Antero Resources Corp (NYSE:AR) stock rose 0.72% (As on September 12, 11:22:29 AM UTC-4, Source: Google Finance) after Wolfe Research analyst Doug Leggate upgrades the company to Outperform from Peer Perform with a $37 price target, saying he sees improved risk-reward that now has near dated gas price risk discounted. Looking forward, Leggate says he sees Antero’s advantaged portfolio helped by one of the lowest portfolio breakevens in the sector and a strong balance enabling unhedged leverage to his view of an improving gas outlook in 2025. Antero’s portfolio is seen as having significant advantages, particularly with 75% of its direct exposure to liquefied natural gas (LNG) hub pricing and half of its C3+ volumes tied to international indices. These indices are currently about 30% higher than Mont Belvieu prices, suggesting a buffer against gas and natural gas liquids (NGL) price volatility.
Further, Wolfe Research’s analysis points to a sector-low breakeven cost of $1.90 per thousand cubic feet (mcf) for Antero Resources. With a ten-year inventory, the firm believes that a fair value of around $37 per share is justifiable, representing competitive upside when compared to other top gas companies like CHK and EQT
Meanwhile, Antero is increasing its full year 2024 production guidance to 3.375 to 3.425 Bcfe/d, an increase at the midpoint of 25 MMcfe/d. The higher than expected volumes are driven by stronger well performance, higher liquids volumes and capital efficiency gains.
Antero is increasing its full year 2024 C3+ NGL realized price guidance to a range of $1.00 to $2.00 per barrel premium to Mont Belvieu, up from the previous guidance of a premium of $0.00 to $1.00 per barrel. This increase in NGL realized price guidance reflects higher expected realizations from take-in-kind transactions, primarily through more exposure to premium international prices during 2024. Antero has firm transportation capacity to sell its propane and butane at the Marcus Hook Export Terminal in Philadelphia, PA. Antero entered into transactions during the second quarter at prices greater than a $0.10 per gallon premium to Mont Belvieu and this premium has further increased in the third quarter. This increasing premium reflects tight Gulf Coast export capacity and continued strong international demand out of Marcus Hook.
In addition, the Company continues to forecast total drilling and completion capital in 2024 to be in the range of $650 to $700 million.