Antero Resources Corporation’s ( AR Quick Quote AR - Free Report) shares have jumped 24.8% in the past month compared with the industry’s 16.8% rally. The Zacks Rank #3 (Hold) stock witnessed an upward revision in the Zacks Consensus Estimate for its 2021 bottom line over the past seven days.
Let’s delve into the factors that are responsible for the stock price appreciation.
What’s Favoring the Stock?
The company is the third largest natural gas producer in the United States. In the southwestern core of the prolific Marcellus and Utica shale plays, Antero Resources’ footprint covers more than 542,000 net acres. In the resources, the company owns many undeveloped core drilling locations, which has brightened up the upstream energy player’s production outlook.
Notably, Antero Resources is expecting significant well cost reduction in the Marcellus that will aid its bottom line. Moreover, the company has hedged 93% of the estimated 2021 natural gas volumes at $2.78 per MMBtu, thereby combating the commodity price volatility. Also, the balance sheet of Antero Resources has lower exposure to debt capital as compared to the composite companies belonging to the industry.
Antero Resources has a 29% ownership interest in Antero Midstream Corporation (
AM Quick Quote AM - Free Report) through which the upstream firm generates steady revenues. Remarkably, with its midstream energy assets, Antero Midstream provides services to gas production in the Marcellus and Utica shales.
Despite so many positive factors aiding the stock’s price rally, one point is needed to be kept in mind. Notably, more than 60% of the company’s net leasehold acreage is undeveloped. Some of the leases in the Marcellus and Utica acreage have set a condition for the company to drill commercially productive wells. Hence, the company can possibly lose the rights under some specific leases if the upstream firm finds it difficult to drill commercially-productive wells.
Stocks to Consider
Some better-ranked players in the energy space include
Viper Energy Partners LP ( VNOM Quick Quote VNOM - Free Report) and Diamondback Energy, Inc. ( FANG Quick Quote FANG - Free Report) . While Viper Energy carries a Zacks Rank #2 (Buy),Diamondback sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
Viper Energy has seen upward earnings estimate revisions for 2021 in the past 60 days.
Diamondback is likely to see earnings growth of 55% in 2021.
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