Antero Resources Corporation Q3 FY2025 earnings call

Strategic Initiatives

• Entering an exciting time for natural gas market with demand growth from U.S. LNG exports and data center power generation; Antero poised to benefit via Marcellus position expansion in West Virginia.

Operating Results

• Third quarter was most impressive operating performance to date with drilling and completion records, including 14.5 stages per day completion and world record for continuous pumping hours.

Marcellus Core Fairway Expansion

• Additional land investment due to development plan success and organic leasing, with well performance expanding Marcellus core boundaries.

Liquids and NGL Fundamentals

• Improving NGL fundamentals with reduced U.S. NGL production growth, increased propane exports despite trade uncertainty, and new LPG export terminals coming online.

Natural Gas Market

• LNG export demand increase, TGP 500L basis strength, and significant natural gas demand surge from new LNG and power projects.

Free Cash Flow

• Generated over $90 million in free cash flow in Q3, year-to-date $600 million; uses include $180 million debt paydown, $163 million stock purchase, and $242 million asset acquisitions.

Hedge Program

• Added natural gas swaps for 2025 Q4 and full years 2026-2027, restructured collars for 2026 to raise floor price, hedging 24% of 2026 natural gas volumes.

The third quarter was Antero's most impressive operating performance to date, with numerous company records set. On drilling and completion, completion stages per day averaged a quarterly record of 14.5 stages per day or 2,900 feet per day, and a world record for continuous pumping hours of 15 days of nonstop pumping. The Marcellus core fairway expansion is driven by ongoing success of the development plan and organic leasing, with strong well performance expanding the view of Marcellus core boundaries.

• 2026 production expected to be in the 3.25 to 3.5 range in 4Q, with maintenance capital and incremental increases.
• Hedging strategy to lock in free cash flow yields, with 24% of 2026 natural gas volumes hedged.
• Capital allocation strategy balancing debt repayment, share repurchases, and accretive transactions.

• Market uncertainties affecting NGL exports.
• Competition for natural gas supply from various projects.
• Global trade uncertainties impacting propane exports.

Q: Greetings, and welcome to the Antero Resources Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Dan Katzenberg, Director of Investor Relations. Thank you. You may begin.

A: Thank you for joining us for Antero's Third Quarter 2025 Investor Conference Call. We'll spend a few minutes going through the financial and operating highlights, and then we'll open it up for Q&A. I would also like to direct you to the homepage of our website at www.anteroresources.com, where we have provided a separate earnings call presentation that will be reviewed during today's call. Today's call may contain certain non-GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such measures. Joining me on the call today are Michael Kennedy, CEO and President; Brendan Krueger, CFO; Dave Cannelongo, Senior Vice President of Liquids Marketing and Transportation; and Justin Fowler, Senior Vice President of Natural Gas Marketing. I will now turn the call over to Mike.

Q: Arun Jayaram with JPMorgan asked about the catalyst for commencing D&C operations on the gas side in Harrison County and thoughts on 2026 program.

A: Michael Kennedy said the catalyst was local demand and discussions, with 100,000 acres, midstream infrastructure, and proof-of-concept pad; 2026 production expected to be in 3.25 to 3.5 range, drilling JV still to be determined.

Q: John Freeman with Raymond James asked about impact of acquisitions on maintenance CapEx and if acquisitions are a bigger focus.

A: Michael Kennedy said maintenance CapEx increases by 3% with production increase, and acquisitions are evaluated on a case-by-case basis as they make sense in the West Virginia Marcellus.

Q: David Deckelbaum with TD Cowen asked about average lateral length progression in 2026 and acquisitions trend.

A: Michael Kennedy said average lateral length expected to go up to 14,000 feet, and acquisitions are opportunistic if accretive and make sense in Antero's dominant Marcellus position.

Q: Kevin MacCurdy with Pickering Energy Partners asked about hedging strategy change and ethane volume outperformance.

A: Michael Kennedy said hedging strategy is a mix of opportunistic and prudent, locking in free cash flow yields; Dave Cannelongo said ethane volume outperformance due to customer timing and improving spreads.

Q: Phillip Jungwirth with BMO Capital Markets asked about uplift in Harrison County wells and data center cooling opportunity.

A: Michael Kennedy said expected 50% improvement in Harrison County wells, from 1.3 Bcf per day to 2 Bcf; Brendan Krueger discussed data center cooling opportunity with upstream-midstream integration and ongoing discussions.

Q: Douglas George Blyth Leggate with Wolfe Research asked about decision point for dry gas growth and Ohio asset sales.

A: Michael Kennedy said decision points include proof of concept results, local demand, and basis, with Antero uniquely positioned; Ohio assets are in market check process.

Q: Betty Jiang with Barclays asked about data center proof of concept and land budget.

A: Michael Kennedy said proof of concept is for EURs and deliverability, land budget around $75-100 million with potential increase based on opportunities; Brendan Krueger discussed land budget and organic leasing.

Q: Jacob Roberts with TPH asked about cash taxes and dry gas activity iteration.

A: Brendan Krueger said no material cash taxes through 2027; Michael Kennedy said dry gas activity is ready to go into manufacturing mode with typical design.

Q: Nitin Kumar with Mizuho Securities asked about cash return profile and M&A proceeds use.

A: Michael Kennedy said no dividend, focus on countercyclical share repurchases and transactions; M&A proceeds could be used for debt paydown or share repurchases if Ohio assets are sold.

Q: Leo Mariani with ROTH MKM asked about M&A strategy and operational improvement potential.

A: Michael Kennedy said M&A is small bolt-on transactions for net growth, operational improvement possible with continued high completion stages; Neil Mehta asked about next frontiers and macro on NGLs.

A: Michael Kennedy discussed strategic initiatives and Dave Cannelongo discussed NGL recovery driven by demand and supply factors.

Q: Kalei Akamine with Bank of America asked about Marcellus core expansion confidence and gas demand pipeline opportunities.

A: Michael Kennedy discussed core expansion due to well performance; Justin Fowler discussed gas demand pipeline visibility and direct-to-consumer opportunities with patience.

Q: Neil Mehta with Goldman Sachs asked about CEO perspective and NGL macro.

A: Michael Kennedy discussed strategic frontiers; Dave Cannelongo discussed NGL recovery factors.

Q: Paul Diamond with Citi asked about capital allocation and production management.

A: Michael Kennedy discussed capital allocation in bull scenarios and production management as economics-based; Paul Diamond asked about production management on margins.

A: Michael Kennedy said production management is economics-based and built into guidance, with limited local basis exposure.