Antero Resources Q2 2025 Earnings Report

Antero Resources EPS Results

• Actual EPS: $0.35
• Consensus EPS: $0.68
• Beat/Miss: Missed by -$0.33
• One Year Ago EPS: -$0.21

Antero Resources Revenue Results

• Actual Revenue: $1.30 billion
• Expected Revenue: $1.30 billion
• Beat/Miss: Missed by -$5.46 million
• YoY Revenue Growth: +32.60%

Antero Resources Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: After Market Closes
• Conference Call Date: Thursday, July 31, 2025
• Conference Call Time: 11:00AM ET

Antero Resources (NYSE:AR), an independent oil and natural gas company, engages in the development, production, exploration, and acquisition of natural gas, natural gas liquids (NGLs), and oil properties in the United States. It operates in three segments: Exploration and Development; Marketing; and Equity Method Investment in Antero Midstream. As of December 31, 2023, the company had approximately 515,000 net acres in the Appalachian Basin; and approximately 172,000 net acres in the Upper Devonian Shale. Its gathering and compression systems also comprise 631 miles of gas gathering pipelines in the Appalachian Basin. The company was formerly known as Antero Resources Appalachian Corporation and changed its name to Antero Resources Corporation in June 2013. Antero Resources Corporation was incorporated in 2002 and is headquartered in Denver, Colorado.

Antero Resources Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Antero raised its 2025 production guidance by 5% while cutting maintenance capital by 26%, achieving the lowest capex per Mcfe ($0.53) among peers.
• Positive Sentiment: The company hedged approximately 20% of its 2026 natural gas volumes with costless collars at a $3.14 floor and $6.31 ceiling, lowering its 2026 free cash flow breakeven to $1.75/Mcf.
• Positive Sentiment: Antero’s realized C3+ price averaged $37.92/bbl in Q2, and it expects NGL premiums of $1–$2.50/bbl in H2, with double-digit export lock-ins sustaining strong margins.
• Positive Sentiment: Near- and medium-term demand is set to rise meaningfully, driven by Plaquemines LNG’s accelerated ramp, 8 Bcf/d of new LNG capacity by 2026, and ~5 Bcf/d of announced Appalachian power projects.
• Positive Sentiment: In Q2, Antero generated $260 million of free cash flow, used $200 million to reduce debt, and repurchased $150 million of shares at an 8% discount, cutting debt 30% YTD.

Presentation

[Operator]

Greetings, and welcome to the Antero Resources Second Quarter twenty twenty five Earnings Call. Please note this conference is being recorded. I will now turn the conference over to our host, Brendan Kruger, Vice President of Finance. Thank you. You may begin.

[Brendan Krueger, VP - Finance & Treasurer at Antero Resources]

Good morning. Thank you for joining us for Antero's second quarter twenty twenty five 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 and A. I would also like to direct you to the homepage of our website at ww.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.

[Brendan Krueger, VP - Finance & Treasurer at Antero Resources]

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 Canelongo, 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.

[Paul Rady, Co-Founder, President, Chairman & CEO at Antero Resources]

Thank you, Brandon, and good morning, everyone. Let's start on slide number three titled Efficiencies Reduce Maintenance Capital, which highlights the tangible benefit of our best in class capital efficiency. For the second consecutive year, we have increased our production guidance while decreasing CapEx. Looking at the chart on the left side of the slide, since the year 2023, our maintenance production target has increased 5% from under 3.3 Bcf equivalent per day to over 3.4 Bcf equivalent a day. During that same time, our maintenance capital requirements declined by 26% from $900,000,000 to $663,000,000 The chart on the right hand side of the slide highlights this capital efficiency relative to our peers.

[Paul Rady, Co-Founder, President, Chairman & CEO at Antero Resources]

Antero has the lowest maintenance cap per Mcfe of its peer group at just $0.53 per Mcfe. This is 27% below the peer average of $0.73 per Mcfe. Now let's turn to Slide number four to discuss our updated hedges. During the quarter, we added additional wide natural gas costless collars for the year 2026. These wide collars lock in attractive rates of return with a floor price of $3.14 and a ceiling of 6.31 With these new hedges in place, we have hedged approximately 20% of our expected natural gas volumes through 2026.

[Paul Rady, Co-Founder, President, Chairman & CEO at Antero Resources]

Our hedge book allows us to protect the downside while maintaining significant exposure to rising natural gas prices. These hedges lower our 2026 free cash flow breakeven to $1.75 per Mcf. 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, Dan Canelongo for his comments. Dave?

[David Cannelongo, SVP - Liquids Marketing & Transportation at Antero Resources]

Thanks, Paul. I'll start on slide number five titled NGL Pricing Premium. During the second quarter Antero's realized C3 plus price averaged $37.92 per barrel. Looking ahead, we continue to expect realizations to be at attractive premiums to the NGL benchmark in the second half of the year. As a reminder, these differentials are firm in our existing term agreements and therefore we have high confidence that differentials will improve going into the third and fourth quarters of this year as winter heating and gasoline blending season ramp up.

[David Cannelongo, SVP - Liquids Marketing & Transportation at Antero Resources]

Additionally, our domestic basis improves for butane beginning in September and for propane beginning in October. Although we reduced our full year NGL price guidance slightly, this was primarily a reflection of our second quarter actuals that was impacted by inventory adjustments. We continue to expect premiums in the second half of this year to average in the range of 1 point to $2.5 per barrel with the fourth quarter anticipated to realize the strongest premium of the year. I will also point out that Antero's C3 plus realizations improved year over year as a percentage of WTI showing strengthening underlying fundamentals in NGL markets. In the 2025, Antero's C3 plus realizations averaged 59% of WTI compared to the 2024 when realizations were 50% of WTI.

[David Cannelongo, SVP - Liquids Marketing & Transportation at Antero Resources]

On the export side, Antero has locked in a substantial portion of our export volume at double digit premiums to Mont Belvieu and we continue to benefit from those deals. As we've talked about in prior earnings calls, when dock capacity is viewed as sufficient and export premiums are modest, benchmark NGL prices typically rise. This was clearly evident during the second quarter as reflected in the relative NGL strength versus WTI. We anticipate that new trade deals signed in the coming weeks and months will increase confidence in the reliability of U. S.

[David Cannelongo, SVP - Liquids Marketing & Transportation at Antero Resources]

LPG supply and help strengthen export volumes and benchmark pricing further. Uncertainty surrounding trade negotiations had a significant but transitory impact on the global NGL market during the quarter. For LPG, the market saw a shift in trade flows with relatively more U. S. Barrels going to Japan, South Korea and Indonesia and China sourcing more LPG from The Middle East and Canada.

[David Cannelongo, SVP - Liquids Marketing & Transportation at Antero Resources]

These changes were largely anticipated by the market as we discussed on last quarter's earnings call. Despite the destination reshuffling, overall U. Exports remained strong and increased year over year. Reshuffling, Exports have averaged over 1,800,000 barrels per day, which is 6% higher than the same period last year. As shown on Slide number six titled New Capacity to Increase Exports, New Gulf Coast export capacity that has just been placed in service is expected to lead to higher exports, a rebalancing of inventories and further strengthening of Mont Belvieu NGL prices.

[David Cannelongo, SVP - Liquids Marketing & Transportation at Antero Resources]

With that, I'll now turn it over to our Senior Vice President of Natural Gas Marketing, Justin Fowler to discuss the natural gas market.

[Justin B. Fowler, SVP - Gas Marketing & Transportation at Antero Resources]

Thanks Dave. We continue to see the positive demand trends for natural gas both near term and long term. Starting first with the near term demand growth, the 2025 saw a significantly faster ramp at Venture Global's Plaquemines LNG facility. This July, the facility achieved a daily record for feed gas at over 2.9 Bcf per day, which represents 120% of Phase one nameplate capacity.

[Justin B. Fowler, SVP - Gas Marketing & Transportation at Antero Resources]

Now Venture Global is starting LNG production at Phase two of the terminal, which will increase nameplate capacity to 3.6 Bcf. This initial production is ahead of prior expectations with full Phase two in service expected in late twenty twenty five. This accelerated ramp has led to higher demand along our TGP 500 leg firm transport and driven a higher premium at that delivery point relative to Henry Hub. As shown on slide number seven titled, not all transport to The U. S.

[Justin B. Fowler, SVP - Gas Marketing & Transportation at Antero Resources]

Gulf Coast is equal. Maintenance along the pipeline restricted the amount of volume that captured that premium during the second quarter. However, we anticipate our premium realizations will improve in the 2025 and in 2026. As a reminder, Antero has five seventy MMcf a day of capacity on the TTP 500 leg. Slide number eight dives a bit further into the LNG market.

[Justin B. Fowler, SVP - Gas Marketing & Transportation at Antero Resources]

Over the next thirty months, LNG demand is expected to increase by another eight Bcf a day, driven by the startup of Plaquemines Phase two, Golden Pass, Corpus Christi and Calcasieu Pass Phase two. Combined with the continued power demand growth, the natural gas market is expected to be materially undersupplied during this period, which we expect to support higher prices next year. Now let's shift topics from near term LNG demand to the medium term Appalachia regional power demand trends. Turning to Slide number nine titled Regional Natural Gas Demand. The first version of this slide was created for our first quarter earnings call in April.

[Justin B. Fowler, SVP - Gas Marketing & Transportation at Antero Resources]

At that time approximately three Bcf of regional power demand had been announced. A short ninety days later, we are now up to almost five Bcf of announced projects within our region. While we certainly acknowledge there is a lot of work to be done, we anticipate the acceleration in power demand announcements to continue, resulting in significant opportunities for Antero. Antero remains advantaged in this power demand story with our extensive resource base, integrated midstream assets and investment grade balance sheet. Through our firm transportation to The U.

[Justin B. Fowler, SVP - Gas Marketing & Transportation at Antero Resources]

S. Gulf Coast, we are uniquely positioned as the only natural gas company that can meaningfully participate in both the LNG export growth strategy and the expected regional power demand growth. With that, I will turn it over to Mike Kennedy, CFO of Antero Resources.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Thanks, Justin. We continue to execute on our plan, while doing so in a more capital efficient manner. During the second quarter, this execution led to $260,000,000 of free cash flow, nearly $200,000,000 of which we used to reduce debt. Once again, we continued our opportunistic share repurchases, accelerating our buybacks during periods when the stock does not reflect the underlying fundamentals. This was highlighted by our activity April through July when our average share repurchase price came in at an 8% discount to the volume weighted average price during that same period.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Our return of capital strategy is anchored by our low absolute debt position that provides us with substantial flexibility. With this flexibility, we can pivot between share buybacks or debt reduction depending on market conditions. Year to date, we have now reduced total debt by 30% or $400,000,000 while also repurchasing $150,000,000 of shares. Let's turn to slide number 10 titled Antero has the highest exposure to NYMEX linked pricing. Justin already highlighted the significant demand that is coming later this year and continuing through the end of this decade.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

We expect regional pricing will remain volatile with sustained periods trading at a steep discount to NYMEX due to pipeline constraints and seasonality impacts. This chart highlights Antero's peer leading exposure to NYMEX. While all of our peers forecast realized prices well back of NYMEX due to in basin exposure, we expect realized prices at a premium to NYMEX. Looking forward, we plan to continue to target maintenance capital at future growth opportunities from regional demand increases. Any future growth would be tied to a direct demand at attractive prices.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Given our firm transportation capacity that sells our natural gas at premiums to NYMEX, we are unlikely to spend growth capital for in basin pricing. Slide number 11 illustrates that over the last ten years any regional basis tightening has been short lived given robust Appalachian supply and pipeline takeaway constraints. However, if regional demand were to lead to a sustained improvement in basin pricing, we have over ten years of dry gas drilling inventory where we could accelerate activity to grow volumes in a short timeframe and capture that higher regional pricing. With that, I will now turn the call over to the operator for questions.

[Operator]

Thank you. And at this time, we will conduct our question and answer session. Our first question comes from Arun Jayaram with JPMorgan. Please state your question.

[Arun Jayaram, Research Analyst at JP Morgan Chase & Co]

Yes. Good morning, gentlemen. Maybe for Dave. Dave, I wanted to see if you could maybe elaborate on slide six where we're going to see some additions to Gulf Coast LPG export capacity. Your thoughts on the implications for Mont Belvieu pricing and just the international versus Mont Belvieu spread next year and how this will maybe shape some of your marketing efforts?

[David Cannelongo, SVP - Liquids Marketing & Transportation at Antero Resources]

Yes. Good morning, Arun. We've seen this dynamic play out a few times as you see in the chart going back to 2020, 2021 where you have a sizable build out new export capacity. And we've talked about in the past during those times you see the dock premiums be fairly modest, and tying to Mont Belvieu pricing, but the result of that is Mont Belvieu is as closely linked to the international price as it can be. And so that's what we expect with the build out that you see there from parties just there through 2026.

[David Cannelongo, SVP - Liquids Marketing & Transportation at Antero Resources]

And obviously, there's another consortium that's working on another large export project in The Gulf. So a significant amount of export dock capacity coming online in The U. S. Really should debottleneck us for the foreseeable future. As a result of that, I think the premiums of the docs will be more modest going forward, but we'll see overall higher benchmark as a result, which for Antero with the domestic exposure that we have in the end higher Mont Belvieu prices is net net better for us than strong ARBs.

[Arun Jayaram, Research Analyst at JP Morgan Chase & Co]

Got it. Got it. And maybe one for Mike. You guys continue to kind of walk and chew gum in terms of reducing your already low debt balances and buyback stock. Based on your view Mike and Paul of the fundamental picture, how do you gauge the mix of maybe buybacks and debt reduction going forward?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Sure. We came into the year thinking that first $600,000,000 of the free cash flow is going to be used to reduce debt. Then we saw some market dislocations over the past four or five months, which really the Ontario Resources stock price is not reflecting our strong fundamentals. So we took advantage of that and started to buy back early. We'll continue to do that.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Be opportunistic. We continue to want to reduce debt. We're at $1,100,000,000 We'd like to reduce that further of course. But also if there's continued dislocations in stock we'll continue to buy that. So it's kind of a mix just depending on market conditions.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

But we are happy to be able to buy in stock where we have so far this year.

[Arun Jayaram, Research Analyst at JP Morgan Chase & Co]

Great. I'll turn it back.

[Operator]

Your next question comes from John Freeman with Raymond James. Please state your question.

[John Freeman, Managing Director at Raymond James Financial]

Thanks. Good morning. You highlighted the last few years you've been able to meaningfully reduce the maintenance CapEx while still moving the production higher. Just at a high level just how we should think about maybe 2026, do you all have the ability directionally to keep pushing that maintenance CapEx lower?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. Yes, we do. This year I think our well costs are down 3% year over year and we continue to drill them in a quick and complete them in a very quick fashion. That 3% decline and that's on a per foot basis is actually on a bit shorter laterals than typical for us. We're kind of more in the 13,000 foot range this year.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

But that returns next year more to the 14,015 foot range. So just assuming all things equal service costs equal, no more efficiencies, which I don't expect to happen. That would lead to a further 3% decline in well costs next year. So our well costs continue to decline and we continue to drill them faster. And so I think that continues into 2026.

[John Freeman, Managing Director at Raymond James Financial]

That's great. And then my follow-up question, some of your peers this earnings season have talked about kind of the pretty big uplift to cash flow due to the tax impact, the recent tax changes. Are you all able to sort of talk to that?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. We have a similar uplift from that as well. We have a lot of tax attributes, a lot of NOLs from the past, a lot of R and D tax credits. But with the new bill, you're able to expense all of the R and D expenses There's better interest expense treatment.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

It's 30% of EBITDA versus EBIT, also 100% bonus depreciation on lease and well equipment. So you combine all that with our tax attributes that we carried forward and we do not expect to pay any material cash taxes for the next three years. So it's pushed out at least until 2028 based on today's commodity prices.

[John Freeman, Managing Director at Raymond James Financial]

Great. Thanks. Appreciate it.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Sure.

[Operator]

Your next question comes from Doug Leggate with Wolfe Research. Please state your question.

[Doug Leggate, MD & Senior Research Analyst at Wolfe Research]

Good morning, guys. Thanks for having me on the call. Actually, I wonder if I could just follow-up on the last questions very quickly. I want to make sure we understand this correctly. And so you can understand the context, one of your large peers talked about ten years of significant deferred tax.

[Doug Leggate, MD & Senior Research Analyst at Wolfe Research]

Is it fair to say that you guys are not subject to the AMT, the corporate alternative minimum tax, which basically means that the treatment is probably a little different or is that am I thinking about that different am I thinking about that the wrong way?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. We're not subject to AMT. We're aware of the treatment. We don't qualify. Think you have to have a three year average of $1,000,000,000 of GI.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

So we're not in that bucket. This bill also makes IDC deductible for A and P purposes. So that further helps. So that may be what they're suggesting. But we are not subject to A and P and do not forecast to be subject to A and P.

[Doug Leggate, MD & Senior Research Analyst at Wolfe Research]

That's very helpful. That was naturally my primary question. I'm just opportunistic given the last one. But my primary question is actually back to the sustaining capital issue. We've watched this from afar for quite some time get better every year.

[Doug Leggate, MD & Senior Research Analyst at Wolfe Research]

And my question is, is there anything in mix here that is changing as it relates to what you're targeting as perhaps the macro gets a little better on the gas side as opposed to on the liquid side. But and I guess my end goal here is to try and figure out how much is that like a target or a level you can say we think it can get to this level on a sustained basis going forward? Any color on the magnitude of any continued improvement would be really helpful.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. Actually maintenance capital should continue to improve everything else equal. I mentioned the lateral lengths, also every year you maintenance capital, your decline rate comes down. I think we're in the low 20% now. Every year it ticks down by about 1%.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

So when you actually look in the out years to maintain this, you're below where we're at and you continue to go lower each year. So that should continue. On target mix, we continue to favor the liquids twelve seventy five. We had some DUC dry gas pads or lean gas pads that we completed in late first quarter and early third quarter, which has that mix at least the condensate a bit off. But that should return to kind of in that high around 10,000 barrels a day in Q4 with liquids staying the same.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

So the mix really just continue to target twelve seventy five BTU, but our maintenance capital continues to tick lower not only from our capital efficiencies, but from longer laterals and also lower declines.

[Doug Leggate, MD & Senior Research Analyst at Wolfe Research]

That's a great message guys. Thanks so much.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Thank you.

[Operator]

Your next question comes from Greta Dresca with Goldman Sachs. Please state your question.

[Greta Drefke, Equity Research Analyst at Goldman Sachs]

Good morning and thank you for taking my questions. I first just wanted to touch on hedging here a little bit, given that you leaned into some more callers this quarter. Given the volatility of the forward curve that we've seen in the past couple of months, what's your current view on potentially layering in incremental hedges in 2026 or 2027 if the forward curve does give you that opportunity?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes, good question. So '26 was unique. Never seen in my career where you could get a two to one call SKU on a contango curve that's $1 higher in the front. So we took advantage of that. We had lean gas pads that I just mentioned, but we also have some lean gas pads going forward.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

So we wanted to lock in that was kind of the original program. We've added to that in the second quarter now up to $500,000,000 a day just opportunistic. It's putting in the $3 in a quarter downside to $7 upside. So that was attractive. If that dynamic would present itself in 2027 that'd be something we're interested in.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

But we have low debt. We don't have any in basin price exposure. We have the lowest maintenance capital. So it's not something that's needed. But if you get those type of dynamics in the gas market, seems prudent to put some hedges on.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

We're only 20% hedged, but have upside to $7 that was a good trade.

[Greta Drefke, Equity Research Analyst at Goldman Sachs]

Great. I appreciate that color. And then just touch on capital returns a little bit more. As you continue to make progress on deleveraging while also returning cash to shareholders through buybacks, Is there a debt level or leverage point at which you would consider ramping up Antero's return of capital maybe towards 75% or so?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. We ramp up really on the stock price compared to underlying fundamentals. We're now in a position where we can use all of our free cash flow to do that if that was an opportunity for us. We do want to continue to have a lower debt. We do have a 2,030 note that it's $600,000,000 at 5.38%.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

So that's a good piece of paper. We'd like to keep that in our capital structure. So we only really have $500,000,000 of debt that we would pay down right now. So it will just depend on market conditions, but we're very happy to continue to accelerate our share buyback and actually go higher if there's an opportunity.

[Greta Drefke, Equity Research Analyst at Goldman Sachs]

Great. Thank you.

[Operator]

Your next question comes from David Deckelbaum with Cowen. Please state your question.

[David Deckelbaum, MD - Sustainability & Energy Transition at TD Cowen]

Morning, everyone. Thanks for taking my questions today. Mike, not to belabor the point, but maybe just like if I were to summarize just the return of capital thoughts. Just considering the fact that your outstanding notes, right, are all callable and you can redeem some of those 29 notes, should we just think about it as opportunistically every quarter with free cash, you'll just be considering the implied return on paying down debt or sort of redeeming those notes versus buying back shares?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. What we also look at David is just on a forward basis, the commodity prices, what's our kind of cash flow outlook, free cash flow outlook and then compare that to how the valuation is of Antero and if that's an opportunity for us we'll act on that. So that's really what we think about. We could call those notes in right now. Just under the credit facility, we have so much room under the facility.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

It's basically undrawn today. So we could call it in, no problem, continue to buy back. But like I said, we're really just trying to be opportunistic and it is an opportunity when you see the stock at these levels versus the underlying business.

[David Deckelbaum, MD - Sustainability & Energy Transition at TD Cowen]

Appreciate that. Maybe if Dave can take this one. Just curious, Dave, with the benefits in the second half of this year on plus realizations, with the added LPG capacity, is the anticipation that that premium to Velvio is pretty sustainable into 2026? Will there be perhaps just a greater mix going international?

[David Cannelongo, SVP - Liquids Marketing & Transportation at Antero Resources]

Again international kind of remains to be contracted. So we'll be in the market, getting what is prevailing prices are at that time. And we do expect it will be lower than what we saw here in 2025 when we talked about double digit premiums 2025. You don't typically see that with ample dock capacity. So you go back to 2020 to 2022, you're probably averaging $06 to $07 premiums during that time period.

[David Cannelongo, SVP - Liquids Marketing & Transportation at Antero Resources]

So that will certainly be reflected in our realizations next year and I would expect that to come down modestly in twenty six percent versus 25%.

[David Deckelbaum, MD - Sustainability & Energy Transition at TD Cowen]

Appreciate it guys.

[Operator]

Thank you. You. Your next question comes from Kevin McCurdy with Pickering Energy Partners. Please state your question.

[Kevin MacCurdy, Managing Director at Pickering Energy Partners]

Hey, good morning. Production in 2Q was a little gassier compared to the prior quarters and it looks like the production raise was most related to gas volumes. Do you have any comments on what drove the mix this quarter? And any thoughts on how that kind of mix could change throughout the year and into next year?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. So we brought on two DUC pads that we've talked about quite a lot over the past conference calls. One of them was brought on at the end of the first quarter and these were lean gas pads more in the 1,200 btu range. And then the second one was brought on in July. So second and third quarter were always expected to be a bit gassier.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

But that reverses like I mentioned into the fourth quarter you get back to that 10,000 barrel a day as condensate and liquids continues to increase. So going forward all the pads we're bringing on for the remainder of the year are more like twelve seventy five Btu. So that will reverse going into the fourth quarter.

[Kevin MacCurdy, Managing Director at Pickering Energy Partners]

Got it. Appreciate the detail on that. And then as a follow-up on the collars, mean that was a very impressive SKU on the 26 collars. Does that echo kind of your internal view on gas with the more upside to downside in '26? And just wanted to get your current thoughts on or any changes to your medium term macro view based on how kind of storage and production has trended this summer?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. No, that made sense to us just because the skew is definitely to the upside. The margins today are razor thin. There are no volumes that are shut in. Everything is producing full out.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

You've had a lack of investment in the gas development over the last two years. Rig counts are still subdued. So anything could tip this to the upside. If you have an early winter, if you have any sort of winter next year, you could definitely see the gas going much, much higher. So it didn't make sense to us.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

But just locking in 20% and taking advantage of that basically funding your capital program while still maintaining upside to $7 and still maintaining 80% upside exposure with something that appealed to us lowering our free cash flow breakeven already the lowest down to $1.0.7 So we thought we should take advantage of that. And like I mentioned, I've never seen that in my thirty plus year career. I kind of call SKU on a contango strip. So if that would present itself again, I think we just continue to act just because it's so attractive, but definitely skewed to the upside.

[Kevin MacCurdy, Managing Director at Pickering Energy Partners]

Appreciate that. Thank you.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Sure.

[Operator]

Your next question comes from Leo Mariani with Roth. Please state your question.

[Leo Mariani, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Yes, hi. Obviously, you guys mentioned some of the in basin demand projects. So I appreciate that slide there. Obviously, new projects recently announced by one of your competitors here. Can you maybe provide maybe some color on where Antero is in that sort of scheme here?

[Leo Mariani, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

I assume that you guys are also talking to new in basin sources of demand. So can you kind of give us a bit of an update on kind of where you guys stand there?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. Good question. First, we've seen that incremental two Bcf a day of natural gas demand just in the last quarter. So that's exciting to us and that's why we put that slide out that's well ahead of ours and probably everyone's expectation. How does Antero play a role?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

I mean we're so uniquely positioned. Some of the attributes we have, we have the integration between the upstream and midstream, one stop shop there also importantly that no one's kind of focusing on, but it's a huge attribute for us and kind of sets us apart as we have the water systems and the water that the data centers require and the turbines require. So that is unique to us and that kind of puts us in a different position. We also as we always mentioned, we have the 500,000 acres, decades of core Marcellus inventory right there, HVP legacy production. So, able to satisfy that.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

We have what we think is the best natural gas marketing team in the business. You've got exposure to Justin. They're terrific over there. So they'll be able to capture any opportunities. And we also have the investment grade balance sheet, is important for long term kind of arrangements.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

But with it being a long term deal, we're really not attracted to any deals that are based on local pricing. It's going to have to be accretive to our overall store and our overall pricing. Doing deals just at local has never been exciting for us. We would always be cautious around putting hundreds of millions of dollars behind development to fund the local pricing deal. This is thought it's kind of driven our whole strategy from day one and what's created our firm transportation portfolio strategy.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

We put that slide there. Anytime there's been local tightening of basis, it's always been met with incremental supply and incremental development because it's there's really no barriers to entry to feed that local gas and how prolific the Marcellus is. So, anything that we would do would have to be NYMEX based or accretive to our pricing. If we're wrong and there is attractive local pricing for sustained periods, we'll just grow into it with our ten plus years of dry gas inventory. We can turn that on quick, that's already built, infrastructure already there.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

So we will be a participant. We're uniquely advantaged like I mentioned with all those attributes, but it's going to have to be accretive to the story.

[Leo Mariani, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Okay. I appreciate that. Just wanted to follow-up on that there though. Are you guys maybe in any somewhat advanced discussions with in basin demand sources and you think there's potential for some announcements in the near future, call it a matter of months as opposed to years? Just trying to see if we can get a little more color around where you guys are in the process.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. We wouldn't put any timing around that. We have set up an internal team. We have a lot of efforts on it, a lot of discussions, but not going to put any timing on that. But to remind you, we have all the firm transporter, the vast majority of it on a percentage basis to the Gulf Coast and that's where the demand is going to come, the LNG and natural gas demand growth over the kind of short to midterm.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

We're unique. We have that exposure, but we also are going to have exposure to the local demand from the data center growth. So it's not like we need to announce deals around that. We'll be cautious and announce them at the appropriate time and enter in the appropriate deals and not rush to enter into any.

[Leo Mariani, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Okay. Very helpful on that point. And then just quickly on shareholder returns here. Obviously, you don't have that much more debt to pay off as you've enumerated somewhere around $500,000,000 or so. When that's sort of done, are we going to see just a much more meaningful return of capital?

[Leo Mariani, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Because obviously at that point, leverage will be so low and if gas stays healthy, you'll just be building a lot of cash. So should people expect that? And obviously, you've done the buyback, but could there be a dividend in place at some point as well?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. I think you're already seeing us. We basically already are at the point where we don't need to reduce debt any further. It's more just being driven by market conditions. So we'll continue to do that.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

We continue to buy back in size as we move forward. I haven't thought about a dividend. That's also going to be market based and market conditions. Really just been focused on the debt reduction and getting the share count as low as we can.

[Leo Mariani, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Thank you.

[Operator]

Your next question comes from Philip Jungworth with BMO Capital Markets. Please state your question.

[Phillip Jungwirth, Managing Director at BMO Capital Markets]

Thanks. Good morning. You noted how Cal26 for the TPG 500 leg has increased to $0.60 That's higher year on year up from your last update. Just with Plaquemines ramping further into next year, wondering if there's a theoretical ceiling you guys think about for how high this premium could get considering the LNG demand pull and where global gas prices sit? And anything to keep in mind as far as incremental supply going to this price point?

[Justin B. Fowler, SVP - Gas Marketing & Transportation at Antero Resources]

Yes. Good morning, Philip. Justin Fowler here. As we look out at the next couple of years, we definitely think that Plaquemines plus the local power gen could continue to pull that basis up. We saw that basis accelerate so quickly.

[Justin B. Fowler, SVP - Gas Marketing & Transportation at Antero Resources]

And when we think about our other delivery points, for example, Columbia Gulf Onshore, which is also correlated with Plaquemines LNG, we've already seen, those basis locations at CTT Onshore, ANR Southeast start to, trade a premium as we look out in the forward. So if you just look at history there and understand that there's only a finite amount of gas that can get to Plaquemines and then the other LNG facilities that we can again highly correlate to Antero's two Bcf of Feet delivery to the Gulf Coast. We definitely think that there could be additional upward movement as these new projects come on with new liquefaction capacity and you just continue to hear all the deals out of Europe, Asia on long term LNG contracts. So we do think, yes, it could support that. When you think about the Gulf Coast and the New York City gates, for example, you start seeing this high demand in certain specific locations and it can drive those specific basis points much higher versus Henry Hub, if you think about it as a Citygate type equivalent.

[Justin B. Fowler, SVP - Gas Marketing & Transportation at Antero Resources]

So yes, definitely thinking there could be some additional upside here.

[Phillip Jungwirth, Managing Director at BMO Capital Markets]

Okay, great. And then on Appalachia differentials still $0.90 back in future years despite a bullish in basin demand outlook. We have seen a lot of consolidation versus the last ten years. I know you guys do some of the best work on remaining inventory, not just for Antero, but the overall basin. So just wondering if you think it could be different this time in terms of the industry supply response, just given we do have a lot fewer players and generally less runway as far as core inventory?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes, could be. Good point. We'll continue to see what transpires always seems to be Appalachian supply to meet any local demand. But it's a fair point of yours. And as that occurs, we're just very well positioned.

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Like I said, our original purchase of the Marcellus was really in this dry gas area window and it's all HBP and we have over ten years plus drilling locations of the highest quality. So hopefully you're right, but we're not going to plan on that.

[Phillip Jungwirth, Managing Director at BMO Capital Markets]

Thanks.

[Operator]

And your next question comes from Betty Jiang with Barclays. Please state your question.

[Betty Jiang, Senior Equity Research Analyst - US Integrated Oil and E&Ps at Barclays]

Good morning. Thank you for taking my question. I have a follow-up to Paul, your comment earlier about pricing on the power supply deal that anything would need to be NYMEX based. Is there appetite from the customer standpoint to sign a NYMEX link deal if from our understanding is that the market dynamic for Gulf Coast is very different than local where they source that gas. So just wondering how competitive is that pricing discussion and appetite for a NYMEX link deal?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

We saw how much demand like we mentioned it's over five Bcf a day. So, ultimately they're going to have to secure their supply and we're the second largest producer in the basin with all those attributes that I talked about and I think only there's only two investment grade counterparties as well and only two with upstream and midstream together. So if they want to secure the supply and be with that type of producer, obviously we would have leverage because all of our other pricings on NYMEX and really don't need to sell anything at a local basis.

[Betty Jiang, Senior Equity Research Analyst - US Integrated Oil and E&Ps at Barclays]

Got it. Thanks. And would you mind talking a bit about the power dynamic going on in the West Virginia area just because, we have seen all the deals happening in Pennsylvania by understand there's legislature that's, being signed that's supporting power development, in West Virginia as well. So does that position you guys specifically for the opportunities arising in the region?

[Michael Kennedy, Senior VP of Finance & CFO at Antero Resources]

Yes. They just passed that micro bid bill in West Virginia to allow for more ease of development around these data centers and the AI build out. So that was in direct response to this. So they are trying to position West Virginia favorably and I think we are in a favorable position.

[Betty Jiang, Senior Equity Research Analyst - US Integrated Oil and E&Ps at Barclays]

Okay. Got it. Thanks.

[Operator]

Thank you. And there are no further questions at this time. I'll hand it back to Brendan Kruger for closing remarks.

[Brendan Krueger, VP - Finance & Treasurer at Antero Resources]

Yes. Thank you for joining us on today's call. Please reach out with any further questions. Thank you.

[Operator]

This concludes today's conference. All parties may disconnect. Have a good

Participants

Executives

• Brendan Krueger, VP - Finance & Treasurer
• Paul Rady, Co-Founder, President, Chairman & CEO
• David Cannelongo, SVP - Liquids Marketing & Transportation
• Justin B. Fowler, SVP - Gas Marketing & Transportation
• Michael Kennedy, Senior VP of Finance & CFO

Analysts

• Arun Jayaram, Research Analyst at JP Morgan Chase & Co
• John Freeman, Managing Director at Raymond James Financial
• Doug Leggate, MD & Senior Research Analyst at Wolfe Research
• Greta Drefke, Equity Research Analyst at Goldman Sachs
• David Deckelbaum, MD - Sustainability & Energy Transition at TD Cowen
• Kevin MacCurdy, Managing Director at Pickering Energy Partners
• Leo Mariani, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC
• Phillip Jungwirth, Managing Director at BMO Capital Markets
• Betty Jiang, Senior Equity Research Analyst - US Integrated Oil and E&Ps at Barclays