Antero Resources Corporation (NYSE:AR) Q4 2019 Earnings Conference Call - Final Transcript

Feb 13, 2020 • 11:00 am ET

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Antero Resources Corporation (NYSE:AR) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greeting, and welcome to the Antero Resources 2020 Fourth Quarter Earnings Conference Call. [Operator Instructions]

I will now turn the conference over to your host Michael Kennedy. You may begin.

Executive
Michael Kennedy

Thank you for joining us for Antero's fourth quarter 2019 investor conference call. We'll spend a few minutes going through the financial and operational highlights and then we'll open it up for Q&A. I'd also like to direct you to the home page of our website at www.anteroresources.com, where we have provided a separate earnings call presentation that will be reviewed during today's call.

Before we start our comments, I would first like to remind you that during this call, Antero management will make forward-looking statements. Such statements are based on our current judgments regarding factors that will impact the future performance of Antero and are subject to a number of risks and uncertainties, many of which are beyond Antero's control.

Actual outcomes and results could materially differ from what is expressed implied or forecast in such statements. Today's call may also contain certain non-GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures.

Joining me on the call today are Paul Rady, Chairman and CEO; and Glen Warren, President and CFO.

I will now turn the call over to Paul.

Executive
Paul M. Rady

Thank you, Mike, and thank you to everyone for listening to the call today. In my comments, I'll begin with an update on the continued momentum around our internal cost savings initiatives, including our lower well cost targets for 2020, and then Glen will highlight our balance sheet and liquidity position and provide a brief update on our ongoing asset monetization efforts.

Let's start by discussing the cost reduction momentum across all of Antero's cost structure. Detailed on Slide number 3, titled Cost Reduction Momentum, nearly half of these reductions will come from lower well costs, as we target almost a $2 million per well cost reduction in 2020 relative to our initial 2019 capital budget. This equates to roughly $240 million in total well cost savings assuming our budgeted 125 completed wells in 2020 with an average lateral length of 11,400 feet. Lower midstream fees, net marketing expense, LOE, and G&A make up the remaining savings of approximately $280 million. In total, we expect our cost structure to be reduced by $520 million in 2020 as compared to 2019.

Now let's move on to Slide number 4 titled Marcellus Well Cost Reductions, which provides an update to our Marcellus well cost targets. Driven by expanded flowback water blending operations and continued step change improvements in our drilling and completion efficiencies, we are now targeting a reduction of 15% to 18% or $1.7 million to $2.0 million per well. The left-hand side of the page illustrates AR's January 2019 budgeted well cost at $970 per lateral foot. As we exited the fourth quarter of 2019, AR's well costs were approximately $840 per foot, which equates