Antero Resources Corporation

Greetings and welcome to Antero Resources Q3 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brendan Kruger, Chief Financial Officer of Antero and Vice President of Finance.

Thank you. Good morning, everyone. Thank you for joining us for Antero's third 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 Canalongo, Senior Vice President of Liquid 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 half of 2023 operationally, We continued to build on this momentum during the third quarter. As an example, our completion pumping hours per day increased to over 17 hours per day, up nearly 50% from a year ago. In June, we set a company record pumping on average for over 22 hours a day. This increase in pumping hours per day contributes to higher completion stages per day. Year to date completion stages per day have averaged 11 stages a day, a 35% improvement compared to the 2022 average, and is a nearly 90% increase from our 2019 levels. The net impact of all of our operational improvements has led to significantly shorter cycle times as shown on the bottom of the page. These cycle times reflect the total number of days it takes on average from first spotting a pad to turning that entire pad to sales. Since 2019, our cycle times have decreased by an impressive 65% and averaged just 160 days through the first three quarters of 2023. In June, we had the fastest cycle times in our company history at 129 days. Shorter cycle times means higher capital efficiency. Highlighting this point, we completed roughly 80% of our 2023 expected completion stages during the first nine months of 2023. Now let's turn to slide number four. Faster cycle times and improving well performance has led to two production guidance increases in 2023. This gain in capital efficiencies is highlighted by our 9% total production growth in the third quarter compared to the year-ago period. Our production growth was driven by an 18% liquids growth, while natural gas volumes increased 4% year over year. Looking at this on an annual basis, we now expect production this year to increase by 225 million cubic feet equivalent per day, or 7%, from the exit rate in 2022 to the exit rate in 2023. Importantly, these capital efficiency gains also reduce our maintenance capital budget. We continue to expect materially lower DNC capital in 2024, driven by operational efficiency gains alone. Lastly, I'd like to discuss our multi-decade inventory position. Turning to slide number five, titled AR has the largest low-cost inventory. This chart compares inventory positions across our natural gas peer group based on data from a recent third party report. Antero has the most sub $2.75 per MCFE drilling inventory at 22 years. It's important to note that this inventory comparison is after our peers spent a combined $17 billion on acquisitions over the last two years. In contrast, we remain focused on our organic leasing efforts where we've invested some $340 million over that same time to acquire targeted drilling locations within our development footprint. On average, we've been able to add locations for approximately a million dollars per location through this program. That is less than half of the over $2 million average cost per location for the pier acquisitions. Touching on the recent flurry of M&A headlines, in our opinion, drivers for M&A usually relate to either, one, limited core inventory, two, a lack of pipeline capacity to move your production out of basin, or three, for balance sheet repair. With a peer-leading low-cost inventory position, the largest firm transportation portfolio in the E&P sector, and low absolute debt and leverage, Antero can stay focused on improving operations, which we believe drives ultimate shareholder value. Now, to touch on the current liquids and NGL fundamentals, I'm going to turn it over to our Senior Vice President of Liquids Marketing and Transportation, Dave Cantalongo, for his comments. Dave?