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Antero Resources Beat Revenue Estimates but Missed on Earnings

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Antero Resources’ 4Q17 and fiscal 2017 revenue

Antero Resources (AR) reported its 4Q17 earnings on February 13, 2018. The company reported revenue of ~$1.0 billion, which was higher than analysts’ expectations of $787.2 million. In 4Q16, AR reported revenues of $156.2 million.

The low revenue figure in 4Q16 was due to an $829 million non-cash loss on unsettled hedges. The significantly higher revenue in 1Q17 was due to a $394 million non-cash gain on unsettled hedges.

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AR’s 4Q17 revenue included a $123 million non-cash gain on unsettled hedges as well as a $21 million loss on unsettled marketing hedges. The year-over-year growth in revenues in 4Q17 was also supported by high natural gas liquids (or NGLs) sales as well as oil sales, which grew 77% and 44%, respectively.

AR’s earnings release noted that liquids production represented a 24% increase over the prior-year period and contributed 41% of total revenues compared to 30% of total revenues in 4Q16.

The company’s revenues for fiscal 2017 were $3.7 billion versus $1.7 billion reported in fiscal 2016. The annual increase in NGL sales volumes in 2017 were 101%, while oil sales grew 76%, contributing to annual revenue growth.

Antero Resources’ 4Q17 and fiscal 2017 earnings

Antero’s adjusted EPS (earnings per share) in 4Q17 were $0.23 compared to Wall Street analyst consensus EPS estimates of about $0.36. As you can see in the graph above, AR’s 4Q17 earnings, like its revenues, were higher on a year-over-year as well as on a sequential basis. Apart from higher revenues, earnings were also affected by the new tax legislation enacted in December 2017.

AR recognized a deferred tax benefit of $428 million in 4Q17, mostly as a result of the remeasurement of the company’s net deferred tax liability for the reduction in the US statutory tax rate from 35% to 21%.

Earnings per share for fiscal 2017 were $0.33 versus $0.71 reported in fiscal 2016. So, on an annual basis, earnings declined. The decline was because of higher operating expenses in fiscal 2017 versus fiscal 2016. For example, lease operating expenses in fiscal 2017 increased 78% versus fiscal 2016, while gathering, compression, processing, and transportation, as well as exploration expenses, both increased 24% each in fiscal 2017.

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