A month has gone by since the last earnings report for Antero Resources (AR - Free Report) . Shares have lost about 0.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Antero Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Second-Quarter 2018 Results
Antero Resources Corporation reported adjusted second-quarter 2018 earnings per share of 2 cents, missing the Zacks Consensus Estimate of 18 cents, thanks to the surge in lease operating expenses and lower realized natural gas price. However, the bottom line compared favorably with the year-earlier quarter loss per share of 4 cents, courtesy of a surge in natural gas-equivalent production.
Antero’s total operating revenues in the second quarter amounted to $989.3 million, surpassing the Zacks Consensus Estimate of $968 million and the year-ago quarter’s $790.4 million.
Total production through second-quarter 2018 was recorded at 229 billion cubic feet equivalent (Bcfe) —comprising 72% natural gas — 15% higher than 200 Bcfe a year ago. Natural gas production increased 16% to 167 billion cubic feet (Bcf) from 144 Bcf in the April-to-June quarter of 2017.
The production of oil in second-quarter 2018 was reported at 632 thousand barrel (MBbl), up 3% from 613 MBbl in the prior-year quarter. Antero’s production of 3,290 MBbl of C2 Ethane was higher than 2,548 MBbl in the year-ago quarter by 29%. The output of 6,414 MBbl of C3+ NGLs for the April-to-June quarter of 2018 was 4% higher than 6,190 MBbl in the year-earlier quarter.
Realized Prices (Excluding Derivatives Settlements)
The natural gas-equivalent price realization for the quarter was $3.35 per thousand cubic feet equivalent (Mcfe), up from $3.26 in the year-earlier quarter by 3%. However, the realized prices for natural gas fell 10% from $3.15 per thousand cubic feet (Mcf) to $2.83 Mcf.
The company’s oil price realization for the quarter was reported $61.55 per Bbl, up 42% from $43.24. The realized price for C2 Ethane jumped 18% to $9.93 per Bbl from $8.40. Moreover, the company’s realized price for C3+ NGLs increased to $34.81 per Bbl from $24.14 in the prior-year quarter.
Operating Expenses Surge
Antero’s total expenses in the second quarter skyrocketed year over year to $1,022.1 million from $666.7 million. This was supported by almost a 79% jump in lease operating expenses to $30.2 million.
The increase in gathering, compression, processing, and transportation expenses by 15.4% also drove total operating costs.
Financials & Capital Spending
As of Jun 30, 2018, the company reported cash and cash equivalents of $50.6 million and long-term debt of $5,288.3 million, with a debt-to-capitalization ratio of 37.5%. For drilling and completion operations, the company spent $393 million through the second quarter of 2018.
The company projects natural gas realized price for 2018 between 5 cents and 10 cents premium to NYMEX Henry Hub against the prior guidance of 0 cents to 5 cents premium.
Antero also expects to hedge the entire natural gas production through 2018 and 2019 at $3.50 per MMBtu.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -13.32% due to these changes.
At this time, Antero Resources has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Antero Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.