What happened

Shares of Antero Midstream (NYSE:AM) and Antero Resources (NYSE:AR) are soaring today, up by 21% and 24%, respectively, as of 11:30 a.m. EST. Fueling these two energy stocks' moves higher were agreements to enhance their operations and outlook.

So what

Antero Resources has secured agreements to reduce its gathering, processing, and transportation costs by about $350 million over the next four years. These contracts include a growth incentive fee program with Antero Midstream that aligns with the company's current plan to grow its production at an 8% to 10% compound annual rate through 2021. Antero Resources has also signed agreements with other third-party midstream providers to help relieve its burdensome transportation costs.

A man in a suit using his finger to draw an upward sloping line.

Image source: Getty Images.

Antero Resources also announced plans to sell between $750 million and $1 billion in assets this year. It expects to use the proceeds to repurchase some of its bonds, which currently trade at a discount. During the fourth quarter, for example, it bought back $215 million of its bonds at a 17% discount, which reduced its total debt by $37 million and eliminated $5 million in annualized interest expenses.

The company kicked off its asset sales process by selling $100 million in Antero Midstream stock back to that entity. That repurchase agreement will save Antero Midstream $20 million in dividend payments next year. As a result, the company will be able to generate enough cash to cover its current payout -- which yields a sky-high 22.5% -- by 1.1 times next year.

Now what

Shares of Antero Resources and its affiliated midstream company have been under tremendous pressure this year due to sinking natural gas prices. That weakness caused investors to worry that the company's deteriorating financial profile could eventually lead it into bankruptcy if it didn't take action. However, the steps Antero Resources outlined today should enhance its ability to generate free cash flow this year while helping it deliver a meaningful reduction in its debt level, which will put it on a much firmer financial foundation.