Antero Resources Corp: More Growth Than You'd Believe

Antero Resources expects fantastic growth for the next couple of years, but investors need to keep an eye out for infrastructure issues that have hit Cabot Oil & Gas and Gulfport Energy in the same regions.

Jul 17, 2014 at 12:48PM

The amount of long-term growth forecasted by Antero Resources Corporation (NYSE:AR) is almost unheard of outside of social media stocks, especially for a company with a greater than $15 billion market cap. The Marcellus and Utica Shale natural gas exploration and production firm is probably mostly unknown by investors after going public last October. 

Despite production growth rates of over 100% and heading toward nearly 950 MMcfe/d during 2014, the company continues to forecast growth rates in excess of 50% in both 2015 and 2016. At this point, Antero appears to be overcoming the infrastructure bottlenecks that have disturbed Marcellus production by Cabot Oil & Gas (NYSE:COG) and Utica growth at Gulfport Energy Corp (NASDAQ:GPOR). The biggest question is whether the growth at Antero can be maintained as guided.

Massive first quarter
Antero Resources claims to be the most active driller in the Marcellus and it shows with production surging 105% for the quarter to reach 786 MMcfe/d. The company has 15 rigs running in the Marcellus compared to only six operated by Cabot Oil & Gas. The interesting part is that Cabot decided to forgo plans to expand to seven rigs in the area to focus more short-term capital on the oil-rich Eagle Ford shale.

Even more impressive was revenue growth that for the first quarter surged 127% to reach $413 million, compared to only $181 million in the prior year period. Analysts forecast revenue surging to $525 million in the current third quarter for a roughly 25% gain in only six months.

Despite the infrastructure issues leading to lower price realizations for Cabot in the Marcellus, Antero Resources is still forecasting solid production growth of over 40% through 2016. Similarly, Gulfport greatly reduced breakneck production growth to improve long-term operating efficiencies and reduce costs from service crews, while at the same time removing potential risks of infrastructure snags down the road. Though the Utica specialist still expects production growth exceeding 100% to average nearly 40,000 boe/d for the year, the company reduced the previous guidance that upset the market.

Liquids growth
As with any exploration and production firm, liquids based production is more attractive than dry gas all things being equal. The biggest issue that most firms run into is that shifting to an oily region across the country leads to disruptions in drilling from moving crews and establishing a base of operations in the new region. In the case of Antero, the company was able to create a liquids holding of 115,000 acres in the Utica Shale core of Ohio.

For the first quarter, liquids production soared nearly 600% to reach 16,332 Bbls/d. The company expects further significant growth this year with guidance for an average production rate of 25,000 Bbls/d. The more impressive number is that revenue will reach the 24% level providing significant upside to cash flow.

Bottom line
The production growth rates of Antero Resources are almost unimaginable for a large-cap firm, but investors need to understand the recent lessons of Cabot Oil & Gas and Gulfport Energy. Breakneck growth can have downsides as well, especially in these new shale plays where infrastructure issues reduce access to markets with attractive prices. Assuming Antero Resources remains on its current path without hiccups, the stock is undoubtedly attractive. Investors need to keep in mind that achieving these growth rates at the expected size by 2015 is increasingly difficult.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Mark Holder has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers