Scotia Howard Weil 48 th Annual Energy Conference March 24, 2020
Legal Disclaimer This presentation includes "forward-looking statements." Such forward-looking statements are subject to a number of risks and uncertainties, many of which are not under AR’s control. All statements, except for statements of historical fact, made in this presentation regarding activities, events or developments Antero expects, believes or anticipates will or may occur in the future, such as those regarding expected results, future commodity prices, future production targets, completion of natural gas or natural gas liquids transportation projects, future earnings, Adjusted EBITDAX, leverage targets, future capital spending plans, improved and/or increasing capital efficiency, continued utilization of existing infrastructure, gas marketability, estimated realized natural gas, natural gas liquids and oil prices, acreage quality, access to multiple gas markets, expected drilling and development plans (including the number, type, lateral length and location of wells to be drilled, the number and type of drilling rigs and the number of wells per pad), projected well costs and cost savings initiatives, including with respect to potential incremental flowback and produced water services by AM, future financial position, future technical improvements, and future marketing opportunities, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking statements speak only as of the date of this presentation. Although AR 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. Except as required by law, AR expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements. AR cautions you that these forward-looking statements are subject to all of the risks and uncertainties incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil, most of which are difficult to predict and many of which are beyond the AR’s control. 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, world healthy events, and the other risks described under the heading "Item 1A. Risk Factors" in AR’s Annual Report on Form 10-K for the year ended December 31, 2019. This presentation includes certain AR and AM financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”) . These AR measures include (i) Adjusted EBITDAX, (ii) Net Debt, (iii) leverage and (iv) free cash flow. For AM, these measures include (i) Adjusted EBITDA, (ii) Net Debt, (iii) leverage, (iv) Return on Invested Capital (“ROIC”) and (v) free cash flow. Please see “Antero Definitions” and “Antero Non-GAAP Measures” for the definition of each of these AR and AM measures as well as certain additional information regarding these measures, including the most comparable financial measures calculated in accordance with GAAP. All 2019 non-GAAP measures of AM included in this presentation represent pro forma financial results of Antero Midstream Corporation and its subsidiaries, including Antero Midstream Partners and its subsidiaries, that reflect the applicable results as if the simplification transaction closed on January 1, 2018 unless otherwise noted. AM data presented for historical periods represent the results of legacy Antero Midstream Partners LP and its subsidiaries for comparison purposes. The information on such slides is included for reference, but AR does not take responsibility for the validity or completeness of such information. For more information regarding AM and the assumptions and qualifications of the statements made by it, please refer to its website and its filings with the SEC. Antero Resources Corporation is denoted as “AR” in the presentation and Antero Midstream Corporation is denoted as “AM”, which are their respective New York Stock Exchange ticker symbols. 2
Antero Resources at a Glance Denver, CO Antero Resources Acreage Map HEADQUARTERS Antero Marcellus Rig Industry Marcellus Rig S&P 400 Industry Utica Rig Antero Acreage CONSTITUENT SW Marcellus Core Ohio Utica Core 2 nd Largest U.S. NGL PRODUCER (1) 5 th Largest U.S. GAS PRODUCER (1) Own 40% OF CORE LIQUIDS-RICH DRILLING LOCATIONS IN APPALACHIA (2) 94% Hedged Core Liquids-Rich Appalachian Undrilled Locations (2) ON NATURAL GAS THROUGH 2021 @ $2.83/MMBtu (3) ) Ba3/BB-/BB- Moody’s Peers AR S&P ~60% ~40% Fitch RATINGS (4) Note: Hedge position as of 12/31/19. Rigs on map as of 3/13/20, per Rig data. 1) Based on 4Q19 reported production. 2) Based on Antero analysis of undeveloped acreage in the core of the Marcellus and Ohio Utica Shales. 3 3) Percentage hedged represents percent of expected natural gas production hedged based on natural gas production guidance of 2.375 Bcf/d and 9% midpoint of targeted growth in 2021. Represents corporate rating for Moody’s and issuer ratings for S&P and Fitch. 4)
Leading Sustainability and ESG Metrics GHG Emissions Water Management • Antero has zero flaring of produced gas , one of the lowest GHG • Fresh water pipeline network intensity metrics in the industry (upstream independents and majors) and eliminated 570,000 water truck a very low methane leak loss rate: trips in 2019 Total Direct GHG Emissions and Intensity (CO 2 e) Methane Leak Loss Rate • AR recycles and reuses over Thousand Metric Tons Tons/MBOE 1% 3.9 90% of flowback and produced 506 water (~50,000 Bbl/d currently) 2.7 0.28% Safety 2.4 0.10% 0.05% 432 428 • Lost Time Incident Rate in 2018 OF Industry Upstream 2018 OF AR 2019 outperformed the industry Target 2025 Sector Upstream 2017 2018 2019 Target Sector Avg. benchmark by 75% 2019 Antero vs 2018 Industry GHG Emission Intensity (1) • Total Recordable Incident Rate * in 2018 outperformed the 40 industry benchmark by 52% 35 Governance 30 • Both AR and AM are C-corps and CO 2 e Tons/MBOE 25 have a majority of independent directors 20 15 • Management compensation is tied to free cash flow (AR), ROIC 10 (AM) and safety and 5 environmental performance 0 metrics * * * * * * * * AR A B C AR D E F G H I J K L M N O P Q R + * * AM For more information, please visit: https://www.anteroresources.com/community-sustainability; OF stands for ONE Future Source: Data retrieved from 2018 and 2019 sustainability reports or calculated from 2018 sustainability and public disclosures. Antero Resources’ intensity is based on the total GHG emissions reported to the EPA under Subpart W of the Greenhouse Gas Reporting Rule Program (GHGRP). Previous years have been updated as of 3/2020. 4 *Company's GHG intensity includes their midstream and/or downstream operations. 1) Comparisons for independents and majors who report include: BP, CHK, CNX, COP, CVX, DVN, ENI, EOG, EQNR, FANG, HES, MPC, NBL, RRC, RDS, SWN and XEC.
AR Business Strategy Antero Resources Principles Priorities 1 Spend within cash flow, fill premium Build scale with firm transportation capacity Liquids Diversification 2 Liquidity and strengthen balance sheet with leverage target of mid 2- times 3 Mitigate Develop liquids-rich locations Maintain Strong Commodity Price Balance Sheet with superior margins and returns Risk With and Financial vs dry gas locations Hedges and Firm Flexibility Transportation 4 Hedge commodities to protect cash flow and balance sheet Denotes management & employee compensation plan metrics 5 Note: Leverage is a non-GAAP financial measure. Please see the appendix for more information.
1 Spend Within Cash Flow - Cost Structure Reset Drilling and completion efficiencies result in a reduction in 2020 CAPEX to $1.0 B, down $150 MM from prior guidance Cost Savings Update 2020 Expected Impact (1) Well Cost Reduction Progress $330 MM • D&C target of $750/lateral foot by mid-2020, a 23% reduction from $970/ft in 2019 • $1.0 B D&C capital budget in 2020, a $150 MM reduction from the initial budget and ($970/ft - $750/ft ) x 12,000’ = $2.6 MM 21% below 2019, with no change to production guidance $2.6 MM per well x 125 wells = $330 MM + Water Savings Driving LOE Lower • 4Q19 represented a 24% reduction from 3Q19 $74 MM • Expect to save $74 MM in 2020 as a result of increased blending operations ~50% reduction from 2019 combined with reduced trucking + GP&T and Net Marketing Expense Reduction • $90 MM of midstream fee reductions in 2020 with Antero Midstream and other third $190 MM party midstream providers • Targeting $100 MM reduction in 2020 net marketing expense (1) + G&A Cost Reduction • 18% reduction by mid-2020 due to headcount reductions in 1H2019, natural $24 MM employee attrition and a reduction across the board in expenses = Grand Total Cost Reset ~$620 MM Note: Cost reductions are based on 2020 guidance vs original 2019 guidance 6 (1) Based on midpoint 2020 guidance.
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