Industry Overview - Natural gas prices ended the week slightly higher at $3.447 per Mcf, despite ongoing supply-side pressures and bearish market sentiment [6][10] - The latest EIA report indicated a storage build of 101 billion cubic feet (Bcf), exceeding market expectations and marking the fifth consecutive week of triple-digit builds [4][10] - Total natural gas stocks reached 2,476 Bcf, which is 316 Bcf (11.3%) below the 2024 level but 93 Bcf (3.9%) above the five-year average [5] Demand and Supply Dynamics - The total supply of natural gas averaged 112.5 Bcf per day, an increase of 0.7 Bcf per day week-over-week, primarily due to higher shipments from Canada [5] - Daily natural gas consumption decreased to 97.3 Bcf from 98.1 Bcf the previous week, attributed to weakened power demand [5] - Forecasts predict cooler-than-normal conditions in key demand regions, which may continue to suppress gas usage from the power sector [7] Investment Opportunities - Recommended stocks include Expand Energy (EXE), Gulfport Energy (GPOR), and Antero Resources (AR), which are well-positioned amid the current market conditions [3][10] - Expand Energy has become the largest natural gas producer in the U.S. and is expected to benefit from increasing demand driven by LNG exports and electrification trends, with a projected 444.7% year-over-year earnings growth for 2025 [11][12] - Gulfport Energy, emerging from bankruptcy, focuses on free cash flow and debt reduction, with a forecasted 61.7% year-over-year earnings growth for 2025 [13][14] - Antero Resources, with a strong production outlook from its low-cost drilling inventory, anticipates a remarkable 1,485.7% year-over-year earnings growth for 2025 [15][16]

Core Viewpoint - Antero Resources has seen a 12.1% increase in share price over the past month, outperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Estimates Movement - Estimates for Antero Resources have remained flat over the past two months [2] VGM Scores - Antero Resources holds a strong Growth Score of A, a Momentum Score of B, and a Value Score of C, resulting in an aggregate VGM Score of B, indicating a balanced investment strategy [3] Outlook - Antero Resources is rated with a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the upcoming months [4] Industry Performance - Antero Resources is part of the Zacks Oil and Gas - Exploration and Production - United States industry, where EQT Corporation has gained 10% over the past month [5] - EQT reported revenues of $2.15 billion for the last quarter, reflecting a year-over-year increase of 25.1%, with an EPS of $1.18 compared to $0.82 a year ago [6] - EQT is projected to post earnings of $0.52 per share for the current quarter, indicating a significant year-over-year change of 750%, with a 9.6% upward revision in the Zacks Consensus Estimate over the last 30 days [6] - EQT also holds a Zacks Rank 3 (Hold) and has a VGM Score of B [7]

Industry Overview - The U.S. Energy Department reported a higher-than-expected increase in natural gas supplies, with stockpiles rising by 120 billion cubic feet (Bcf) for the week ended May 16, exceeding analysts' expectations of 118 Bcf [2] - Total natural gas stocks reached 2,375 Bcf, which is 333 Bcf (12.3%) below the 2024 level but 90 Bcf (3.9%) higher than the five-year average [3] - Daily natural gas consumption increased to 98.2 Bcf from 94.2 Bcf the previous week, driven by residential, commercial use, and stronger power demand due to warmer spring weather [4] Natural Gas Prices - Natural gas prices ended the week flat at $3.334/MMBtu despite volatility, as traders balanced rising supply with cautious sentiment [5] - The market is experiencing oversupply pressures, but forecasts of warmer weather could shift the tone, potentially leading to tighter market conditions [7] Company Focus - **Gulfport Energy**: A natural gas-focused exploration and production company with over 90% of its production in natural gas. The company has emerged from bankruptcy with a stronger balance sheet and a focus on free cash flow [8] - **Coterra Energy**: An independent upstream operator with around 65% of its production in natural gas. The company has a projected earnings growth rate of 20.3% over the next three to five years [10][11] - **Antero Resources**: A leading natural gas producer with a strong production outlook, having produced 306 billion cubic feet equivalent in the most recent quarter, with over 60% being natural gas [12]

Group 1 - Antero Resources reported stronger quarterly cash flows compared to previous years, indicating a positive outlook for its business [1] - The company has engaged in stock repurchases and significantly reduced its debt [1]

Financial Performance - Antero Resources Corporation reported first-quarter 2025 adjusted earnings of 78 cents per share, missing the Zacks Consensus Estimate of 90 cents, but an increase from 7 cents in the same quarter last year [1] - Total quarterly revenues were $1,353 million, below the Zacks Consensus Estimate of $1,399 million, but up from $1,122 million year-over-year [1] Production Overview - Total production in the first quarter was 306 billion cubic feet equivalent (Bcfe), down from 312 Bcfe a year ago and below the estimate of 302 Bcfe [2] - Natural gas production, which accounted for 64% of total production, was 195 Bcf, a 3% decrease from 202 Bcf year-over-year and below the estimate of 201 Bcf [2] - Oil production amounted to 852 thousand barrels (MBbls), an 18% decline from 1,035 MBbls in the previous year and below the estimate of 1,008 MBbls [3] - C2 Ethane production increased by 10% to 7,442 MBbls from 6,760 MBbls year-over-year, exceeding the estimate of 5,761 MBbls [3] - C3+ NGLs production was 10,229 MBbls, a 3% decrease from 10,564 MBbls reported a year ago, but higher than the estimate of 10,122 MBbls [4] Price Realization - Weighted natural-gas-equivalent price realization was $4.55 per thousand cubic feet equivalent (Mcfe), up from $3.39 year-over-year but below the estimate of $5.24 [5] - Realized prices for natural gas increased 71% to $4.01 per Mcf from $2.35 a year ago, below the estimate of $4.40 per Mcf [5] - Oil price realization was $59.08 per barrel (Bbl), lower than $62.53 year-over-year but above the estimate of $57.60 per Bbl [6] - Realized price for C3+ NGLs increased to $45.65 per Bbl from $43.05 year-over-year, exceeding the estimate of $39.04 per Bbl [6] - Realized price for C2 Ethane rose to $12.70 per Bbl from $9.32 year-over-year, above the estimate of $8.55 per Bbl [6] Operating Expenses - Total operating expenses increased to $1,081 million from $1,075 million year-over-year, below the estimate of $1,107 million [7] - Average lease operating costs were 11 cents per Mcfe, up 22% from 9 cents year-over-year [7] - Gathering and compression costs were 77 cents per Mcfe, a 7% increase from the prior year [8] - Transportation expenses rose 5% year-over-year to 65 cents per Mcfe, while processing costs increased 4% to 85 cents per Mcfe [8] Capital Expenditures and Financials - In the first quarter, Antero Resources spent $157 million on drilling and completion operations [10] - As of March 31, 2025, the company had no cash and cash equivalents and a long-term debt of $1.29 billion [10]

Financial Data and Key Metrics Changes - The company reported production of 3.4 Bcfe per day, aligning with guidance, and generated $337 million in free cash flow, benefiting from strong natural gas and NGL premiums [22][23] - Drilling and completion capital was $157 million, representing 23% of the full-year guidance [22] - Total debt was reduced by over $200 million during the first quarter, with a total debt of $1.3 billion, the lowest among peers [23][26] Business Line Data and Key Metrics Changes - The average completed feet per day increased by 15% to 2,452 feet compared to 2023 [5] - The company averaged 12.3 completion stages per day, with a record of 18 stages achieved in March [6] - The NGL pricing outlook remains strong, with a projected premium of $1.5 to $2.5 per barrel to Mont Belvieu, an improvement from $1.41 in 2024 [10] Market Data and Key Metrics Changes - U.S. propane exports are at record high levels, 7% above the previous year, indicating no impact on U.S. propane demand [16] - The faster-than-expected ramp-up at the Venture Global Plaquemines LNG facility has led to higher demand and pricing along the TGP 500 L transport [18] - The global LPG market is expected to adjust trade patterns, with increased U.S. LPG volumes heading to Europe and Asia [14] Company Strategy and Development Direction - The company is focused on maintaining a lean program with just two rigs and one completion crew to sustain production levels [7] - Antero is positioned to benefit from both LNG export growth and regional power demand through data center expansions [20] - The company has a strong organic leasing program, adding locations at low costs, and sees no immediate need for M&A [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong fundamentals of the business, highlighting the ability to pivot between share buybacks and debt reduction based on market conditions [23][24] - The company remains bullish on natural gas demand growth, citing low rig counts and muted associated gas growth from other basins [89] - Management noted that local demand would need to increase significantly for the company to consider growing production beyond maintenance capital [60] Other Important Information - The company has hedged approximately 9% of expected natural gas volumes through 2026, locking in attractive rates [8] - Antero's capital efficiency is highlighted by the lowest maintenance capital per Mcfe among peers at $0.54 [24] Q&A Session Summary Question: Clarification on LPG marketing agreements - The 90% figure refers to export volumes, with domestic sales also locked in at a high level [30] Question: Thoughts on M&A opportunities in U.S. shale - The company has a strong organic leasing program and sees no immediate need for M&A unless it is opportunistic and accretive [36] Question: Buyback strategy and future plans - The company is adopting a flexible approach, balancing between debt reduction and share buybacks based on market conditions [40][70] Question: Hedging strategy for 2026 - The company remains bullish and plans to continue hedging opportunistically while capturing premium pricing [46] Question: In-basin demand and local pricing dynamics - The company is focused on maintaining pricing based on NYMEX Henry Hub and is cautious about committing to local basis pricing without strong demand [84]

Financial Data and Key Metrics Changes - The company reported production of 3.4 Bcfe per day, aligning with guidance [21] - Free cash flow generated was $337 million, benefiting from strong natural gas and NGL premiums [21] - Total debt was reduced by over $200 million during the first quarter, with total debt at $1.3 billion, the lowest among peers [22][25] Business Line Data and Key Metrics Changes - Completed feet per day increased to an average of 2,452 feet, a 15% increase from 2023 [4] - Average completion stages per day reached 12.3, with a record of 18 stages achieved in March [5] - The company hedged approximately 9% of expected natural gas volumes through 2026 with new collars locking in a floor price of $3.7 and a ceiling of $5.96 [6] Market Data and Key Metrics Changes - Antero's NGL pricing outlook remains strong, with guidance for a $1.5 to $2.5 per barrel premium to Mont Belvieu, an improvement from $1.41 in 2024 [8] - U.S. propane exports are at record high levels, 7% above the previous year [15] - The faster-than-expected ramp-up at the Venture Global Plaquemines LNG facility has led to higher demand and pricing along the TGP 500 L transport [16] Company Strategy and Development Direction - The company is focused on organic growth through a strong leasing program, with no immediate need for M&A due to substantial inventory and low-cost production [32] - Antero is uniquely positioned to benefit from both LNG export growth and regional power demand through data center expansions [20] - The company plans to maintain a flexible approach between share buybacks and debt reduction based on market conditions [22][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the natural gas demand growth, citing low rig counts and muted associated gas growth from the Permian [90] - The company is pursuing a maintenance capital plan to maximize returns while monitoring local demand for potential growth opportunities [78] - Management highlighted the importance of local demand in driving future production growth, emphasizing the need for substantial demand before increasing volumes [58] Other Important Information - The company has entered into firm sales agreements on 90% of LPG volumes for 2025 at double-digit premiums to Mont Belvieu [9] - Antero's marketing strategy limits the impact of tariffs, with minimal exposure to the Chinese market [11][12] Q&A Session Summary Question: Clarification on LPG marketing agreements - The 90% figure refers to export volumes, with domestic sales also locked in at a high percentage [28] Question: Thoughts on M&A opportunities in U.S. shale - The company has a strong organic leasing program and sees no immediate need for M&A, although it remains open to opportunistic deals [32] Question: Buyback strategy and future plans - The company is adopting a flexible approach to capital allocation, balancing between debt reduction and share buybacks based on market conditions [68] Question: Hedging strategy for 2026 - The company remains bullish and plans to continue hedging, with no significant changes to the strategy anticipated [42] Question: In-basin demand and local pricing dynamics - The company is focused on maintaining pricing linked to NYMEX Henry Hub and is cautious about committing to local basis pricing without substantial demand [84]

2025 Guidance - Antero Resources (AR) projects net production between 3.35 and 3.45 Bcfe/d [7] - Net natural gas production is expected to be between 2.16 and 2.20 Bcf/d [7] - Net liquids production is guided to be between 198,000 and 208,000 Bbl/d [7] - C3+ NGL production is projected to be between 113,000 and 117,000 Bbl/d [7] - Ethane production is expected to be between 76,000 and 80,000 Bbl/d [7] - Oil production is guided to be between 9,000 and 11,000 Bbl/d [7] - D&C capital expenditures are estimated to be between $650 million and $700 million [7] - Land capital expenditures are projected to be between $75 million and $100 million [7] Natural Gas Hedge Position - In 2025, AR has production payment swaps (VPP) for 44,000 MMBtu/d at a weighted average index price of $2.61/MMBtu [8] - For 2025, AR has NYMEX Henry Hub swaps for 100,000 MMBtu/d at a weighted average index price of $3.12/MMBtu [9] - In 2026, AR has NYMEX Henry Hub Collars for 320,000 MMBtu/d with a floor price of $3.07/MMBtu and a ceiling price of $5.96/MMBtu [9]

Group 1 - Antero Resources (NYSE: AR) reported a strong first quarter, benefiting from a cold winter that supported natural gas prices, which had previously been weak [2] - The oil and gas industry is characterized as a boom-bust, cyclical sector, requiring patience and experience for successful investment [2] Group 2 - The analysis of oil and gas companies focuses on identifying undervalued firms by examining their balance sheets, competitive positions, and development prospects [1]

Core Viewpoint - Antero Resources reported quarterly earnings of $0.78 per share, missing the Zacks Consensus Estimate of $0.90 per share, representing an earnings surprise of -13.33% [1][2] Financial Performance - The company posted revenues of $1.35 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 2.42%, compared to $1.12 billion in revenues a year ago [2] - Over the last four quarters, Antero Resources has surpassed consensus EPS estimates only once [2] Stock Performance - Antero Resources shares have increased by approximately 3.2% since the beginning of the year, while the S&P 500 has declined by -5.5% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.72 on revenues of $1.34 billion, and for the current fiscal year, it is $3.60 on revenues of $5.64 billion [7] - The estimate revisions trend for Antero Resources is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Oil and Gas - Exploration and Production - United States industry is currently in the bottom 25% of over 250 Zacks industries, which may impact stock performance [8]