Antero Resources battled against low natural gas prices during the third quarter. That caused the driller to post an adjusted net loss of $149.8 million, $0.49 per share, which was $0.19 per share worse than the consensus estimate.
Those weak market conditions, however, are leading the company to take actions to reduce costs. One of the biggest was releasing a significant portion of its unused pipeline capacity to third parties. That decision helped reduce its net marketing expenses by 22% compared to the first half of the year, with some of those cost savings carrying over into 2020. The company is also aiming to slash its general and administrative expenses by another 10% by the middle of next year through headcount and other cost reductions. Finally, efficiency gains now have the company's capital spending on target to come in between $1.275 billion and $1.3 billion, which is 4% below the midpoint of its prior range.
Despite that spending reduction, Antero expects its full-year output to come in at the top end of its guidance range, which is 2% higher than its previous view. The company's ability to produce more gas for less money should enhance its return on investment.
Antero also provided a preliminary outlook for 2020. The gas driller expects to spend between $1.2 billion and $1.25 billion to complete 110 to 120 new wells. That activity level should support production growth of 8% to 10% from 2019's level. While capital spending will come down next year, Antero still expects to outspend its cash flow by $100 million to $150 million so that it can continue growing production. That's mainly because it still needs to fill unused pipeline space.
Antero is working to navigate through the current challenges in the natural gas market by cutting costs and reducing its investment spending level. However, it's still on track to outspend cash flow to grow production, which the market doesn't need right now. Because of that, it's adding to the industry's problems, which could put more pressure on its stock price in the coming year if gas prices weaken any further.