Antero Resources Corporation

Hello and welcome to the Antero Resources fourth quarter 2023 earnings conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Brendan Krueger, Vice President of Finance. Please go ahead, Brendan.

Thank you. Good morning, everyone. Thank you for joining us for Antero's fourth 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.

Thanks, Brendan. Good morning, everyone. I'll start my comments on slide number three of our presentation titled Drilling and Completion Efficiencies. 2023 was a transformational year for Antero as our operating performance made significant advances. Our drilling and completions teams set a number of company and industry records throughout the year. As an example, days per 10,000 feet of lateral drill averaged five and a half days in 2023, a decline of 14% since 2019. On the completion side, 2023 completion stages per day averaged nearly 11 stages a day, 35% improvement compared to the 2022 average, and more than an 80% increase from 2019 levels. The result of these operational improvements was 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 in 2023. Shorter cycle times means higher capital efficiency, of course. In addition, our well performance continues to improve. This operating momentum is highlighted by the fact that while targeting a maintenance capital program this last year, our volumes actually grew 6% in 2023 compared to 2022. Most importantly, these capital efficiencies and well productivity gains drive a reduced maintenance capital budget. Now let's turn to slide number four, titled, Efficiencies Translate to Lower Maintenance Capital in 2024. In 2024, we expect production to be flat, averaging between 3.3 and 3.4 BCF equivalent a day. Meanwhile, our drilling and completion capital is expected to be down over 25% compared to the prior year. Our maintenance capital budget midpoint of $675 million is over $225 million below the $909 million that we spent in 2023. The operating efficiency gains captured in 2023 allowed us to drop one drilling rig at the end of last year, and then to drop a completion crew at the beginning of this year. We now plan to average two drilling rigs and just over one completion crew for our maintenance capital program in 2024. Also contributing to our reduced capital budget is a lower base decline rate. As we enter year four of a maintenance capital program, our decline rate is substantially lower in the mid to low 20% range. This low decline rate requires less capital to hold production flat. In addition, our land capital budget midpoint of $88 million is down over $60 million compared to 2023. In total, this will result in $275 million to $300 million of reduced capital spending compared to last year. while maintaining the same production level. This significant reduction in capital highlights the high quality asset base at Antero and the flexibility that we have. As we look ahead to 2024, these significant capital savings combined with the recent increase in NGL prices is expected to generate free cash flow during the year. This positive free cash flow generation is expected to occur despite being unhedged in today's challenging natural gas price environment. This positive free cash flow outlook is even more impressive when considering that the current strip is at the lowest natural gas price for any calendar year outside of the COVID year in the last 25 years. 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 Canalongo, for his comments.