Antero Resources Corporation

Greetings and welcome to the Antero Resources Corporation's second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow a formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Dan Katzenberg, Vice President of Investor Relations. Thank you. You may begin.

Thank you for joining us for Intero's second quarter 2026 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 interoresources.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 the earnings specialist for important disclosures regarding such measures. Joining me on the call today are Michael Kennedy, CEO and President of Rady Krueger, CFO, Dave Camuago, Senior Vice President of Liquids Marketing and Transportation, Justin Fowler, Senior Vice President of Natural Gas Marketing. I will now turn the call over to Mike.

Thank you, Dan, and good morning, everyone. I'll start on slide number three, titled Structural Margin Improvement at Intero. This structural improvement has strengthened our financial performance and importantly reduced earnings volatility. The results of this strategy can be seen in the table on the right side of the slide. While Henry Hub natural gas prices were down 16% from a year ago, the impact of increased scale, product diversity, and lower cash operating expense led to our majestic EBITDAX increasing 57% over that period. These structural and sustainable improvements in our business will reduce volatility in our future cash flow. Staying on the topic of cost reductions, let's turn to slide number four, titled Significant Reduction in Cash Costs. The cost reductions we realized during the second quarter was just the beginning of lower cost, comma, and taro. In June, we announced a cost reduction initiative that will significantly improve our margins. We're forecasting our cash costs to decline by over 25% from 2025 to year-end 2028. to $2 per MCFE. This dramatic change in our cost structure will be achieved as our company evolves from being 100% liquids development and 100% out of basins product sales to a much more balanced, rich and dry gas development program, as well as having sales in basin and out of basin. This shift in strategy that increases our exposure to dry gas and in basin sales is supported by the surge in new regional demand. This higher regional demand is expected to occur at the same time that many of our firm transportation commitments come up for renewal. To be clear, much of our LNG fairway-directed firm transport is attractive and will be retained. However, as we shift from the producer push era to the demand pull era, we are uniquely positioned to review each flow path and choose the highest margin sales point in supply contract for our natural gas and NGLs. Next, on slide number five, we provide details on our margin enhancement. The 70 cent improvement in our cash costs will be partially offset by 35 cents and lower price realizations as we sell more product in basin. This assumes strict pricing for in basin differentials without any tightening of basis that could occur When Regional Man Starts to Ramp Up In the chart on the right-hand side of the slide, we break out the $300 million of annual margin improvements into three categories. First, we have two financial transactions that we entered into early this decade that come to an end, the overriding royalty interest transaction and the BPP. The overriding royalty interest transaction return threshold to the counterparty was met in the second quarter. leading to the Martica entity being dissolved on June 30th and resulting in an increase of $60 million of annualized cash flow beginning in the third quarter of 2026. The VPP will expire in July of 27 and result in a $30 million annualized cash flow uplift. Second, optimization of our liquids firm transport is forecast to improve margins by another $105 million. This includes limited needs for recontracting of FAA transport, as well as the refinement of our LPG firm transport. The enhancements to our liquids margin structure are expected to be realized at the end of 2028. And third, the remaining $105 million of margin improvements through 2028 will primarily come through optimizing our natural gas firm transportation portfolio and increasing dry gas development. The increased demand for natural gas is shifting the market from a producer push market to a demand pull market. This is expected to drive meaningful improvements in our overall natural gas netbacks. These are exciting times for Entero and the natural gas industry in Appalachia. We are encouraged by the power deals that have been publicly announced to date as they further validate the significant regional demand growth that we are expecting. We continue to be actively engaged in conversations with all of these projects. However, Contero approaches these negotiations from a uniquely advantaged position. We hold optionality as we already sell our volumes at premium prices along the ONG fairway and are the second largest NGO producer in the country, which provides margin uplift. This means that local power projects must compete with the broader energy markets on returns to attract our volumes. This compares with many of our peers who lack the firm transportation portfolio or liquid production and are looking for projects for nearly 100% of their production. These attributes allow us to be highly selective in which projects we ultimately partner with. The projects that we elect to participate in will have to be accretive on a risk adjusted basis, which includes pricing, Now, to touch on the current liquids and NGL fundamentals, I'm going to turn it over to our Senior Vice President of Liquid Marketing and Transportation, Dave Conolongo, for his comments.