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Baupost Group Raised Stake in Antero Resources

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Baupost Group raised stake in Antero Resources

The Baupost Group increased its position in Antero Resources (AR) during 4Q14. The position accounted for a significant 6.26% of the total portfolio in 4Q14. The fund disclosed ownership of 7,847,831 shares—up from 2,759,510 shares in 3Q14. We noted that the position was initiated in 3Q14.

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Overview of Antero Resources

Antero Resources is an independent oil and natural gas company. The company is involved in the exploitation, development, and acquisition of natural gas, NGLs (natural gas liquids), and oil properties. It focuses on unconventional reservoirs that can generally be characterized as fractured shale formations.

The oil and natural gas company is controlled by private equity firm Warburg Pincus LLC. Its drilling opportunities are focused in the Marcellus Shale and the Utica Shale in the Appalachian Basin.

Major oil and gas producers in the Marcellus include Cabot Oil & Gas (COG), Anadarko Petroleum (APC), and Antero Resources. Many of these producers are also part of the Energy Select SPDR ETF (XLE) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

Antero posted $607 million profit for 4Q14

For 4Q14, Antero posted profit of $607 million, or $2.32 per basic and diluted share—compared to a net loss of $225 million in 4Q13. It said its average net daily production was 1,265 MMcfe/d (millions of cubic feet equivalent per day)—up 87% over the same quarter last year and a 17% increase sequentially. Total revenue grew to $1.5 billion from $480 million in 4Q13. For 2014, the total revenue was $2.7 billion—compared to $1.3 billion the year before.

Lowered the initial capital budget for 2015

In January, Antero said its initial capital budget for 2015 is $1.8 billion—a 41% reduction from the 2014 capital budget of $3.05 billion. It said its initial capital budget for 2015 includes “$1.6 billion for drilling and completion, $50 million for fresh water distribution infrastructure, and $150 million for core leasehold acreage acquisitions.” It said a 33% reduction in drilling and completion capital was due to “continuing capital efficiency improvements, a reduction in rig count and the deferral of 50 Marcellus well completions, which were previously scheduled to occur during the second and third quarters of 2015, into 2016.”

A statement said that “Despite the challenging commodity price environment, Antero is well positioned to continue executing on its development program and achieve peer-leading growth and margins.”

The next part of this series, we’ll discuss Baupost Group’s updated position in Kosmos Energy.

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