

Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation

 

$

128,201

 

 

(275,971)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share—basic

 

$

0.41

 

 

(0.87)

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share—assuming dilution

 

$

0.41

 

 

(0.87)

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

315,275

 

 

316,850

 

Diluted

 

 

316,140

 

 

316,850

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Equity

Nine Months Ended September 30, 2017

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

Additional paid-

 

Accumulated

 

Noncontrolling

 

Total

 

 

    

Shares

    

Amount

    

in capital

    

earnings

    

interests

    

equity

 

Balances, December 31, 2016

 

 

314,877

 

$

3,149

 

 

5,299,481

 

 

959,995

 

 

1,465,953

 

 

7,728,578

 

Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes

 

 

129

 

 

 1

 

 

(1,658)

 

 

 —

 

 

 —

 

 

(1,657)

 

Issuance of common units by Antero Midstream Partners LP, net of underwriter discounts and offering costs

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

223,119

 

 

223,119

 

Equity-based compensation

 

 

 —

 

 

 —

 

 

23,354

 

 

 —

 

 

2,149

 

 

25,503

 

Net income and comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

268,396

 

 

37,162

 

 

305,558

 

Effects of changes in ownership interests in consolidated subsidiaries

 

 

 —

 

 

 —

 

 

1,085,981

 

 

 —

 

 

(1,085,981)

 

 

 —

 

Distributions to noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(27,149)

 

 

(27,149)

 

Balances, March 31, 2017

 

 

315,006

 

$

3,150

 

 

6,407,158

 

 

1,228,391

 

 

615,253

 

 

8,253,952

 

Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes

 

 

442

 

 

 4

 

 

(5,848)

 

 

 —

 

 

 —

 

 

(5,844)

 

Issuance of common units by Antero Midstream Partners LP, net of underwriter discounts and offering costs

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

23,466

 

 

23,466

 

Issuance of common units in Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes

 

 

 —

 

 

 —

 

 

(1,559)

 

 

 —

 

 

627

 

 

(932)

 

Equity-based compensation

 

 

 —

 

 

 —

 

 

24,543

 

 

 —

 

 

2,432

 

 

26,975

 

Net income (loss) and comprehensive income (loss)

 

 

 —

 

 

 —

 

 

 —

 

 

(5,132)

 

 

45,097

 

 

39,965

 

Effects of changes in ownership interests in consolidated subsidiaries

 

 

 —

 

 

 —

 

 

10,753

 

 

 —

 

 

(10,753)

 

 

 —

 

Distributions to noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(34,720)

 

 

(34,720)

 

Balances, June 30, 2017

 

 

315,448

 

$

3,154

 

 

6,435,047

 

 

1,223,259

 

 

641,402

 

 

8,302,862

 

Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes

 

 

22

 

 

 1

 

 

(68)

 

 

 —

 

 

 —

 

 

(67)

 

Issuance of common units by Antero Midstream Partners LP, net of underwriter discounts and offering costs

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

2,364

 

 

2,364

 

Sale of common units of Antero Midstream Partners LP held by Antero Resources Corporation, net of tax

 

 

 —

 

 

 —

 

 

205,780

 

 

 —

 

 

(19,940)

 

 

185,840

 

Net income (loss) and comprehensive income (loss)

 

 

 —

 

 

 —

 

 

 —

 

 

(135,063)

 

 

45,063

 

 

(90,000)

 

Equity-based compensation

 

 

 —

 

 

 —

 

 

23,889

 

 

 —

 

 

2,558

 

 

26,447

 

Effects of changes in ownership interests in consolidated subsidiaries

 

 

 —

 

 

 —

 

 

(100,328)

 

 

 —

 

 

100,328

 

 

 —

 

Distributions to noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(40,184)

 

 

(40,184)

 

Balances, September 30, 2017

 

 

315,470

 

$

3,155

 

 

6,564,320

 

 

1,088,196

 

 

731,591

 

 

8,387,262

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Equity

Nine Months Ended September 30, 2018

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

Additional paid-

 

Accumulated

 

Noncontrolling

 

Total

 

 

    

Shares

    

Amount

    

in capital

    

earnings

    

interests

    

equity

 

Balances, December 31, 2017

 

 

316,379

 

$

3,164

 

 

6,570,952

 

 

1,575,065

 

 

726,955

 

 

8,876,136

 

Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes

 

 

145

 

 

 1

 

 

(1,067)

 

 

 —

 

 

 —

 

 

(1,066)

 

Issuance of common units in Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes

 

 

 —

 

 

 —

 

 

(50)

 

 

 —

 

 

32

 

 

(18)

 

Equity-based compensation

 

 

 —

 

 

 —

 

 

18,802

 

 

 —

 

 

2,354

 

 

21,156

 

Net income and comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

14,833

 

 

65,977

 

 

80,810

 

Effects of changes in ownership interests in consolidated subsidiaries

 

 

 —

 

 

 —

 

 

(555)

 

 

 —

 

 

555

 

 

 —

 

Distributions to noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(55,915)

 

 

(55,915)

 

Other

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(5)

 

 

(5)

 

Balances, March 31, 2018

 

 

316,524

 

$

3,165

 

 

6,588,082

 

 

1,589,898

 

 

739,953

 

 

8,921,098

 

Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes

 

 

528

 

 

 6

 

 

(5,589)

 

 

 —

 

 

 —

 

 

(5,583)

 

Issuance of common units in Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes

 

 

 —

 

 

 —

 

 

(4,007)

 

 

 —

 

 

2,707

 

 

(1,300)

 

Equity-based compensation

 

 

 —

 

 

 —

 

 

16,930

 

 

 —

 

 

2,141

 

 

19,071

 

Net income (loss) and comprehensive income (loss)

 

 

 —

 

 

 —

 

 

 —

 

 

(136,385)

 

 

69,110

 

 

(67,275)

 

Effects of changes in ownership interests in consolidated subsidiaries

 

 

 —

 

 

 —

 

 

2,121

 

 

 —

 

 

(2,121)

 

 

 —

 

Distributions to noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(63,108)

 

 

(63,108)

 

Other

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 8

 

 

 8

 

Balances, June 30, 2018

 

 

317,052

 

$

3,171

 

 

6,597,537

 

 

1,453,513

 

 

748,690

 

 

8,802,911

 

Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes

 

 

34

 

 

 —

 

 

(157)

 

 

 —

 

 

 —

 

 

(157)

 

Issuance of common units in Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes

 

 

 —

 

 

 —

 

 

(306)

 

 

 —

 

 

226

 

 

(80)

 

Equity-based compensation

 

 

 —

 

 

 —

 

 

14,646

 

 

 —

 

 

1,556

 

 

16,202

 

Net income (loss) and comprehensive income (loss)

 

 

 —

 

 

 —

 

 

 —

 

 

(154,419)

 

 

76,447

 

 

(77,972)

 

Effects of changes in ownership interests in consolidated subsidiaries

 

 

 —

 

 

 —

 

 

(372)

 

 

 —

 

 

372

 

 

 —

 

Distributions to noncontrolling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(69,752)

 

 

(69,752)

 

Balances, September 30, 2018

 

 

317,086

 

$

3,171

 

 

6,611,348

 

 

1,299,094

 

 

757,539

 

 

8,671,152

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8


 

Table of Contents

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2017 and 2018

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

    

2017

    

2018

 

Cash flows provided by (used in) operating activities:

 

 

 

 

  

 

 

Net income (loss) including noncontrolling interests

 

$

255,523

 

 

(64,437)

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

Depletion, depreciation, amortization, and accretion

 

 

612,823

 

 

711,581

 

Impairment of unproved properties

 

 

83,098

 

 

406,068

 

Impairment of gathering systems and facilities

 

 

               —

 

 

9,658

 

Commodity derivative fair value gains

 

 

(458,459)

 

 

(134,793)

 

Gains on settled commodity derivatives

 

 

137,392

 

 

268,369

 

Proceeds from derivative monetizations

 

 

749,906

 

 

 —

 

Marketing derivative fair value gains

 

 

               —

 

 

(94,081)

 

Gains on settled marketing derivatives

 

 

               —

 

 

78,098

 

Deferred income tax expense

 

 

105,087

 

 

2,500

 

Equity-based compensation expense

 

 

78,925

 

 

56,429

 

Equity in earnings of unconsolidated affiliates

 

 

(12,887)

 

 

(27,832)

 

Distributions of earnings from unconsolidated affiliates

 

 

10,120

 

 

29,660

 

Other

 

 

1,191

 

 

2,945

 

Changes in current assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

1,771

 

 

4,653

 

Accrued revenue

 

 

28,375

 

 

(53,888)

 

Other current assets

 

 

(3,836)

 

 

(3,721)

 

Accounts payable

 

 

4,731

 

 

8,177

 

Accrued liabilities

 

 

43,043

 

 

27,446

 

Revenue distributions payable

 

 

56,982

 

 

36,215

 

Other current liabilities

 

 

(977)

 

 

(2,649)

 

Net cash provided by operating activities

 

 

1,692,808

 

 

1,260,398

 

Cash flows used in investing activities:

 

 

 

 

 

 

 

Additions to proved properties

 

 

(179,318)

 

 

 —

 

Additions to unproved properties

 

 

(182,207)

 

 

(130,381)

 

Drilling and completion costs

 

 

(946,508)

 

 

(1,125,660)

 

Additions to water handling and treatment systems

 

 

(143,470)

 

 

(77,385)

 

Additions to gathering systems and facilities

 

 

(254,619)

 

 

(337,448)

 

Additions to other property and equipment

 

 

(11,417)

 

 

(5,371)

 

Investments in unconsolidated affiliates

 

 

(216,776)

 

 

(91,419)

 

Change in other assets

 

 

(16,148)

 

 

(2,675)

 

Other

 

 

2,156

 

 

 —

 

Net cash used in investing activities

 

 

(1,948,307)

 

 

(1,770,339)

 

Cash flows provided by (used in) financing activities:

 

 

 

 

 

 

 

Issuance of common units by Antero Midstream Partners LP

 

 

248,949

 

 

 —

 

Proceeds from sale of common units of Antero Midstream Partners LP held by Antero Resources Corporation

 

 

311,100

 

 

 —

 

Borrowings (repayments) on bank credit facilities, net

 

 

(198,000)

 

 

682,000

 

Distributions to noncontrolling interests in consolidated subsidiary

 

 

(102,053)

 

 

(188,775)

 

Employee tax withholding for settlement of equity compensation awards

 

 

(8,500)

 

 

(8,205)

 

Other

 

 

(3,913)

 

 

(3,520)

 

Net cash provided by financing activities