Antero Resources Reports Third Quarter 2013 Financial and Operational Results

Antero Resources Reports Third Quarter 2013 Financial and Operational Results

PR Newswire

DENVER, Nov. 6, 2013

DENVER, Nov. 6, 2013 /PRNewswire/ --

(Logo: http://photos.prnewswire.com/prnh/20131101/LA09101LOGO)

Highlights:

  oNet daily production averaged 566 MMcfe/d, a 25% increase over second
    quarter 2013 and a 128% increase over third quarter 2012 production from
    continuing operations
  oNet daily production included 7,900 Bbl/d of liquids, an 89% increase over
    second quarter 2013
  oReported GAAP earnings were $118 million and adjusted net income was $49
    million, a 10% decrease and 45% increase over second quarter 2013,
    respectively
  oEBITDAX was $183million, a 38% increase over second quarter 2013 and a
    159% increase over third quarter 2012 EBITDAX from continuing operations
  oCompleted 34 Marcellus wells in the third quarter with an average 24-hour
    peak rate of 18.3 MMcfe/d (16% liquids in ethane rejection)
  oFirst 13 unconstrained Marcellus Shale wells with shorter stage lengths
    (SSL) are averaging 20% to 30% above the Company's type curve 
  oCompleted one additional Utica Shale well since 2nd quarter 2013 press
    release with an average 24-hour peak rate of 7,246 Boe/d (44% liquids
    assuming ethane recovery)

Antero Resources Corporation (NYSE: AR) ("Antero" or the "Company") today
released its third quarter 2013 financial and operating results. The relevant
financial statements are included in Antero's Quarterly Report on Form10-Q
for the quarter ended September 30, 2013, which has been filed with the
Securities and Exchange Commission ("SEC").

Recent Developments

Initial Public Offering

On October 16, 2013 Antero completed its initial public offering (IPO) of
41,083,750 shares of common stock at a price to the public of $44.00 per
share, including the full exercise by the underwriters of their options to
purchase an additional 3,409,091 shares of common stock from the selling
stockholder and an additional 1,949,659 shares of common stock from the
Company. Net proceeds received by the Company from the sale of 37,674,659
shares of common stock were approximately $1.6 billion, after deducting
underwriting discounts and expenses of the offering. A portion of the
proceeds will be used to redeem $140 million of the Company's outstanding
7.25% Senior Notes due 2019 at a price of 107.25% of the principal amount,
plus accrued and unpaid interest to the redemption date. Following the IPO,
Antero elected to reduce lender commitments to its bank credit facility from
$1.75 billion to $1.5 billion. Pro forma for the IPO closing and reduced
lender commitments, Antero's $3.0 billion of net debt as of September 30, 2013
would be reduced to approximately $1.5 billion, including a fully undrawn
credit facility and $32 million in letters of credit outstanding, resulting in
$1.5 billion of available liquidity and $2.0 billion of unused borrowing base
capacity.

Debt Offering

On November 5, 2013 Antero closed a private placement of $1.0 billion in
aggregate principal amount of 5.375% senior unsecured notes due 2021 at par.
Antero received net proceeds of approximately $987 million, a portion of which
will be used to finance the redemption of the Company's outstanding $525
million of 9.375% senior notes due 2017. The Company intends to use the
remaining net proceeds to repay in full its 9.0% senior note due 2013, repay
the outstanding borrowings under its credit facility and fund a portion of its
drilling and development program. Antero's net debt as of September 30, 2013,
pro forma for the IPO, optional redemptions and credit facility repayment,
remains unchanged at approximately $1.5 billion, but available liquidity
increased to $1.8 billion.

Financial Results

Net production for the third quarter of 2013 averaged 566 MMcfe/d, an increase
of 25% from the second quarter of 2013 and 128% from continuing operations in
the third quarter of 2012. Net production was comprised of 519 MMcf/d of
natural gas (92%), 6,929 Bbl/d of natural gas liquids (NGLs) (7%) and 948
Bbl/d of crude oil (1%). Third quarter 2013 net liquids production of 7,877
Bbl/d increased 89% from the second quarter of 2013. The Company had
virtually no liquids production in the third quarter of 2012. The net
production increase was primarily driven by production from 34 new Marcellus
wells and 10 new Utica wells brought on line in the third quarter of 2013.

Average natural gas prices before commodity derivatives increased 30% from the
prior-year quarter to $3.82 per Mcf, a $0.22 per Mcf premium to NYMEX, due to
higher natural gas prices and an increase in Antero's average residue gas
heating value or Btu. Additionally, 67% of Antero's third quarter 2013
natural gas revenues were realized at the Columbia Gas Transmission (TCO)
index price at a $0.07 per Mcf negative differential to NYMEX but at a net
$0.34 per Mcf positive differential to NYMEX after Btu upgrade. The Company's
remaining natural gas revenues were realized at various other index pricing
points at a $0.21 per Mcf negative differential to NYMEX but at a net $0.01
per Mcf negative differential to NYMEX after Btu upgrade.

Average realized propane-plus (C3+) NGL prices for the third quarter of 2013
were $50.13 per barrel and average realized oil prices were $97.10 per
barrel. Average natural gas-equivalent prices including NGLs and oil, before
hedge settlements, increased 45% to $4.27 per Mcfe from the prior year
quarter.

Average realized natural gas prices including commodity derivatives were $4.81
per Mcf for the third quarter of 2013, a 2% decrease as compared to the third
quarter of 2012. Average natural gas-equivalent prices including NGLs, oil
and hedge settlements, increased by 6% to $5.18 per Mcfe for the third quarter
of 2013 as compared to the third quarter of 2012. For the third quarter of
2013, Antero realized natural gas hedging gains of $0.91 per Mcfe.

Revenues for the third quarter of 2013 were $385 million as compared to $(92)
million for the third quarter of 2012. Revenues for the third quarter of 2013
included a $115 million non-cash gain on unsettled commodity derivatives while
the third quarter of 2012 included a $204 million non-cash loss on unsettled
commodity derivatives. Liquids production contributed 18% of oil, NGLs and
natural gas revenues before commodity derivatives in the third quarter of 2013
compared to less than 1% during the third quarter of 2012. Non-GAAP adjusted
net revenues increased 141% to $270 million compared to the third quarter of
2012 (including cash-settled derivative gains and losses but excluding
unsettled derivative gains and losses). For a reconciliation of adjusted net
revenue to operating revenues, the most comparable GAAP measure, please read
"Non-GAAP Financial Measures."

Per unit cash production expense (lease operating, gathering, compression,
processing and transportation, and production tax) for the third quarter of
2013 was $1.40 per Mcfe which is a 4% increase compared to $1.34 per Mcfe in
the prior year quarter. The increase was primarily driven by processing costs
associated with liquids production in the third quarter of 2013. The Company
had no access to gas processing capacity in the third quarter of 2012. Per
unit general and administrative expense for the third quarter of 2013 was
$0.28 per Mcfe, a 46% decrease from the third quarter of 2012. The decrease
was primarily driven by the increase in net production. Per unit
depreciation, depletion and amortization expense increased 8% from the prior
year quarter to $1.27 per Mcfe, primarily driven by higher depreciation on
gathering and compression assets as the Company continued to build out its
gathering system in the rich gas areas of the Marcellus and Utica Shales.

EBITDAX from continuing operations of $183million for the third quarter of
2013 was 159% higher than the prior-year quarter due to increased production
and revenues. For the third quarter of 2013, cash flow from continuing
operations before changes in working capital, a non-GAAP financial measure,
increased 309% from the prior-year quarter to $141million.

The Company had net income of $118 million ($0.45 per basic and diluted share
on a pro forma basis) on a GAAP basis for the third quarter of 2013, including
$115 million of non-cash gains on unsettled commodity derivatives and $47
million of settled gains on commodity derivatives during the quarter.
Excluding the non-cash gain on unsettled commodity derivatives, and a $2
million non-cash impairment expense, both net of tax, adjusted net income, a
non-GAAP measure, was $49 million ($0.19 per basic and diluted share on a pro
forma basis) for the third quarter of 2013 as compared to $12 million for the
prior year quarter. 

For a description of EBITDAX from continuing operations, cash flow from
continuing operations before changes in working capital and adjusted net
income and reconciliations to their nearest comparable GAAP measures, please
read "Non-GAAP Financial Measures".

Operational Results

All operational figures are as of the date of this release unless otherwise
noted.

During the third quarter of 2013, Antero completed 44 gross (40 net) operated
horizontal wells in the Marcellus and Utica Shales with an average lateral
length of 6,800 feet and currently has 65 gross (59 net) operated wells in
various stages of drilling, completion, or waiting on completion in the
Marcellus and Utica Shale projects.

Marcellus Shale — Antero is currently operating 15 drilling rigs in the
Marcellus Shale play, including four intermediate rigs that drill the vertical
section of some horizontal wells to the kick-off point at approximately 6,000
feet. The Company plans to maintain this rig count into 2014. Antero has 53
horizontal wells either in the process of drilling, completing or waiting on
completion. The Company has two dedicated frac crews currently working in
West Virginia along with four spot frac crews. Antero plans to drill a total
of 133 horizontal Marcellus wells in 2013 with an average lateral length of
7,600 feet.

The 217 horizontal Marcellus wells that Antero has completed and placed on
line since project inception had an average 24-hour peak rate of 14.9 MMcfe/d
(9% liquids in ethane rejection), an average lateral length of approximately
7,000 feet, an average Btu of 1120 and an average drilling and completion cost
of $9.2 million per well. Additionally, 209 of these wells have been on line
for more than 30 days and had an average 30-day rate of 8.5 MMcfe/d in ethane
rejection. In the third quarter of 2013, Antero completed 34 horizontal
Marcellus Shale wells with an average 24-hour peak rate of 18.3 MMcfe/d (16%
liquids in ethane rejection), an average lateral length of approximately 7,100
feet, an average Btu of 1190 and an average drilling and completion cost of
$10.3 million per well. Additionally, 33 of these wells had an average 30-day
rate of 10.4 MMcfe/d in ethane rejection, despite being partially curtailed
throughout the quarter due to compression constraints.

During the third quarter, Antero completed 19 Marcellus wells with SSL
completions meaning average frac stage lengths less than 225 feet. While
Antero wells utilizing SSL completions have limited production history, Antero
is encouraged by its well results as well as those of other operators in the
southwestern core of the Marcellus who have implemented shorter stage lengths
and reduced cluster spacing completions. To date, Antero has completed and
placed on line 13 relatively unconstrained wells utilizing SSL completions.
Having been on line for up to 100 days, these wells are currently 20% to 30%
above Antero's type curve. The SSL well cost was approximately 20% higher
than comparable wells with average stage lengths of 350 feet. Antero plans to
continue with SSL completions as it optimizes completion techniques and
expects future completed well costs, assuming SSL completions, access to the
Company's new fresh water distribution system, and a 7,000 foot lateral to
average $9.0 to $9.5 million.

Antero has access to a total of 400 MMcf/d of cryogenic processing capacity at
the MarkWest Sherwood processing facility located in Doddridge County, West
Virginia. Currently the Sherwood complex is running at near full capacity.
Antero has committed to a third 200 MMcf/d cryogenic processing plant,
Sherwood III, which is expected to go on line in the fourth quarter of 2013, a
fourth 200 MMcf/d plant, Sherwood IV, expected to go on line in the second
quarter of 2014 and a fifth 200 MMcf/d plant, Sherwood V, expected to go on
line in the fourth quarter of 2014. These commitments provide Antero access
to a total of 1 Bcf/d of Marcellus cryogenic processing capacity. Ethane is
currently being rejected at the processing facility and left in the gas
stream. Recently, additional third-party compression capacity came on line in
eastern and central Doddridge County relieving some of the constraints on the
Company's rich gas production.

Since the second quarter 2013 earnings release, Antero has increased its
Marcellus acreage position by 9,000 net acres resulting in 334,000 net acres
in the southwestern core of the Marcellus Shale play. Approximately 27% of
this net acreage was associated with proved reserves at mid-year 2013 and
approximately 68% of Antero's Marcellus leasehold is prospective for
processable rich gas assuming an 1100 Btu cutoff.

Utica Shale — Antero is currently operating four drilling rigs, including one
intermediate rig, in the rich gas/condensate window of the core of the Utica
Shale play in southeastern Ohio. The Company plans to add a fifth rig in the
fourth quarter of 2013 and expects to maintain this rig count into 2014. In
addition to its 12 wells on line, Antero has 12 wells either in the process of
drilling, completing, or waiting on completion including a 4-well pad and a
2-well pad, both located in Noble County, Ohio, that are currently being
completed and expected to be placed on line in the fourth quarter of 2013.
Antero has one dedicated frac crew currently working in Ohio along with
several spot crews available as needed. Antero plans to drill a total of 24
horizontal Utica wells in 2013 with an average lateral length of 7,300 feet.

Antero recently placed on line the Gary 2H well that produced at a 24-hour
peak rate of 24.2 MMcf/d of natural gas, 162 Bbl/d of condensate and 3,053
Bbl/d of NGLs assuming full ethane recovery (per current industry practice and
assuming typical ethane plant product recoveries of 85% to 90%). The Gary 2H
had a natural gas shrink of 16% associated with 1220 Btu wellhead gas and an
oil-equivalent rate of 7,246 Boe/d (44% liquids). This rate is the fourth
highest peak rate announced in the Utica Shale to date.The well is located
in Monroe County, Ohio, and was drilled with a lateral length of 8,900 feet.
The initial 12 horizontal Utica wells that Antero has completed and placed
online to date have an average 24-hour peak rate of 5,635 Boe/d assuming
ethane recovery, an average lateral length of approximately 6,500 feet, an
average Btu of 1245 and an average drilling and completion cost of $12.3
million per well. Antero expects well costs to decline as well completions
have access to the Company's fresh water distribution system and drilling and
completion efforts are optimized.

Rich gas production from all but one of Antero's 12 completed horizontal Utica
wells, previously processed at the MarkWest Cadiz facility, is now being
processed at the recently commissioned Seneca processing complex. MarkWest
recently completed Seneca I, a 200 MMcf/d cryogenic processing plant, and is
also building Seneca II, a second 200 MMcf/d cryogenic processing plant, which
is expected to be in service late in the fourth quarter of 2013. Antero has
firm processing capacity of 200 MMcf/d in Seneca I and an additional 50 MMcf/d
of interim capacity at the Seneca II facility until early third quarter 2014.
Antero recently committed to 100 MMcf/d of firm processing capacity at a third
200 MMcf/d facility to be constructed at the Seneca complex, Seneca III, which
is expected to be placed on line in the second quarter of 2014. The Company
also has the option to increase the Seneca III commitment to the full 200
MMcf/d of plant capacity by early third quarter 2014. This results in total
firm processing capacity of 350 MMcf/d by second quarter of 2014 with an
option to increase to a total of 400 MMcf/d by early third quarter 2014.
Additional processing beyond this timeframe is in the planning stages. Ethane
is currently being rejected at the processing facility and left in the gas
stream. 

Antero's rich gas production going into the Seneca processing complex is
flowing against 1100 psi of line pressure until compression capacity comes on
line, resulting in constrained production. Antero has a compression and
condensate stabilization agreement with a third-party midstream provider to
construct and operate three compressor stations in Noble and Monroe Counties,
Ohio that have a combined capacity of 340 MMcf/d as well as three condensate
stabilization facilities with a combined capacity of 16,000 Bbl/d, all of
which are fully dedicated to Antero. The first two compressor stations and
condensate stabilization facilities are expected to start up in the fourth
quarter of 2013 while the third compressor station and condensate
stabilization facility is expected to start up early in the second quarter of
2014. Antero continues to lay both low- and high-pressure gas gathering
pipelines to transport its future production to the Seneca complex.

Since the second quarter 2013 earnings release, Antero has added 3,000 net
acres and currently holds approximately 104,000 net acres of leasehold in the
core of the Utica Shale play. Approximately 4% of this net acreage was
associated with proved reserves at mid-year 2013 and approximately 75% of
Antero's Utica leasehold is prospective for processable rich gas assuming an
1100 Btu cutoff.

Antero has an additional 116,000 net acres of deep rights underlying its
Marcellus acreage that has Utica dry gas resource potential. The Company has
identified 950 potential drilling locations on this acreage with approximately
5 Tcf of net resource. Antero plans to drill a Utica dry gas well in West
Virginia in early 2014.

Capital Spending

Antero's drilling and completion costs for the three months ended September
30, 2013 were $509 million including $73 million for our water-handling
infrastructure projects in the Marcellus and Utica Shales. In addition,
during the third quarter of 2013, $72 million was expended on acreage
purchases and $88 million on gathering systems and compression.

Antero has completed approximately 75% and 60% of its planned 2013 Marcellus
and Utica Shale fresh water sourcing infrastructure projects, respectively.
The Company expects these projects to service over 30% of its planned fourth
quarter 2013 well completions and over 90% of its planned 2014 well
completions. Additionally, during the third quarter of 2013, Antero
constructed and placed into service approximately 26 miles of gathering
pipelines in West Virginia and Ohio.

Commodity Hedges

As of September 30, 2013 Antero has hedged 1,104 Bcf and 1.5 MMBbl of future
natural gas and oil production using fixed price swaps covering the period
from October 1, 2013 through December 31, 2019 at average index price of
$4.71/MMBtu and $98.50/Bbl, respectively. During the third quarter of 2013,
Antero increased its hedge position by 162 Bcf and 1.4 MMBbl. Approximately
34% of Antero's financial hedges are NYMEX hedges and 66% are tied to the
Appalachian Basin or Chicago. For the NYMEX hedges, Antero physically
delivers its hedged gas through backhaul firm transportation to Henry Hub, the
index for NYMEX pricing, which eliminates basis risk on these NYMEX hedges.
Antero has 11 different counterparties to its hedge contracts, all but one of
which are lenders under Antero's bank facility.

As of September 30, 2013, the Company's positions in fixed price natural gas
and oil swaps from October 1, 2013 through December 31, 2019 are summarized in
the following table:



                                        MMbtu/d  Bbl/d  Price
Three Months ending December31, 2013:
CGTAP (TCO)                             260,000  —      $ 4.56
Dominion South                          190,844  —      4.89
NYMEX-WTI                               —        4,300  103.97
2013 Total                              450,844  4,300
Year ending December31, 2014:
CGLA                                    10,000          $ 3.87
CGTAP (TCO)                             210,000         5.11
Dominion South                          160,000         5.15
NYMEX                                   120,000         4.00
NYMEX-WTI                               —        3,000  96.53
2014 Total                              500,000  3,000
Year ending December31, 2015:
CGLA                                    40,000          $ 4.00
CGTAP (TCO)                             130,000         4.93
Dominion South                          230,000         5.60
NYMEX                                   80,000          4.10
2015 Total                              480,000
Year ending December31, 2016:
CGLA                                    170,000         $ 4.09
CGTAP (TCO)                             80,000          4.67
Dominion South                          272,500         5.35
NYMEX                                   60,000          4.25
2016 Total                              582,500
Year ending December31, 2017:
CGLA                                    420,000         $ 4.27
NYMEX                                   220,000         4.44
CCG                                     70,000          4.57
CGTAP (TCO)                             20,000          4.02
2017 Total                              730,000
Year ending December31, 2018:
NYMEX                                   530,000         $ 4.73
Year ending December31, 2019:
NYMEX                                   87,500          $ 4.75

Fourth Quarter 2013 Outlook:

The Company is using the following key assumptions in its projections for the
fourth quarter 2013:

4Q 2013 Outlook:
Net Production                              660 – 690 MMcfe/d
Net Liquids Production                      12,000 – 15,000 Bbl/d
Production Expense(1)                       $1.40 – $1.50/Mcfe
G&A Expense                                 $0.25 – 0.30/Mcfe
(1) Includes lease operating expenses, gathering, compression and
transportation expenses and production taxes.

Antero's fourth quarter 2013 net production is expected to average in a range
of 660 to 690 MMcfe/d which would represent a 17% to 22% increase compared to
the third quarter of 2013 production and a 109% to 119% increase as compared
to our fourth quarter 2012 average net production of 316 MMcfe/d from
continuing operations. Net liquids production is expected to increase to an
average of 12,000 to 15,000 Bbl/d in the fourth quarter of 2013 primarily
driven by expanding Marcellus Shale processing capacity and rich gas volumes
and the initiation of gas processing and rich gas volumes in our Utica Shale
project which would represent a 52% to 90% increase compared to the third
quarter of 2013 production and a 289% to 386% increase as compared to our
fourth quarter 2012 average net production of 3,086 Bbl/d from continuing
operations.

Based on current commodity price markets, Antero expects its natural gas
realized price differentials to be a positive $0.20/Mcf to $0.25/Mcf compared
to NYMEX. Realized NGL prices are expected to be 45% to 55% of WTI and
realized oil prices are expected to be $8.00/Bbl to $10.00/Bbl below WTI.

Antero's 2013 capital expenditures are expected to total $2,650 million
including $1,550 million for drilling and completion, $450 million for land
and $650 million for midstream infrastructure including the construction of
fresh water sourcing infrastructure and gathering pipelines and facilities.
This revised 2013 capital budget represents a $100 million increase to the
drilling and completion budget including an increased number of SSL
completions, longer lateral lengths and higher average working interests.
Based on the positive early results on wells utilizing SSL completions, Antero
has elected to implement this completion methodology on approximately 75% of
its third and fourth quarter 2013 drilling locations. In addition, due to the
success of the in-fill acreage leasing efforts, the Company expects to
increase its average drilled lateral length by 4% during the second half of
2013 compared to the prior budget. The successful acreage adds also had the
effect of increasing the average working interest on wells drilled in the
second half of 2013 to 97% from 95% in the prior budget. This updated capital
budget also represents a $50 million increase to the midstream budget for the
acceleration of compression projects planned in 2014 and $50 million of
additional land expenditures due to the assumption of an additional 10,000
processable net acres acquired than in the prior budget in West Virginia and
Ohio.

Conference Call

A conference call to review the results is scheduled on Thursday, November 7
at 9:00 a.m. MT. To participate in the call, dial in at 877-317-6789 (U.S.),
866-605-3852 (Canada), or 412-317-6789 (International) and reference passcode
10035927. A telephone replay of the call will be available until November 18,
2013 at 877-344-7529 or 412-317-0088 (International) using the same pass code.

A simultaneous webcast of the call may be accessed over the internet at
www.anteroresources.com. The webcast will be archived for replay on the
Company's website until November 18.

Presentation

An updated presentation will be posted to the Company's website before the
November 7, 2013 conference call. The presentation can be found at
www.anteroresources.com on the homepage. Information on the Company's website
does not constitute a portion of this press release.

Non-GAAP Financial Measures

Adjusted net revenue as set forth in this release represents operating
revenues adjusted for certain non-cash items, including unsettled derivative
gains and losses and gains and losses on asset sales. The Company believes
that adjusted net revenue is useful to investors in evaluating operational
trends of the Company and its performance relative to other oil and gas
producing companies. Adjusted net revenue is not a measure of financial
performance under GAAP and should not be considered in isolation or as a
substitute for total operating revenues as an indicator of financial
performance. The following table reconciles total operating revenues to
adjusted net revenues:

                              Threemonthsended       Nine months ended
                              September 30,
                                                       September 30,
                              2012        2013         2012         2013
Total operating revenues      $ (92,038)  $ 384,522  $ 500,628    $ 833,120
Commodity derivative (gains)  159,004     (161,968)    (52,210)     (285,510)
losses
Cash receipts for settled     44,790      47,034       141,506      109,311
derivatives
Loss (gain) on sale of        115         —            (291,190)    —
gathering system
Adjusted net revenues         $ 111,871   $ 269,588  $ 298,734    $ 656,921



Adjusted net income as set forth in this release represents income from
continuing operations, adjusted for certain non-cash items. We believe that
adjusted net income is useful to investors in evaluating operational trends of
the Company and its performance relative to other oil and gas producing
companies. Adjusted net income is not a measure of financial performance
under GAAP and should not be considered in isolation or as a substitute for
net income (loss) from continuing operations as an indicator of financial
performance. The following table reconciles net income (loss) from continuing
operations to adjusted net income:



                             Threemonthsended        Nine months ended
                             September 30,
                                                       September 30,
                             2012         2013         2012         2013
Net income (loss) from       $ (113,887)  $ 117,794  $ 140,431    $ 200,990
continuing operations
Non-cash commodity
derivative (gains) losses    124,518      (71,029)     54,560       (108,891)
on unsettled derivatives,
net of tax
Impairment of unproved       1,490        1,981        2,456        5,911
properties, net of tax
Gain on sale of gathering    —            —            (177,917)    —
system, net of tax
Adjusted net income from     $ 12,121     $ 48,746   $ 19,530     $ 98,010
continuing operations



Cash flow from continuing operations before changes in working capital as
presented in this release represents net cash provided by operating activities
before changes in working capital. Cash flow from continuing operations
before changes in working capital is widely accepted by the investment
community as a financial indicator of an oil and gas company's ability to
generate cash to internally fund exploration and development activities and to
service debt. Cash flow from continuing operations before changes in working
capital is also useful because it is widely used by professional research
analysts in valuing, comparing, rating and providing investment
recommendations of companies in the oil and gas exploration and production
industry. In turn, many investors use this published research in making
investment decisions. Cash flow from continuing operations before changes in
working capital is not a measure of financial performance under GAAP and
should not be considered in isolation or as a substitute for cash flows from
operating, investing, or financing activities, as an indicator of cash flows,
or as a measure of liquidity.

The following table reconciles net cash provided by operating activities to
cash flow from continuing operations before changes in working capital as used
in this release:



                                   Threemonthsended     Nine months ended
                                   September 30,
                                                          September 30,
                                   2012      2013         2012       2013
Net cash provided by operating     $ 64,416  $ 139,540  $ 225,400  $ 331,937
activities
Net change in working capital      (5,470)   1,194        (9,510)    (13,529)
Cash flow from operations before     58,946    140,734    215,890    318,408
changes inworkingcapital
Cash flow from discontinued
operations before changes            24,566    —          124,846    —
inworkingcapital
Cash flow from continuing                                         
operations before changes          $ 34,380  $ 140,734    91,044     318,408
inworkingcapital                                      $          $



EBITDAX is a non-GAAP financial measure that we define as net income (loss)
from continuing operations after adjusting for those items shown in the table
below. EBITDAX, as used and defined by us, may not be comparable to similarly
titled measures employed by other companies and is not a measure of
performance calculated in accordance with GAAP. EBITDAX should not be
considered in isolation or as a substitute for operating income, net income or
loss, cash flows from operating, investing and financing activities, or other
income or cash flow statement data prepared in accordance with GAAP. EBITDAX
provides no information regarding a company's capital structure, borrowings,
interest costs, capital expenditures, and working capital movement or tax
position. EBITDAX does not represent funds available for discretionary use
because those funds may be required for debt service, capital expenditures,
working capital, income taxes, franchise taxes, exploration expenses, and
other commitments and obligations. However, our management team believes
EBITDAX is useful to an investor in evaluating our financial performance
because this measure:

  ois widely used by investors in the oil and gas industry to measure a
    company's operating performance without regard to items excluded from the
    calculation of such term, which can vary substantially from company to
    company depending upon accounting methods and book value of assets,
    capital structure and the method by which assets were acquired, among
    other factors;
  ohelps investors to more meaningfully evaluate and compare the results of
    our operations from period to period by removing the effect of our capital
    structure from our operating structure; and
  ois used by our management team for various purposes, including as a
    measure of operating performance, in presentations to our board of
    directors, as a basis for strategic planning and forecasting and by our
    lenders pursuant to covenants under our credit facility and the indentures
    governing our senior notes.

There are significant limitations to using EBITDAX as a measure of
performance, including the inability to analyze the effect of certain
recurring and non-recurring items that materially affect our net income or
loss, the lack of comparability of results of operations of different
companies and the different methods of calculating EBITDAX reported by
different companies. The following table represents a reconciliation of our
net income (loss) from continuing operations to EBITDAX from continuing
operations, a reconciliation of our income (loss) from discontinued operations
to EBITDAX from discontinued operations and a reconciliation of our total
EBITDAX to net cash provided by operating activities for the three and nine
months ended September 30, 2012 and 2013:



                     Threemonthsended            Nine months ended
                     September 30,
                                                   September 30,
                    2012           2013            2012           2013
Net income (loss)
from continuing   $ (113,887)    $ 117,794       $ 140,431      $ 200,990
operations
Commodity
derivative fair     159,004        (161,968)       (52,210)       (285,510)
value (gains)
losses
Net cash receipts
on settled          44,790         47,034          141,506        109,311
derivative
instruments
(Gain) loss on      115            —               (291,190)      —
sale of assets
Interest expense    22,453         37,444          71,046         100,840
Provision
(benefit) for       (75,444)       67,370          108,525        120,695
income taxes
Depreciation,
depletion,          26,883         65,963          65,360         159,447
amortization and
accretion
Impairment of
unproved            2,438          3,205           4,019          9,564
properties
Exploration         3,156          5,372           7,912          17,034
expense
Other               996            620             2,992          1,820
EBITDAX from
continuing          70,504         182,834         198,391        434,191
operations
Income (loss)
from discontinued     (13,791)     3,100           (418,465)      3,100
operations
Commodity
derivative fair      18,880        —               (46,358)       —
value (gains)
losses
Net cash receipts
on settled           13,862        —               79,736         —
derivative
instruments
Loss (gain) on       —             (5,000)         427,232        (5,000)
sale of assets
Provision
(benefit) for        (8,642)       1,900           4,085          1,900
income taxes
Depreciation,
depletion,           14,288        —               77,654         —
amortization and
accretion
Impairment of
unproved             (31)          —               962            —
properties
Exploration          95            —               507            —
expense
EBITDAX from
discontinued         24,661        —               125,353        —
operations
Total EBITDAX        95,165        182,834         323,744        434,191
Interest expense     (22,453)      (37,444)        (71,046)       (100,840)
and other
Exploration          (3,156)       (5,372)         (7,912)        (17,034)
expense
Changes in
current assets       5,470         (1,194)         9,510          13,529
and liabilities
Other                (10,610)      716             (28,896)       2,091
Net cash provided
by operating      $  64,416      $ 139,540       $ 225,400     $  331,937
activities

Antero Resources is an independent oil and natural gas company engaged in the
acquisition, development and production of unconventional oil and liquids-rich
natural gas properties located in the Appalachian Basin in West Virginia, Ohio
and Pennsylvania. Our website is located at www.anteroresources.com.

This release includes "forward-looking statements". Such forward-looking
statements are subject to a number of risks and uncertainties, many of which
are beyond Antero's control. All statements, other than historical facts
included in this release, are forward-looking statements. All forward-looking
statements speak only as of the date of this release. Although Antero believes
that the plans, intentions and expectations reflected in or suggested by the
forward-looking statements are reasonable, there is no assurance that these
plans, intentions or expectations will be achieved. Therefore, actual outcomes
and results could materially differ from what is expressed, implied or
forecast in such statements.

We caution you that these forward-looking statements are subject to all of the
risks and uncertainties, most of which are difficult to predict and many of
which are beyond our control, incident to the exploration for and development,
production, gathering and sale of natural gas, NGLs and oil. These risks
include, but are not limited to, commodity price volatility, inflation, lack
of availability of drilling and production equipment and services,
environmental risks, drilling and other operating risks, regulatory changes,
the uncertainty inherent in estimating natural gas, NGLs and oil reserves and
in projecting future rates of production, cash flow and access to capital, the
timing of development expenditures, and the other risks described under the
heading "Risk Factors" in our Final Prospectus dated October 9, 2013 on file
with the Securities and Exchange Commission (File No. 333-189284).







ANTERO RESOURCES LLC

Condensed Consolidated Balance Sheets

December 31, 2012 and September 30, 2013

(Unaudited)

(In thousands)


                                                       2012         2013
Assets
Current assets:
Cash and cash equivalents                              $ 18,989     11,584
Accounts receivable                                    21,296       33,023
Notes receivable — current portion                     4,555        3,111
Accrued revenue                                        46,669       86,122
Derivative instruments                                 160,579      204,857
Other                                                  22,518       20,816
Total current assets                                   274,606      359,513
Property and equipment:
Oil and natural gas properties, at cost (successful
efforts method):
Unproved properties                                    1,243,237    1,420,719
Proved properties                                      1,689,132    3,199,830
Gathering systems and facilities                       168,930      455,818
Other property and equipment                           9,517        12,741
                                                       3,110,816    5,089,108
Less accumulated depletion, depreciation, and          (173,343)    (331,993)
amortization
Property and equipment, net                            2,937,473    4,757,115
Derivative instruments                                 371,436      503,666
Notes receivable — long-term portion                   2,667        —
Other assets, net                                      32,611       51,914
Total assets                                           $ 3,618,793  5,672,208
Liabilities and Equity
Current liabilities:
Accounts payable                                       $ 181,478    311,092
Accrued liabilities and other                          61,161       103,359
Derivative instruments                                 —            309
Revenue distributions payable                          46,037       68,926
Current portion of long-term debt                      25,000       25,000
Deferred income tax liability                          62,620       78,199
Total current liabilities                              376,296      586,885
Long-term liabilities:
Long-term debt                                         1,444,058    2,970,455
Deferred income tax liability                          91,692       202,708
Other long-term liabilities                            33,010       34,333
Total liabilities                                      1,945,056    3,794,381
Equity:
Members' equity                                        1,460,947    1,460,947
Accumulated earnings                                   212,790      416,880
Total equity                                           1,673,737    1,877,827
Total liabilities and equity                           $ 3,618,793  5,672,208







ANTERO RESOURCES LLC

Condensed Consolidated Statements of Operations and Comprehensive Income
(Loss)

Three Months ended September 30, 2012 and 2013

(Unaudited)

(In thousands, except per share amounts)


                                                        2012         2013
Revenue:
Natural gas sales                                       $ 66,796     182,125
Natural gas liquids sales                               —            31,956
Oil sales                                               285          8,473
Commodity derivative fair value gains (losses)          (159,004)    161,968
Loss on sale of assets                                  (115)        —
Total revenue                                           (92,038)     384,522
Operating expenses:
Lease operating                                         1,513        2,697
Gathering, compression, processing, and transportation  25,291       58,383
Production taxes                                        3,621        11,851
Exploration                                             3,156        5,372
Impairment of unproved properties                       2,438        3,205
Depletion, depreciation, and amortization               26,858       65,697
Accretion of asset retirement obligations               25           266
General and administrative                              11,938       14,443
Total operating expenses                                74,840       161,914
Operating income (loss)                                 (166,878)    222,608
Interest expense                                        (22,453)     (37,444)
Income (loss) from continuing operations before income  (189,331)    185,164
taxes and discontinued operations
Income tax (expense) benefit                            75,444       (67,370)
Income (loss) from continuing operations                (113,887)    117,794
Discontinued operations:
Income (loss) from results of operations and sale of    (13,791)     3,100
discontinued operations
Net income (loss) and comprehensive income (loss)       $ (127,678)  120,894
attributable to Antero equity owners
Pro forma information:
Pro forma earnings (loss) per share - basic:
Continuing operations                                   $ (0.44)     $   0.45
Discontinued operations                                 $ (0.05)     $   .01
Net income (loss)                                       $ (0.49)     $   0.46
Pro forma earnings (loss) per share - diluted:
Continuing operations                                   $ (0.44)     $   0.45
Discontinued operations                                 $ (0.05)     $   .01
Net income (loss)                                       $ (0.49)     $   0.46
Pro forma weighted average number of shares
outstanding:
Basic                                                   262,050      262,050
Diluted                                                 262,050      262,050







ANTERO RESOURCES LLC

Condensed Consolidated Statements of Operations and Comprehensive Income
(Loss)

Nine Months ended September 30, 2012 and 2013

(Unaudited)

(In thousands, except per share amounts)


                                                       2012         2013
Revenue:
Natural gas sales                                      $ 156,618    476,403
Natural gas liquids sales                              —            59,772
Oil sales                                              610          11,435
Commodity derivative fair value gains                  52,210       285,510
Gain on sale of gathering system                       291,190      —
Total revenue                                          500,628      833,120
Operating expenses:
Lease operating                                        4,072        5,222
Gathering, compression, processing, and                56,945       148,023
transportation
Production taxes                                       10,734       30,578
Exploration                                            7,912        17,034
Impairment of unproved properties                      4,019        9,564
Depletion, depreciation, and amortization              65,289       158,650
Accretion of asset retirement obligations              71           797
General and administrative                             31,584       40,727
Total operating expenses                               180,626      410,595
Operating income                                       320,002      422,525
Interest expense                                       (71,046)     (100,840)
Income from continuing operations before income taxes  248,956      321,685
and discontinued operations
Income tax expense                                     (108,525)    (120,695)
Income from continuing operations                      140,431      200,990
Discontinued operations:
Income (loss) from results of operations and sale of   (418,465)    3,100
discontinued operations
Net income (loss) and comprehensive income (loss)      $ (278,034)  204,090
attributable to Antero equity owners
Pro forma information:
Pro forma earnings (loss) per share - basic:
Continuing operations                                  $ 0.54       $   0.77
Discontinued operations                                $ (1.60)     $   0.01
Net income (loss)                                      $ (1.06)     $   0.78
Pro forma earnings (loss) per share - diluted:
Continuing operations                                  $ 0.54       $   0.77
Discontinued operations                                $ (1.60)     $   0.01
Net income (loss)                                      $ (1.06)     $   0.78
Pro forma weighted average number of shares
outstanding:
Basic                                                  262,050      262,050
Diluted                                                262,050      262,050







ANTERO RESOURCES LLC

Condensed Consolidated Statements of Cash Flows

Nine Months ended September 30, 2012 and 2013

(Unaudited)

(In thousands)


                                                     2012         2013
Cash flows from operating activities:
Net income (loss)                                    $ (278,034)  204,090
Adjustment to reconcile net income to net cash
provided by operating activities:
Depletion, depreciation, amortization, and           65,360       159,447
accretion
Impairment of unproved properties                    4,019        9,564
Commodity derivative fair value gains                (52,210)     (285,510)
Cash receipts for settled derivatives                141,506      109,311
Gain on sale of assets                               (291,190)    —
Loss (gain) on sale of discontinued operations       427,232      (5,000)
Deferred income tax expense                          87,695       120,695
Depletion, depreciation, amortization, accretion,
and impairment of unproved properties –              78,616       —
discontinued operations
Commodity derivative fair value gains -              (46,358)     —
discontinued operations
Cash receipts for settled derivatives -              79,736       —
discontinued operations
Deferred income tax expense – discontinued           4,085        1,900
operations
Other                                                (4,567)      3,911
Changes in current assets and liabilities:
Accounts receivable                                  (16,811)     (11,727)
Accrued revenue                                      17,378       (39,453)
Other current assets                                 (3,112)      1,702
Accounts payable                                     (9,812)      (4,602)
Accrued liabilities                                  7,281        44,720
Revenue distributions payable                        (414)        22,889
Other                                                15,000       —
Net cash provided by operating activities            225,400      331,937
Cash flows from investing activities:
Additions to proved properties                       (4,451)      —
Additions to unproved properties                     (428,574)    (342,832)
Development costs                                    (619,344)    (1,267,086)
Additions to gathering systems and facilities        (58,748)     (240,119)
Additions to other property and equipment            (2,786)      (3,225)
Proceeds from asset sales                            816,167      —
Changes in other assets                              2,556        (11,622)
Net cash used in investing activities                (295,180)    (1,864,884)
Cash flows from financing activities:
Issuance of senior notes                             —            231,750
Borrowings on bank credit facility, net              82,000       1,295,500
Payments of deferred financing costs                 —            (8,334)
Other                                                992          6,626
Net cash provided by financing activities            82,992       1,525,542
Net increase (decrease) in cash and cash             13,212       (7,405)
equivalents
Cash and cash equivalents, beginning of period       3,343        18,989
Cash and cash equivalents, end of period             $ 16,555     11,584
Supplemental disclosure of cash flow information:
Cash paid during the period for interest             $ (61,930)   (70,221)
Supplemental disclosure of noncash investing
activities:
Increase in accounts payable for additions to        $ 73,430     134,525
properties, gathering systems, and facilities





OPERATING DATA


The following table sets forth selected operating data (as recast for
discontinued operations) for the three months ended September 30, 2012
compared to the three months ended September 30, 2013:


                         ThreeMonthsEnded       Amountof
                         September30,            Increase
                         2012          2013       (Decrease)  PercentChange
                         (inthousands,exceptperunitandproductiondata)
Operating revenues:
Natural gas sales        $  66,796     $ 182,125  $  115,329  173            %
NGL sales                —             31,956     31,956      *
Oil sales                285           8,473      8,188       2,873
Commodity derivative
fair value gains         (159,004)     161,968    320,972     *
(losses)
Loss on sale of assets   (115)         —          115         *
Total operating          (92,038)      384,522    476,560     *
revenues
Operating expenses:
Lease operating expense  1,513         2,697      1,184       78             %
Gathering, compression,
processing, and          25,291        58,383     33,092      131            %
transportation
Production taxes         3,621         11,851     8,230       227            %
Exploration expenses     3,156         5,372      2,216       70             %
Impairment of unproved   2,438         3,205      767         31             %
properties
Depletion,
depreciation, and        26,858        65,697     38,839      145            %
amortization
Accretion of asset       25            266        241         964            %
retirement obligations
General and              11,938        14,443     2,505       21             %
administrative
Total operating          74,840        161,914    87,074      116            %
expenses
Operating income (loss)  (166,878)     222,608    389,486     *
Interest expense         (22,453)      (37,444)   (14,991)    67             %
Income (loss) before     (189,331)     185,164    374,495     *
income taxes
Income tax benefit       75,444        (67,370)   (142,814)   *
(expense)
Income (loss) from       (113,887)     117,794    231,681     *
continuing operations
Income (loss) from       (13,791)      3,100      16,891      *
discontinued operations
Net income (loss)
attributable to Antero   $  (127,678)  $ 120,894  $  248,572  *
members
EBITDAX from continuing  $  70,504     $ 182,834  $  112,330  159            %
operations
Total EBITDAX            $  95,165     $ 182,834  $  87,669   92             %
Production data:
Natural gas (Bcf)        23            48         25          109            %
NGLs (MBbl)              —             637        637         *
Oil (MBbl)               4             87         83          2,393          %
Combined (Bcfe)          23            52         29          128            %
Daily combined           248           566        318         128            %
production (MMcfe/d)
Average prices before
effects of hedges:
Natural gas (per Mcf)    $  2.93       $ 3.82     $  0.89     30             %
NGLs (per Bbl)           $  —          $ 50.13    $  50.13    *
Oil (per Bbl)            $  81.20      $ 97.10    $  15.90    20             %
Combined (per Mcfe)      $  2.94       $ 4.27     $  1.33     45             %
Average realized prices
after effects of
hedges:
Natural gas (per Mcf)    $  4.89       $ 4.81     $  (0.08)   (2)%
NGLs (per Bbl)           $  —          $ 50.13    $  50.13    *
Oil (per Bbl)            $  81.20      $ 94.71    $  13.51    17             %
Combined (per Mcfe)      $  4.90       $ 5.18     $  0.28     6              %
Average costs (per
Mcfe):
Lease operating costs    $  0.07       $ 0.05     $  (0.02)   (29)%
Gathering, compression,
processing, and          $  1.11       $ 1.12     $  0.01     1              %
transportation
Production taxes         $  0.16       $ 0.23     $  0.07     44             %
Depletion,
depreciation,            $  1.18       $ 1.27     $  0.09     8              %
amortization, and
accretion
General and              $  0.52       $ 0.28     $  (0.24)   (46)%
administrative





OPERATING DATA


The following table sets forth selected operating data (as recast for
discontinued operations) for the nine months ended September 30, 2012 compared
to the nine months ended September 30, 2013:


                   NineMonthsEnded                Amountof
                   September30,                    Increase
                   2012               2013          (Decrease)  PercentChange
                   (inthousands,exceptperunitandproductiondata)
Operating
revenues:
Natural gas        $   156,618        $  476,403    $  319,785  204       %
sales
NGL sales          —                  59,772        59,772      *
Oil sales          610                11,435        10,825      1,775     %
Commodity
derivative fair    52,210             285,510       233,300     447       %
value gains
Gain on sale of    291,190            —             (291,190)   *
gathering system
Total operating    500,628            833,120       332,492     66        %
revenues
Operating
expenses:
Lease operating    4,072              5,222         1,150       28        %
expense
Gathering,
compression,       56,945             148,023       91,078      160       %
processing, and
transportation
Production taxes   10,734             30,578        19,844      185       %
Exploration        7,912              17,034        9,122       115       %
expenses
Impairment of
unproved           4,019              9,564         5,545       138       %
properties
Depletion,
depreciation,      65,289             158,650       93,361      143       %
and amortization
Accretion of
asset retirement   71                 797           726         1,023     %
obligations
General and        31,584             40,727        9,143       29        %
administrative
Total operating    180,626            410,595       229,969     127       %
expenses
Operating income   320,002            422,525       102,523     32        %
Interest expense   (71,046)           (100,840)     (29,794)    42        %
Income before      248,956            321,685       72,729      29        %
income taxes
Income tax         (108,525)          (120,695)     (12,170)    11        %
expense
Income from
continuing         140,431            200,990       60,559      43        %
operations
Income (loss)
from               (418,465)          3,100         421,565     *
discontinued
operations
Net income
(loss)             $   (278,034)      $  204,090    $  482,124  *
attributable to
Antero members
EBITDAX from
continuing         $   198,391        $  434,191    $  235,800  119       %
operations
Total EBITDAX      $   323,744        $  434,191    $  110,447  34        %
Production data:
Natural gas        58                 120           62          106       %
(Bcf)
NGLs (MBbl)        —                  1,197         1,197       *
Oil (MBbl)         8                  122           114         1506      %
Combined (Bcfe)    58                 128           70          120       %
Daily combined
production         214                470           256         120       %
(MMcfe/d)
Average prices
before effects
of hedges:
Natural gas (per   $   2.69           $  3.96       $  1.27     47        %
Mcf)
NGLs (per Bbl)     $   —              $  49.95      $  49.95    *
Oil (per Bbl)      $   80.58          $  93.76      $  13.18    16        %
Combined (per      $   2.70           $  4.27       $  1.57     58        %
Mcfe)
Average realized
prices after
effects of
hedges:
Natural gas (per   $   5.11           $  4.87       $  (0.24)   (5)%
Mcf)
NGLs (per Bbl)     $   —              $  49.95      $  49.95    *
Oil (per Bbl)      $   80.58          $  90.28      $  9.70     12        %
Combined (per      $   5.12           $  5.12       $  —        —         %
Mcfe)
Average costs
(per Mcfe):
Lease operating    $   0.07           $  0.04       $  (0.03)   (43)%
costs
Gathering,
compression, and   $   0.98           $  1.15       $  0.17     17        %
transportation
Production taxes   $   0.18           $  0.24       $  0.06     33        %
Depletion,
depreciation,      $   1.12           $  1.24       $  0.12     11        %
amortization,
and accretion
General and        $   0.54           $  0.32       $  (0.22)   (41)%
administrative





SOURCE Antero Resources Corporation

Website: http://www.anteroresources.com
Contact: Michael Kennedy - VP Finance, at (303) 357-6782 or
mkennedy@anteroresources.com
 
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