Please ensure Javascript is enabled for purposes of website accessibility

Why Antero Resources Stock Tumbled Nearly 15% in July

By Matthew DiLallo – Aug 5, 2019 at 10:35AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The natural gas driller had a tough month.

What happened

Shares of Antero Resources (AR -4.65%) fell 14.5% in July, according to data provided by S&P Global Market Intelligence. Weighing on the natural gas driller's stock was weaker pricing and its somewhat disappointing second-quarter results.

So what

Natural gas prices tumbled last month, falling to a three-year low. Driving down the fuel's price is persistent oversupply because drillers continue to produce more gas than the market needs. The glut came in spite of robust gas consumption from the power industry last month. The sector generated record amounts of electricity to meet demand from air conditioners used to battle this summer's heatwave.

A natural gas wellhead.

Image source: Getty Images.

The weaker natural gas prices this year are having an impact on Antero Resources. That was evident during the second quarter, when the company reported a much larger loss than analysts had anticipated.

Antero has been working hard to battle against those headwinds by continuing to drive down costs. Those efforts are paying off, as the company reached its full-year cost reduction targets by midyear. That enabled it to incur its lowest level of capital spending since its initial public offering in 2013. Furthermore, Antero expects its costs to improve by another 10% to 14% next year. That should put the company in an even better position to navigate through what continues to be a challenging commodity price environment.

Now what

Antero continues to cut costs so that it can improve its profitability. However, the company is also part of the problem given that its gas output soared 28% year over year during the second quarter, which added to the U.S.A.'s gas glut. Unless Antero and its peers reduce their growth rates, they're going to keep putting downward pressure on the price of natural gas.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Antero Resources Corporation Stock Quote
Antero Resources Corporation
$29.30 (-4.65%) $-1.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.