Antero Resources Corporation

Greetings and welcome to the Antero Resources second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And as a reminder, this conference is being recorded. It is now my pleasure to introduce to you Brendan Krueger, VP of Finance. Thank you, Brendan. You may begin.

Thank you. Good morning. Thank you for joining us for Antero's second quarter 2023 investor conference call. We'll spend a few minutes going through the financial and operating highlights, and then we'll open it up for Q&A. I would also like to direct you to the homepage of our website at www.anteroresources.com, where we have provided a separate earnings call presentation that will be reviewed during today's call. Today's call may contain certain non-GAAP financial measures. please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. Joining me on the call today are Paul Rady, Chairman, CEO, and President, Michael Kennedy, CFO, Dave Cantalongo, Senior Vice President of Liquids Marketing and Transportation, and Justin Fowler, Senior Vice President of Natural Gas Marketing. I will now turn the call over to Paul.

Thank you, Brendan. I'll start my comments on slide number three, titled Drilling and Completion Efficiencies. After a record-breaking first quarter operationally, the strong momentum continued in the second quarter. Completion stages averaged more than 11 per day in the second quarter, a 40% improvement compared to the 2022 average, and over a 90% increase from 2019 levels. Drill-outs, which are the process of drilling out the plugs in each stage of the horizontal portion of the well, exhibited the same success during the quarter. Drill-outs averaged over 4,000 feet per day during the second quarter, up 9% from the 2022 average, and over 50% increase from the 2019 levels. Faster drill-outs and completion times have resulted in significantly shorter cycle times, as shown on the bottom of the page. Since 2019, our cycle times have decreased by 65% and averaged just 151 days in the second quarter. In June, we had the fastest cycle times in our company history at 129 days. These cycle times reflect the total number of days it takes on average from first spud on a pad to turning the entire pad to sales. As a reminder, we average six wells per visit per pad. Shorter cycle times mean higher capital efficiency. Highlighting this point, we completed roughly 60% of our 2023 budgeted completion stages during the first six months of 2023. Now, let's turn to slide number four titled, Antero Wells Continue to Outperform Peers. In addition to the drilling and completion records, we continue to see increases in well productivity. The chart on this slide highlights well productivity trends versus our peers since 2020. As illustrated on the page, Andero's average cumulative equivalent production per well is 20% higher than the peer average over this time. This differentiates Andero from its peers. With many companies having already drilled their best acreage, our long core inventory life continues to deliver stronger results each year. Now let's turn to slide number five. Faster cycle times and improving well performance led to the increase in our 2023 production guidance. This gain in capital efficiencies is highlighted by our 5% total production growth in the second quarter compared to the year-ago period. Our production growth was driven by 16% liquids growth while natural gas was essentially flat year over year. These capital efficiency gains also reduce our maintenance capital budget. As illustrated in the chart on the right-hand side of the page, we currently expect 10% lower D&C capital in 2024, driven by operational efficiency gains alone. To be clear, the lower capital outlook for 2024 assumes we maintain our increased 2023 production level. The potential for a rollover in service costs suggests that there could be further reductions in next year's capital budget, but it's too early to assume that those service costs will come to fruition today. Now, to touch on the current liquids and NGL fundamentals, I'll turn it over to our Senior Vice President of Liquids Marketing and Transportation, Dave Canalongo, for his comments.