On Aug 26, 2014, upstream energy firm Antero Resources Corporation (AR) declared that it has increased its production guidance for the years 2014, 2015 and 2016. The company revealed that it will also invest higher capital this year than its previous projection.
Updated Production Guidance
Antero Resources anticipates 2014 production of 990–1,010 million cubic feet equivalent per day (MMcfe/d) higher than the prior guidance of 925–975 MMcfe/d. The company also raised its projected net output for the second half of 2014 to 1,160 MMcfe/d. The improvements are all reflections of the company’s positive outlook related to its operating activities for the rest of 2014.
Antero Resources also projects 2015 output of 1.5 billion cubic feet equivalent per day (Bcfe/d), up from its prior expectation of 1.4 Bcfe/d. Moreover, the company anticipates 2016 production at 2.2 Bcfe/d, up from its earlier projection of 2.1 Bcfe/d.
To support its increased production guidance the company will focus more on natural gas rich resources like Marcellus and Utica shales.
Increased Capital Budget
Antero Resources will likely invest $3.7 billion in 2014, higher than the previous expected amount of $2.9 billion. The company announced that more than 64% of the new capital budget will be allocated toward drilling and completion activities. For 2015, Antero Resources expects its capital budget for drilling and completion operations between $2.3 billion and $2.5 billion.
The company is planning to operate an average of 21 drilling rigs during 2014, up from its prior expectation of 18 rigs.
Antero Resources’ plan to add roughly 70,000 net acres to its gas and dry gas properties during 2014, encouraged it to invest more in drilling activities and also to operate more drilling rigs.
Outlook
We can say that increased capital expenditure and higher production guidance would be reflected in Antero Resources’ earnings, which will likely improve over the coming years.
Our Take
Antero Resources currently carries a Zacks Rank #3 (Hold) – implying that it will perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the energy sector like Patterson-UTI Energy Inc. (PTEN), Cameron International Corporation (CAM) and Sanchez Energy Corporation (SN). All these stocks sport a Zacks Rank #1 (Strong Buy).
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