Antero Resources Second Quarter 2014 Operations and Firm Transportation Update

Antero Resources Second Quarter 2014 Operations and Firm Transportation Update

PR Newswire

DENVER, July 17, 2014

DENVER, July 17, 2014 /PRNewswire/ --Antero Resources (NYSE: AR) ("Antero" or
the "Company") announced today second quarter 2014 operational highlights and
an increase in its firm transportation position.

Antero Resources logo.

  oSecond quarter 2014 average net daily gas equivalent production was 891
    MMcfe/d, a 94% increase over the prior year quarter and a 13% increase
    sequentially
  oSecond quarter 2014 average net daily liquids production was 20,200 Bbl/d,
    a 387% increase over the prior year quarter and a 25% increase
    sequentially; representing 14% of net gas equivalent production for the
    quarter
  oRecently achieved milestone of 1 Bcfe/d of net daily gas equivalent
    production
  oFour-well Bee Lewis pad in the Marcellus had a combined 79 MMcfe/d peak
    5-day sales rate while producing 1265 Btu gas (27% liquids while rejecting
    ethane); represents first four-well pad in the Highly-Rich Gas regime
    utilizing SSL completions
  oThree-well Carpenter pad in the Utica had a combined 65 MMcfe/d initial
    5-day sales rate while producing 1225 Btu gas (20% liquids while rejecting
    ethane); represents first pad in the Highly-Rich Gas regime in 2014
  oSignificant additions made to the transportation portfolio resulting in
    Appalachian E&P industry leading 3.4 Bcf/d of firm transportation and firm
    sales by 2016
  oExecuted LNG supply agreement with Cheniere Energy to sell 200,000 MMBtu/d
    of gas for the Sabine Pass LNG facility at NYMEX-based pricing upon
    commencement of operations at the facility
  oMid-year 2014 proved reserves increased 19% from year-end 2013 to 9.1 Tcfe
    (13% liquids) and 3P reserves increased 7% to 37.5 Tcfe (15% liquids) with
    a pre-tax PV10 of $26.4 billion including the value of hedges

Recent Developments

Mid-Year 2014 Proved and 3P Reserves

On July 15, 2014, Antero announced that proved reserves at June 30, 2014 were
9.1 Tcfe (13% liquids), a 19% increase compared to proved reserves at December
31, 2013, in each case assuming ethane rejection. Proved developed reserves
at mid-year 2014 totaled 2.8 Tcfe (12% liquids), a 37% increase over year-end
2013. Additionally, the percentage of proved reserves classified as proved
developed increased from 27% at year-end 2013 to 30% as of June 30, 2014. The
Company's proved, probable and possible ("3P") reserves at mid-year 2014
totaled 37.5 Tcfe (15% liquids), which represents a 7% increase compared to
year-end 2013, also assuming ethane rejection. 3P pre-tax PV10 including
hedge value increased by 24% to $26.4 billion from year-end 2013. Antero's
reserves at June 30, 2014 were prepared by its internal reserve engineers and
have not been reviewed or audited by its independent reserve engineers.

Operating Update

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

Antero's net daily production for the second quarter of 2014 averaged 891
MMcfe/d, including 20,200 Bbl/d of liquids (14% liquids). Second quarter 2014
production represents an organic production growth rate of 94% and 13% from
the second quarter of 2013 and first quarter of 2014, respectively. Liquids
production for the second quarter of 2014 represents an organic production
growth rate of 387% and 25% from the second quarter of 2013 and first quarter
of 2014, respectively. The Company has completed and placed on line a combined
330 horizontal wells in the Marcellus Shale and Utica Shale plays since
commencing drilling operations in Appalachia in 2009.

Commenting on Antero's production, Paul Rady, Antero's Chairman of the Board
and CEO, said, "With strong results in our Marcellus and Utica rich gas areas
in early July, the Company recently surpassed 1 Bcfe/d of net production for
the first time in its history. With second quarter 2014 production meeting our
plan and current production in excess of 1 Bcfe/d, we expect to meet our 2014
production guidance as well as our 45% to 50% growth targets for both 2015 and
2016."

Marcellus Shale — Antero has utilized shorter stage length ("SSL") completions
on virtually all of its 70 Marcellus wells completed and placed on line in
2014. Actual average SSL production rates, compared to the non-SSL type
curve, continue to exhibit a 20% to 30% improvement. The average well cost for
an SSL well, defined as a well with an average stage length less than 225
feet, is approximately 10% to 15% higher than a comparable non-SSL well with
an average stage length of 350 feet.

Additionally, 47 of the 70 completed wells have been on line for more than 30
days and had an average 30-day rate of 12.9 MMcfe/d in ethane rejection (15%
liquids). The average lateral length for the 47 wells was approximately 8,150
feet. The Company continues to complete some of the longest laterals in the
Marcellus Shale, having recently drilled the Weigle 1H with a lateral length
of approximately 10,700 feet and 70 frac stages.

In July of 2014, Antero placed on line the four-well Bee Lewis pad in its
Highly-Rich Gas regime, having an average Btu of 1265, which had a combined 79
MMcfe/d peak 5-day sales rate in ethane rejection (27% liquids). These strong
initial rates are indicative of the successful recent transition of Antero's
development program into the more liquids rich areas of its Marcellus
leasehold position utilizing SSL completions.

Antero is currently operating 15 drilling rigs in the Marcellus Shale play
including four intermediate rigs. The Company has 76 gross (75 net)
horizontal wells either in the process of drilling, completing or waiting on
completion as well as two gross (two net) wells waiting on pipeline in the
Marcellus. Antero currently has five dedicated frac crews and one spot frac
crew working in West Virginia.

During the first half of 2014, Antero added approximately 22,000 net acres and
currently holds approximately 369,000 net acres in the southwestern core of
the Marcellus play. Approximately 31% of this net acreage was associated with
proved locations and approximately 10% with proved developed locations at
mid-year 2014. Additionally, approximately 70% of the leasehold is believed
to contain processable rich gas assuming an 1100 Btu cutoff.

Marcellus Processing Update

Antero currently has access to a total of 600 MMcf/d of cryogenic processing
capacity at the MarkWest Sherwood processing facility located in Doddridge
County, West Virginia. The Company has committed to four additional 200
MMcf/d cryogenic processing plants, Sherwood 4, 5, 6 and 7. Sherwood 4 is
expected to go on line in the third quarter of 2014, Sherwood 5 is expected to
go on line in the fourth quarter of 2014, Sherwood 6 is expected to go on line
in the second quarter of 2015 and Sherwood 7 is expected to go on line in the
third quarter of 2015. These commitments provide Antero access to a total of
1.4 Bcf/d of Marcellus cryogenic processing capacity. Ethane is currently
being rejected at the Sherwood processing facility and sold in the gas
stream.

Utica Shale –Antero has completed and placed on line 23 wells in the Utica
Shale in 2014. Additionally, 19 of these wells have been on line for more
than 30 days and had an average 30-day rate of 14.8 MMcfe/d in ethane
rejection (47% liquids). The average lateral length for the 19 wells was
approximately 7,300 feet. Similar to the Marcellus, Antero has drilled many
of the longest laterals in the Utica Shale, having recently completed the
Myron 1H with a lateral length of approximately 11,700 feet and 51 frac
stages.

In July of 2014, Antero placed on line the three-well Carpenter pad in its
Highly-Rich Gas regime, having an average Btu of 1225, which had a combined 65
MMcfe/d initial 5-day sales rate in ethane rejection (20% liquids). These
wells represent Antero's first Highly-Rich Gas wells placed on sales in 2014,
and the Company plans to complete 14 additional wells located in the
Highly-Rich and Rich Gas regimes throughout the remainder of the year.

Antero is currently operating five drilling rigs in the Utica Shale play
including one intermediate rig. The Company has 20 gross (18 net) horizontal
wells either in the process of drilling, completing or waiting on completion.
Antero currently has one full time dedicated frac crew and one spot crew
working in Ohio.

During the first half of 2014, Antero added approximately 13,000 net acres
including the 6,363 net acre Piedmont Lake lease acquisition and currently
holds approximately 119,000 net acres in the core of the Utica Shale play.
Approximately 11% of this net acreage was associated with proved locations and
approximately 4% with proved developed locations at mid-year 2014.
Additionally, approximately 75% of the leasehold is believed to contain
processable rich gas assuming an 1100 Btu cutoff.

Utica Natural Gas Sales Update

On June 26, 2014, the Rockies Express Pipeline ("REX") Seneca Lateral began
service allowing Antero to flow natural gas from the MarkWest Seneca plant to
Midwest markets where prices are more favorable. The Company currently has
access to 250 MMcf/d of firm REX capacity. This firm capacity is expected to
increase to 600 MMcf/d in the fourth quarter of 2014 when additional
compression is added. The REX Seneca Lateral allows Antero to shift its Utica
Shale production realizations from Tetco M2 pricing to Chicago Index pricing
which based on current 2014 markets represents an approximate $1.50 per MMBtu
price increase.

Firm Transportation and Firm Sales

As summarized below, Antero has entered into firm transportation agreements
with various pipelines and firm sales agreements with various counterparties
who own firm transportation capacity in order to facilitate the delivery of
the Company's production to preferred markets and diversify its exposure to
basis concentration risk. The firm transportation agreements generally have a
term of ten to thirty years and include fixed and variable cost components
referred to as demand and commodity charges respectively. The firm sales
agreements are sales to other firm shippers, are typically two to five years
in term, are settled on an index price, and do not involve demand or commodity
charges.

Natural Gas

In the second quarter of 2014, Antero entered into approximately 1.1 Bcf/d of
transportation agreements, a third of which represents new firm transportation
that will access eastern directed markets. The remainder will feed
Antero'sexisting firm transportation on Kinder Morgan's Tennessee Gas
Pipeline accessing Gulf Coast markets, as previously disclosed on April 14,
2014. In association with these agreements, Antero entered into a firm sales
agreement with a local consumer for 200 MMcf/d of sales at TCO pricing and 200
MMcf/d of sales at TCO pricing for the peak winter months and NYMEX based
pricing for the remainder of the year.

Antero concurrently executed an agreement to access 1.1 Bcf/d of new capacity
on a third party's extension of an existing gathering system. This capacity
is expected to be completed and in service in the fourth quarter of 2015.
This project will connect Antero's Marcellus assets with the firm
transportation described in the preceding paragraph. As part of the
agreement, Antero will have the option to participate in up to 15% of the
project as an equity partner, which the Company expects would be owned by
Antero's midstream subsidiary.

Also in the second quarter of 2014, Antero signed an agreement to become an
anchor shipper on the recently announced Energy Transfer Rover Pipeline
Project which will connect its Marcellus and Utica Shale assets to the Midwest
and Gulf Coast, or for export to Canadian markets. Subject to the outcome of
the binding open season currently underway, and all of the necessary
regulatory approvals, the project will enable Antero to transport natural gas
between the Sherwood and Seneca processing facilities to Defiance, Ohio. This
will result in increased marketing optionality by connecting to Antero's
separate and existing Midwest and Gulf Coast directed firm transportation
agreements, including the 600,000 MMBtu/d Gulf Coast directed ANR
transportation referenced in our release on April 14, 2014. By linking this
Gulf Coast directed transportation on the ANR Pipeline through the Rover
Pipeline Project, these volumes are now incremental to the Antero firm
transportation portfolio. Additionally, as part of the signed agreement,
Antero has the option to participate in up to 20% of the 2.2 Bcf/d Rover
Pipeline Project as an equity partner, which the Company expects would be
owned by Antero's midstream subsidiary.

In June 2014, Antero signed a firm transportation agreement with Midwestern
Gas Transmission Company ("Midwestern") for 125,000 MMBtu/d of capacity on
Midwestern's mainline that interconnects with REX at Scotland, Illinois. This
incremental capacity further enables the Company to flow gas north into
Midwest pricing hubs and commences in the third quarter of 2016.

The firm transportation and sales agreements discussed above result in an
increase of Antero's total portfolio to 3.4 Bcf/d by 2016. Below is a summary
of Antero's average annual firm transportation and sales volumes for each of
the years presented.

                                  2014 –    2015 –    2016 –
                                  Average   Average   Average
                                  MMbtu/d   MMbtu/d   MMbtu/d   Pricing
                                                                Region
Firm Transportation
Columbia                          403,000   595,000   582,000   Appalachia or
                                                                Gulf Coast
REX/Rover/MGT/ANR/NGPL            306,000   600,000   700,000   Midwest
ANR                               –         –         300,000   Gulf Coast
Tennessee                         –         100,000   590,000   Gulf Coast
Other Regional                      395,000 615,000   625,000   Appalachia
Firm Sales                        250,000   306,000   633,000   Appalachia,
                                                                NYMEX
Total Firm Transportation and     1,354,000 2,216,000 3,430,000
Sales

By 2016, the above firm transportation portfolio provides Antero the ability
to direct 48% of its production to the Gulf Coast, 32% to Appalachia and 20%
to Midwest pricing, including the Chicago and MichCon markets. Antero's
all-in average firm portfolio cost per MMbtu assuming full utilization,
including both demand and commodity charges, is $0.28, $0.35 and $0.50 in
2014, 2015 and 2016, respectively. The firm transportation portfolio, based
on current futures pricing and differentials, would result in an approximate
$0.15 per MMbtu basis differential improvement in the Company's 2016 realized
prices compared to 2014 realized prices.

Glen Warren, Antero's President and Chief Financial Officer, commented "Antero
has the largest firm transport portfolio of any Appalachian producer with an
average of 3.4 Bcf/d by 2016, thereby reducing our exposure to Appalachian
pricing indices to 32%. Our firm transportation portfolio gives us great
visibility on production growth and basis exposure. We now have sufficient
firm transportation capacity to accommodate Antero's accelerated development
program for the foreseeable future while also securing access to the most
favorable pricing regions. We believe that our industry leading firm
transportation portfolio provides Antero with a significant competitive
advantage as we expect the Appalachian region will remain the epicenter of
natural gas development in North America for some time."

NGLs

As previously announced, Antero has signed an agreement to become the anchor
ethane supplier for the Ascent petrochemical complex in Wood County, West
Virginia. Under the agreement, Antero intends to provide 30,000 barrels per
day of ethane to Ascent which represents almost half of the volume required to
operate the Ascent ethane cracker that is planned for the Parkersburg, West
Virginia site. This agreement is contingent upon Ascent reaching a final
investment decision once the multi-year feasibility analysis is completed and
a construction decision has been made.

Additionally, Antero recently signed an agreement to become an anchor ethane
supplier to the proposed Shell ethane cracker complex in Beaver County,
Pennsylvania. Under the agreement, Antero intends to provide 25,000 barrels
per day of ethane to Shell which represents a significant portion of the
volumes needed to operate the proposed cracker. This agreement is contingent
upon Shell reaching a final investment decision once the multi-year
feasibility analysis is completed and a construction decision has been made.

Antero is committed to a 10 year transport, terminal and storage agreement
with Sunoco Logistics Partners LPrelated to its Mariner East II Project that
will connect the NGL resources in the Marcellus and Utica Shale to Sunoco's
existing infrastructure and international port at its Marcus Hook facility
near Philadelphia. Mariner East II is expected to be operational in late 2016
pending final investment decision which is expected in the third quarter of
2014. Under the agreement, Antero will be an anchor shipper and have firm
transportation of 51,500 barrels per day (11,500 barrels of ethane, 28,000
barrels of propane and 12,000 barrels of butane). Antero will have the
ability, through the Marcus Hook facility, to market ethane, propane and
butane to local markets in the Northeast as well as export product to
international markets. These markets are currently paying a premium price
relative to Appalachian prices.

Liquefied Natural Gas (LNG)

Antero recently signed an agreement with Sabine Pass Liquefaction, LLC
("Cheniere") to sell 50,000 MMBtu/d of natural gas at NYMEX-based pricing for
volumes shipped to the Gulf Coast region via existing Antero firm
transportation agreements. In addition, the agreement allows for 50,000
MMBtu/d of incremental increases to volumes, to a total of 200,000 MMBtu/d, as
each of the four trains are placed into service. This agreement will become
effective upon notification from Cheniere that operations have commenced at
the first LNG liquefaction train in the Sabine Pass liquefaction facility
located in Cameron Parish, Louisiana.

Antero Second Quarter 2014 Earnings Release and Call

Antero's second quarter 2014 financial results news release will be issued
Wednesday, August 6, 2014 after the close of trading on the New York Stock
Exchange.

A conference call is scheduled on Thursday, August 7, 2014 at 9:00 am MDT to
discuss the results. A brief Q&A session for security analysts will
immediately follow the results discussion. To participate in the call, dial
in at 877-300-8521 (U.S.), 855-669-9657 (Canada), or 412-317-6026
(International) and reference passcode 10049883. A telephone replay of the
call will be available until Tuesday, August 18, 2014 at 9:00 am MDT at
877-870-5176 (U.S.) or 858-384-5517 (International) using the same passcode.

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 Tuesday, August 18, 2014 at 9:00 am MDT.

Presentation

An updated presentation has been posted to the Company's website. 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.

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. The Company's 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.

Antero cautions 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 the Company's 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 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 "Item 1A. Risk Factors" in Antero's Annual Report on Form 10-K for
the year ended December 31, 2013.

The SEC permits oil and gas companies to disclose probable and possible
reserves in their filings with the SEC. Antero does not plan to include
probable and possible reserve estimates in its filings with the SEC. Antero
has provided internally generated estimates that have not been reviewed or
audited by its third party reserve engineer in this release. Antero's
estimate of proved, probable and possible reserves is provided in this release
because management believes it is useful information that is widely used by
the investment community in the valuation, comparison and analysis of
companies. However, the Company notes that the SEC prohibits companies from
aggregating proved, probable and possible reserves in filings with the SEC due
to the different levels of certainty associated with each reserve category.

Logo - http://photos.prnewswire.com/prnh/20131101/LA09101LOGO

SOURCE Antero Resources

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