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    AR
    Earnings call· Mar 2026(Q1 FY26)

    ANTERO RESOURCES Q1 FY26 earnings call AR

    Apr 30, 2026 Source

    Executive summary

    Antero Resources Q1 FY26 — Record Production and Accelerated Debt Reduction

    Antero Resources delivered a strong quarter, marked by record production and robust free cash flow generation, significantly accelerating debt reduction following the HG acquisition. The company is strategically positioned to benefit from rising global demand for U.S. energy, particularly NGLs and LNG, amidst geopolitical supply disruptions. Management is focused on cost optimization and leveraging its integrated upstream and midstream assets to capitalize on growing regional power and data center demand.

    Highlights

    5

    • Achieved record Q1 production of 3.9 Bcfe per day, representing a 13% increase year-over-year.

    • Generated $657 million in free cash flow, marking the second highest quarterly level in company history.

    • Accelerated debt reduction, funding over 50% of the HG acquisition by Q1 FY26 and expecting full funding by early next year, a year ahead of schedule.

    • Reduced 2026 cash cost guidance by $0.10 per Mcfe at the midpoint, reflecting $0.30 per Mcfe total cost reductions including G&A and marketing.

    • Anticipates hitting its leverage target of 1x by mid-2026, six months ahead of prior expectations.

    Concerns

    1

    • The company noted significant uncertainties due to geopolitical events and Middle East infrastructure attacks, which prevented providing updated guidance with a high level of confidence.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year 2026 Production
    4.1 Bcfe per day
    high materiality
    High
    Leverage Target (Net Debt/EBITDA)
    1x
    high materiality
    High
    Full-year 2026 Cash Cost Guidance
    Reduced by $0.10 per Mcfe at the midpoint
    medium materiality
    High
    Full-year 2026 Capital Expenditure
    $1 billion
    high materiality
    High
    HG Acquisition Funding Completion
    Fully funded
    high materiality
    High

    Operational metrics

    34
    HG Acquisition Operating Synergies (Achieved)
    $15 million to $20 million
    Q1 FY26

    Achieved ahead of schedule from the HG acquisition.

    HG Acquisition Operating Synergies (Full Year Forecast)
    $80 millionoutpacing initial target of $50 million
    FY26

    Forecasted for the full year, driven by drilling and completion design changes, water handling optimization, and economies of scale.

    Cash Cost Reduction (Q2-Q4 2026 Production Expense)
    $0.26 per Mcfeover 10% below the full year average in 2025
    Q2-Q4 2026

    Reflects reductions in cash production expenses.

    Cash Cost Reduction (Total)
    $0.30 per Mcfe
    FY26

    Total cost reductions including G&A and net marketing expense.

    Natural Gas Hedged Volumes
    over 60%
    2026

    Part of the strategy to target 25%-50% of annual production hedging.

    Natural Gas Hedged Volumes
    1/3
    2027

    Part of the strategy to target 25%-50% of annual production hedging.

    Liquids Hedged Volumes
    unhedged
    Current

    Company remains unhedged on NGLs.

    LNG Exposure Volume
    2.3 Bcf per day
    Current

    Volume of production sold to sales points along the LNG fairway.

    NGL Production (C3+)
    46 million net barrels
    Annual

    The company's net production of C3+ NGLs, where a $1/barrel increase results in $46 million in incremental cash flows.

    Incremental FCF from C3+ Pricing Increase
    over $550 million
    2026

    Reflects an approximate $12 per barrel increase in C3+ realized pricing.

    U.S. LPG Export Capacity Added
    610,000 barrels a day
    Past year

    New capacity added, bringing total terminal capacity to approximately 3 million barrels a day.

    U.S. LPG Export Capacity (Total Terminal)
    3 million barrels a day
    Current

    Total terminal capacity for LPG exports.

    U.S. LPG Export Capacity (Additional)
    approximately another 1 million barrels a day
    By 2028

    Additional expansions expected through 2028.

    Propane Export Volume (Recent Peak)
    2.3 million barrels a day
    Recent weeks

    Record level exports expected to sustain in the months ahead.

    LNG Export Demand Increase
    7 Bcf per day
    By end of 2027

    Expected increase in LNG export demand.

    Golden Pass LNG Capacity
    1.6 Bcf
    2026

    Expected to ramp up in 2026.

    Golden Pass LNG Capacity
    2.4 Bcf per day
    2027

    Ultimate export capacity for Golden Pass LNG.

    EU Winter Storage Level
    below 30%second lowest storage level on record
    End of Q1

    EU exited the past winter with low storage levels.

    EU Imports from Middle East Decline
    91%
    March and April

    Decline in imports from the Middle East, adding to storage issues.

    Regional Power Demand Projects (Publicly Announced)
    over 8 Bcf per day
    Current

    Publicly announced power projects in the region.

    Regional Power Demand Projects (Total Estimate)
    exceed 10 Bcf per day
    Current

    Total estimated regional power demand, including non-disclosed projects.

    West Virginia Power Generation Capacity (Current)
    15 gigawatts
    Today

    Current power generation capacity in West Virginia, part of the 50x50 plan.

    West Virginia Power Generation Capacity Target
    50 gigawatts
    By 2050

    Target for West Virginia's 50x50 plan to increase power generation capacity.

    Basin Total Production
    approximately 36 Bcf per day
    Current

    Total production in the basin, compared to incremental regional demand growth.

    HG Acquisition Acres
    nearly 400,000 net acres
    Acquisition

    Added to the company's core West Virginia Marcellus position.

    HG Acquisition Drilling Locations
    400 drilling locations
    Acquisition

    Added to the company's core West Virginia Marcellus position.

    HG Acquisition Pad Lateral Feet
    110,000 total lateral feet
    First HG pad

    Total lateral feet for the first 6-well HG pad, with average lateral lengths over 18,000 feet per well.

    HG Acquisition Pad Net Royalty Interest
    89%
    First HG pad

    Net royalty interest for the first HG pad, enhancing its rate of return.

    HG Acquisition Pad Production
    150 million per day
    First HG pad

    Expected production from the first HG pad, anticipated to remain flat for some time. (Transcription note: 'million per day' assumed to be MMcf/day based on context.)

    Gas Supply Proposals Total
    over 5 Bcf a day
    Last few months

    Total volume of gas supply proposals for regional/local demand, excluding LNG.

    Drilling Efficiency (Stages per day)
    over 14 stages per dayHG was in the 2, 3, 4 stages per day
    Current

    Achieved on new HG pads, significantly higher than the previous operator's performance.

    Drilling Efficiency (Days per well)
    under 9 days per wellThey were triple quadruple that
    Current

    Improved drilling times on HG assets compared to the previous operator.

    Liquids Cut
    Low 30s
    Current

    Refers to the percentage of liquids in the production stream.

    Undeveloped Inventory (Marcellus Dry Gas)
    over 1,000 locations
    Current

    Located in the premium core of the Marcellus dry gas acreage.

    Industry KPIs

    6
    MetricValueDetails
    D c efficiency rig activityover 14 stages per daystages/day
    Realized price differential$0.94 premiumUSD
    Basin level production volume3.9 Bcfe per dayBcfe/day
    Cost of supply unit cash cost$0.30 per McfeUSD/Mcfe
    FCF shareholder distributions$657 millionUSD
    Weather event volume earnings impact100% uptime

    Deals & partnerships

    2
    HGAcquisition of substantial production, cash flow, nearly 400,000 net acres, and 400 drilling locations in core West Virginia Marcellus.

    Closed in Q1 FY26.

    Ohio Utica ShaleDivestiture of assets in the Ohio Utica Shale.

    Closed in Q1 FY26.

    Capital programs

    1
    Discretionary Growth Capital (3 pads)TBD$200 million

    Benefit: Increased production

    This is incremental capital for completing 3 pads, with the decision to spend being discretionary based on local natural gas prices and demand.

    Risks & headwinds

    2
    Geopolitical events and Middle East infrastructure attacksNear term and years ahead

    Far too many uncertainties for us to be able to provide updated guidance with a high level of confidence.

    Mitigation: Company's unhedged NGL position is poised to benefit from rising global demand and higher Mont Belvieu pricing; Antero's unique export strategy and advantaged position in global energy markets.

    Insufficient U.S. propane inventory to meet global demandCurrent to winter season

    U.S. can probably backfill only about 30 million barrels of the 120+ million barrels of LPG lost globally.

    Mitigation: Expected strong demand in the U.S. to keep barrels onshore, leading to higher Mont Belvieu pricing.

    What to watch in Q2 FY26

    4

    Leverage Target (Net Debt/EBITDA)

    Mid-2026
    Target1x

    Why it matters

    Achieving this target ahead of schedule would demonstrate strong financial discipline and free up capital for shareholder returns.

    Looking ahead, improved NGL fundamentals are expected to result in us hitting our leverage target of 1x by mid-2026, 6 months ahead of prior expectations.

    Q&A highlights

    6

    How do Antero's NGL marketing arrangements work, particularly regarding international exposure and pricing premiums to Mont Belvieu, given the $0.94 premium in Q1?

    Dave Cannelongo explained that the portfolio includes international index pricing and Mont Belvieu, with a mix of term and spot transactions. He noted that while April and May saw higher pricing due to Middle East conflict, June arbs have tightened. The company is constructive on stronger Mont Belvieu pricing for 2026 due to inventory situations and global demand.

    “But if you look out even the June, the arbs have already tightened quite considerably, they're now in the $0.10 to $0.15 per gallon premium to Mont Belvieu range. And I think as we look out forward in the year with the inventory situation and what we expect to happen just as the U.S. attempts to meet a portion of what the rest of the world has lost through this conflict in the Middle East, those arbs will tighten further.”

    asked by Arun Jayaram from JPMorgan Chase & Co. · answered by David Cannelongo

    2 min read6 chapters

    Detailed Narrative

    01

    HG Acquisition Integration & Synergies

    Antero Resources has significantly accelerated the integration of the HG acquisition, turning in line the first 6-well pad with average lateral lengths over 18,000 feet and 89% net royalty interest, expected to produce 150 MMcf/day. Operating synergies have already reached $15 million to $20 million, with a full-year forecast of over $80 million, exceeding the initial target of $50 million due to drilling and completion design changes, water handling optimization, and economies of scale.

    02

    NGL Market Dynamics & Export Strategy

    The company, as the largest U.S. NGL producer/exporter, is poised to benefit from rising global demand for U.S. energy, particularly NGLs, due to Middle East supply disruptions. U.S. LPG export capacity has expanded by 610,000 barrels a day over the past year to 3 million barrels a day, with another 1 million barrels a day expected by 2028. Recent propane exports reached 2.3 million barrels a day, and Antero expects record levels to sustain, leading to higher Mont Belvieu pricing.

    03

    Natural Gas Market Outlook & Regional Demand

    LNG export demand is projected to increase by 7 Bcf per day by the end of 2027, with Golden Pass ramping up to 2.4 Bcf per day in 2027. This, combined with low EU storage levels and increasing regional power demand, is expected to create an undersupplied U.S. market. West Virginia, where Antero is the largest producer, is seeing significant power demand projects exceeding 10 Bcf per day, including data centers from Microsoft, NVIDIA, and Google, supported by initiatives like the state's 50x50 plan.

    04

    Cost Structure Optimization

    Antero reduced its 2026 cash cost guidance by $0.10 per Mcfe, driven by $0.26 per Mcfe production expense reductions for Q2-Q4 2026 and $0.30 per Mcfe total cost reductions. Beyond 2026, the company anticipates further margin enhancement through commercial agreements on natural gas and liquids takeaway, including direct agreements with end-users and replacing expiring transport contracts with better netback transactions, potentially generating hundreds of millions of dollars in incremental EBITDA annually.

    05

    Capital Allocation & Debt Reduction

    The company generated over $750 million in free cash flow from December 2025 through Q1 2026, paying down over 25% of the HG acquisition cost. Combined with Utica divestiture proceeds, over half of the transaction is funded, with full funding expected by early next year, a year ahead of schedule. This accelerated debt reduction positions Antero to direct nearly all free cash flow towards share buybacks once the term loan is retired.

    06

    Drilling & Completion Efficiency

    Antero has significantly improved drilling and completion efficiency on the acquired HG assets, achieving over 14 stages per day on new pads compared to the previous operator's 2-4 stages per day. Drilling times have also been reduced to under 9 days per well, substantially improving cycle times and optimizing capital deployment, which was not underwritten in the initial acquisition valuation.

    AI-generated summary of the company’s earnings call. Not investment advice.