Check out the latest Antero Resources earnings call transcript.

What happened

Shares of Antero Resources (AR -0.34%) nosedived last year, falling 50.6% overall, according to data provided by S&P Global Market Intelligence. That sell-off came even though the price of natural gas, which is Antero's main commodity, rose about 5% for the year. The company also made several noteworthy strategic moves. Here's a quick look at went happened to Antero in 2018.

So what

Antero Resources entered 2018 frustrated with the performance of its stock price, which had declined almost 20% in 2017 even though the company's operations performed well. That led Antero to form a special committee to review its options to maximize shareholder value. It unveiled the findings of that committee in early October, announcing that it would combine its two midstream entities, Antero Midstream Partners (AM -0.14%) and Antero Midstream GP (NYSE: AMGP), into one single company. That transaction would simplify their structure and reduce costs while providing Antero with a $300 million cash payout. The company plans to use those funds, as well as the free cash flow it's producing from operations, to buy back $600 million in stock to help boost the share price.

A natural gas field with pipeline valves and the sun setting in the background.

Image source: Getty Images.

Antero started repurchasing its stock in the fourth quarter, using $129 million of cash to retire 3% of its outstanding shares. That buyback, however, failed to boost the stock, which continued falling. That was due to the slump in oil prices, which plunged 40% from their peak in October and 19% for the year. While Antero doesn't produce very much oil and has hedges in place that lock in the price of 100% of its gas production through the end of 2019, it still has exposure to oil-price volatility. That's because the company is the largest natural gas liquids (NGLs) producer in the U.S., and they derive their price from oil. As such, crude's collapse took the price of NGLs with it. That will have a big impact on Antero's cash flow, because even though NGLs only accounted for 29% of its production during the third quarter, they contributed 43% of the company's revenue.

Now what

With crude and NGL prices falling, Antero Resources is tapping on the brakes in 2019 by reducing its spending level. That will cause the company to grow at a slower rate this year. However, it will also enable Antero to generate free cash flow, which it intends on using to buy back its beaten-down stock. Given where the shares trade these days, future repurchases could retire more than 10% of its outstanding stock. That buyback could help move the needle in 2019 if oil and NGL prices recover this year, making Antero an interesting stock to watch.