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Can Antero Resources (AR) Soar Further After Gaining 43.2% YTD?

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Antero Resources Corporation’s (AR - Free Report) shares have jumped 43.2% in the year-to-date period against the industry’s 41.7% plunge. While the upstream energy industry is grappling with coronavirus woes, Antero Resources has managed to navigate through the negatives. The Denver, CO-based company — with a market c­­­­­­ap of $1 billion — is one of the fast-growing natural gas producers in the United States.

The company has a trailing four-quarter earnings surprise of 44.6%, on average. It continues to benefit from its prolific Appalachian Basin resources. But the current focus is:

Can It Retain Momentum?

The answer is yes and here’s why we think so:

Antero Resources’ core Appalachian Basin acreage position allows for significant long lateral drilling opportunities and capital efficiencies. The company boasts a total of 522,000 net acres in Marcellus and Utica shales, which position it well to boost production. Moreover, with an additional inventory of 1,200 drilling locations in Appalachian, the company’s production outlook seems bright.

Even though Antero Resources intends to reduce capital spending in 2020, it has kept its net natural gas equivalent production guidance for 2020 unchanged at 3,500 MMcfe/d, indicating a 9% year-over-year rise. Liquids production for 2020 is expected to be 187,500 Bbls/d. Moreover, aided by its drilling and completion capital budget reduction, the company expects to generate $175-$200 million in free cash flow in second-half 2020.

The Zacks Rank #2 (Buy) company has plans to generate proceeds of $750-$1,000 million in 2020 from the asset sale program. By third quarter-end, it closed $751 million of transactions. Antero Resources used the proceeds from the transactions to buy back debt at a discount. Moreover, it plans to maintain a strong hedging position in the coming days.

Most importantly, the bullish natural gas price outlook is likely to keep favoring the stock. Rising domestic demand, LNG exports and decreased production are boosting the commodity’s price. Throughout 2021, natural gas prices are expected to average $3.14 per million British thermal units (MMBtu), indicating a rise from the estimated 2020 figure of $2.14 per MMBtu, per U.S. Energy Information Administration. Higher natural gas prices will likely boost Antero Resources’ profit levels.

Other Stocks to Consider

Other top-ranked players in the energy space include Matador Resources Company (MTDR - Free Report) , Goodrich Petroleum Corporation and Global Partners LP (GLP - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Matador Resources’ bottom line for 2021 is expected to surge 187% year over year.

Goodrich Petroleum’stop line for 2021 is expected to rise 52.4% year over year.

Global Partners’ bottom line for 2020 is expected to rise 150.5% year over year.

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Global Partners LP (GLP) - free report >>

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Antero Resources Corporation (AR) - free report >>

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