What happened
Shares of Antero Resources Corp. (AR 1.20%) tumbled 11.5% last month, according to data provided by S&P Global Market Intelligence. While the natural gas producer reported lots of good news in October, it wasn't enough to overcome a swoon in the energy market.
So what
The market took a nasty tumble in October as a growing number of worries caused stocks and commodities to slump. The price of oil, for example, fell more than 10%, its worst percentage decline in two years. That sell-off weighed on most energy stocks, including the gas-focused Antero Resources. That's because the company is a major producer of natural gas liquids (NGLs), which derive their value from the price of oil. Thus crude's decline last month will likely impact the company's cash flow.
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The sell-off in the oil market overshadowed what would have been a good month for Antero Resources. For starters, the company's midstream arms Antero Midstream Partners (AM 0.19%) and Antero Midstream GP LP (NYSE: AMGP) agreed to join forces in a transaction that will simplify their structure. As part of the deal, Antero Resources will receive $300 million in cash as well as a 31% stake in the new Antero Midstream. The company plans to use that money along with some of its excess cash flow to finance a share repurchase program, using as much as $600 million in the next 12 to 18 months, which would be enough to retire about 10% of its outstanding shares.
In addition, Antero Resources reported solid third-quarter results last month. The company's production rose 17% year over year, driven by the completion of 73 wells during the quarter, the highest level in the company's history. Meanwhile, Antero reported $77 million, or $0.23 per share, of adjusted net income, which came in $0.01 per share ahead of analysts' expectations.
Now what
The slump in oil prices caused investors to miss all the positives that occurred at Antero Resources last month. One of the most notable is the announcement of a needle-moving share-repurchase program. That buyback could prove to be a catalyst for the company, especially if it's able to take advantage of sell-offs such as last month's and retire a meaningful amount of shares.
