In a Jan. 8 research note, analyst Jane Trotsenko reported that Antero Resources Corp. (AR:NYSE) revised its 2019 guidance to reflect a more dour outlook, lowering expected production and raising cash costs and marketing expenses.
As for projected commodity prices for 2019, the company decreased projection for natural gas liquids (NGL) as a percent of West Texas Intermediate to 62.5% from 72%. It increased the anticipated differential for crude oil prices to $7.50 per barrel from $5.50.
Trotsenko explained that less favorable NGL pricing looking forward led the company to lower its expected 2019 production by 3% to 3.2 billion of cubic feet equivalent per day from 3.3 at the midpoint. In 2019 versus 2018, Antero's NGL production is forecasted to increase 28% year whereas crude oil production is expected to decrease 5%, ultimately resulting in a "slightly higher amount of revenue in 2019 than in 2018," the analyst wrote.
Regarding capex in 2019, Antero guides to about $2 billion, consistent with that of 2018. However, Trotsenko commented, "the company plans to continue to focus on liquids-rich assets, as those still deliver stronger economics despite the recent decline in liquids pricing."
Not all the news is negative, Trotsenko indicated. For one, Antero expects to garner a greater premium to Henry Hub pricing, $0.15–0.20 per million cubic feet as opposed to its previous $0.00–0.10 per million cubic feet, due to its now greater Gulf Coast and Midwest exposure.
Also, two of Antero's peers, Cabot and EQT, also revised production guidance downward, Trotsenko pointed out. "Should other natural gas (and crude oil) producers follow suit, the natural gas (crude oil and NGL) macro outlook for 2019+ could improve substantially."
Stifel has a Buy rating and a $21.60 per share target price on Antero. The company's share price (currently about $10.58) could face pressure, Trotsenko noted, when consensus decreases its estimates on the company.
[NLINSERT]Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Disclosures from Stifel, Antero Resources Corp., January 8, 2019
I, Jane Trotsenko, certify that the views expressed in this research report accurately reflect my personal views about the subject securities or issuers; and I, Jane Trotsenko, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. Our European Policy for Managing Research Conflicts of Interest is available at www.stifel.com.
For a price chart with our ratings and any applicable target price changes for LBRT click here.
Prior to March 22, 2017, a different Stifel research analyst provided research coverage of Antero Resources Corporation and its securities. Antero Resources Corporation's price chart for the period prior to March 22, 2017 reflects the rating and price target history of the former Stifel research analyst for such issuer and its securities.
Prior to May 22, 2018, a different Stifel research analyst provided research coverage of Antero Resources Corporation and its securities. Antero Resources Corporation's price chart for the period prior to May 22, 2018 reflects the rating and price target history of the former Stifel research analyst for such issuer and its securities.
Stifel or an affiliate expects to receive or intends to seek compensation for investment banking services from Antero Resources Corporation in the next 3 months.
Stifel or an affiliate is a market maker or liquidity provider in the securities of Antero Resources Corporation.
The equity research analyst(s) responsible for the preparation of this report receive(s) compensation based on various factors, including Stifel’s overall revenue, which includes investment banking revenue.
As a multi-disciplined financial services firm, Stifel regularly seeks investment banking assignments and compensation from issuers for services including, but not limited to, acting as an underwriter in an offering or financial advisor in a merger or acquisition, or serving as a placement agent in private transactions.
