Antero Resources Corporation (NYSE:AR) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 11:00 am ET

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Antero Resources Corporation (NYSE:AR) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

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

It is now my pleasure to introduce your host, Michael Kennedy, Senior Vice President of Finance. Thank you, Mr. Kennedy. You may begin.

Executive
Michael N. Kennedy

Thank you for joining us for Antero's Second Quarter 2020 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 would also like to direct you to the homepage 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; Glen Warren, President and CFO; and Dave Cannelongo, Vice President of Liquids Marketing and Transportation.

I will now turn the call over to Paul.

Executive
Paul M. Rady

Thank you, Mike. I'll open by commenting on the progress we've made on our asset sale program. We have announced $531 million of asset sale proceeds to date, which is over half of our $750 million to $1 billion target for 2020. The proceeds we have received to date have enabled us to reduce debt by approximately $365 million since the asset sale program began in the fourth quarter of 2019. During the same period, we repurchased 37 million shares of AR stock at an average price of $1.75 per share. We continue to be engaged in additional asset sale discussions, which Glenn will highlight in his remarks, and we remain confident that we will achieve our targeted proceeds in 2020. Now let's turn to our progress in reducing Antero's cost structure, which is detailed on slide number 3 titled Cost Reduction Momentum. Over half of AR's cost savings in 2020 are expected to come from lower well costs, as we have driven a $3.2 million per well cost reduction in 2020 relative to our initial 2019 capital budget. This equates to roughly $335 million in total well cost savings, based on our development plan that assumes 105 completed wells in 2020.

Lower midstream fees, net marketing expense, LOE and G&A make up the remaining savings of approximately $280 million. In total, we expect our capital and operating cost structure to be reduced by more than $600 million in 2020 as compared to 2019, resulting in a much improved free cash flow profile. Now let's get a little