ANTERO RESOURCES Corp 10-Q

Item 1. Financial Statements (Unaudited) ​ 4 Item 2. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 44 Item 3. ​ Quantitative and Qualitative Disclosures about Market Risk ​ 69 Item 4. ​ Controls and Procedures ​ 70 PART II—OTHER INFORMATION ​ 71 Item 1. ​ Legal Proceedings ​ 71 Item 1A. ​ Risk Factors ​ 71 Item 2. ​ Unregistered Sales of Equity Securities ​ 72 Item 6. ​ Exhibits ​ 73 SIGNATURES ​ 74 ​ ​ 1 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Some of the information in this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. Words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward-looking statements, although not all forward-looking statements contain such identifying words. When considering these forward-looking statements, investors should keep in mind the risk factors and other cautionary statements in this Quarterly Report on Form 10-Q. These forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include: ● our ability to execute our business strategy; ● our production and oil and gas reserves; ● our financial strategy, liquidity, and capital required for our development program; ● our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; ● natural gas, natural gas liquids (“NGLs”), and oil prices; ● impacts of world health events, including the coronavirus (“COVID-19”) pandemic; ● timing and amount of future production of natural gas, NGLs, and oil; ● our hedging strategy and results; ● our ability to execute our debt repurchase program and/or our asset sale program; ● our ability to meet minimum volume commitments and to utilize or monetize our firm transportation commitments; ● our future drilling plans; ● our projected well costs and cost savings initiatives, including with respect to water handling services provided by Antero Midstream Corporation; ● competition and government regulations; ● pending legal or environmental matters; ● marketing of natural gas, NGLs, and oil; ● leasehold or business acquisitions; ● costs of developing our properties; ● operations of Antero Midstream Corporation; ● general economic conditions; ● credit markets; ● expectations regarding the amount and timing of jury awards; ● uncertainty regarding our future operating results; and 2 Table of Contents ● our other plans, objectives, expectations and intentions contained in this Quarterly Report on Form 10-Q. We caution investors that these forward-looking statements are subject to all of the risks and uncertainties incidental to our business, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, inflation, availability of drilling, completion, and production equipment and services, environmental risks, drilling and completion and other operating risks, marketing and transportation risks, regulatory changes, the uncertainty inherent in estimating natural gas, NGLs, and oil reserves and in projecting future rates of production, cash flows and access to capital, the timing of development expenditures, conflicts of interest among our stockholders, impacts of world health events, including the COVID-19 pandemic, potential shut-ins of production due to lack of downstream demand or storage capacity, and the other risks described or referenced under the heading “Risk Factors” herein, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, each of which is on file with the Securities and Exchange Commission (“SEC”). Reserve engineering is a process of estimating underground accumulations of natural gas, NGLs, and oil that cannot be measured in an exact manner. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data, and the price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing, and production activities, or changes in commodity prices, may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of natural gas, NGLs, and oil that are ultimately recovered. Should one or more of the risks or uncertainties described or referenced in this Quarterly Report on Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q. ​ ​ 3 Table of Contents PART I—FINANCIAL INFORMATION ANTERO RESOURCES CORPORATION Condensed Consolidated Balance Sheets December 31, 2019 and September 30, 2020 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Unaudited) ​ ​ ​ December 31, ​ September 30, ​ ​ 2019 2020 ​ Assets ​ Current assets: ​ ​ ​ ​ ​ ​ Accounts receivable ​ $ 46,419 ​ ​ 88,062 ​ Accounts receivable, related parties ​ ​ 125,000 ​ ​ — ​ Accrued revenue ​ ​ 317,886 ​ ​ 338,729 ​ Derivative instruments ​ ​ 422,849 ​ ​ 83,057 ​ Other current assets ​ ​ 10,731 ​ ​ 11,934 ​ Total current assets ​ ​ 922,885 ​ ​ 521,782 ​ Property and equipment: ​ ​ ​ ​ ​ ​ ​ Oil and gas properties, at cost (successful efforts method): ​ ​ ​ ​ ​ ​ ​ Unproved properties ​ ​ 1,368,854 ​ ​ 1,265,255 ​ Proved properties ​ ​ 11,859,817 ​ ​ 12,149,941 ​ Gathering systems and facilities ​ ​ 5,802 ​ ​ 5,802 ​ Other property and equipment ​ ​ 71,895 ​ ​ 72,936 ​ ​ ​ ​ 13,306,368 ​ ​ 13,493,934 ​ Less accumulated depletion, depreciation, and amortization ​ ​ ( 3,327,629 ) ​ ​ ( 3,659,376 ) ​ Property and equipment, net ​ ​ 9,978,739 ​ ​ 9,834,558 ​ Operating leases right-of-use assets ​ ​ 2,886,500 ​ ​ 2,660,188 ​ Derivative instruments ​ ​ 333,174 ​ ​ 44,070 ​ Investment in unconsolidated affiliate ​ ​ 1,055,177 ​ ​ 272,926 ​ Other assets ​ ​ 21,094 ​ ​ 16,215 ​ Total assets ​ $ 15,197,569 ​ ​ 13,349,739 ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and Equity ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 14,498 ​ ​ 55,173 ​ Accounts payable, related parties ​ ​ 97,883 ​ ​ 81,519 ​ Accrued liabilities ​ ​ 400,850 ​ ​ 344,606 ​ Revenue distributions payable ​ ​ 207,988 ​ ​ 148,917 ​ Derivative instruments ​ ​ 6,721 ​ ​ 107,933 ​ Short-term lease liabilities ​ ​ 305,320 ​ ​ 251,568 ​ Deferred revenue, VPP ​ ​ — ​ ​ 43,192 ​ Other current liabilities ​ ​ 6,879 ​ ​ 2,467 ​ Total current liabilities ​ ​ 1,040,139 ​ ​ 1,035,375 ​ Long-term liabilities: ​ ​ ​ ​ ​ ​ ​ Long-term debt ​ ​ 3,758,868 ​ ​ 3,158,225 ​ Deferred income tax liability ​ ​ 781,987 ​ ​ 381,233 ​ Derivative instruments ​ ​ 3,519 ​ ​ 149,222 ​ Long-term lease liabilities ​ ​ 2,583,678 ​ ​ 2,410,114 ​ Deferred revenue, VPP ​ ​ — ​ ​ 167,466 ​ Other liabilities ​ ​ 58,635 ​ ​ 64,223 ​ Total liabilities ​ ​ 8,226,826 ​ ​ 7,365,858 ​ Commitments and contingencies (Notes 14 and 15) ​ ​ ​ ​ ​ ​ ​ Equity: ​ ​ ​ ​ ​ ​ ​ Stockholders' equity: ​ ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.01 par value; authorized - 50,000 shares; none issued ​ ​ — ​ ​ — ​ Common stock, $ 0.01 par value; authorized - 1,000,000 shares; 295,941 shares and 268,549 shares issued and outstanding at December 31, 2019 and September 30, 2020, respectively ​ ​ 2,959 ​ ​ 2,685 ​ Additional paid-in capital ​ ​ 6,130,365 ​ ​ 6,165,750 ​ Accumulated earnings (deficit) ​ ​ 837,419 ​ ​ ( 500,308 ) ​ Total stockholders' equity ​ ​ 6,970,743 ​ ​ 5,668,127 ​ Noncontrolling interests ​ ​ — ​ ​ 315,754 ​ Total equity ​ ​ 6,970,743 ​ ​ 5,983,881 ​ Total liabilities and equity ​ $ 15,197,569 ​ ​ 13,349,739 ​ ​ See accompanying notes to unaudited condensed consolidated financial statements. ​ ​ 4 Table of Contents ANTERO RESOURCES CORPORATION Condensed Consolidated Statements of Operations and Comprehensive Loss Three Months Ended September 30, 2019 and 2020 (Unaudited) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ ​ 2019 2020 Revenue and other: ​ ​ ​ ​ ​ ​ ​ Natural gas sales ​ $ 524,448 ​ ​ 436,304 ​ Natural gas liquids sales ​ ​ 284,958 ​ ​ 327,426 ​ Oil sales ​ ​ 40,561 ​ ​ 34,265 ​ Commodity derivative fair value gains (losses) ​ ​ 220,788 ​ ​ ( 514,751 ) ​ Marketing ​ ​ 46,645 ​ ​ 91,497 ​ Amortization of deferred revenue, VPP ​ ​ — ​ ​ 5,175 ​ Other income ​ ​ 1,481 ​ ​ 675 ​ Total revenue ​ ​ 1,118,881 ​ ​ 380,591 ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ Lease operating ​ ​ 35,928 ​ ​ 21,450 ​ Gathering, compression, processing, and transportation ​ ​ 603,860 ​ ​ 656,615 ​ Production and ad valorem taxes ​ ​ 28,863 ​ ​ 25,790 ​ Marketing ​ ​ 108,216 ​ ​ 128,580 ​ Exploration ​ ​ 208 ​ ​ 454 ​ Impairment of oil and gas properties ​ ​ 1,041,469 ​ ​ 29,392 ​ Impairment of midstream assets ​ ​ 7,800 ​ ​ — ​ Depletion, depreciation, and amortization ​ ​ 241,503 ​ ​ 238,418 ​ Accretion of asset retirement obligations ​ ​ 927 ​ ​ 1,115 ​ General and administrative (including equity-based compensation expense of $ 3,875 and $ 5,699 in 2019 and 2020, respectively) ​ ​ 35,923 ​ ​ 31,640 ​ Contract termination and rig stacking ​ ​ 62 ​ ​ 1,246 ​ Total operating expenses ​ ​ 2,104,759 ​ ​ 1,134,700 ​ Operating loss ​ ​ ( 985,878 ) ​ ​ ( 754,109 ) ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ Equity in earnings (loss) of unconsolidated affiliates ​ ​ ( 117,859 ) ​ ​ 24,419 ​ Transaction expense ​ ​ — ​ ​ ( 524 ) ​ Interest expense, net ​ ​ ( 47,754 ) ​ ​ ( 48,043 ) ​ Gain on early extinguishment of debt ​ ​ — ​ ​ 55,633 ​ Total other income (expense) ​ ​ ( 165,613 ) ​ ​ 31,485 ​ Loss before income taxes ​ ​ ( 1,151,491 ) ​ ​ ( 722,624 ) ​ Provision for income tax benefit ​ ​ 272,627 ​ ​ 168,778 ​ Net loss and comprehensive income loss including noncontrolling interests ​ ​ ( 878,864 ) ​ ​ ( 553,846 ) ​ Less: net loss and comprehensive loss attributable to noncontrolling interests ​ ​ — ​ ​ ( 18,233 ) ​ Net loss and comprehensive loss attributable to Antero Resources Corporation ​ $ ( 878,864 ) ​ ​ ( 535,613 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss per share—basic ​ $ ( 2.86 ) ​ ​ ( 1.99 ) ​ Loss per share—diluted ​ $ ( 2.86 ) ​ ​ ( 1.99 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of shares outstanding: ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 307,781 ​ ​ 268,511 ​ Diluted ​ ​ 307,781 ​ ​ 268,511 ​ ​ See accompanying notes to unaudited condensed consolidated financial statements ​ 5 Table of Contents ANTERO RESOURCES CORPORATION Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Nine Months Ended September 30, 2019 and 2020 (Unaudited) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2019 2020 ​ Revenue and other: ​ ​ ​ ​ ​ ​ ​ Natural gas sales ​ $ 1,735,086 ​ ​ 1,214,801 ​ Natural gas liquids sales ​ ​ 902,606 ​ ​ 797,296 ​ Oil sales ​ ​ 137,675 ​ ​ 78,233 ​ Commodity derivative fair value gains (losses) ​ ​ 471,847 ​ ​ ( 116,933 ) ​ Gathering, compression, water handling and treatment ​ ​ 4,479 ​ ​ — ​ Marketing ​ ​ 200,911 ​ ​ 201,855 ​ Amortization of deferred revenue, VPP ​ ​ — ​ ​ 5,175 ​ Other income ​ ​ 3,348 ​ ​ 2,180 ​ Total revenue ​ ​ 3,455,952 ​ ​ 2,182,607 ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ Lease operating ​ ​ 118,517 ​ ​ 71,836 ​ Gathering, compression, processing, and transportation ​ ​ 1,595,223 ​ ​ 1,877,084 ​ Production and ad valorem taxes ​ ​ 95,509 ​ ​ 71,481 ​ Marketing ​ ​ 408,839 ​ ​ 334,906 ​ Exploration ​ ​ 648 ​ ​ 895 ​ Impairment of oil and gas properties ​ ​ 1,253,712 ​ ​ 155,962 ​ Impairment of midstream assets ​ ​ 14,782 ​ ​ — ​ Depletion, depreciation, and amortization ​ ​ 724,006 ​ ​ 652,130 ​ Loss on sale of assets ​ ​ 951 ​ ​ — ​ Accretion of asset retirement obligations ​ ​ 2,821 ​ ​ 3,330 ​ General and administrative (including equity-based compensation expense of $ 19,327 and $ 17,001 in 2019 and 2020, respectively) ​ ​ 146,507 ​ ​ 101,264 ​ Contract termination and rig stacking ​ ​ 14,026 ​ ​ 12,317 ​ Total operating expenses ​ ​ 4,375,541 ​ ​ 3,281,205 ​ Operating loss ​ ​ ( 919,589 ) ​ ​ ( 1,098,598 ) ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ Equity in loss of unconsolidated affiliates ​ ​ ( 90,193 ) ​ ​ ( 83,408 ) ​ Impairment of equity investment ​ ​ — ​ ​ ( 610,632 ) ​ Gain on deconsolidation of Antero Midstream Partners LP ​ ​ 1,406,042 ​ ​ — ​ Transaction expense ​ ​ — ​ ​ ( 6,662 ) ​ Interest expense, net ​ ​ ( 173,868 ) ​ ​ ( 152,956 ) ​ Gain on early extinguishment of debt ​ ​ — ​ ​ 175,365 ​ Total other income (expenses) ​ ​ 1,141,981 ​ ​ ( 678,293 ) ​ Income (loss) before income taxes ​ ​ 222,392 ​ ​ ( 1,776,891 ) ​ Provision for income tax (expense) benefit ​ ​ ( 33,332 ) ​ ​ 421,167 ​ Net income (loss) and comprehensive income (loss) including noncontrolling interests ​ ​ 189,060 ​ ​ ( 1,355,724 ) ​ Less: net income (loss) and comprehensive income (loss) attributable to noncontrolling interests ​ ​ 46,993 ​ ​ ( 17,997 ) ​ Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation ​ $ 142,067 ​ ​ ( 1,337,727 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) per share—basic ​ $ 0.46 ​ ​ ( 4.89 ) ​ Income (loss) per share—diluted ​ $ 0.46 ​ ​ ( 4.89 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of shares outstanding: ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 308,509 ​ ​ 273,689 ​ Diluted ​ ​ 308,646 ​ ​ 273,689 ​ ​ See accompanying notes to unaudited condensed consolidated financial statements. 6 Table of Contents ANTERO RESOURCES CORPORATION Condensed Consolidated Statement of Stockholders’ Equity Nine Months Ended September 30, 2019 (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ paid-in ​ earnings ​ Noncontrolling ​ Total ​ ​ Shares Amount capital (deficit) interests equity ​ Balances, December 31, 2018 ​ ​ 308,594 ​ $ 3,086 ​ ​ 6,485,174 ​ ​ 1,177,548 ​ ​ 821,669 ​ ​ 8,487,477 ​ Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes ​ ​ 147 ​ ​ 1 ​ ​ ( 451 ) ​ ​ — ​ ​ — ​ ​ ( 450 ) ​ Issuance of common units in Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes ​ ​ — ​ ​ — ​ ​ ( 85 ) ​ ​ — ​ ​ 56 ​ ​ ( 29 ) ​ Equity-based compensation ​ ​ — ​ ​ — ​ ​ 7,801 ​ ​ — ​ ​ 1,102 ​ ​ 8,903 ​ Net income and comprehensive income ​ ​ — ​ ​ — ​ ​ — ​ ​ 978,763 ​ ​ 46,993 ​ ​ 1,025,756 ​ Distributions to noncontrolling interests ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 85,076 ) ​ ​ ( 85,076 ) ​ Effect of deconsolidation of Antero Midstream Partners LP ​ ​ — ​ ​ — ​ ​ ( 359,039 ) ​ ​ — ​ ​ ( 784,744 ) ​ ​ ( 1,143,783 ) ​ Balances, March 31, 2019 ​ ​ 308,741 ​ $ 3,087 ​ ​ 6,133,400 ​ ​ 2,156,311 ​ ​ — ​ ​ 8,292,798 ​ Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes ​ ​ 382 ​ ​ 4 ​ ​ ( 1,819 ) ​ ​ — ​ ​ — ​ ​ ( 1,815 ) ​ Equity-based compensation ​ ​ — ​ ​ — ​ ​ 6,549 ​ ​ — ​ ​ — ​ ​ 6,549 ​ Net income and comprehensive income ​ ​ — ​ ​ — ​ ​ — ​ ​ 42,168 ​ ​ — ​ ​ 42,168 ​ Balances, June 30, 2019 ​ ​ 309,123 ​ $ 3,091 ​ ​ 6,138,130 ​ ​ 2,198,479 ​ ​ — ​ ​ 8,339,700 ​ Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes ​ ​ 99 ​ ​ 1 ​ ​ ( 86 ) ​ ​ — ​ ​ — ​ ​ ( 85 ) ​ Repurchases and retirements of common stock ​ ​ ( 5,061 ) ​ ​ ( 51 ) ​ ​ ( 17,877 ) ​ ​ — ​ ​ — ​ ​ ( 17,928 ) ​ Equity-based compensation ​ ​ — ​ ​ — ​ ​ 3,875 ​ ​ — ​ ​ — ​ ​ 3,875 ​ Net loss and comprehensive loss ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 878,864 ) ​ ​ — ​ ​ ( 878,864 ) ​ Balances, September 30, 2019 ​ ​ 304,161 ​ $ 3,041 ​ ​ 6,124,042 ​ ​ 1,319,615 ​ ​ — ​ ​ 7,446,698 ​ ​ See accompanying notes to unaudited condensed consolidated financial statements. ​ ​ 7 Table of Contents ANTERO RESOURCES CORPORATION Condensed Consolidated Statement of Stockholders’ Equity Nine Months Ended September 30, 2020 (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ paid-in ​ earnings ​ Noncontrolling ​ Total ​ ​ Shares Amount capital (deficit) interests equity ​ Balances, December 31, 2019 ​ ​ 295,941 ​ $ 2,959 ​ ​ 6,130,365 ​ ​ 837,419 ​ ​ — ​ ​ 6,970,743 ​ Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes ​ ​ 178 ​ ​ 2 ​ ​ ( 34 ) ​ ​ — ​ ​ — ​ ​ ( 32 ) ​ Repurchases and retirements of common stock ​ ​ ( 27,193 ) ​ ​ ( 272 ) ​ ​ ( 42,418 ) ​ ​ — ​ ​ — ​ ​ ( 42,690 ) ​ Equity-based compensation ​ ​ — ​ ​ — ​ ​ 3,329 ​ ​ — ​ ​ — ​ ​ 3,329 ​ Net loss and comprehensive loss ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 338,810 ) ​ ​ — ​ ​ ( 338,810 ) ​ Balances, March 31, 2020 ​ ​ 268,926 ​ ​ 2,689 ​ ​ 6,091,242 ​ ​ 498,609 ​ ​ — ​ ​ 6,592,540 ​ Issuance of common units in Martica Holdings, LLC ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 300,000 ​ ​ 300,000 ​ Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes ​ ​ 464 ​ ​ 5 ​ ​ ( 305 ) ​ ​ — ​ ​ — ​ ​ ( 300 ) ​ Distributions to noncontrolling interest ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 3,413 ) ​ ​ ( 3,413 ) ​ Repurchases and retirements of common stock ​ ​ ( 1,000 ) ​ ​ ( 10 ) ​ ​ ( 743 ) ​ ​ — ​ ​ — ​ ​ ( 753 ) ​ Equity-based compensation ​ ​ — ​ ​ — ​ ​ 7,973 ​ ​ — ​ ​ — ​ ​ 7,973 ​ Net loss and comprehensive loss ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 463,304 ) ​ ​ 236 ​ ​ ( 463,068 ) ​ Balances, June 30, 2020 ​ ​ 268,390 ​ $ 2,684 ​ ​ 6,098,167 ​ ​ 35,305 ​ ​ 296,823 ​ ​ 6,432,979 ​ Issuance of common units in Martica Holdings, LLC ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 51,000 ​ ​ 51,000 ​ Equity component of 2026 Convertible Notes, net ​ ​ — ​ ​ — ​ ​ 61,926 ​ ​ — ​ ​ — ​ ​ 61,926 ​ Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes ​ ​ 159 ​ ​ 1 ​ ​ ( 42 ) ​ ​ — ​ ​ — ​ ​ ( 41 ) ​ Distributions to noncontrolling interest ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 13,836 ) ​ ​ ( 13,836 ) ​ Equity-based compensation ​ ​ — ​ ​ — ​ ​ 5,699 ​ ​ — ​ ​ — ​ ​ 5,699 ​ Net loss and comprehensive loss ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 535,613 ) ​ ​ ( 18,233 ) ​ ​ ( 553,846 ) ​ Balances, September 30, 2020 ​ ​ 268,549 ​ $ 2,685 ​ ​ 6,165,750 ​ ​ ( 500,308 ) ​ ​ 315,754 ​ ​ 5,983,881 ​ ​ See accompanying notes to unaudited condensed consolidated financial statements. ​ ​ ​ 8 Table of Contents ANTERO RESOURCES CORPORATION Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2019 and 2020 (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2019 2020 Cash flows provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ ​ Net income (loss) including noncontrolling interests ​ $ 189,060 ​ ​ ( 1,355,724 ) ​ Adjustments to reconcile net income (loss) to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Depletion, depreciation, amortization, and accretion ​ ​ 726,827 ​ ​ 655,460 ​ Impairment of oil and gas properties ​ ​ 1,253,712 ​ ​ 155,962 ​ Impairment of midstream assets ​ ​ 14,782 ​ ​ — ​ Commodity derivative fair value (gains) losses ​ ​ ( 471,847 ) ​ ​ 116,933 ​ Gains on settled commodity derivatives ​ ​ 261,794 ​ ​ 740,805 ​ Proceeds from derivative monetizations ​ ​ — ​ ​ 18,073 ​ Loss on sale of assets ​ ​ 951 ​ ​ — ​ Equity-based compensation expense ​ ​ 19,327 ​ ​ 17,001 ​ Deferred income tax expense (benefit) ​ ​ 32,019 ​ ​ ( 426,267 ) ​ Gain on early extinguishment of debt ​ ​ — ​ ​ ( 175,365 ) ​ Equity in loss of unconsolidated affiliates ​ ​ 90,193 ​ ​ 83,408 ​ Impairment of equity investment ​ ​ — ​ ​ 610,632 ​ Gain on deconsolidation of Antero Midstream Partners LP ​ ​ ( 1,406,042 ) ​ ​ — ​ Distributions/dividends of earnings from unconsolidated affiliates ​ ​ 109,241 ​ ​ 128,267 ​ Amortization of deferred revenue ​ ​ — ​ ​ ( 5,175 ) ​ Amortization of debt issuance costs, debt discount debt premium and other ​ ​ 8,179 ​ ​ 7,391 ​ Changes in current assets and liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ 14,236 ​ ​ ( 15,454 ) ​ Accrued revenue ​ ​ 193,650 ​ ​ ( 20,843 ) ​ Other current assets ​ ​ 2,365 ​ ​ ( 1,455 ) ​ Accounts payable including related parties ​ ​ ( 971 ) ​ ​ ( 2,198 ) ​ Accrued liabilities ​ ​ ( 11,169 ) ​ ​ 15,522 ​ Revenue distributions payable ​ ​ ( 72,176 ) ​ ​ ( 54,403 ) ​ Other current liabilities ​ ​ 1,387 ​ ​ ( 60 ) ​ Net cash provided by operating activities ​ ​ 955,518 ​ ​ 492,510 ​ Cash flows provided by (used in) investing activities: ​ ​ ​ ​ ​ ​ ​ Additions to unproved properties ​ ​ ( 69,796 ) ​ ​ ( 31,136 ) ​ Drilling and completion costs ​ ​ ( 957,931 ) ​ ​ ( 693,920 ) ​ Additions to water handling and treatment systems ​ ​ ( 24,416 ) ​ ​ — ​ Additions to gathering systems and facilities ​ ​ ( 48,239 ) ​ ​ — ​ Additions to other property and equipment ​ ​ ( 5,980 ) ​ ​ ( 1,346 ) ​ Settlement of water earnout ​ ​ — ​ ​ 125,000 ​ Investments in unconsolidated affiliates ​ ​ ( 25,020 ) ​ ​ — ​ Proceeds from the Antero Midstream Partners LP Transactions ​ ​ 296,611 ​ ​ — ​ Proceeds from asset sales ​ ​ 7,461 ​ ​ — ​ Proceeds from VPP sale, net ​ ​ — ​ ​ 215,833 ​ Change in other assets ​ ​ 1,983 ​ ​ 1,506 ​ Net cash used in investing activities ​ ​ ( 825,327 ) ​ ​ ( 384,063 ) ​ Cash flows provided by (used in) financing activities: ​ ​ ​ ​ ​ ​ ​ Repurchases of common stock ​ ​ ( 17,924 ) ​ ​ ( 43,443 ) ​ Issuance of senior notes ​ ​ 650,000 ​ ​ — ​ Issuance of convertible notes ​ ​ — ​ ​ 287,500 ​ Repayment of senior notes ​ ​ — ​ ​ ( 899,971 ) ​ Borrowings (repayments) on bank credit facilities, net ​ ​ ( 45,000 ) ​ ​ 275,000 ​ Payments of deferred financing costs ​ ​ ( 8,259 ) ​ ​ ( 8,907 ) ​ Sale of noncontrolling interest ​ ​ — ​ ​ 300,000 ​ Distributions to noncontrolling interests in Antero Midstream Partners LP ​ ​ ( 85,076 ) ​ ​ — ​ Distributions to noncontrolling interests in Martica Holdings LLC ​ ​ — ​ ​ ( 17,249 ) ​ Employee tax withholding for settlement of equity compensation awards ​ ​ ( 2,379 ) ​ ​ ( 373 ) ​ Other ​ ​ ( 2,021 ) ​ ​ ( 1,004 ) ​ Net cash provided by (used in) financing activities ​ ​ 489,341 ​ ​ ( 108,447 ) ​ Effect of deconsolidation of Antero Midstream Partners LP ​ ​ ( 619,532 ) ​ ​ — ​ Net decrease in cash and cash equivalents ​ ​ — ​ ​ — ​ Cash and cash equivalents, beginning of period ​ ​ — ​ ​ — ​ Cash and cash equivalents, end of period ​ $ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ ​ ​ Cash paid during the period for interest ​ $ 142,288 ​ ​ 135,494 ​ Decrease in accounts payable and accrued liabilities for additions to property and equipment ​ $ 22,103 ​ ​ 44,302 ​ ​ See accompanying notes to unaudited condensed consolidated financial statements. ​ 9 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ (1) Organization Antero Resources Corporation (individually referred to as “Antero”) and its consolidated subsidiaries (collectively referred to as “Antero Resources,” the “Company,” “we,” “us” or “our”) are engaged in the exploration, development, and acquisition of natural gas, NGLs, and oil properties in the Appalachian Basin in West Virginia and Ohio. The Company targets large, repeatable resource plays where horizontal drilling and advanced fracture stimulation technologies provide the means to economically develop and produce natural gas, NGLs, and oil from unconventional formations. The Company’s corporate headquarters are located in Denver, Colorado. ​ (2) Summary of Significant Accounting Policies (a) Basis of Presentation These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) applicable to interim financial information and should be read in the context of the Company’s December 31, 2019 consolidated financial statements and notes thereto for a more complete understanding of the Company’s operations, financial position, and accounting policies. The Company’s December 31, 2019 consolidated financial statements were included in Antero Resources’ 2019 Annual Report on Form 10-K, which was filed with the SEC. These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, and, accordingly, do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Company’s financial position as of December 31, 2019 and September 30, 2020, its results of operations for the three and nine months ended September 30, 2019 and 2020 and its cash flows for the nine months ended September 30, 2019 and 2020. The Company has no items of other comprehensive income or loss; therefore, its net income or loss is equal to its comprehensive income or loss. Operating results for the period ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year because of the impact of fluctuations in prices received for natural gas, NGLs, and oil, natural production declines, the uncertainty of exploration and development drilling results, fluctuations in the fair value of derivative instruments, the impacts of COVID-19 and other factors. (b) Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Antero Resources Corporation, its wholly owned subsidiaries, any entities in which the Company owns a controlling interest, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Through March 12, 2019, Antero Midstream Partners LP (“Antero Midstream Partners”), a publicly traded limited partnership, was included in the consolidated financial statements of Antero. Prior to the Closing (defined in Note 3—Deconsolidation of Antero Midstream Partners LP to the unaudited condensed consolidated financial statements), the Company’s ownership of Antero Midstream Partners common units represented approximately a 53 % limited partner interest in Antero Midstream Partners, and Antero Resources consolidated Antero Midstream Partners’ financial position and results of operations into its consolidated financial statements. The Transactions (defined in Note 3—Deconsolidation of Antero Midstream Partners LP to the unaudited condensed consolidated financial statements) resulted in the exchange of the limited partner interest Antero Resources owned in Antero Midstream Partners for common stock of Antero Midstream Corporation, par value $ 0.01 per share (the “Antero Midstream Corporation common stock”), representing an approximate 31 % interest in Antero Midstream Corporation. As a result, Antero Resources’ controlling interest in Antero Midstream Partners was converted to an interest in Antero Midstream Corporation that provides significant influence, but not control, over Antero Midstream Corporation. Thus, effective March 13, 2019, Antero no longer consolidates Antero Midstream Partners in its consolidated financial statements and accounts for its interest in Antero Midstream Corporation using the equity method of accounting. See Note 3—Deconsolidation of Antero Midstream Partners LP to the unaudited condensed consolidated financial statements for further discussion on the Transactions. For the three months and nine months ended September 30, 2020, the Company determined that Martica Holdings LLC (“Martica”) is a VIE for which Antero is the primary beneficiary. Therefore, Martica’s accounts are consolidated in the Company’s consolidated financial statements. Antero is the primary beneficiary of Martica based on its power to direct the activities that most 10 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ significantly impact Martica’s economic performance, and its obligation to absorb losses of, or right to receive benefits from, Martica that could be significant to Martica. In reaching such determination that Antero is the primary beneficiary of Martica, the Company considered the following: ● Martica was formed to hold certain overriding royalty interests across the Company’s existing asset base; ● substantially all of Martica’s revenues are derived from production from the Company’s natural gas, NGLs, and oil properties in the Appalachian Basin in West Virginia and Ohio; ● Antero owns the Class B Units in Martica, which entitle Antero to receive distributions in respect of the Incremental Override (as defined in Note 4—Transactions); and ● Antero provides accounting, administrative and other services to Martica under a Management Services Agreement. All significant intercompany accounts and transactions have been eliminated in the Company’s unaudited condensed consolidated financial statements. The noncontrolling interest in the Company’s unaudited condensed consolidated financial statements for the nine months ended September 30, 2019 represents the interests in Antero Midstream Partners that were owned by the public prior to the Transactions, and the incentive distribution rights in Antero Midstream Partners. The noncontrolling interest in the Company’s unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2020 represents the interest in Martica owned by third parties. See Note 4—Transactions for more information on the sale of this noncontrolling interest. Martica is a discrete entity and the assets and credits of Martica are not available to satisfy the debts and obligations of the Company or its other subsidiaries. Investments in entities for which the Company exercises significant influence, but not control, are accounted for under the equity method. The Company’s judgment regarding the level of influence over its equity investments includes considering key factors such as Antero’s ownership interest, representation on the board of directors and participation in the policy-making decisions of equity method investees. Such investments are included in Investment in unconsolidated affiliate on the Company’s unaudited condensed consolidated balance sheets. Income (loss) from investees that are accounted for under the equity method is included in Equity in earnings (loss) of unconsolidated affiliates on the Company’s unaudited condensed consolidated statements of operations and cash flows. When Antero records its proportionate share of net income or net loss, it is recorded in equity in earnings (loss) of unconsolidated affiliates in the statements of operations and the carrying value of that investment on the Company’s balance sheet. When a distribution is received, it is recorded as a reduction to the carrying value of that investment on the Company’s balance sheet. The Company’s equity in earnings of unconsolidated affiliates is adjusted for intercompany transactions and the basis differences recognized due to the difference between the cost of the equity investment in Antero Midstream Corporation and the amount of underlying equity in the net assets of Antero Midstream Partners as of the date of deconsolidation. The Company accounts for distributions received from equity method investees under the “nature of the distribution” approach. Under this approach, distributions received from equity method investees are classified on the basis of the nature of the activity or activities of the investee that generated the distribution as either a return on investment, which is classified as cash inflows from operating activities, or a return of investment, which is classified as cash inflows from investing activities. (c) Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect revenues, expenses, assets, liabilities and the disclosure of contingent assets and liabilities. Changes in facts and circumstances or discovery of new information may result in revised estimates, and actual results could differ from those estimates. The Company’s unaudited condensed consolidated financial statements are based on a number of significant estimates, including estimates of natural gas, NGLs, and oil reserve quantities, which are the basis for the calculation of depletion and impairment of oil and gas properties. Reserve estimates, by their nature, are inherently imprecise. Other items in the Company’s unaudited condensed consolidated financial statements that involve the use of significant estimates include derivative assets and liabilities, accrued revenue, deferred and current income taxes, equity-based compensation, asset retirement obligations, depreciation, amortization, and commitments and contingencies. 11 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ (d) Risks and Uncertainties The markets for natural gas, NGLs, and oil have, and continue to, experience significant price fluctuations. Price fluctuations can result from variations in weather, levels of production, availability of storage capacity and transportation to other regions of the country, the level of imports to and exports from the United States and various other factors. Increases or decreases in the prices the Company receives for its production could have a significant impact on the Company’s future results of operations and reserve quantities. (e) Cash and Cash Equivalents The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments. From time to time, the Company may be in the position of a “book overdraft” in which outstanding checks exceed cash and cash equivalents. The Company classifies book overdrafts in accounts payable and revenue distributions payable within its unaudited condensed consolidated balance sheets, and classifies the change in accounts payable and revenue distributions payable associated with book overdrafts as an operating activity within its unaudited condensed consolidated statements of cash flows. As of December 31, 2019, the book overdraft included within accounts payable and revenue distributions payable was $ 7 million and $ 18 million, respectively. As of September 30, 2020, the book overdraft included within accounts payable and revenue distributions payable was $ 8 million and $ 13 million, respectively. (f) Oil and Gas Properties The Company accounts for its natural gas, NGLs, and oil exploration and development activities under the successful efforts method of accounting. Under the successful efforts method, the costs incurred to acquire, drill, and complete productive wells, development wells, and undeveloped leases are capitalized. Oil and gas lease acquisition costs are also capitalized. Exploration costs, including personnel and other internal costs, geological and geophysical expenses, delay rentals for gas and oil leases, and costs associated with unsuccessful lease acquisitions are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged to expense if the Company determines that the well does not contain reserves in commercially viable quantities. The Company reviews exploration costs related to wells-in- progress at the end of each quarter and makes a determination, based on known results of drilling at that time, whether the costs should continue to be capitalized pending further well testing and results, or charged to expense. The Company incurred no such charges to expense during the three and nine months ended September 30, 2020. During the nine months ended September 30, 2019, the Company recorded an impairment charge of $ 26 million for design and initial costs related to pads that are no longer planned to be placed into service. The sale of a partial interest in a proved property is accounted for as a cost recovery, and no gain or loss is recognized as long as this treatment does not significantly affect the units-of- production amortization rate. A gain or loss is recognized for all other sales of producing properties. Unproved properties are assessed for impairment on a property-by- property basis, and any impairment in value is charged to expense. Impairment is assessed based on remaining lease terms, commodity price outlooks, future plans to develop acreage, drilling results and reservoir performance of wells in the area. Unproved properties and the related costs are transferred to proved properties when reserves are discovered on, or otherwise attributed to, the property. Proceeds from sales of partial interests in unproved properties are accounted for as a recovery of cost without recognition of any gain or loss until the cost has been recovered. For the three months ended September 30, 2019 and 2020, impairment of unproved properties was $ 160 million and $ 29 million, respectively. For the nine months ended September 30, 2019 and 2020, impairment of unproved properties was $ 347 million and $ 156 million, respectively. The Company evaluates the carrying amount of its proved natural gas, NGLs, and oil properties for impairment on a geological reservoir basis whenever events or changes in circumstances indicate that a property’s carrying amount may not be recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company would estimate the fair value of its properties and record an impairment expense for any excess of the carrying amount of the properties over the estimated fair value of the properties. Factors used to estimate fair value may include estimates of proved reserves, estimated future commodity prices, future production estimates, and anticipated capital expenditures, using a commensurate discount rate. Because estimated undiscounted future net cash flows based on future commodity prices as of September 30, 2019 exceeded the carrying amount of our proved properties in the Marcellus Shale as of September 30, 2019, management did not further evaluate our Marcellus proved properties for impairment. However, the carrying amount of the Company’s proved properties in the Utica 12 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ Shale exceeded the estimated undiscounted future cash flows based on future commodity prices as of September 30, 2019. The Company estimated the fair value of the Utica Shale assets based on sales of other properties, estimates of proved reserves, estimated future commodity prices and future production estimates. As a result, the Company recorded an impairment expense of $ 881 million related to proved properties in the Utica Shale during the three months ended September 30, 2019. The Company did not incur any impairment expenses related to proved properties in the Utica Shale for the nine months ended September 30, 2020. The Company did not record any impairment expenses associated with its proved properties in the Marcellus Shale during the nine months ended September 30, 2019 and 2020. (g) Derivative Financial Instruments In order to manage its exposure to natural gas, NGLs, and oil price volatility, the Company enters into derivative transactions from time to time, which may include commodity swap agreements, basis swap agreements, collar agreements, and other similar agreements related to the price risk associated with the Company’s production. To the extent legal right of offset exists with a counterparty, the Company reports derivative assets and liabilities on a net basis. The Company has exposure to credit risk to the extent that the counterparty is unable to satisfy its settlement obligations. The Company actively monitors the creditworthiness of counterparties and assesses the impact, if any, on its derivative positions. The Company records derivative instruments on the unaudited condensed consolidated balance sheets as either assets or liabilities measured at fair value and records changes in the fair value of derivatives in current earnings as they occur. Changes in the fair value of commodity derivatives, including gains or losses on settled derivatives, are classified as revenues on the Company’s unaudited condensed consolidated statements of operations. The Company’s derivatives have not been designated as hedges for accounting purposes. (h) Asset Retirement Obligations The Company is obligated to dispose of certain long- lived assets upon their abandonment. The Company’s asset retirement obligations (“AROs”) relate primarily to its obligation to plug and abandon oil and gas wells at the end of their lives. AROs are recorded at estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement obligations, which is then discounted at the Company’s credit-adjusted, risk- free interest rate. Revisions to estimated AROs often result from changes in retirement cost estimates or changes in the estimated timing of abandonment. The fair value of the liability is added to the carrying amount of the associated asset, and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. (i) Deferred Revenue Under the terms of the VPP (as defined below in Note 4—Transactions), the Company is obligated to deliver certain natural gas volumes from specified wells to an overriding royalty interest owner over the term of the arrangement. The Company has accounted for the VPP as a conveyance under Accounting Standard Codifications (“ASC”) Topic 932, Extractive Industries—Oil and Gas (“ASC 932”), which requires the net proceeds to be recognized as deferred revenue due to the Company’s future performance obligations. Deferred revenue is recognized as volumes are delivered using the units-of-production method over the term of the VPP in Amortization of deferred revenue on the Company’s unaudited condensed consolidated statements of operations. See Note 4—Transactions for further discussion of the VPP transaction. (j) Natural Gas, NGLs, and Oil Revenues The Company’s revenues are primarily derived from the sale of natural gas and oil production, as well as the sale of NGLs that are extracted from our natural gas. Sales of natural gas, NGLs, and oil are recognized when we satisfy a performance obligation by transferring control of a product to a customer. Payment is generally received in the month following the sale. Under the Company’s natural gas sales contracts, it delivers natural gas to the purchaser at an agreed upon delivery point. Natural gas is transported from the wellheads to delivery points specified under sales contracts. To deliver natural gas to these points, Antero Midstream Corporation or other third parties gather, compress, process and transport the Company’s natural gas. The Company maintains control of the natural gas during gathering, compression, processing, and transportation. The Company’s sales contracts provide that it receives a specific index price adjusted for pricing differentials. The Company transfers control of the product at the delivery point and recognizes revenue based on the contract price. The costs incurred to gather, compress, process and transport natural gas are recorded as Gathering, compression, processing and transportation expense. 13 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ NGLs, which are extracted from natural gas through processing, are either sold by the Company directly or by the processor under processing contracts. For NGLs sold by the Company directly, the sales contracts primarily provide that the Company delivers the product to the purchaser at an agreed upon delivery point and that it receives a specific index price adjusted for pricing differentials. The Company transfers control of the product to the purchaser at the delivery point and recognizes revenue based on the contract price. The costs incurred to process and transport NGLs are recorded as Gathering, compression, processing, and transportation expense. For NGLs sold by the processor, the Company’s processing contracts provide that the Company transfers control to the processor at the tailgate of the processing plant and it recognizes revenue based on the price received from the processor. Under the Company’s oil sales contracts, Antero Resources’ generally sells oil to purchasers and collects a contractually agreed upon index price, net of pricing differentials. The Company recognizes revenue based on the contract price when it transfers control of the product to a purchaser. When applicable, the costs incurred to transport oil to a purchaser are recorded as Gathering, compression, processing and transportation expense. (k) Marketing Revenues and Expenses Marketing revenues are derived from activities to purchase and sell third-party natural gas and NGLs and to market excess firm transportation capacity to third parties. The Company retains control of the purchased natural gas and NGLs prior to delivery to the purchaser. The Company has concluded that it is the principal in these arrangements and therefore, the Company recognizes revenue on a gross basis, with costs to purchase and transport natural gas and NGLs presented as marketing expenses. Contracts to sell third party gas and NGLs are generally subject to similar terms as contracts to sell the Company’s produced natural gas and NGLs. The Company satisfies performance obligations to the purchaser by transferring control of the product at the delivery point and recognizes revenue based on the contract price received from the purchaser. Fees generated from the sale of excess firm transportation marketed to third parties are included in Marketing revenue. Marketing expenses include the cost of purchased third-party natural gas and NGLs. The Company classifies firm transportation costs related to capacity contracted for in advance of having sufficient production and infrastructure to fully utilize the capacity (excess capacity) as marketing expenses since it is marketing this excess capacity to third parties. Firm transportation for which the Company has sufficient production capacity (even though it may not use the transportation capacity because of alternative delivery points with more favorable pricing) is considered unutilized capacity and is charged to transportation expense. (l) Gathering, compression , water handling and treatment revenue Substantially all revenues from the gathering, compression, water handling and treatment operations were derived from transactions for services Antero Midstream Partners provided to our exploration and production operations through March 12, 2019 and were eliminated in consolidation. Effective March 13, 2019, Antero Midstream Partners is no longer consolidated in Antero’s results. See Note 3 —Deconsolidation of Antero Midstream Partners LP to the consolidated financial statements for further discussion on the Transactions and Note 18—Segment information to the consolidated financial statements for disclosures on the Company’s reportable segments. The portion of such fees shown in our consolidated financial statements prior to March 13, 2019 represent amounts charged to interest owners in Antero-operated wells, as well as fees charged to other third parties for water handling and treatment services provided by Antero Midstream Partners or usage of Antero Midstream Partners’ gathering and compression systems. For gathering and compression revenue, Antero Midstream Partners satisfied its performance obligations and recognized revenue when low pressure volumes were delivered to a compressor station, high pressure volumes were delivered to a processing plant or transmission pipeline, and compression volumes were delivered to a high pressure line. Revenue was recognized based on the per Mcf gathering or compression fee charged by Antero Midstream Partners in accordance with the gathering and compression agreement. For water handling and treatment revenue, Antero Midstream Partners satisfied its performance obligations and recognized revenue when the fresh water volumes were delivered to the hydration unit of a specified well pad and the wastewater volumes were delivered to its wastewater treatment facility. For services contracted through third-party providers, Antero Midstream Partners’ performance obligation was satisfied when the services performed by the third-party providers were completed. Revenue was recognized based on the per barrel fresh water delivery or wastewater treatment fee charged by Antero Midstream Partners in accordance with the water services agreement. (m) Industry Segments and Geographic Information Management has evaluated how the Company is organized and managed and has identified the following segments: (1) the exploration, development, and production of natural gas, NGLs, and oil; (2) marketing and utilization of excess firm transportation 14 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ capacity; and (3) our equity method investment in Antero Midstream Corporation. Through March 12, 2019, the results of Antero Midstream Partners were included in the unaudited consolidated financial statements of Antero. Effective March 13, 2019, the results of Antero Midstream Partners are no longer consolidated in Antero’s results; however, the Company’s segment disclosures include our equity method investment in Antero Midstream Corporation due to its significance to the Company’s operations. See Note 3—Deconsolidation of Antero Midstream Partners LP to the unaudited condensed consolidated financial statements for further discussion on the Transactions and Note 18—Segment Information to the unaudited condensed consolidated financial statements for disclosures on the Company’s reportable segments. All of the Company’s assets are located in the United States and substantially all of its production revenues are attributable to customers located in the United States; however, some of the Company’s production revenues are attributable to customers who then transport the Company’s production to foreign countries for resale or consumption. (n ) Earnings (Loss) Per Common Share Earnings (loss) per common share—basic for each period is computed by dividing net income (loss) attributable to Antero by the basic weighted average number of shares outstanding during the period. Earnings (loss) per common share—assuming dilution for each period is computed after giving consideration to the potential dilution from outstanding equity awards and shares of common stock issuable upon conversion of the 2026 Convertible Notes (as defined below in Note 8—Long-Term Debt), calculated using the treasury stock method. The Company includes restricted stock unit (“RSUs”) awards, performance share unit (“PSUs”) awards and stock options in the calculation of diluted weighted average shares outstanding based on the number of common shares that would be issuable if the end of the period was also the end of the performance period required for the vesting of the awards. During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all equity awards is anti-dilutive. The following is a reconciliation of the Company’s basic weighted average shares outstanding to diluted weighted average shares outstanding during the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Nine months ended ​ ​ ​ September 30, ​ September 30, ​ ​ 2019 2020 2019 2020 ​ Basic weighted average number of shares outstanding ​ 307,781 ​ 268,511 ​ 308,509 ​ 273,689 ​ Add: Dilutive effect of RSUs ​ — ​ — ​ 27 ​ — ​ Add: Dilutive effect of outstanding stock options ​ — ​ — ​ — ​ — ​ Add: Dilutive effect of PSUs ​ — ​ — ​ 110 ​ — ​ Diluted weighted average number of shares outstanding ​ 307,781 ​ 268,511 ​ 308,646 ​ 273,689 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of outstanding securities excluded from calculation of diluted earnings per common share (1) : ​ ​ ​ ​ ​ ​ ​ ​ ​ RSUs ​ 2,356 ​ 10,129 ​ 2,008 ​ 7,397 ​ Outstanding stock options ​ 514 ​ 432 ​ 541 ​ 432 ​ PSUs ​ 2,676 ​ 1,988 ​ 2,141 ​ 1,808 ​ 2026 Convertible Notes (2) ​ — ​ — ​ — ​ — ​ (1) The potential dilutive effects of these awards were excluded from the computation of earnings (loss) per common share—assuming dilution because the inclusion of these awards would have been anti-dilutive. (2) In August 2020 and September 2020, the Company issued $ 287.5 million in aggregate principal amount of 4.25 % convertible senior notes due September 1, 20206 (the “2026 Convertible Notes”). The Company intends to settle the principal amount of the 2026 Convertible Notes in cash upon conversion. As a result, only the amount by which the conversion value exceeds the aggregate principal amount of the 2026 Convertible Notes is considered in the diluted earnings per share computation under the treasury stock method. As of September 30, 2020, the conversion value did not exceed the principal amount of the notes, and accordingly, there was no impact to diluted earnings per share for the periods presented. See Note 8—Long-Term Debt. 15 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ (o) Treasury Share Retirement The Company retires treasury shares acquired through share repurchases and returns those shares to the status of authorized but unissued. When treasury shares are retired, the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired first, to additional paid-in capital, and then to accumulated earnings. The portion allocable to additional paid-in capital is determined by applying a percentage, determined by dividing the number of shares to be retired by the number of shares outstanding, to the balance of additional paid-in capital as of retirement. (p) Recently Issued Accounting Standard On August 5, 2020, the Financial Accounting Standards Board issued Accounting Standards Update No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which eliminates the cash conversion model in ASC 470-20, Debt with Conversion and Other Options , that require separate accounting for conversion features that is currently being applied to the 2026 Convertible Notes, and instead, allows the debt instrument and conversion features to be accounted for as a single debt instrument. The new standard becomes effective for the Company on January 1, 2022, and early adoption is permitted. The Company is evaluating its plans for adoption, including the adoption date and transition method. Upon adoption of this new standard, the Company expects to reclassify $ 62 million, net of deferred income taxes and equity issuance costs, to long-term debt and deferred income tax liability, as applicable, from stockholders’ equity. Additionally, annual interest expense for the 2026 Convertible Notes will be based on an effective interest rate of 4.8 % as compared to 11.7 % for the three and nine months ended September 30, 2020 in the statement of operations and the weighted average diluted shares outstanding will increase from zero as of September 30, 2020 under the treasury-stock method to 66 million under the if-converted method. T he Company does not believe that adoption of the standard will impact its operational strategies or growth prospects . ​ ​ (3) Deconsolidation of Antero Midstream Partners LP On March 12, 2019, Antero Midstream GP LP and Antero Midstream Partners completed (the “Closing”) the transactions contemplated by the Simplification Agreement (the “Simplification Agreement”), dated as of October 9, 2018, by and among Antero Midstream GP LP, Antero Midstream Partners and certain of their affiliates, pursuant to which (i) Antero Midstream GP LP was converted from a limited partnership to a corporation under the laws of the State of Delaware and changed its name to Antero Midstream Corporation, and (ii) an indirect, wholly owned subsidiary of Antero Midstream Corporation was merged with and into Antero Midstream Partners, with Antero Midstream Partners surviving the merger as an indirect, wholly owned subsidiary of Antero Midstream Corporation (together, along with the other transactions contemplated by the Simplification Agreement, the “Transactions”). In connection with the Closing, Antero received $ 297 million in cash and 158.4 million shares of Antero Midstream Corporation common stock in consideration for 98,870,335 common units representing limited partnership interests in Antero Midstream Partners. The Company recorded a gain on deconsolidation of $ 1.4 billion calculated as the sum of (i) the cash proceeds received, (ii) the fair value of the Antero Midstream Corporation common stock received at the Closing, and (iii) the elimination of the noncontrolling interest less the carrying amount of the investment in Antero Midstream Partners. The fair value of Antero’s retained equity method investment on March 13, 2019 in Antero Midstream Corporation was $ 2.0 billion based on the market price of the shares received on March 12, 2019. See Note 6—Equity Method Investments to the unaudited condensed consolidated financial statements for further discussion on equity method investments. Antero Midstream Partners’ results of operations are no longer consolidated in the Company’s unaudited consolidated statement of operations and comprehensive income (loss) beginning March 13, 2019. Because Antero Midstream Partners does not meet the requirements of a discontinued operation, Antero Midstream Partners’ results of operations continue to be included in the Company’s consolidated unaudited statement of operations and comprehensive income (loss) through March 12, 2019. 16 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ (4) Transactions Conveyance of Overriding Royalty Interest On June 15, 2020, the Company announced the consummation of a transaction with an affiliate of Sixth Street Partners, LLC (“Sixth Street”) relating to certain overriding royalty interests across the Company’s existing asset base (the “ORRIs”). In connection with the transaction, the Company contributed the ORRIs to Martica and Sixth Street contributed $ 300 million in cash (subject to customary adjustments) and agreed to contribute up to an additional $ 102 million in cash if certain production thresholds attributable to the ORRIs are achieved in the third quarter of 2020 and first quarter of 2021. All cash contributed by Sixth Street at the initial closing was distributed to the Company. As of September 30, 2020, the Company determined it met the production threshold related to the third quarter of 2020 whereby it became entitled to receive a $ 51 million cash distribution that will be paid in the fourth quarter of 2020. The ORRIs include an overriding royalty interest of 1.25 % of the Company’s working interest in all of its proved operated developed properties in West Virginia and Ohio, subject to certain excluded wells (the “Initial PDP Override”), and an overriding royalty interest of 3.75 % of the Company’s working interest in all of its undeveloped properties in West Virginia and Ohio (the “Development Override”). Wells turned to sales after April 1, 2020 and prior to the later of (a) the date on which the Company turns to sales 2.2 million lateral feet (net to the Company’s interest) of horizontal wells burdened by the Development Override and (b) the earlier of (i) April 1, 2023 and (ii) the date on which the Company turns to sales 3.82 million lateral feet (net to the Company’s interest) of horizontal wells are subject to the Development Override. The ORRIs also include an additional overriding royalty interest of 2.00 % of the Company’s working interest in the properties underlying the Initial PDP Override (the “Incremental Override”). The Incremental Override (or a portion thereof, as applicable) may be re-conveyed to the Company (at the Company’s election) if certain production targets attributable to the ORRIs are achieved through March 31, 2023. Any portion of the Incremental Override that may not be re-conveyed to the Company based on the Company failing to achieve such production volumes through March 31, 2023 will remain with Martica. Prior to Sixth Street achieving an internal rate of return of 13 % and 1.5 x cash-on-cash return (the “Hurdle”), Sixth Street will receive all distributions in respect of the Initial PDP Override and the Development Override, and the Company will receive all distributions in respect of the Incremental Override, unless certain production targets are not achieved, in which case Sixth Street will receive some or all of the distributions in respect of the Incremental Override. Following Sixth Street achieving the Hurdle, the Company will receive 85 % of the distributions in respect of the ORRIs to which Sixth Street was entitled immediately prior to the Hurdle being achieved. The conveyance of the ORRIs from the Company to Martica was accounted for as a transaction between entities under common control. As a result, the contributed ORRIs have been recorded by Martica at their historical cost. Volumetric Production Payment Transaction On August 10, 2020, the Company completed a volumetric production payment transaction and received net proceeds of approximately $ 215 million (the "VPP"). In connection with the VPP, the Company entered into a purchase and sale agreement, together with a conveyance agreement and production and marketing agreement, with J.P. Morgan Ventures Energy Corporation ("JPM-VEC") to convey, effective July 1, 2020, an overriding royalty interest in dry gas producing properties in West Virginia (the "VPP Properties") equal to 136,589,000 MMBtu over the expected seven-year term of the VPP. The Company has accounted for the VPP as a conveyance under ASC 932, and the net proceeds were recognized as deferred revenue as of September 30, 2020. Deferred revenue is recognized as volumes are delivered using the units-of-production method over the term of the VPP. Under the production and marketing agreement, Antero and its affiliates provide certain marketing services as JPM-VEC’s agent, and any income or expenses related to these services will be recorded as marketing revenue or marketing expenses (as the case may be). Contemporaneously with the VPP transaction, the Company executed a call option related to the production volumes associated with its retained interest in the VPP properties, which is collateralized by a mortgage on the VPP properties. Additionally, the production and marketing agreement contains an embedded put option related to the production volumes for the Company’s 17 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ retained interest in the VPP properties, which has been bifurcated from the production and marketing arrangement and accounted for as a derivative instrument recorded at fair value as of September 30, 2020. See Note 12—Derivative Instruments. (5) Revenue (a) Disaggregation of Revenue Revenue is disaggregated by type in the following table. The table also identifies which reportable segment that the disaggregated revenues relate. For more information on reportable segments, see Note 18—Segment Information. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Nine months ended ​ ​ ​ ​ ​ September 30, ​ September 30, ​ ​ ​ (in thousands) 2019 2020 2019 2020 Reportable segment ​ Revenues from contracts with customers: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Natural gas sales ​ $ 524,448 ​ ​ 436,304 ​ $ 1,735,086 ​ ​ 1,214,801 ​ Exploration and production ​ Natural gas liquids sales (ethane) ​ ​ 26,488 ​ ​ 32,444 ​ ​ 92,378 ​ ​ 85,884 ​ Exploration and production ​ Natural gas liquids sales (C3+ NGLs) ​ ​ 258,470 ​ ​ 294,982 ​ ​ 810,228 ​ ​ 711,412 ​ Exploration and production ​ Oil sales ​ ​ 40,561 ​ ​ 34,265 ​ ​ 137,675 ​ ​ 78,233 ​ Exploration and production ​ Gathering and compression (1) ​ — ​ — ​ ​ 3,972 ​ — ​ Equity method investment in Antero Midstream Corporation ​ Water handling and treatment (1) ​ ​ — ​ ​ — ​ ​ 507 ​ ​ — ​ Equity method investment in Antero Midstream Corporation ​ Marketing ​ ​ 46,645 ​ ​ 91,497 ​ ​ 200,911 ​ ​ 201,855 ​ Marketing ​ Total revenue from contracts with customers ​ 896,612 ​ ​ 889,492 ​ ​ 2,980,757 ​ 2,292,185 ​ ​ ​ Income (loss) from derivatives and other sources ​ ​ 222,269 ​ ​ ( 508,901 ) ​ ​ 475,195 ​ ​ ( 109,578 ) ​ ​ ​ Total revenue and other ​ $ 1,118,881 ​ ​ 380,591 ​ $ 3,455,952 ​ ​ 2,182,607 ​ ​ ​ (1) Gathering and compression and water handling and treatment revenues were included through March 12, 2019. See Note 3—Deconsolidation of Antero Midstream Partners to the unaudited condensed consolidated financial statements for further discussion on the Transactions. ​ (b) Transaction Price Allocated to Remaining Performance Obligations For the Company’s product sales that have a contract term greater than one year, the Company utilized the practical expedient, which does not require the disclosure of the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under the Company’s product sales contracts, each unit of product delivered to the customer represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. For the Company’s product sales that have a contract term of one year or less, the Company utilized the practical expedient, which does not require the disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. (c) Contract Balances Under the Company’s sales contracts, the Company invoices customers after the Company’s performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Company’s contracts do not give rise to contract assets or liabilities. At December 31, 2019 and September 30, 2020, the Company’s receivables from contracts with customers were $ 318 million and $ 339 million, respectively. (6) Equity Method Investments As of September 30, 2020, the Company owned approximately 29.2 % of Antero Midstream Corporation’s common stock, which is reflected in Antero’s consolidated financial statements using the equity method of accounting. See Note 3—Deconsolidation of Antero Midstream Partners to the unaudited condensed consolidated financial statements for further discussion on the Transactions. 18 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ The following table is a reconciliation of investments in unconsolidated affiliates for the nine months ended September 30, 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ Antero Midstream ​ ​ Corporation ​ Balance as of December 31, 2019 ​ $ 1,055,177 ​ Equity in loss of unconsolidated affiliates ​ ​ ( 83,408 ) ​ Distributions/dividends from unconsolidated affiliates ​ ​ ( 128,267 ) ​ Impairment (1) ​ ​ ( 610,632 ) ​ Elimination of intercompany profit ​ ​ 40,056 ​ Balance as of September 30, 2020 ​ $ 272,926 ​ (1) Other-than-temporary impairment of investment in Antero Midstream Corporation. Summarized Financial Information of Antero Midstream Corporation The following tables present summarized financial information of Antero Midstream Corporation. Balance Sheet ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, ​ (in thousands) 2019 2020 ​ Current assets ​ $ 108,558 ​ ​ 108,008 ​ Noncurrent assets ​ ​ 6,174,320 ​ ​ 5,565,496 ​ Total assets ​ $ 6,282,878 ​ ​ 5,673,504 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ $ 242,084 ​ ​ 61,259 ​ Noncurrent liabilities ​ ​ 2,897,380 ​ ​ 3,126,754 ​ Stockholders' equity ​ ​ 3,143,414 ​ ​ 2,485,491 ​ Total liabilities and stockholders' equity ​ $ 6,282,878 ​ ​ 5,673,504 ​ ​ Statement of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the period ​ ​ ​ ​ ​ March 13, 2019 ​ ​ ​ ​ ​ through ​ Nine months ended ​ (in thousands) September 30, 2019 September 30, 2020 ​ Revenues ​ $ 553,521 ​ ​ 696,859 ​ Operating expenses ​ ​ 745,940 ​ ​ 929,480 ​ Loss from operations ​ $ ( 192,419 ) ​ ​ ( 232,621 ) ​ Loss attributable to the equity method investment ​ $ ( 197,006 ) ​ ​ ( 198,985 ) ​ ​ ​ ​ (7) Accrued Liabilities Accrued liabilities as of December 31, 2019 and September 30, 2020 consisted of the following items (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, ​ ​ 2019 2020 ​ Capital expenditures ​ $ 105,706 ​ 46,122 ​ Gathering, compression, processing, and transportation expenses ​ ​ 134,153 ​ ​ 158,043 ​ Marketing expenses ​ ​ 52,612 ​ ​ 55,777 ​ Interest expense, net ​ 30,834 ​ 40,355 ​ Accrued taxes ​ ​ 39,332 ​ ​ 20,403 ​ Other ​ 38,213 ​ 23,906 ​ Total accrued liabilities ​ $ 400,850 ​ 344,606 ​ ​ 19 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ ​ ​ (8) Long-Term Debt Long-term debt as of December 31, 2019 and September 30, 2020 consisted of the following items (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ September 30, ​ ​ 2019 2020 ​ Credit Facility (a) ​ $ 552,000 ​ ​ 827,000 ​ 5.375 % senior notes due 2021 (b) ​ ​ 952,500 ​ ​ 315,279 ​ 5.125 % senior notes due 2022 (c) ​ ​ 923,041 ​ ​ 660,516 ​ 5.625 % senior notes due 2023 (d) ​ ​ 750,000 ​ ​ 579,232 ​ 5.00 % senior notes due 2025 (e) ​ ​ 600,000 ​ ​ 590,000 ​ 4.25 % convertible senior notes due 2026 (f) ​ ​ — ​ ​ 287,500 ​ Total principal ​ ​ 3,777,541 ​ ​ 3,259,527 ​ Unamortized premium (discount), net ​ ​ 791 ​ ​ ( 83,658 ) ​ Unamortized debt issuance costs ​ ​ ( 19,464 ) ​ ​ ( 17,644 ) ​ Long-term debt ​ $ 3,758,868 ​ ​ 3,158,225 ​ ​ (a) Senior Secured Revolving Credit Facility Antero Resources has a senior secured revolving credit facility (the “Credit Facility”) with a consortium of bank lenders. Borrowings under the Credit Facility are subject to borrowing base limitations based on the collateral value of Antero Resources’ assets and are subject to regular semi-annual redeterminations. The borrowing base was re-affirmed in October 2020 at $ 2.85 billion and lender commitments are $ 2.64 billion. The next redetermination of the borrowing base is scheduled to occur in April 2021. The maturity date of the Credit Facility is the earlier of (i) October 26, 2022 and (ii) the date that is 91 days prior to the earliest stated redemption date of any series of Antero Resources’ senior notes then outstanding. The Company intends to extinguish the 2021 Notes on or prior to August 2, 2021 with proceeds from its asset sales program, cash flow from operations and available borrowings under the Credit Facility. Consequently, the Company has classified the Credit Facility as long-term debt. The classification of the Credit Facility does not impact any of the Company’s financial covenants. As of September 30, 2020, Antero Resources had an outstanding balance under the Credit Facility of $ 827 million, with a weighted average interest rate of 3.28 %, and outstanding letters of credit of $ 730 million. As of December 31, 2019, Antero Resources had an outstanding balance under the Credit Facility of $ 552 million, with a weighted average interest rate of 3.28 %, and outstanding letters of credit of $ 623 million. Commitment fees on the unused portion of the Credit Facility are due quarterly at rates ranging from 0.300 % to 0.375 % (subject to certain exceptions) of the unused portion based on utilization. ​ (b) 5.375 % Senior Notes Due 2021 On November 5, 2013, Antero Resources issued $ 1.0 billion of 5.375 % senior notes due November 1, 2021 (the “2021 Notes”) at par . The 2021 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2021 Notes rank pari passu to Antero Resources’ other outstanding senior notes. The 2021 Notes are guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ wholly owned subsidiaries and certain of its future restricted subsidiaries. Interest on the 2021 Notes is payable on May 1 and November 1 of each year. Antero may redeem all or part of the 2021 Notes at any time at a redemption price of 100.00 %. If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2021 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101 % of the principal amount of the 2021 Notes, plus accrued and unpaid interest. (c) 5.125 % Senior Notes Due 2022 On May 6, 2014, Antero Resources issued $ 600 million of 5.125 % senior notes due December 1, 2022 (the “2022 Notes”) at par . On September 18, 2014, Antero Resources issued an additional $ 500 million of the 2022 Notes at 100.5 % of par. The 2022 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2022 Notes rank pari passu to Antero Resources’ other outstanding senior notes. The 2022 Notes are guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ wholly owned subsidiaries and certain of its 20 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ future restricted subsidiaries. Interest on the 2022 Notes is payable on June 1 and December 1 of each year. Antero Resources may redeem all or part of the 2022 Notes at any time at a redemption price of 100.00 %. If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2022 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101 % of the principal amount of the 2022 Notes, plus accrued and unpaid interest. (d) 5.625 % Senior Notes Due 2023 On March 17, 2015, Antero Resources issued $ 750 million of 5.625 % senior notes due June 1, 2023 (the “2023 Notes”) at par . The 2023 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2023 Notes rank pari passu to Antero Resources’ other outstanding senior notes. The 2023 Notes are guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ wholly owned subsidiaries and certain of its future restricted subsidiaries. Interest on the 2023 Notes is payable on June 1 and December 1 of each year. Antero Resources may redeem all or part of the 2023 Notes at any time at redemption prices ranging from 101.406 % currently to 100.00 % on or after June 1, 2021. If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2023 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101 % of the principal amount of the 2023 Notes, plus accrued and unpaid interest. (e) 5.00 % Senior Notes Due 2025 On December 21, 2016, Antero Resources issued $ 600 million of 5.00 % senior notes due March 1, 2025 (the “2025 Notes”) at par . The 2025 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2025 Notes rank pari passu to Antero Resources’ other outstanding senior notes. The 2025 Notes are guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ wholly owned subsidiaries and certain of its future restricted subsidiaries. Interest on the 2025 Notes is payable on March 1 and September 1 of each year. Antero Resources may redeem all or part of the 2025 Notes at any time at redemption prices ranging from 103.75 % currently to 100.00 % on or after March 1, 2023. If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2025 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101 % of the principal amount of the 2025 Notes, plus accrued and unpaid interest. (f) 4.25 % Convertible Senior Notes Due 2026 On August 21, 2020, Antero Resources issued $ 250 million in aggregate principal amount of 2026 Convertible Notes. On September 2, 2020, Antero Resources issued an additional $ 37.5 million of the 2026 Convertible Notes. The 2026 Convertible Notes were issued pursuant to an indenture and are senior, unsecured obligations of Antero Resources. The 2026 Convertible Notes bear interest at a fixed rate of 4.25 % per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on March 1, 2021. Proceeds from the issuance of the 2026 Convertible Notes totaled $ 278.6 million, net of initial purchasers’ fees and issuance cost of $ 8.9 million. Each capitalized term used in this subsection but not otherwise defined in this Quarterly Report on Form 10-Q has the meaning as set forth in the indenture governing the 2026 Convertible Notes. The initial conversion rate is 230.2026 shares of Antero Resources’ common stock per $1,000 principal amount of 2026 Convertible Notes, subject to adjustment upon the occurrence of specified events. The 2026 Convertible Notes will mature on September 1, 2026, unless earlier repurchased, redeemed or converted. Before May 1, 2026, note holders will have the right to convert their 2026 Convertible Notes only upon the occurrence of the following events: ● during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on September 30, 2020, if the Last Reported Sale Price per share of Antero Resources’ common stock exceeds 130 % of the Conversion Price for each of at least 20 Trading Days (whether or not consecutive) during the 30 consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter; ● during the five consecutive Business Days immediately after any 10 consecutive trading day period (such 10 consecutive Trading Day period, the “Measurement Period”) if the trading Price per $1,000 principal amount of 2026 Convertible Notes, as determined following a request by a noteholder in accordance with the procedures set forth below, for each trading day of the Measurement Period was less than 98 % of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day; 21 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ ● if Antero Resources calls any or all of the 2026 Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or ● upon the occurrence of certain specified corporate events as set forth in the indenture governing the 2026 Convertible Notes. From and after May 1, 2026, noteholders may convert their 2026 Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. Upon conversion, Antero Resources may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash, shares of Antero Resources’ common stock or a combination of cash and shares of Antero Resources’ common stock, at Antero Resources’ election, in the manner and subject to the terms and conditions provided in the indenture governing the 2026 Convertible Notes. Antero Resources’ current intent is to settle the principle amount of the 2026 Convertible Notes in cash upon conversion. Antero Resources’ current intent is to settle the principle amount of the 2026 Convertible Notes in cash upon conversion. At no point since issuance of the 2026 Convertible Notes has the conditions allowing holders of the 2026 Convertible Notes to exercise their conversion right been met. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture governing the 2026 Convertible Notes. In addition, following certain corporate events, as described in the indenture governing the 2026 Convertible Notes, that occur prior to the maturity date, Antero Resources will increase the conversion rate for a holder who elects to convert its 2026 Convertible Notes in connection with such a corporate event. If certain corporate events that constitute a Fundamental Change occur, then noteholders may require Antero Resources to repurchase their 2026 Convertible Notes at a cash repurchase price equal to the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving Antero Resources and certain de-listing events with respect to Antero Resources’ common stock. Upon issuance, the Company separately accounted for the liability and equity components of the 2026 Convertible Notes. The liability component was recorded at the estimated fair value of a similar debt instrument without the conversion feature. The difference between the principal amount of the 2026 Convertible Notes and the estimated fair value of the liability component was recorded as a debt discount and will be amortized to interest expense over the term of the 2026 Convertible Notes using the effective interest method, with an effective interest rate of 10.8 % per annum. As of the issuance date, the fair value of the 2026 Convertible Notes was estimated at $ 203 million, resulting in a debt discount at inception of $ 85 million. The equity component, representing the value of the conversion option, was computed by deducting the fair value of the liability component from the initial proceeds of the 2026 Convertible Notes issuance. This equity component was recorded, net of deferred taxes and issuance costs, in additional paid-in capital within the unaudited consolidated statement of stockholders’ equity and will not be remeasured as long as it continues to meet the conditions for equity classification. Transaction costs related to the 2026 Convertible Notes issuance were allocated to the liability and equity components based on their relative fair values. Issuance costs attributable to the liability component were recorded within debt issuance costs on the unaudited consolidated balance sheet and are amortized over the term of the 2026 Convertible Notes using the effective interest method. Issuance costs attributable to the equity component were recorded as a charge to additional paid-in capital within the unaudited consolidated statement of stockholders’ equity. 22 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ The 2026 Convertible Notes consist of the following as of September 30, 2020 (in thousands): ​ ​ ​ ​ ​ Liability component: ​ ​ ​ ​ Principal ​ $ 287,500 ​ Less: unamortized note discount ​ ​ ( 84,084 ) ​ Less: unamortized debt issuance costs ​ ​ ( 6,209 ) ​ Net carrying value ​ $ 197,207 ​ Equity component (1) ​ $ 84,972 ​ (1) Recorded in additional paid-in capital, net of $ 3 million of issuance costs and $ 20 million of deferred taxes. Interest expense recognized on the 2026 Convertible Notes related to the stated interest rate and amortization of the debt discount totaled $ 2.3 million for the three months ended September 30, 2020. (g) Debt Repurchase Program During the three and nine months ended September 30, 2020, Antero Resources repurchased $ 461 million and $ 1.1 billion, respectively, principal amount of debt at a weighted average discount of 13 % and 17 % , respectively, which purchases included a portion of the 2021 Notes, 2022 Notes, 2023 Notes and 2025 Notes. The Company recognized a gain of $ 56 million and $ 175 million for the three and nine months ended September 30, 2020, respectively, on the early extinguishment of the debt repurchased. Repurchases of the principal amount of debt during the three and nine months ended September 30, 2020 include repurchases of $ 367 million on the 2021 Notes, 2022 Notes and 2023 Notes through previously disclosed tender offers at a weighted average discount of 10 %. ​ (9) Asset Retirement Obligations The following is a reconciliation of the Company’s asset retirement obligations for the nine months ended September 30, 2020 (in thousands): ​ ​ ​ ​ ​ Asset retirement obligations—December 31, 2019 $ 54,845 ​ Obligations incurred ​ 1,529 ​ Accretion expense ​ ​ 3,330 ​ Settlement of obligations ​ ​ ( 229 ) ​ Asset retirement obligations—September 30, 2020 ​ $ 59,475 ​ ​ Asset retirement obligations are included in other liabilities on the Company’s unaudited condensed consolidated balance sheets. ​ (10) Equity-Based Compensation On June 17, 2020, Antero Resources’ stockholders approved the Antero Resources Corporation 2020 Long-Term Incentive Plan (the “2020 Plan”), which replaced the Antero Resources Corporation Long-Term Incentive Plan (the “2013 Plan”), and the 2020 Plan became effective as of such date. The 2020 Plan provides for grants of stock options (including incentive stock options), stock appreciation rights, restricted stock awards, RSU awards, vested stock awards, dividend equivalent awards, and other stock-based and cash awards. The terms and conditions of the awards granted are established by the Compensation Committee of Antero Resources’ Board of Directors. Employees, officers, non-employee directors and other service providers of the Company and its affiliates are eligible to receive awards under the 2020 Plan. No further awards will be granted under the 2013 Plan on or after June 17, 2020. The 2020 Plan provides for the reservation of 10,050,000 shares of the Company’s common stock, plus the number of certain shares that become available again for delivery from the 2013 Plan in accordance with the share recycling provisions described below. The share recycling provisions allow for all or any portion of an award (including an award granted under the 2013 Plan that was outstanding as of June 17, 2020) that expires or is cancelled, forfeited, exchanged, settled for cash, or otherwise terminated without actual delivery of the shares to be considered not delivered and thus available for new awards under the 2020 Plan. Further, any shares withheld or surrendered in payment of any taxes relating to awards that were outstanding under either the 2013 Plan as of June 23 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ 17, 2020 or are granted under the 2020 Plan (other than stock options and stock appreciation rights) will again be available for new awards under the 2020 Plan. A total of 7,149,371 shares were available for future grant under the 2020 Plan as of September 30, 2020. Antero Midstream Partners’ general partner was authorized to grant up to 10,000,000 common units representing limited partner interests in Antero Midstream Partners under the Antero Midstream Partners LP Long-Term Incentive Plan (the “AMP Plan”) to non-employee directors of its general partner and certain officers, employees, and consultants of Antero Midstream Partners and its affiliates (which includes Antero Resources). As part of the Transactions, each outstanding phantom unit award under the AMP Plan, was assumed by Antero Midstream Corporation and converted into 1.8926 RSUs under the Antero Midstream Corporation Long Term Incentive Plan (the “AMC Plan”). Each RSU award under the AMC Plan represents a right to receive one share of Antero Midstream Corporation common stock. The Company’s equity-based compensation expense, by type of award, was as follows for the three and nine months ended September 30, 2019 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, ​ Nine months ended September 30, ​ ​ 2019 ​ 2020 ​ 2019 2020 ​ RSU awards ​ $ 2,229 ​ ​ 3,063 ​ $ 8,829 ​ ​ 9,021 ​ Stock options ​ ​ — ​ ​ — ​ ​ 389 ​ ​ — ​ PSU awards ​ ​ 399 ​ ​ 1,827 ​ ​ 6,027 ​ ​ 5,380 ​ Antero Midstream Partners phantom unit awards (1) ​ ​ 867 ​ ​ 459 ​ ​ 2,942 ​ ​ 1,881 ​ Equity awards issued to directors ​ ​ 380 ​ ​ 350 ​ ​ 1,140 ​ ​ 719 ​ Total expense ​ $ 3,875 ​ ​ 5,699 ​ $ 19,327 ​ ​ 17,001 ​ (1) Antero Resources recognized compensation expense for equity awards granted under both the 2013 Plan and the AMP Plan because the awards under the AMP Plan are accounted for as if they are distributed by Antero Midstream Partners to Antero Resources. Antero Resources allocates a portion of equity-based compensation expense related to grants prior to the Transactions to Antero Midstream Partners based on its proportionate share of Antero Resources’ labor costs. Through March 12, 2019, the total amount of equity-based compensation is included in the consolidated financial statements of Antero Resources; and effective March 13, 2019 (date of deconsolidation), the amount allocated to Antero Midstream Partners is no longer reflected in Antero Resources consolidated financial statements. See Note 3—Deconsolidation of Antero Midstream Partners LP to the unaudited condensed consolidated financial statements for further discussion on the Transactions. Restricted Stock Unit Awards A summary of RSU award activity for the nine months ended September 30, 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ average ​ Aggregate ​ ​ ​ Number of ​ grant date ​ intrinsic value ​ ​ shares fair value (in thousands) ​ Total awarded and unvested—December 31, 2019 ​ 2,370,575 ​ $ 12.81 ​ $ 6,756 ​ Granted ​ 7,108,061 ​ $ 2.39 ​ ​ ​ ​ Vested ​ ( 1,045,771 ) ​ $ 12.50 ​ ​ ​ ​ Forfeited ​ ( 119,679 ) ​ $ 12.46 ​ ​ ​ ​ Total awarded and unvested—September 30, 2020 ​ 8,313,186 ​ $ 4.08 ​ $ 22,862 ​ ​ Intrinsic values are based on the closing price of Antero Resources’ common stock on the referenced dates. As of September 30, 2020, there was approximately $ 26 million of unamortized equity-based compensation expense related to unvested RSUs. That expense is expected to be recognized over a weighted average period of approximately 2.3 years. 24 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ Stock Options A summary of stock option activity for the nine months ended September 30, 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Weighted ​ average ​ ​ ​ ​ ​ ​ ​ average ​ remaining ​ Intrinsic ​ ​ ​ Stock ​ exercise ​ contractual ​ value ​ ​ options price life (in thousands) ​ Outstanding as of December 31, 2019 ​ 467,633 ​ $ 50.64 ​ 5.05 ​ $ — ​ Granted ​ — ​ $ — ​ ​ ​ ​ ​ ​ Exercised ​ — ​ $ — ​ ​ ​ ​ ​ ​ Forfeited ​ — ​ $ — ​ ​ ​ ​ ​ ​ Expired ​ ( 35,172 ) ​ $ 50.56 ​ ​ ​ ​ ​ ​ Outstanding at September 30, 2020 ​ 432,461 ​ $ 50.64 ​ 4.31 ​ $ — ​ Vested or expected to vest as of September 30, 2020 ​ 432,461 ​ $ 50.64 ​ 4.31 ​ $ — ​ Exercisable as of September 30, 2020 ​ 432,461 ​ $ 50.64 ​ 4.31 ​ $ — ​ ​ Intrinsic values are based on the exercise price of the options and the closing price of Antero Resources’ common stock on the referenced dates. As of September 30, 2020, all stock options were fully vested resulting in no unamortized equity-based compensation expense. Performance Share Unit Awards Performance Share Unit Awards Based on Total Shareholder Return (“TSR”) In July 2020, the Company granted PSU awards to certain of its executive officers that vest based on Antero Resources’ absolute total shareholder return (“TSR”) determined as of the last day of each of three one-year performance periods ending on April 15, 2021, April 15, 2022, and April 15, 2023, and one cumulative three-year performance period ending on April 15, 2023, in each case, subject to the executive officer’s continued employment through April 15, 2023. The number of shares of common stock that may ultimately be earned following the end of the cumulative three-year performance period ranges from zero to 150 % of the target number of PSUs granted. Expense related to these PSUs is recognized on a graded-vested basis over approximately three years . Forfeitures are accounted for as they occur by reversing the expense previously recognized for awards that were forfeited during the period. Additionally, in July 2020, the Company granted PSUs to certain of its executive officers that vest based on Antero Resources’ TSR relative to the TSR of certain peer companies determined as of the last day of each of three one-year performance periods ending on April 15, 2021, April 15, 2022, and April 15, 2023, and one cumulative three-year performance period ending on April 15, 2023, in each case, subject to the executive officer’s continued employment through April 15, 2023. The number of shares of common stock that may ultimately be earned following the end of the cumulative three-year performance period ranges from zero to 150 % of the target number of PSUs granted. Expense related to these PSUs is recognized on a graded-vested basis over approximately three years . Forfeitures are accounted for as they occur by reversing the expense previously recognized for awards that were forfeited during the period. A summary of PSUs activity for the nine months ended September 30, 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ Number of ​ average grant ​ ​ units date fair value ​ Total awarded and unvested—December 31, 2019 ​ 2,537,283 ​ $ 16.74 ​ Granted ​ 469,000 ​ $ 2.97 ​ Forfeited ​ ( 29,316 ) ​ $ 12.21 ​ Cancelled (unearned) ​ ( 458,485 ) ​ $ 25.32 ​ Total awarded and unvested—September 30, 2020 ​ 2,518,482 ​ $ 11.94 ​ ​ 25 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ The following table presents information regarding the weighted average fair values for market-based PSUs granted during the nine months ended September 30, 2019 and 2020, and the assumptions used to determine the fair values: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended ​ ​ ​ ​ September 30, ​ ​ ​ 2019 ​ 2020 ​ ​ Dividend yield ​ ​ — % ​ ​ — % ​ Volatility ​ ​ 36 % ​ ​ 80 % ​ Risk-free interest rate ​ ​ 2.35 % ​ ​ 0.17 % ​ Weighted average fair value of awards granted—Return on Capital Employed ​ $ 9.26 ​ ​ $ — ​ ​ Weighted average fair value of awards granted—Absolute TSR ​ $ — ​ ​ $ 2.63 ​ ​ Weighted average fair value of awards granted—Relative TSR ​ $ — ​ ​ $ 3.30 ​ ​ ​ As of September 30, 2020, there was approximately $ 10 million of unamortized equity-based compensation expense related to unvested PSUs. That expense is expected to be recognized over a weighted average period of approximately 1.4 years. Cash Awards In January 2020, the Company granted cash awards of approximately $ 3.3 million to certain executives under the 2013 Plan, and compensation expense for these awards is recognized ratably over the vesting period for each of three tranches through January 20, 2023. In July 2020, the Company granted additional cash awards on the aggregate of $ 2.6 million to certain non-executive employees under the 2020 Plan that vest ratably over four years . As of September 30, 2020, the Company has accrued approximately $ 2.2 million in Other liabilities in the unaudited condensed consolidated balance sheet related to cash awards. Antero Midstream Partners Phantom Unit Awards and Antero Midstream Corporation Restricted Stock Unit Awards A summary of Antero Midstream Corporation RSU awards for the nine months ended September 30, 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ average ​ Aggregate ​ ​ ​ Number of ​ grant date ​ intrinsic value ​ ​ units fair value (in thousands) ​ Total awarded and unvested—December 31, 2019 ​ 657,757 ​ $ 14.71 ​ $ 4,992 ​ Granted ​ — ​ $ — ​ ​ ​ ​ Vested ​ ( 335,051 ) ​ $ 11.67 ​ ​ ​ ​ Forfeited ​ ( 22,577 ) ​ $ 14.09 ​ ​ ​ ​ Total awarded and unvested—September 30, 2020 ​ 300,129 ​ $ 5.19 ​ $ 1,558 ​ ​ Intrinsic values are based on the closing price of shares of Antero Midstream Corporation common stock. As of September 30, 2020, there was approximately $ 3 million of unamortized equity-based compensation expense related to unvested phantom unit awards. That expense is expected to be recognized over a weighted average period of approximately 1.2 years. (11) Financial Instruments The carrying values of accounts receivable and accounts payable at December 31, 2019 and September 30, 2020 approximated market values because of their short-term nature. The carrying values of the amounts outstanding under the Credit Facility at December 31, 2019 and September 30, 2020 approximated fair value because the variable interest rates are reflective of current market conditions. Based on Level 2 market data inputs, the fair value of senior notes was approximately $ 2.8 billion and $ 1.6 billion at December 31, 2019 and September 30, 2020, respectively. The fair value of the 2026 Convertible Notes was approximately $ 235 million as of September 30, 2020 based on Level 2 market data inputs. See Note 12—Derivative Instruments to the unaudited condensed consolidated financial statements for information regarding the fair value of derivative financial instruments. 26 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ ​ (12) Derivative Instruments The Company is exposed to certain risks relating to its ongoing business operations, and it uses derivative instruments to manage its commodity price risk. In addition, the Company periodically enters into contracts that contain embedded features that are required to be bifurcated and accounted for separately as derivatives. (a) Commodity Derivative Positions The Company periodically enters into natural gas, NGLs, and oil derivative contracts with counterparties to hedge the price risk associated with its production. These derivatives are not entered into for trading purposes. To the extent that changes occur in the market prices of natural gas, NGLs, and oil, the Company is exposed to market risk on these open contracts. This market risk exposure is generally offset by the change in market prices of natural gas, NGLs, and oil recognized upon the ultimate sale of the Company’s production. The Company was party to various fixed price commodity swap contracts that settled during the nine months ended September 30, 2019 and 2020. The Company enters into these swap contracts when management believes that favorable future sales prices for the Company’s production can be secured. Under these swap agreements, when actual commodity prices upon settlement exceed the fixed price provided by the swap contracts, the Company pays the difference to the counterparty. When actual commodity prices upon settlement are less than the contractually provided fixed price, the Company receives the difference from the counterparty. In addition, the Company has entered into basis swap contracts in order to hedge the difference between the New York Mercantile Exchange (“NYMEX”) index price and a local index price. The Company also entered into NGL derivative contracts, which establish a contractual price for the settlement month as a fixed percentage of the West Texas Intermediate Crude Oil index (“WTI”) price for the settlement month. When the percentage of the contractual price is above the contracted percentage, the Company pays the difference to the counterparty. When it is below the contracted percentage, the Company receives the difference from the counterparty. In addition, the Company has also entered into a call option agreement that gives the counterparty the right, but not the obligation, to enter into a fixed price swap agreement on a specified future date for a specific amount of production for a specified future period. The Company’s derivative contracts have not been designated as hedges for accounting purposes; therefore, all gains and losses are recognized in the Company’s statements of operations. 27 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ As of September 30, 2020, the Company’s fixed price natural gas, oil and NGL swap positions from October 1, 2020 through December 31, 2023 were as follows (abbreviations in the table refer to the index to which the swap position is tied, as follows: NYMEX=Henry Hub; NYMEX-WTI=West Texas Intermediate; ARA Propane =European Propane CIF ARA; OPIS Ethane Mt Belv=Mont Belvieu Purity Ethane-OPIS): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Natural Gas ​ ​ ​ Weighted ​ ​ ​ Natural gas ​ Liquids ​ Oil ​ average index ​ ​ MMBtu/day Bbls/day Bbls/day price Three months ending December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NYMEX ($/MMBtu) ​ 2,067,500 ​ — ​ — ​ $ 2.84 ​ ARA Propane ($/Gal) ​ — ​ 10,315 ​ — ​ ​ 0.65 ​ OPIS Ethane Mt Belv ($/Gal) ​ — ​ 24,500 ​ — ​ ​ 0.20 ​ NYMEX-WTI ($/Bbl) ​ — ​ — ​ 26,000 ​ ​ 55.63 ​ Total ​ 2,067,500 ​ 34,815 ​ 26,000 ​ ​ ​ ​ Three months ending March 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPIS Ethane Mt Belv ($/Gal) ​ ​ ​ 19,000 ​ ​ ​ $ 0.20 ​ Year ending December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NYMEX ($/MMBtu) ​ 2,160,000 ​ ​ ​ — ​ $ 2.77 ​ NYMEX-WTI ($/Bbl) ​ — ​ ​ ​ 3,000 ​ ​ 55.16 ​ Total ​ 2,160,000 ​ ​ ​ 3,000 ​ ​ ​ ​ Year ending December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NYMEX ($/MMBtu) ​ 905,897 ​ ​ ​ ​ ​ $ 2.43 ​ Year ending December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NYMEX ($/MMBtu) ​ 43,000 ​ ​ ​ ​ ​ $ 2.37 ​ ​ A portion of the NYMEX-WTI ($/Bbl) in 2020 combined with the Mont Belvieu Natural Gasoline to NYMEX-WTI are intended to fix the price of Natural Gasoline. ​ In addition, the Company has a call option agreement, which entitles the holder the right, but not the obligation, to enter into a fixed price swap agreement on December 21, 2023 to purchase 427,500 MMBtu per day at a price of $ 2.77 per MMBtu for the year ending December 31, 2024. ​ As of September 30, 2020, the Company’s natural gas basis swap positions, which settle on the pricing index to basis differential of the Columbia Gas Transmission pipeline (“TCO”) to the NYMEX Henry Hub natural gas price were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ Natural gas ​ average hedged ​ ​ MMBtu/day differential ​ Three months ending December 31, 2020: ​ ​ ​ ​ ​ ​ NYMEX to TCO ($/MMBtu) ​ 15,123 ​ $ 0.353 ​ Year ending December 31, 2021: ​ ​ ​ ​ ​ ​ NYMEX to TCO ($/MMBtu) ​ 40,000 ​ $ 0.414 ​ Year ending December 31, 2022: ​ ​ ​ ​ ​ ​ NYMEX to TCO ($/MMBtu) ​ 60,000 ​ $ 0.515 ​ Year ending December 31, 2023: ​ ​ ​ ​ ​ ​ NYMEX to TCO ($/MMBtu) ​ 50,000 ​ $ 0.525 ​ Year ending December 31, 2024: ​ ​ ​ ​ ​ ​ NYMEX to TCO ($/MMBtu) ​ 50,000 ​ $ 0.530 ​ ​ 28 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ As of September 30, 2020, the Company had NGL contracts for January 1, 2021 through December 31, 2021 that fix the Mont Belvieu index price for natural gasoline to percentages of WTI as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Gas ​ average ​ ​ ​ ​ Liquids ​ Payout ​ ​ ​ Bbls/day Ratio ​ ​ Year ending December 31, 2021: ​ ​ ​ ​ ​ ​ Mont Belvieu Natural Gasoline to NYMEX-WTI ​ 14,150 ​ 78 % ​ ​ 29 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ As of September 30, 2020, the Company’s fixed price natural gas, oil and NGL swap positions from October 1, 2020 through March 31, 2025 for Martica, the Company’s consolidated subsidiary, were as follows (abbreviations in the table refer to the index to which the swap position is tied, as follows: NYMEX=Henry Hub; NYMEX-WTI=West Texas Intermediate; OPIS Propane Mt Belv Non-TET = Mont Belvieu Propane-OPIS; OPIS Ethane Mt Belv=Mont Belvieu Purity Ethane-OPIS; OPIS Natural Gasoline Mt Belv Non-TET = Mont Belvieu Natural Gasoline-OPIS): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Natural Gas ​ ​ ​ Weighted ​ ​ ​ Natural gas ​ Liquids ​ Oil ​ average index ​ ​ MMBtu/day Bbls/day Bbls/day price ​ Three months ending December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NYMEX ($/MMBtu) ​ 46,495 ​ — ​ — ​ $ 2.06 ​ OPIS Propane Mt Belv Non-TET ​ — ​ 982 ​ — ​ ​ 0.49 ​ OPIS Natural Gasoline Mt Belv Non-TET ​ — ​ 298 ​ — ​ ​ 0.67 ​ OPIS Ethane Mt Belv ($/Gal) ​ — ​ 633 ​ — ​ ​ 0.20 ​ NYMEX-WTI ($/Bbl) ​ — ​ — ​ 128 ​ ​ 37.78 ​ Total ​ 46,495 ​ 1,913 ​ 128 ​ ​ ​ ​ Year ending December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NYMEX ($/MMBtu) ​ 46,536 ​ — ​ — ​ $ 2.62 ​ OPIS Propane Mt Belv Non-TET ​ — ​ 932 ​ — ​ ​ 0.43 ​ OPIS Natural Gasoline Mt Belv Non-TET ​ — ​ 282 ​ — ​ ​ 0.71 ​ OPIS Ethane Mt Belv ($/Gal) ​ — ​ 987 ​ — ​ ​ 0.17 ​ NYMEX-WTI ($/Bbl) ​ — ​ — ​ 117 ​ ​ 39.94 ​ Total ​ 46,536 ​ 2,201 ​ 117 ​ ​ ​ ​ Three months ending March 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPIS Propane Mt Belv Non-TET ​ — ​ 379 ​ — ​ $ 0.43 ​ OPIS Natural Gasoline Mt Belv Non-TET ​ — ​ 115 ​ — ​ ​ 0.72 ​ OPIS Ethane Mt Belv ($/Gal) ​ — ​ 521 ​ — ​ ​ 0.16 ​ NYMEX-WTI ($/Bbl) ​ — ​ — ​ 17 ​ ​ 43.85 ​ Total ​ — ​ 1,015 ​ 17 ​ ​ ​ ​ Year ending December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NYMEX ($/MMBtu) ​ 38,356 ​ — ​ — ​ $ 2.39 ​ OPIS Natural Gasoline Mt Belv Non-TET ​ — ​ 254 ​ — ​ ​ 0.83 ​ NYMEX-WTI ($/Bbl) ​ — ​ — ​ 66 ​ ​ 40.92 ​ Total ​ 38,356 ​ 254 ​ 66 ​ ​ ​ ​ Year ending December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NYMEX ($/MMBtu) ​ 35,616 ​ — ​ — ​ $ 2.35 ​ NYMEX-WTI ($/Bbl) ​ — ​ — ​ 52 ​ ​ 42.45 ​ Total ​ 35,616 ​ — ​ 52 ​ ​ ​ ​ Year ending December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NYMEX ($/MMBtu) ​ 23,885 ​ ​ ​ — ​ $ 2.33 ​ NYMEX-WTI ($/Bbl) ​ — ​ ​ ​ 43 ​ ​ 44.02 ​ Total ​ 23,885 ​ ​ ​ 43 ​ ​ ​ ​ Three months ending March 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NYMEX ($/MMBtu) ​ 18,021 ​ ​ ​ — ​ $ 2.53 ​ NYMEX-WTI ($/Bbl) ​ — ​ ​ ​ 39 ​ ​ 45.06 ​ Total ​ 18,021 ​ ​ ​ 39 ​ ​ ​ ​ ​ 30 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ (b) Embedded Derivatives The VPP includes an embedded put option tied to NYMEX pricing for the production volumes associated with the Company’s retained interest in the VPP properties of 120,667,000 MMBtu remaining through December 31, 2026 at a weighted average strike price of $ 2.60 per MMBtu that is not clearly and closely related to the host contract. Therefore, the Company bifurcated this embedded put option and reflected it at fair value in the unaudited condensed consolidated financial statements. (c) Summary The following table presents a summary of the fair values of the Company’s derivative instruments and where such values are recorded in the consolidated balance sheets as of December 31, 2019 and September 30, 2020. None of the Company’s derivative instruments are designated as hedges for accounting purposes and the fair value of derivative instruments was determined using Level 2 inputs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ September 30, 2020 ​ ​ ​ Balance sheet ​ Fair value ​ Balance sheet ​ Fair value ​ ​ location (In thousands) location (In thousands) ​ Asset derivatives not designated as hedges for accounting purposes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commodity derivatives—current (1) ​ Derivative instruments ​ $ 422,849 ​ Derivative instruments ​ $ 75,776 ​ Embedded derivatives—current ​ Derivative instruments ​ ​ — ​ Derivative instruments ​ ​ 7,281 ​ Commodity derivatives—noncurrent (1) ​ Derivative instruments ​ ​ 333,174 ​ Derivative instruments ​ ​ 6,998 ​ Embedded derivatives—noncurrent ​ Derivative instruments ​ ​ — ​ Derivative instruments ​ ​ 37,072 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total asset derivatives ​ ​ ​ ​ 756,023 ​ ​ ​ ​ 127,127 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liability derivatives not designated as hedges for accounting purposes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commodity derivatives—current ​ Derivative instruments ​ ​ 6,721 ​ Derivative instruments ​ ​ 107,933 ​ Commodity derivatives—noncurrent ​ Derivative instruments ​ ​ 3,519 ​ Derivative instruments ​ ​ 149,222 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liability derivatives ​ ​ ​ ​ 10,240 ​ ​ ​ ​ 257,155 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net derivatives assets (liabilities) ​ ​ ​ $ 745,783 ​ ​ ​ $ ( 130,028 ) ​ (1) Approximately $ 16 million of commodity derivative liabilities, including $ 8 million of current commodity derivatives and $ 8 million of noncurrent commodity derivatives, are attributable to our consolidated VIE, Martica. The following table presents the gross values of recognized derivative assets and liabilities, the amounts offset under master netting arrangements with counterparties, and the resulting net amounts presented in the consolidated balance sheets as of the dates presented, all at fair value (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ September 30, 2020 ​ ​ ​ Gross ​ Gross amounts ​ Net amounts of ​ Gross ​ Gross amounts ​ Net amounts of ​ ​ ​ amounts on ​ offset on ​ assets (liabilities) ​ amounts on ​ offset on ​ assets (liabilities) ​ ​ balance sheet balance sheet on balance sheet balance sheet balance sheet on balance sheet Commodity derivative assets ​ $ 882,817 ​ ​ ( 126,794 ) ​ ​ 756,023 ​ $ 212,335 ​ ​ ( 129,561 ) ​ ​ 82,774 ​ Embedded derivative assets ​ $ — ​ ​ — ​ ​ — ​ $ 44,353 ​ ​ — ​ ​ 44,353 ​ Commodity derivative liabilities ​ $ ( 137,034 ) ​ ​ 126,794 ​ ​ ( 10,240 ) ​ $ ( 386,716 ) ​ ​ 129,561 ​ ​ ( 257,155 ) ​ ​ 31 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ The following is a summary of derivative fair value gains and losses and where such values are recorded in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Statement of ​ Three months ended ​ Nine months ended ​ ​ ​ operations ​ September 30, ​ September 30, ​ ​ location ​ 2019 ​ 2020 2019 2020 ​ Commodity derivative fair value gains (losses) ​ Revenue ​ $ 220,788 ​ ​ ( 558,979 ) ​ $ 471,847 ​ ​ ( 161,161 ) ​ Embedded derivative fair value gains (losses) ​ Revenue ​ $ — ​ ​ 44,228 ​ $ — ​ ​ 44,228 ​ ​ ​ ​ (13) Leases The Company leases certain office space, processing plants, drilling rigs and completion services, gas gathering lines, compressor stations, and other office and field equipment. Leases with an initial term of 12 months or less are considered short-term and are not recorded on the balance sheet. Instead, the short-term leases are recognized in expense on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease from one to 20 years or more. The exercise of the lease renewal options are at the Company’s sole discretion. The depreciable lives of the leased assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of the Company’s lease agreements include minimum payments based on a percentage of produced volumes over contractual levels and others include rental payments adjusted periodically for inflation. The Company considers all contracts that have assets specified in the contract, either explicitly or implicitly, that the Company has substantially all of the capacity of the asset, and has the right to obtain substantially all of the economic benefits of that asset, without the lessor’s ability to have a substantive right to substitute that asset, as leased assets. For any contract deemed to include a leased asset, that asset is capitalized on the balance sheet as a right-of-use asset and a corresponding lease liability is recorded at the present value of the known future minimum payments of the contract using a discount rate on the date of commencement. The leased asset classification is determined at the date of recording as either operating or financing, depending upon certain criteria of the contract. The discount rate used for present value calculations is the discount rate implicit in the contract. If an implicit rate is not determinable, a collateralized incremental borrowing rate is used at the date of commencement. As new leases commence or previous leases are modified the discount rate used in the present value calculation is the current period applicable discount rate. The Company has made an accounting policy election to adopt the practical expedient for combining lease and non-lease components on an asset class basis. This expedient allows the Company to combine non-lease components such as real estate taxes, insurance, maintenance, and other operating expenses associated with the leased premises with the lease component of a lease agreement on an asset class basis when the non-lease components of the agreement cannot be easily bifurcated from the lease payment. Currently, the Company is only applying this expedient to certain office space agreements. 32 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ Supplemental Balance Sheet Information Related to Leases The Company’s lease assets as of December 31, 2019 and September 30, 2020 consisted of the following items (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ September 30, 2020 ​ ​ Operating Leases Finance Leases (2) Operating Leases Finance Leases (2) ​ Right-of-use Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Processing plants ​ $ 1,460,770 ​ ​ — ​ $ 1,324,022 ​ ​ — ​ Drilling rigs and completion services ​ ​ 71,662 ​ ​ — ​ ​ 19,480 ​ ​ — ​ Gas gathering lines and compressor stations (1) ​ ​ 1,308,428 ​ ​ — ​ ​ 1,274,755 ​ ​ — ​ Office space ​ ​ 40,491 ​ ​ — ​ ​ 37,784 ​ ​ — ​ Vehicles ​ ​ 4,983 ​ ​ 2,328 ​ ​ 3,367 ​ ​ 1,494 ​ Other office and field equipment ​ ​ 166 ​ ​ 170 ​ ​ 780 ​ ​ — ​ Total right-of-use assets ​ $ 2,886,500 ​ ​ 2,498 ​ $ 2,660,188 ​ ​ 1,494 ​ (1) Gas gathering lines and compressor stations leases includes $ 1.1 billion related to Antero Midstream Corporation as of December 31, 2019 and September 30, 2020. See “—Related party lease disclosure” for additional discussion. (2) Financing lease assets are recorded net of accumulated amortization of $ 9 million and $ 3 million as of December 31, 2019 and September 30, 2020, respectively. ​ The Company’s lease liabilities as of September 30, 2020 consisted of the following items (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ September 30, 2020 ​ ​ Operating Leases Finance Leases Operating Leases Finance Leases ​ Location on the balance sheet: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term lease liabilities ​ $ 304,397 ​ ​ 923 ​ $ 250,594 ​ ​ 974 ​ Long-term lease liabilities ​ ​ 2,582,103 ​ ​ 1,575 ​ ​ 2,409,594 ​ ​ 520 ​ Total lease liabilities ​ $ 2,886,500 ​ ​ 2,498 ​ $ 2,660,188 ​ ​ 1,494 ​ ​ The processing plants, gathering lines and compressor stations that are classified as lease liabilities are classified as such under ASC Topic 842, Leases , because Antero is the sole customer of the assets and because Antero makes the decisions that most impact the economic performance of the assets. Supplemental Information Related to Leases Costs associated with operating leases were included in the statement of operations and comprehensive income (loss) for the three and nine months ended September 30, 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Nine months ended ​ ​ September 30, ​ September 30, Statement of Operations Location 2019 2020 2019 2020 Gathering, compression, processing, and transportation ​ $ 237,618 ​ ​ 409,006 ​ $ 644,007 ​ ​ 1,112,502 General and administrative ​ ​ 2,859 ​ ​ 2,969 ​ ​ 8,395 ​ ​ 8,639 Contract termination and rig stacking ​ ​ — ​ ​ 546 ​ ​ 10,692 ​ ​ 6,387 Total lease expense ​ $ 240,477 ​ ​ 412,521 ​ $ 663,094 ​ ​ 1,127,528 ​ Costs associated with finance leases of less than $ 1 million for each of the three months and nine months ended September 30, 2019 and 2020 were included in interest expense. For the three months ended September 30, 2019 and 2020, the Company capitalized $ 53 million and $ 32 million, respectively, of costs related to operating leases and less than $ 1 million of costs related to finance leases. For the nine months ended September 30, 2019, and 2020, the Company capitalized $ 161 million and $ 91 million, respectively, of costs related to operating leases and less than $ 1 million of costs related to finance leases. 33 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ Short-term lease costs that are more than one month but less than 12 months are excluded from the above amounts and total $ 41 million and $ 16 million, respectively, for the three months ended September 30, 2019 and 2020 and $ 115 million and $ 108 million, respectively, for the nine months ended September 30, 2019 and 2020. Supplemental Cash Flow Information Related to Leases The following is the Company’s supplemental cash flow information related to leases for the three and nine months ended September 30, 2019 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Nine months ended ​ ​ ​ September 30, 2019 ​ September 30, 2019 ​ ​ Operating Leases Finance Leases Operating Leases Finance Leases ​ Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating cash out flows related to operating leases ​ $ 234,399 ​ ​ — ​ $ 591,963 ​ ​ — ​ Investing cash out flows related to operating leases ​ ​ 47,417 ​ ​ — ​ ​ 146,315 ​ ​ — ​ Financing cash out flows related to financing leases ​ ​ — ​ ​ 303 ​ ​ — ​ ​ 1,967 ​ ​ ​ $ 281,816 ​ ​ 303 ​ $ 738,278 ​ ​ 1,967 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noncash activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Right of use assets obtained in exchange for operating lease liabilities ​ $ — ​ ​ — ​ $ 3,345,549 ​ ​ — ​ Right of use assets obtained in exchange for financing lease liabilities ​ $ — ​ ​ — ​ $ — ​ ​ — ​ ​ The following is the Company’s supplemental cash flow information related to leases for the three and nine months ended September 30, 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Nine months ended ​ ​ ​ September 30, 2020 ​ September 30, 2020 ​ ​ Operating Leases Finance Leases Operating Leases Finance Leases ​ Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating cash out flows related to operating leases ​ $ 485,692 ​ ​ — ​ $ 1,147,489 ​ ​ — ​ Investing cash out flows related to operating leases ​ ​ 24,950 ​ ​ — ​ ​ 88,229 ​ ​ — ​ Financing cash out flows related to financing leases ​ ​ — ​ ​ 287 ​ ​ — ​ ​ 1,004 ​ ​ ​ $ 510,642 ​ ​ 287 ​ $ 1,235,718 ​ ​ 1,004 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noncash activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Right of use assets obtained in exchange for operating lease liabilities ​ $ 64,586 ​ ​ — ​ $ 178,348 ​ ​ — ​ Right of use assets obtained in exchange for financing lease liabilities ​ $ — ​ ​ — ​ $ — ​ ​ — ​ ​ 34 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ Maturities of Lease Liabilities The table below is a schedule of future minimum payments for operating and financing lease liabilities as of September 30, 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ Operating Leases ​ Financing Leases ​ Total ​ Remainder of 2020 ​ $ 156,878 ​ ​ 317 ​ ​ 157,195 ​ 2021 ​ ​ 590,519 ​ ​ 844 ​ ​ 591,363 ​ 2022 ​ ​ 578,305 ​ ​ 321 ​ ​ 578,626 ​ 2023 ​ ​ 575,228 ​ ​ 26 ​ ​ 575,254 ​ 2024 ​ ​ 566,460 ​ ​ — ​ ​ 566,460 ​ 2025 ​ ​ 493,783 ​ ​ — ​ ​ 493,783 ​ Thereafter ​ ​ 1,558,470 ​ ​ — ​ ​ 1,558,470 ​ Total lease payments ​ ​ 4,519,643 ​ ​ 1,508 ​ ​ 4,521,151 ​ Less: imputed interest ​ ​ ( 1,859,455 ) ​ ​ ( 14 ) ​ ​ ( 1,859,469 ) ​ Total ​ $ 2,660,188 ​ ​ 1,494 ​ ​ 2,661,682 ​ ​ Lease Term and Discount Rate The table below is the Company’s weighted-average remaining lease term and discount rate as of September 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2020 ​ ​ ​ ​ Operating Leases ​ Finance Leases ​ ​ Weighted-average remaining lease term: ​ 8.2 years ​ 1.6 years ​ ​ Weighted-average discount rate: ​ 13.8 % 6.2 % ​ ​ Related party lease disclosure The Company has a gathering and compression agreement with Antero Midstream Corporation, whereby Antero Midstream Corporation receives a low-pressure gathering fee per Mcf, a high-pressure gathering fee per Mcf and a compression fee per Mcf, in each case subject to adjustments based on the consumer price index. If and to the extent the Company requests that Antero Midstream Corporation construct new high pressure lines and compressor stations, the gathering and compression agreement contains minimum volume commitments that require Antero Resources to utilize or pay for 75 % and 70 %, respectively, of the requested capacity of such new construction for 10 years . In December 2019, the Company and Antero Midstream Corporation agreed to extend the initial term of the gathering and compression agreement to 2038 and established a growth incentive fee program whereby low pressure gathering fees will be reduced from 2020 through 2023 to the extent the Company achieves certain volumetric targets at certain points during such time. Upon completion of the initial contract term, the gathering and compression agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an anniversary of the effective date of the agreement, by either the Company or Antero Midstream Corporation on or before the 180 th day prior to the anniversary of such effective date. The Company achieved the volumetric targets during each quarter in the three and nine months ended September 30, 2020, and Antero Midstream Corporation provided a rebate of $ 12 million in each such quarter. Antero Midstream Corporation has provided rebates of $ 36 million for the nine months ended September 30, 2020. ​ For the three and nine months ended September 30, 2019, gathering and compression fees paid by Antero related to this agreement were $ 171 million and $ 486 million, respectively. For the three and nine months ended September 30, 2020, gathering and compression fees paid by Antero related to this agreement were $ 181 million and $ 503 million, respectively. As of December 31, 2019 and September 30, 2020, $ 57 million and $ 56 million was included within Accounts payable, related parties, respectively, on the condensed consolidated balance sheet as due to Antero Midstream Corporation related to this agreement. ​ ​ 35 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ (14) Commitments The table below is a schedule of future minimum payments for firm transportation, drilling rig and completion services, processing, gathering and compression, and office and equipment agreements, which include leases that have remaining lease terms in excess of one year as of September 30, 2020 (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Processing, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Firm ​ gathering and ​ Land payment ​ Operating and ​ Imputed Interest ​ ​ ​ ​ ​ transportation ​ compression ​ obligations ​ Financing Leases ​ for Leases ​ ​ ​ ​ (a) (b) (c) (d) (d) Total Remainder of 2020 ​ $ 278,430 ​ ​ 14,089 ​ ​ 1,527 ​ ​ 66,340 ​ ​ 90,855 ​ ​ 451,241 ​ 2021 ​ ​ 1,076,424 ​ ​ 55,780 ​ ​ 2,859 ​ ​ 247,159 ​ ​ 344,204 ​ ​ 1,726,426 ​ 2022 ​ ​ 1,033,787 ​ ​ 52,712 ​ ​ — ​ ​ 267,094 ​ ​ 311,532 ​ ​ 1,665,125 ​ 2023 ​ ​ 1,061,265 ​ ​ 58,565 ​ ​ — ​ ​ 300,989 ​ ​ 274,265 ​ ​ 1,695,084 ​ 2024 ​ ​ 1,021,107 ​ ​ 58,687 ​ ​ — ​ ​ 334,693 ​ ​ 231,767 ​ ​ 1,646,254 ​ 2025 ​ ​ 981,271 ​ ​ 47,385 ​ ​ — ​ ​ 306,918 ​ ​ 186,865 ​ ​ 1,522,439 ​ Thereafter ​ ​ 6,941,177 ​ ​ 105,977 ​ ​ — ​ ​ 1,138,489 ​ ​ 419,981 ​ ​ 8,605,624 ​ Total ​ $ 12,393,461 ​ ​ 393,195 ​ ​ 4,386 ​ ​ 2,661,682 ​ ​ 1,859,469 ​ ​ 17,312,193 ​ ​ (a) Firm Transportation The Company has entered into firm transportation agreements with various pipelines in order to facilitate the delivery of its production to market. These contracts commit the Company to transport minimum daily natural gas or NGLs volumes at negotiated rates or pay for any deficiencies at specified reservation fee rates. The amounts in this table are based on the Company’s minimum daily volumes at the reservation fee rate. The values in the table represent the gross amounts that the Company is committed to pay; however, the Company will record in the consolidated financial statements its proportionate share of costs based on its working interest. (b) Processing, Gathering, and Compression Service Commitments The Company has entered into various long- term gas processing, gathering and compression service agreements. Certain of these agreements were determined to be leases. The minimum payment obligations under the agreements that are not leases are presented in this column. The values in the table represent the gross amounts that the Company is committed to pay; however, the Company will record in the consolidated financial statements its proportionate share of costs based on its working interest. (c) Land Payment Obligations The Company has entered into various land acquisition agreements. Certain of these agreements contain minimum payment obligations over various terms. The values in the table represent the minimum payments due under these arrangements. None of these agreements were determined to be leases. (d) Leases, including imputed interest The Company has obligations under contracts for services provided by drilling rigs and completion fleets, processing, gathering, and compression services agreements, and office and equipment leases. The values in the table represent the gross amounts that Antero Resources is committed to pay; however, the Company will record in its financial statements its proportionate share of costs based on its working interests. Refer to Note 13—Leases to the unaudited condensed consolidated financial statements for more information on the Company’s operating and finance leases. ​ 36 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ (15) Contingencies Environmental In June 2018, following site inspections conducted in September 2017 at certain of our facilities located in Doddridge County, Tyler County, and Ritchie County, West Virginia, we received a Notice of Violation (“NOV”) from the U.S. Environmental Protection Agency (“EPA”) Region III for alleged violations of the federal Clean Air Act and the West Virginia State Implementation Plan relating to permitting and control requirements for emissions of regulated pollutants at several of our natural gas production facilities. The NOV alleges that combustion devices at these facilities did not meet applicable air permitting requirements. Separately, in June 2018, we received an information request from EPA Region III pursuant to Section 114(a) of the Clean Air Act relating to the facilities that were inspected in September 2017 as well as additional Antero Resources facilities for the purpose of determining if the additional facilities have the same alleged compliance issues that were identified during the September 2017 inspections. Subsequently, West Virginia Department of Environmental Protection (“WVDEP”) conducted its own inspections, and we have received NOVs from WVDEP alleging violations relating to similar issues being investigated by the EPA. We continue to negotiate with EPA and WVDEP to resolve the issues alleged in the NOVs and the information request; however, we believe that there is a reasonable possibility that these actions may result in monetary sanctions exceeding $ 100,000 . Our operations at these facilities are not suspended, and management does not expect these matters to have a material adverse effect on our financial condition, results of operations, or cash flows. WGL The Company and Washington Gas Light Company and WGL Midstream, Inc. (collectively, “WGL”) were involved in a pricing dispute involving firm gas sales contracts executed June 20, 2014 (the “Contracts”) that the Company began delivering gas under in January 2016. From January 2016 through July 2017 and from December 2017 through January 2018, the aggregate daily gas volumes contracted for under the Contracts was 500,000 MMBtu/day, with the aggregate daily contracted volumes having increased to 600,000 MMBtu/day from August through November 2017. The Company invoiced WGL based on the natural gas index price specified in the Contracts and WGL paid the Company based on that invoice price. However, WGL asserted that the index price was no longer appropriate under the Contracts and claimed that an undefined alternative index was more appropriate for the delivery point of the gas. In July 2016, the matter was referred to arbitration by the Colorado district court. In January 2017, the arbitration panel ruled in the Company’s favor. As a result, the index price has remained as specified in the Contracts and there will be no adjustments to the invoices that have been paid by WGL, nor will future invoices to WGL be adjusted based on the same claim rejected by the arbitration panel. The arbitration panel’s award was confirmed by the Colorado district court on April 14, 2017. In March of 2017, WGL filed a second legal proceeding against the Company in Colorado district court alleging breach of contract and seeking damages of more than $ 30 million. In this lawsuit, WGL claimed that the Company breached its contractual obligations under the Contracts by failing to deliver “TCO pool” gas. In subsequent filings, WGL explained that its claims were based on an alleged obligation that the Company must deliver gas to the Columbia IPP Pool (“IPP Pool”). WGL asserted this exact same issue in the arbitration and it was rejected by the arbitration panel. The arbitration panel specifically found that the Delivery Point under the Contracts was at a specific geographic point in Braxton County, West Virginia, not the IPP Pool. On August 24, 2017, the Colorado district court dismissed with prejudice WGL’s claims against the Company in its new lawsuit and found that the Company had not breached its Contracts with WGL by allegedly failing to deliver to the IPP Pool. The Court dismissed WGL’s lawsuit because WGL had not adequately pled a claim against Antero Resources for the alleged failure to deliver “TCO pool” gas under the Contracts. WGL has appealed this decision to the Colorado Court of Appeals, and on October 11, 2018, the Colorado Court of Appeals reversed the Colorado district court’s decision finding that WGL had adequately pled a claim for relief and remanded the case back to the district court for further proceedings. The Company is also actively engaged in pursuing cover damages against WGL based on WGL’s failure to take receipt of all of the agreed quantities of gas required under the Contracts. WGL’s failure to take the gas volumes specified in the Contracts is directly related to WGL’s lack of primary firm transportation rights at the Delivery Point. The failures by WGL to take the full contracted volumes of gas began in April 2017 and continued each month through December 2017 in varying quantities. In defense of its conduct, WGL asserted to the Company that their failure to receive gas is excused by (1) the Company’s failure to deliver gas to the IPP Pool or (2) alleged instances of Force Majeure under the Contracts. However, as stated above, the alleged obligation that the Company must deliver gas to the IPP Pool was already rejected by the arbitration panel. Further, the Contracts expressly prohibit a Force Majeure claim in circumstances in which the gas purchaser does not have primary firm transportation agreements in place to transport the purchased gas. In each instance that WGL failed to receive the quantity of gas required under the Contracts, the 37 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ Company resold the quantities not taken and invoiced WGL for cover damages pursuant to the terms of the Contracts. WGL refused to pay for the invoiced cover damages as required by the Contracts and also short paid the Company for, among other things, certain amounts of gas received by WGL. The Company filed a lawsuit against WGL in Colorado district court on October 24, 2017 to recover its cover damages, other unpaid amounts, and interest. WGL’s claims have been consolidated with Antero Resources’ claims in the same district court and trial began on June 10, 2019. WGL quantified its damages claim for the alleged failure to deliver TCO Pool gas and sought approximately $ 40 million from Antero Resources. On June 20, 2019, the Company was awarded a jury verdict of approximately $ 96 million in damages after the jury found that WGL breached the Contracts with the Company. In addition, the jury rejected WGL’s claim against the Company, finding that the Company did not breach the Contracts by allegedly failing to deliver TCO Pool gas and awarding no damages in favor of WGL. On August 16, 2019, WGL appealed the judgment and the appeal is currently pending before the Colorado Court of Appeals. In the appeal, briefing has been completed and oral argument is scheduled for November 4, 2020. Effective February 1, 2018, as a result of an amendment to its firm gas sales contract with WGL Midstream, Inc. that was executed on December 28, 2017, the total aggregate volumes to be delivered to WGL at the Braxton delivery point were reduced from 500,000 MMBtu/day to 200,000 MMBtu/day and in November 2018, the total aggregate contract volumes to be delivered to WGL at a delivery point in Loudoun County, Virginia increased by 330,000 MMBtu/day. This increase of 330,000 MMBtu/day is in effect for the remaining term of our gas sale contract with WGL Midstream, which expires in 2038, and these increased volumes are subject to NYMEX-based pricing. Following this increase, the aggregate contract volumes delivered to WGL total 530,000 MMBtu/day. Other The Company is party to various other legal proceedings and claims in the ordinary course of its business. The Company believes that certain of these matters will be covered by insurance and that the outcome of other matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. ​ (16) Contract Termination and Rig Stacking The Company incurs costs associated with the delay or cancellation of drilling and completion contracts with third-party contractors. These costs are recorded in Contract termination and rig stacking and included in the statement of operations and comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, ​ Nine months ended September 30, ​ ​ 2019 2020 2019 2020 ​ Contract termination and rig stacking ​ $ 62 ​ ​ 1,246 ​ $ 14,026 ​ ​ 12,317 ​ ​ ​ ​ ​ (17) Related Parties Antero Midstream Partners’ operations comprised substantially all of the operations reflected in the gathering and processing, and water handling and treatment, results through March 12, 2019. Effective March 13, 2019, Antero Resources accounts for Antero Midstream Corporation as an equity method investment. See Note 3—Deconsolidation of Antero Midstream Partners LP to the unaudited condensed consolidated financial statements for more discussion on the Transactions. Substantially all of the revenues for gathering and processing and water handling and treatment were derived from transactions with Antero Resources. See Note 18—Segment Information to the unaudited condensed consolidated financial statements for the operating results of the Company’s reportable segments. ​ (18) Segment Information See Note 2(l)—Summary of Significant Accounting Policies, Industry Segments and Geographic Information, to the unaudited condensed consolidated financial statements for a description of the Company’s determination of its reportable segments. Revenues from gathering and processing and water handling and treatment operations were primarily derived from intersegment transactions for services provided to the Company’s exploration and production operations prior to the closing of the Transactions. Through March 12, 2019, the results of Antero Midstream Partners were included in the consolidated financial statements of Antero Resources. Effective March 13, 2019, the results of Antero Midstream Partners are no longer consolidated in Antero Resources’ 38 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ results; however, the Company’s segment disclosures include the results of the Company’s unconsolidated affiliates due to their significance to the Company’s operations. See Note 3—Deconsolidation of Antero Midstream Partners LP to the unaudited condensed consolidated financial statements for further discussion on the Transactions. Marketing revenues are primarily derived from activities to purchase and sell third-party natural gas and NGLs and to market excess firm transportation capacity to third parties. Operating segments are evaluated based on their contribution to consolidated results, which is primarily determined by the respective operating income (loss) of each segment. General and administrative expenses were allocated to the midstream segment based on the nature of the expenses and on a combination of the segments’ proportionate share of the Company’s consolidated property and equipment, capital expenditures, and labor costs, as applicable. General and administrative expenses related to the marketing segment are not allocated because they are immaterial. Other income, income taxes, and interest expense are primarily managed and evaluated on a consolidated basis. Intersegment sales were transacted at prices which approximate market. Accounting policies for each segment are the same as the Company’s accounting policies described in Note 2—Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements. 39 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ The operating results and assets of the Company’s reportable segments were as follows for the three months ended September 30, 2019 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity Method ​ Elimination of ​ ​ ​ ​ ​ ​ ​ ​ Investment in ​ intersegment ​ ​ ​ ​ ​ Exploration ​ ​ ​ Antero ​ transactions and ​ ​ ​ ​ ​ and ​ ​ ​ Midstream ​ unconsolidated ​ Consolidated ​ ​ production Marketing Corporation affiliates total ​ Three months ended September 30, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party ​ $ 1,070,755 ​ ​ 46,645 ​ ​ — ​ ​ — ​ ​ 1,117,400 ​ Intersegment ​ 1,481 ​ ​ — ​ ​ 243,795 ​ ​ ( 243,795 ) ​ ​ 1,481 ​ Total ​ $ 1,072,236 ​ ​ 46,645 ​ ​ 243,795 ​ ​ ( 243,795 ) ​ ​ 1,118,881 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease operating ​ $ 35,928 ​ ​ — ​ ​ 49,050 ​ ​ ( 49,050 ) ​ ​ 35,928 ​ Gathering, compression, processing, and transportation ​ ​ 603,860 ​ ​ — ​ ​ 13,091 ​ ​ ( 13,091 ) ​ ​ 603,860 ​ Impairment of oil and gas properties ​ ​ 1,041,469 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,041,469 ​ Impairment of midstream assets ​ ​ — ​ ​ — ​ ​ 465,278 ​ ​ ( 457,478 ) ​ ​ 7,800 ​ Depletion, depreciation, and amortization ​ ​ 241,503 ​ ​ — ​ ​ 24,460 ​ ​ ( 24,460 ) ​ ​ 241,503 ​ General and administrative ​ ​ 35,923 ​ ​ — ​ ​ 30,595 ​ ​ ( 30,595 ) ​ ​ 35,923 ​ Other ​ ​ 30,060 ​ ​ 108,216 ​ ​ 3,210 ​ ​ ( 3,210 ) ​ ​ 138,276 ​ Total ​ ​ 1,988,743 ​ ​ 108,216 ​ ​ 585,684 ​ ​ ( 577,884 ) ​ ​ 2,104,759 ​ Operating income (loss) ​ $ ( 916,507 ) ​ ​ ( 61,571 ) ​ ​ ( 341,889 ) ​ ​ 334,089 ​ ​ ( 985,878 ) ​ Equity in earnings (loss) of unconsolidated affiliates ​ $ ( 117,859 ) ​ ​ — ​ ​ 18,478 ​ ​ ( 18,478 ) ​ ​ ( 117,859 ) ​ Investments in unconsolidated affiliates ​ $ 1,819,323 ​ ​ — ​ ​ 672,310 ​ ​ ( 672,310 ) ​ ​ 1,819,323 ​ Segment assets ​ $ 16,094,927 ​ ​ 25,361 ​ ​ 6,445,504 ​ ​ ( 6,445,504 ) ​ ​ 16,120,288 ​ Capital expenditures for segment assets ​ $ 292,176 ​ ​ — ​ ​ 120,875 ​ ​ ( 120,875 ) ​ ​ 292,176 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity Method ​ Elimination of ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment in ​ intersegment ​ ​ ​ ​ ​ Exploration ​ ​ ​ Antero ​ transactions and ​ ​ ​ ​ ​ and ​ ​ ​ Midstream ​ unconsolidated ​ Consolidated ​ ​ production Marketing Corporation affiliates total ​ Three months ended September 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party ​ $ 288,419 ​ ​ 91,497 ​ ​ — ​ ​ — ​ ​ 379,916 ​ Intersegment ​ 675 ​ ​ — ​ ​ 233,415 ​ ​ ( 233,415 ) ​ ​ 675 ​ Total ​ $ 289,094 ​ ​ 91,497 ​ ​ 233,415 ​ ​ ( 233,415 ) ​ ​ 380,591 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease operating ​ $ 21,450 ​ ​ — ​ ​ — ​ ​ — ​ ​ 21,450 ​ Gathering, compression, processing, and transportation ​ ​ 656,615 ​ ​ — ​ ​ 38,052 ​ ​ ( 38,052 ) ​ ​ 656,615 ​ Impairment of oil and gas properties ​ ​ 29,392 ​ ​ — ​ ​ — ​ ​ — ​ ​ 29,392 ​ Depletion, depreciation, and amortization ​ ​ 238,418 ​ ​ — ​ ​ 26,801 ​ ​ ( 26,801 ) ​ ​ 238,418 ​ General and administrative ​ ​ 31,640 ​ ​ — ​ ​ 13,232 ​ ​ ( 13,232 ) ​ ​ 31,640 ​ Other ​ ​ 28,605 ​ ​ 128,580 ​ ​ 3,513 ​ ​ ( 3,513 ) ​ ​ 157,185 ​ Total ​ ​ 1,006,120 ​ ​ 128,580 ​ ​ 81,598 ​ ​ ( 81,598 ) ​ ​ 1,134,700 ​ Operating income (loss) ​ $ ( 717,026 ) ​ ​ ( 37,083 ) ​ ​ 151,817 ​ ​ ( 151,817 ) ​ ​ ( 754,109 ) ​ Equity in earnings of unconsolidated affiliates ​ $ 24,419 ​ ​ — ​ ​ 23,173 ​ ​ ( 23,173 ) ​ ​ 24,419 ​ Investments in unconsolidated affiliates ​ $ 272,926 ​ ​ — ​ ​ — ​ ​ — ​ ​ 272,926 ​ Segment assets ​ $ 13,349,739 ​ ​ — ​ ​ 5,673,504 ​ ​ ( 5,673,504 ) ​ ​ 13,349,739 ​ Capital expenditures for segment assets ​ $ 151,269 ​ ​ — ​ ​ 41,851 ​ ​ ( 41,851 ) ​ ​ 151,269 ​ 40 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ The operating results and assets of the Company’s reportable segments were as follows for the nine months ended September 30, 2019 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity Method ​ Elimination of ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment in ​ intersegment ​ ​ ​ ​ ​ Exploration ​ ​ ​ Antero ​ transactions and ​ ​ ​ ​ ​ and ​ ​ ​ Midstream ​ unconsolidated ​ Consolidated ​ ​ production Marketing Corporation affiliates total ​ Nine months ended September 30, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party ​ $ 3,247,214 ​ ​ 200,911 ​ ​ 50 ​ ​ — ​ ​ 3,448,175 ​ Intersegment ​ 4,999 ​ ​ — ​ ​ 553,471 ​ ​ ( 550,693 ) ​ ​ 7,777 ​ Total ​ $ 3,252,213 ​ ​ 200,911 ​ ​ 553,521 ​ ​ ( 550,693 ) ​ ​ 3,455,952 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease operating ​ $ 119,754 ​ ​ — ​ ​ 111,427 ​ ​ ( 112,664 ) ​ ​ 118,517 ​ Gathering, compression, processing, and transportation ​ ​ 1,705,709 ​ ​ — ​ ​ 28,324 ​ ​ ( 138,810 ) ​ ​ 1,595,223 ​ Impairment of oil and gas properties ​ ​ 1,253,712 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,253,712 ​ Impairment of midstream assets ​ ​ — ​ ​ — ​ ​ 472,854 ​ ​ ( 458,072 ) ​ ​ 14,782 ​ Depletion, depreciation, and amortization ​ ​ 702,299 ​ ​ — ​ ​ 68,557 ​ ​ ( 46,850 ) ​ ​ 724,006 ​ General and administrative ​ ​ 128,213 ​ ​ — ​ ​ 85,026 ​ ​ ( 66,732 ) ​ ​ 146,507 ​ Other ​ ​ 112,952 ​ ​ 408,839 ​ ​ 8,005 ​ ​ ( 7,002 ) ​ ​ 522,794 ​ Total ​ ​ 4,022,639 ​ ​ 408,839 ​ ​ 774,193 ​ ​ ( 830,130 ) ​ ​ 4,375,541 ​ Operating income (loss) ​ $ ( 770,426 ) ​ ​ ( 207,928 ) ​ ​ ( 220,672 ) ​ ​ 279,437 ​ ​ ( 919,589 ) ​ Equity in earnings (loss) of unconsolidated affiliates ​ $ ( 102,457 ) ​ ​ — ​ ​ 34,981 ​ ​ ( 22,717 ) ​ ​ ( 90,193 ) ​ Investments in unconsolidated affiliates ​ $ 1,819,323 ​ ​ — ​ ​ 672,310 ​ ​ ( 672,310 ) ​ ​ 1,819,323 ​ Segment assets ​ $ 16,094,927 ​ ​ 25,361 ​ ​ 6,445,504 ​ ​ ( 6,445,504 ) ​ ​ 16,120,288 ​ Capital expenditures for segment assets ​ $ 1,053,210 ​ ​ — ​ ​ 262,065 ​ ​ ( 208,913 ) ​ ​ 1,106,362 ​ ​ ​ 41 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity Method ​ Elimination of ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment in ​ intersegment ​ ​ ​ ​ ​ Exploration ​ ​ ​ Antero ​ transactions and ​ ​ ​ ​ ​ and ​ ​ ​ Midstream ​ unconsolidated ​ Consolidated ​ ​ production Marketing Corporation affiliates total ​ Nine months ended September 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Third-party ​ $ 1,978,572 ​ ​ 201,855 ​ ​ — ​ ​ — ​ ​ 2,180,427 ​ Intersegment ​ 2,180 ​ ​ — ​ ​ 696,859 ​ ​ ( 696,859 ) ​ ​ 2,180 ​ Total ​ $ 1,980,752 ​ ​ 201,855 ​ ​ 696,859 ​ ​ ( 696,859 ) ​ ​ 2,182,607 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease operating ​ $ 71,836 ​ ​ — ​ ​ — ​ ​ — ​ ​ 71,836 ​ Gathering, compression, processing, and transportation ​ ​ 1,877,084 ​ ​ — ​ ​ 128,847 ​ ​ ( 128,847 ) ​ ​ 1,877,084 ​ Impairment of oil and gas properties ​ ​ 155,962 ​ ​ — ​ ​ — ​ ​ — ​ ​ 155,962 ​ Impairment of midstream assets ​ ​ — ​ ​ — ​ ​ 665,491 ​ ​ ( 665,491 ) ​ ​ — ​ Depletion, depreciation, and amortization ​ ​ 652,130 ​ ​ — ​ ​ 81,889 ​ ​ ( 81,889 ) ​ ​ 652,130 ​ General and administrative ​ ​ 101,264 ​ ​ — ​ ​ 39,191 ​ ​ ( 39,191 ) ​ ​ 101,264 ​ Other ​ ​ 88,023 ​ ​ 334,906 ​ ​ 14,062 ​ ​ ( 14,062 ) ​ ​ 422,929 ​ Total ​ ​ 2,946,299 ​ ​ 334,906 ​ ​ 929,480 ​ ​ ( 929,480 ) ​ ​ 3,281,205 ​ Operating income (loss) ​ $ ( 965,547 ) ​ ​ ( 133,051 ) ​ ​ ( 232,621 ) ​ ​ 232,621 ​ ​ ( 1,098,598 ) ​ Equity in earnings (loss) of unconsolidated affiliates ​ $ ( 83,408 ) ​ ​ — ​ ​ 63,197 ​ ​ ( 63,197 ) ​ ​ ( 83,408 ) ​ Investments in unconsolidated affiliates ​ $ 272,926 ​ ​ — ​ ​ — ​ ​ — ​ ​ 272,926 ​ Segment assets ​ $ 13,349,739 ​ ​ — ​ ​ 5,673,504 ​ ​ ( 5,673,504 ) ​ ​ 13,349,739 ​ Capital expenditures for segment assets ​ $ 726,402 ​ ​ — ​ ​ 165,265 ​ ​ ( 165,265 ) ​ ​ 726,402 ​ ​ ​ (19) Subsidiary Guarantors Each of the Company’s wholly owned subsidiaries has fully and unconditionally guaranteed Antero Resources’ senior notes. In the event a subsidiary guarantor is sold or disposed of (whether by merger, consolidation, the sale of a sufficient amount of its capital stock so that it no longer qualifies as a “Subsidiary” of Antero (as defined in the indentures governing the notes) or the sale of all or substantially all of its assets (other than by lease)) and whether or not the subsidiary guarantor is the surviving entity in such transaction to a person that is not Antero or a restricted subsidiary of Antero, such subsidiary guarantor will be released from its obligations under its subsidiary guarantee if the sale or other disposition does not violate the covenants set forth in the indentures governing the notes. In addition, a subsidiary guarantor will be released from its obligations under the indentures and its guarantee, upon the release or discharge of the guarantee of other Indebtedness (as defined in the indentures governing the notes) that resulted in the creation of such guarantee, except a release or discharge by or as a result of payment under such guarantee; if Antero designates such subsidiary as an unrestricted subsidiary and such designation complies with the other applicable provisions of the indentures governing the notes or in connection with any covenant defeasance, legal defeasance or satisfaction and discharge of the notes. The following tables present summarized financial information of Antero and its guarantor subsidiaries. The Company’s wholly owned subsidiaries are not restricted from making distributions to the Company. 42 Table of Contents ANTERO RESOURCES CORPORATION Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2019 and September 30, 2020 ​ Balance Sheet ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Parent ​ Guarantor ​ ​ ​ (Antero) ​ Subsidiaries ​ ​ ​ December 31, ​ September 30, ​ December 31, ​ September 30, ​ (in thousands) 2019 ​ 2020 2019 ​ 2020 ​ Accounts receivable, non-guarantor subsidiaries ​ $ — ​ ​ 51,000 ​ $ — ​ ​ — ​ Accounts receivable, related parties ​ ​ 125,000 ​ ​ — ​ ​ 299,450 ​ ​ 398,158 ​ Other current assets ​ ​ 797,885 ​ ​ 446,889 ​ ​ — ​ ​ 35,028 ​ Total current assets ​ ​ 922,885 ​ ​ 497,889 ​ ​ 299,450 ​ ​ 433,186 ​ Noncurrent assets ​ ​ 14,274,684 ​ ​ 11,813,110 ​ ​ 812,129 ​ ​ 202,452 ​ Total assets ​ $ 15,197,569 ​ ​ 12,310,999 ​ $ 1,111,579 ​ ​ 635,638 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable, non-guarantor subsidiaries ​ $ — ​ ​ — ​ $ — ​ ​ — ​ Accounts payable, related parties ​ ​ 397,333 ​ ​ 514,705 ​ ​ — ​ ​ 35,028 ​ Other current liabilities ​ ​ 942,256 ​ ​ 945,647 ​ ​ — ​ ​ — ​ Total current liabilities ​ ​ 1,339,589 ​ ​ 1,460,352 ​ ​ — ​ ​ 35,028 ​ Noncurrent liabilities ​ ​ 7,186,687 ​ ​ 6,322,233 ​ ​ — ​ ​ — ​ Total liabilities ​ $ 8,526,276 ​ ​ 7,782,585 ​ ​ — ​ ​ 35,028 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noncontrolling interests ​ $ — ​ ​ 315,754 ​ ​ — ​ ​ — ​ ​ Statement of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Parent ​ Guarantor ​ ​ ​ (Antero) ​ Subsidiaries ​ ​ ​ Nine months ended ​ Nine months ended ​ ​ ​ September 30, ​ September 30, ​ (in thousands) 2019 ​ 2020 2019 ​ 2020 ​ Revenues ​ $ 3,453,124 ​ ​ 2,158,743 ​ ​ — ​ ​ 93,318 ​ Operating expenses ​ ​ 4,439,278 ​ ​ 2,789,119 ​ ​ — ​ ​ 560,102 ​ Income (loss) from operations ​ ​ ( 986,154 ) ​ ​ ( 630,376 ) ​ ​ — ​ ​ ( 466,784 ) ​ Net income and comprehensive income including noncontrolling interests ​ ​ 10,932 ​ ​ ( 844,755 ) ​ ​ 131,135 ​ ​ ( 510,969 ) ​ Net income and comprehensive income attributable to Antero Resources Corporation ​ $ 10,932 ​ ​ ( 826,758 ) ​ ​ 131,135 ​ ​ ( 510,969 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 43 Table of Contents