Antero Resources (NYSE:AR) executives highlighted operational execution through severe winter conditions, early completion of a major acquisition, and updated capital and hedging plans during the company’s fourth-quarter 2025 investor conference call.
Operational performance and winter reliability
CEO Michael Kennedy opened by crediting upstream and midstream teams for maintaining production during a recent winter storm. Despite subzero temperatures and heavy snowfall, Antero said it experienced no shut-in volumes and brought a seven-well pad online during the event, which Kennedy described as enabling the company to deliver critical natural gas to multiple regions.
HG Energy acquisition and strategic priorities
Kennedy said Antero closed its HG Energy acquisition ahead of original expectations and paired that transaction with the sale of its Ohio Utica asset to further concentrate the portfolio in West Virginia. He said the combination “solidifies Antero as the premier natural gas and NGL producer in West Virginia.”
Management tied the HG transaction to previously outlined strategic initiatives, including:
- Expanding core Marcellus position in West Virginia: The acquisition added 385,000 net acres and more than 400 drilling locations, extending core inventory life by five years.
- Increasing dry gas exposure: Management said the larger production and inventory base positions Antero to pursue demand from LNG exports, data centers, and regional gas-fired power generation.
- Hedging to support free cash flow: The company described hedges as providing confidence in free cash flow over the next several years.
- Reducing cash costs and expanding margins: Management said the transaction lowers cost structure by nearly 10% (assuming no commodity price changes) and lowers break-even prices.
- Leveraging an integrated structure with Antero Midstream: Executives pointed to infrastructure benefits and flexibility.
In Q&A, Kennedy said integration progress was “better than our expectations,” citing adjacency to Antero’s existing field, larger pad potential, wider spacing, and expected cost and recovery improvements. He also said the company did not underwrite recent in-basin pricing strength and suggested potential upside from both pricing and cost structure.
NGL and natural gas market commentary
Senior Vice President of Liquids Marketing and Transportation Dave Cannelongo said NGL markets faced headwinds in 2025, but characterized many as singular events or trends expected to improve. He attributed higher-than-expected propane inventories to trade tensions with China affecting export flows, export terminal startup delays or operational issues on the Gulf Coast, and broader logistical complications. Despite these factors, he said propane “days of supply” generally remained within the five-year range due to strong export and domestic demand.
On the supply side, Cannelongo said U.S. C3+ growth is expected to decelerate, citing a chart showing year-over-year supply growth slowing from 328,000 barrels per day in 2024 to 131,000 in 2026 and 45,000 in 2027, driven by lower oil prices and reduced oil-focused drilling activity, especially in the Permian Basin. He also said LPG export capacity expansions added in 2025 and planned for 2026 should remove bottlenecks, with export capacity “unconstrained through at least 2028.”
Looking to demand, Cannelongo said third-party forecasts show significant global NGL demand growth in 2026, with demand expected to rise by 563,000 barrels per day, driven by steam crackers, propane dehydrogenation (PDH) demand, and residential/commercial growth. He noted C3+ prices were above $35 per barrel at the time of the call, with a backwardated strip implying a $33.50 annual average, and said a $5 move in C3+ pricing equates to $225 million in annual free cash flow. He added that analysts forecast propane storage returning to the normal five-year range by the end of 2026, which management expects would support improving prices through that year.
On PDH in China, Cannelongo said existing infrastructure was running at roughly 65%–70% utilization. He noted four plants came online in 2025, with additional capacity that could ramp by 300,000–400,000 barrels per day, and said two more plants scheduled for 2026 could add about 55,000 barrels per day of incremental PDH demand.
Senior Vice President of Natural Gas Marketing Justin Fowler emphasized winter demand strength, saying residential and commercial demand from November through February averaged nearly 42 Bcf per day—about 350 Bcf above the five-year average—and said January demand averaged above 50 Bcf per day, the third-strongest January on record. Fowler also said January posted the highest industrial gas demand on record dating to 2005, which the company believes is partly related to behind-the-meter power demand from data centers.
Fowler said storage levels flipped from about 200 Bcf above the five-year average at the start of winter to roughly 140 Bcf below, and he expects withdrawals to end below the five-year average. He cited LNG demand up more than 5 Bcf per day year over year—even before the anticipated Golden Pass startup—as a factor that could moderate storage injections in 2026. He also said European storage deficits, about 600 Bcf below the five-year average and nearing 2022 lows, could incentivize strong U.S. LNG exports to Europe through summer.
Discussing basis, Fowler said Plaquemines LNG feed gas averaging more than 4 Bcf per day has strengthened demand along Antero’s TGP 500L firm transport path, with a 2026 premium of +$0.66 versus Henry Hub. He also said Antero’s local 2026 basis was about $0.74 back of Henry Hub, tighter than the five-year average of $0.88 back, and suggested it could tighten further given East-region storage more than 13% below average. As an example, he said February TCO prices settled around a $0.15 differential to Henry Hub, the tightest February differential in 10 years.
2025 free cash flow, 2026 outlook, and hedging
Krueger said Antero generated more than $750 million of free cash flow in 2025. The company used that free cash flow to reduce debt by more than $300 million, repurchase $136 million of stock, and invest more than $250 million in “accretive acquisitions.” He said Antero’s balance sheet and free cash flow profile support an “opportunistic return of capital strategy” that can pivot among debt reduction, buybacks, and transactions.
For 2026, Krueger said the drilling and completion capital budget is $1 billion, including $900 million of maintenance capital and $100 million associated with higher working interest after foregoing a drilling joint venture partner. He also described an optional three-pad development program that could add up to $200 million of growth capital in 2026 and drive additional 2027 production growth. Management repeatedly characterized that growth option as flexible and concentrated in the second half of 2026, with production impact expected in 2027.
Antero said it averaged 3.4 Bcfe per day in 2025 and forecast 4.1 Bcfe per day in 2026, reflecting the early-February close of the HG transaction and an expected February closing of the Ohio Utica divestiture. The company also referenced a plan for 4.3 Bcfe per day in 2027, with a discretionary option to increase to 4.5 Bcfe per day depending on gas prices and in-basin demand.
On hedges, Krueger said Antero hedged HG volumes to support a “clear path” to fund the acquisition in three years using free cash flow from the hedges and proceeds from the Ohio Utica divestiture. For 2026, the company has about 40% of natural gas volumes hedged with swaps at $3.92 per MMBtu and another 20% hedged with wide collars between $3.24 and $5.70 per MMBtu. In Q&A, management said it would continue to consider layering additional 2027 hedges, noting tighter basis and the ability to lock in around $3 local realizations under certain combinations of Henry Hub pricing and basis.
Krueger also said that while Antero’s equity value remained near pre-acquisition levels, the company’s scale and financial profile have changed, citing more than 30% production base growth, five years of inventory life added, nearly 10% cash cost reductions, and higher free cash flow—all without issuing equity. He said the company expects leverage by the end of 2026 to be similar to pre-HG levels, “just below 1x.”
About Antero Resources (NYSE:AR)
Antero Resources Corporation is an independent exploration and production company focused on the development of natural gas, natural gas liquids (NGLs) and oil properties in the Appalachian Basin of the United States. The company’s operations target the Marcellus and Utica shales, where it applies advanced drilling and completion techniques to optimize recovery from its large acreage position. Antero’s portfolio encompasses significant reserves of ethane, propane and other NGLs, alongside dry gas volumes that are positioned to serve both domestic and export markets.
Headquartered in Denver, Colorado, Antero Resources holds approximately 1.8 million net acres of leasehold interests across parts of West Virginia and Ohio.
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