Antero Resources Corporation

Greetings and welcome to the Antero Resources Corporation third quarter 2026 earnings 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. 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 third 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 our earnings press release for important information. Joining me on the call today are Michael Kennedy, CEO and President, Brendan Krueger, CFO, Dave Canalago, Senior Vice President of Marketing and Transportation, and Justin Fowler, Senior Vice President of Natural Gas. I will now turn the call over to Mike.

Thank you, Dan. Good morning, everyone. We're at a supply-demand inflection point for the natural gas market. LNG and power projects are expected to increase demand for natural gas by more than 40 BCF per day across the U.S. by 2038. including more than 15 BCF per day in our local Appalachian region. As we have seen through our marketing efforts and highlighted by the numerous transactions announced this year, demand for natural gas assets continues to increase. The scarcity of core natural gas acreage is becoming apparent, which is resulting in higher and higher values placed on quality natural gas assets. Entero is well positioned to benefit from this inflection point supported by more than 20 years of core drilling inventory, our integration with Entero Midstream, and being one of the few investment grade companies. Combined with our ongoing cost reduction initiatives, we expect these advantages to drive peer leading free cash flow per share growth over the coming years. As depicted on slide number three, Per a recent public analysis by Inveris, we have more than 1,400 core drilling locations remaining. That gives Intero a multi-decade runway of premium inventory at a time when high quality drilling locations are becoming increasingly scarce. As demand moves ahead of supply, we believe this inventory advantage will become increasingly valuable. Now let's move to slide number four, which summarizes some of our quarterly highlights. Production increased 23% year-over-year to a company record of 4.2 BCFE per day. This was achieved while curtailing an excess of $100 million per day during the quarter. Second, as a result of our cost reduction and margin enhancement initiative, we realized our lowest cash cost level in company history, 16% lower than a year ago period. Third, The diversity of our production and a lower cost structure led to our unhedged EBITDAX margin increasing 27% year-over-year, despite natural gas prices declining 4%. We used this strong financial performance to repurchase 1.6 million shares during the quarter and now have reduced our share count by more than 5 million shares since the beginning of 2025. Turning to slide number five, I'll provide an update on our margin enhancement progress. Based on transactions we have executed on the day, we expect to achieve $140 million of our $300 million target by mid-2027. The overriding royalty interest transaction we entered into in 2020 met the return hurdles, resulting in 85% of the cash flow now reverting back to Entero on July 1, 2026. or $60 million of annual free cash flow uplift. We also executed on our firm transportation optimization strategy during the third quarter, resulting in 400 million per day of agreements and $20 million in annualized free cash flow. During the fourth quarter, we are launching a formal process to expand on this strategy. Based on increasing demand pull interest that we are seeing, we expect approximately one BCF per day of firm transportation optimization agreements, resulting in an annualized free cash flow increase of $50 million. Next, the VPP transaction will expire in the third quarter of 2027, resulting in an annualized increase in free cash flow of $30 million. Beyond mid-2027, increased dry gas development, and the expiration of liquids firm transport in 2028 puts us comfortably on track to hit our initial $300 million margin enhancement target. In addition, during the quarter, we entered into attractive natural gas term sales deals with multiple parties at the Clarington Market. In addition to these sales, since announcing Entero Midstream's Eastside Express pipeline last quarter, We have seen increased interest from multiple downstream counterparties seeking access to our natural gas at interconnects on the pipeline. This project gives us widespread connectivity to numerous long-haul pipelines, providing exceptional optionality for contracting with end-user demand. This project also reduces our all-in transport costs resulting in higher margins. I'll end with brief comments on the NGL macro. The start of the fourth quarter has seen NGL prices increase 50% above the third quarter level. We expect NGL strength to continue in 2027, driven by robust global demand and low international inventories that require significant US exports to return to sufficient levels. Following a recent industry transaction, Antero is now the only producer with meaningful NGL exposure going forward. We remain unhatched on our NGLs, providing considerable upside to our free cash flow. Now, to provide more detail on the current liquids and NGL fundamentals, I'm going to turn it over to our Senior Vice President of Marketing and Transportation, Dave Canalongo, for his comments.