It has been about a month since the last earnings report for Antero Resources (AR). Shares have added about 4.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Antero Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Antero’s Q3 Earnings Miss Estimates, Revenues Beat
Anteroreported third-quarter adjusted earnings of $1.63 per share, missing the Zacks Consensus Estimate of $1.91. However, the bottom line significantly improved from the year-ago quarter’s earnings of 19 cents.
Total quarterly revenues of $2,065 million beat the Zacks Consensus Estimate of $1,982 million. The top line increased from the year-ago quarter’s $534 million.
Lower-than-expected quarterly earnings can be attributed to a fall in natural gas-equivalent production volumes. The negatives were offset by higher realizations of commodity prices.
Antero Resources has authorization from the board of directors to increase its share repurchase program by $1 billion to $2 billion, reflecting strong initiatives of returning capital to shareholders.
Total production through the September quarter was 294 billion cubic feet equivalent (Bcfe), which declined 2% from 299 Bcfe a year ago. Natural gas production (accounting for 68% of the total output) fell 2% year over year to 200 Bcf.
Oil production in the third quarter was 804 thousand barrels (MBbls), down 14% from 932 MBbls. Its production of 5,010 MBbls of C2 Ethane was 15% higher than 4,372 MBbls in the year-ago quarter. The company’s output of 9,950 MBbls of C3+ NGLs in the quarter was 3% lower than 10,258 MBbls a year ago.
Realized Prices (Excluding Derivative Settlements)
Weighted natural-gas-equivalent price realization in the quarter was $8.23 per thousand cubic feet equivalent (Mcfe), higher than the year-earlier figure of $5.15. Realized prices for natural gas rose 102% to $8.69 per Mcf from $4.31 a year ago.
The company’s oil price realization in the quarter was $83.41 per barrel (Bbl), up 37% from $60.87 a year ago. Its realized price for C3+ NGLs declined to $50.61 per Bbl from $52.68. Realized price for C2 Ethane increased 77% to $23.40 per Bbl from $13.25 a year ago.
Total operating expenses in the quarter under review increased to $1,290.5 million from $1,217.9 million in the year-ago period.
Average lease operating costs were 9 cents per Mcfe, up 13% year over year. The same for gathering and compression increased 11% to 81 cents per Mcfe.
Transportation expenses rose 18% from the prior-year quarter to 80 cents per Mcfe. Processing costs increased 19% year over year to 82 cents.
Capex & Financials
In third-quarter 2022, Antero Resources spent $195.6 million on drilling and completion operations. As of Sep 30, 2022, it had no cash and cash equivalents. It had long-term debt of $1.2 billion, with a debt to capitalization of 15.4%.
For 2022, Antero Resources has guided its net daily natural gas-equivalent production at 3.2-3.3 Bcfe/d. Also, net daily natural gas production is expected to be 2.2-2.25 Bcf/d.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -10.48% due to these changes.
Currently, Antero Resources has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
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.
Performance of an Industry Player
Antero Resources belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Range Resources (RRC), has gained 7.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Range Resources reported revenues of $1.1 billion in the last reported quarter, representing a year-over-year change of +264.7%. EPS of $1.37 for the same period compares with $0.52 a year ago.
Range Resources is expected to post earnings of $1.21 per share for the current quarter, representing a year-over-year change of +26%. Over the last 30 days, the Zacks Consensus Estimate has changed -10%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Range Resources. Also, the stock has a VGM Score of A.
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