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Antero Resources (AR) Closes ORRI Deal, Stock Up Nearly 15%

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Antero Resources Corporation (AR - Free Report) recently closed an overriding royalty interest (ORRI) transaction with Sixth Street Partners, a private investment firm. The move will provide Antero Resources with proceeds of $402 million. It is expected to use the amount to repay borrowings under the revolving credit facility. Following the news, the stock jumped 14.9% yesterday.

The company received $300 million at the closing of the transaction and is expected to get $102 million over the next year, after reaching certain volume thresholds. Notably, the ORRI deal is expected to help the company reach more than half of the asset sale target. It has plans to generate proceeds of $650-$900 million in 2020 from the asset sale program. The deal will not only enable the company to reduce debt, but also allow it to retain its core acreage position.

Moreover, it announced the buyback of $196 million of 2021 unsecured senior notes in the June quarter at a 17% discount. The company currently has $540 million of 2021 senior notes outstanding.

As a result of the transactions, Antero Resources has $745 million drawn on its credit facility. This leaves the company with $1.2 billion of remaining liquidity. These transactions are important, given the fact that Antero Resources had no cash and cash equivalents as of Mar 31, 2020. It had adjusted available liquidity of $1 billion and a long-term debt of $3,707.8 million.

Price Performance

Antero Resources’ shares have lost 33.9% in the past year compared with 45.7% fall of the industry it belongs to.

Zacks Rank & Stocks to Consider

Currently, Antero Resources has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space include Chaparral Energy, Inc. , CNX Resources Corporation (CNX - Free Report) and Concho Resources Inc. , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chaparral Energy’s bottom line for 2020 is expected to rise 57.8% year over year.

CNX Resources beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 111.5%.

Concho Resources has a positive earnings surprise of 4.9% in the last four quarters.

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