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Item 9A. Controls and Procedures

2021-02-17 compared with 2020-02-12 · 850 added, 1276 removed, 1098 unchanged (66% of the section changed)

21 unchanged sentences

Pursuant to General Instruction G(3) to Form 10-K, we incorporate by reference into this Item the information to be disclosed in our definitive proxy statement for our 2021 Annual Meeting of Stockholders.

Directors and Executive Officers

The following table sets forth names, ages and titles of our directors and executive officers as of February 12, 2020:

Chairman of the Board, Director and Chief Executive Officer

President, Director, Chief Financial Officer and Secretary

Senior Vice President— Reserves, Planning and Midstream

Senior Vice President—Finance

Chief Administrative Officer and Regional Senior Vice President

Howard Keenan Jr.

Set forth below is the description of the backgrounds of our directors and executive officers.

Rady has served as our Chief Executive Officer and Chairman of the Board of Directors since May 2004, and he served in the same roles of our predecessor company from its founding in 2002 to its ultimate sale to XTO Energy, Inc.

in April 2005.

Rady has also served as Chief Executive Officer and Chairman of the Board of Directors of Antero Midstream since March 2019, and previously in the same positions at the general partner of Antero Midstream Partners from February 2014 through March 2019 of the general partner of AMGP from April 2017 through March 2019.

Prior to Antero, Mr.

Rady served as President, CEO and Chairman of Pennaco Energy from 1998 until its sale to Marathon in early 2001.

Prior to Pennaco, Mr.

Rady was with Barrett Resources from 1990 until 1998 where he initially was recruited as Chief Geologist in 1990, then served as Exploration Manager, EVP Exploration, President, COO and Director and ultimately CEO.

Rady began his career with Amoco where he served 10 years as a geologist focused on the Rockies and Mid-Continent.

Rady is the managing member of Salisbury Investment Holdings, LLC.

Rady holds a B.A.

in Geology from Western Colorado University and M.Sc.

in Geology from Western Washington University.

Rady’s significant experience as a chief executive of oil and gas companies, together with his training as a geologist and broad industry knowledge, enable Mr.

Rady to provide the board with executive counsel on a full range of business, strategic and professional matters.

has served as our President, Chief Financial Officer and Secretary and as a director since May 2004, and as President and Chief Financial Officer and as a director of our predecessor company from its founding in 2002 to its ultimate sale to XTO Energy, Inc.

in April 2005.

Warren has also served as President and Secretary and as a director of the Board of Directors of Antero Midstream since March 2019, and previously in the same positions at the general partner of Antero Midstream Partners from February 2014 through March 2019 and of the general partner of AMGP from April 2017 through March 2019.

Prior to Antero, Mr.

Warren served as EVP, CFO and Director of Pennaco Energy from 1998 until its sale to Marathon in early 2001.

Warren spent 10 years as a natural resources investment banker focused on equity and debt financing and M&A advisory with Lehman Brothers, Dillon Read and Kidder Peabody.

Warren began his career as a landman in the Gulf Coast region with Amoco, where he spent six years.

Warren is the managing member of Canton Investment Holdings, LLC.

Warren holds a B.A.

from the University of Mississippi, a J.D.

from the University of Mississippi School of Law and an M.B.A.

from the Anderson School of Management at U.C.L.A.

Warren’s significant experience as a chief financial officer of oil and gas companies, together with his experience as an investment banker and broad industry knowledge, enable Mr.

Warren to provide the board with executive counsel on a full range of business, strategic, financial and professional matters.

Patrick Ash has served as our and Antero Midstream’s Senior Vice President - Reserves, Planning and Midstream since June 2019, prior to which he served as our Vice President of Reservoir Engineering and Planning beginning in December 2017 and the same at Antero Midstream beginning with the closing of the Transactions in March 2019.

Prior to the Transactions, Mr.

Ash served as AMGP’s and Antero Midstream Partners’ Vice President of Reservoir Engineering and Planning beginning in December 2017.

Prior to joining us, Mr.

Ash was at Ultra Petroleum for six years in management positions of increasing responsibility, most recently serving as Vice President, Development, including during and after Ultra’s bankruptcy proceedings, from which it emerged in 2017.

In this position he led the reservoir engineering, geoscience, and corporate engineering groups.

From 2001 to 2011 Mr.

Ash served in engineering roles at Devon, NFR Energy and Encana.

Ash holds a B.S.

in Petroleum Engineering from Texas A&M University and a MBA from Washington University in St.

Kennedy has served as our Senior Vice President of Finance and Chief Financial Officer since January 2016, prior to which he served as our Vice President of Finance beginning in August 2013.

Kennedy has also served as Antero Midstream’s Chief Financial Officer and Senior Vice President of Finance since March 2019 and previously served as Chief Financial Officer of Antero Midstream Partners from January 2016, prior to which he served as Vice President of Finance of Antero Midstream Partners beginning in February 2014, as well as the Chief Financial Officer and Senior Vice President of Finance of AMGP from April 2017.

Kennedy was Executive Vice President and Chief Financial Officer of Forest Oil Corporation 2009 to 2013.

From 2001 until 2009, Mr.

Kennedy held various financial positions of increasing responsibility within Forest.

From 1996 to 2001, Mr.

Kennedy was an auditor with Arthur Andersen LLP focusing on the Natural Resources industry.

Kennedy holds a B.S.

in Accounting from the University of Colorado at Boulder.

Schopp has served as our Chief Administrative Officer and Senior Regional Vice President since January 2020, as Chief Administrative Officer, Regional Senior Vice President and Treasurer from January 2016 to December 2019, as Chief Administrative Officer, Regional Vice President and Treasurer from October 2013 to January 2016, as Vice President of Accounting and Administration and Treasurer from January 2005 to September 2013, as Controller and Treasurer from 2003 to 2005 and as our predecessor company’s Vice President of Accounting and Administration and Treasurer from January 2005 until its sale to XTO Energy, Inc.

Schopp has also served as Chief Administrative Officer and Senior Regional Vice President of Antero Midstream since January 2020, prior to which he served as Chief Administrative Officer, Regional Senior Vice President and Treasurer of Antero Midstream beginning in March 2019.

Schopp also served as Chief Administrative Officer, Regional Senior Vice President and Treasurer of AMGP from April 2017 to March 2019, as well as Chief Administrative Officer, Regional Senior Vice President and Treasurer of Antero Midstream Partners from February 2014 to March 2019.

From 2002 to 2003, Mr.

Schopp was an Executive Financial Consultant with Duke Energy Field Services.

From 1993 to 2000, Mr.

Schopp was CFO, Director and ultimately CEO of T-Netix.

From 1980 to 1993, Mr.

Schopp was with KPMG LLP.

As a Senior Manager with KPMG, he maintained an extensive energy and mining practice.

Schopp holds a B.B.A.

from Drake University.

Clark has served as a director since October 2013.

He is Chairman of our Compensation Committee and currently serves as a member of our Nominating & Governance Committee.

Clark has been Chairman of 3 Bear Energy, LLC, a midstream energy company with operations in the Rocky Mountains, since its formation in March 2013, and served as its Chief Executive Officer from March 2013 until 2019.

Prior to the formation of 3 Bear Energy LLC, Mr.

Clark formed, operated and subsequently sold Bear Tracker Energy in February 2013 (to Summit Midstream Partners, LP), a portion of Bear Cub Energy in April 2007 (to Regency Energy Partners, L.P.) and the remaining portion in December 2008 (to GeoPetro Resources Company) and Bear Paw Energy in 2001 (to ONEOK Partners, L.P., formerly Northern Border Partners, L.P.).

Clark was President of SOCO Gas Systems, Inc.

and Vice President-Gas Management for Snyder Oil Corporation from 1988 to 1995.

Clark served as Vice President Gas-Gathering, Processing and Marketing of Ladd Petroleum Corporation, an affiliate of General Electric, from 1985 to 1988.

Prior to 1985, Mr.

Clark held various management positions with NICOR, Inc.

Clark received his Bachelor of Science degree from Bradley University and his Master's Degree in Business Administration from Northern Illinois University.

Clark is a member of the board of trustees of Children's Hospital Colorado Foundation and the board of directors of Judi's House, a Denver charity for grieving children and families and the Boys and Girls Club of Metro Denver.

Clark has significant experience with energy companies, with over 50 years of experience in the industry.

We believe his background and skill set make Mr.

Clark well-suited to serve as a member of our board of directors.

Hardesty has served as a director since October 2013.

He is Chairman of our Nominating & Governance Committee, and he currently serves as a member of our Compensation Committee and Audit Committee.

Hardesty has been the owner of Alta Energy LLC, a consulting business focused on oil and natural gas in the Appalachian Basin and onshore United States, since May 2010.

In May 2010, Mr.

Hardesty retired as president of Dominion E&P, Inc., a subsidiary of Dominion Resources Inc.

D) engaged in the exploration and production of natural gas in North America, a position he had held since September 2007.

Hardesty joined Dominion in 1995 and served as president of Dominion Appalachian Development, Inc.

until 2000 and general

manager and vice president—Northeast Gas Basins until 2007.

Hardesty was a member of the board of Directors of Blue Dot Energy Services LLC from 2011 until its sale to B/E Aerospace in 2013.

From 1982 to 1995, Mr.

Hardesty served successively as vice president, executive vice president and president of Stonewall Gas Company, and from 1978 to 1982, he served as vice president-operations of Development Drilling Corp.

Hardesty received his Bachelor of Science degree from West Virginia University and his Master of Science—Management degree from The George Washington University.

Hardesty served as an active duty officer in the U.S.

Army Security Agency.

Hardesty currently serves on the board of directors of KLX Energy Services Inc.

Hardesty is a director emeritus and past president of the West Virginia Oil & Natural Gas Association and past president of the Independent Oil & Gas Association of West Virginia.

Additionally, Mr.

Hardesty is a trustee and past chairman of the Nature Conservancy of West Virginia and a member of the board of directors of the West Virginia Chamber of Commerce.

Hardesty serves as a member of the Visiting Committee of the Petroleum Natural Gas Engineering Department of the College of Engineering and Mineral Resources at West Virginia University.

Hardesty has significant experience in the oil and natural gas industry, including in our areas of operation.

We believe his background and skill set make Mr.

Hardesty well-suited to serve as a member of our board of directors.

Howard Keenan, Jr.

has served as a director since 2004 and is a member of our Nominating & Governance Committee.

He has also served on the Board of Directors of Antero Midstream since March 2019, and previously as a director at the general partner of Antero Midstream Partners beginning in February 2014, as well as the general partner of AMGP beginning in April 2017.

Keenan has over 40 years of experience in the financial and energy businesses.

Since 1997, he has been a Member of Yorktown Partners LLC, a private investment manager focused on the energy industry.

From 1975 to 1997, he was in the Corporate Finance Department of Dillon, Read & Co.

and active in the private equity and energy areas, including the founding of the first Yorktown Partners fund in 1991.

He is serving or has served as a director of multiple Yorktown portfolio companies and currently serves as a director of the following public companies:

Brigham Minerals, Inc.

and Solaris Oilfield Infrastructure, Inc.

Keenan holds an B.A.

degree cum laude from Harvard College and an M.B.A.

degree from Harvard University.

Keenan has significant experience with energy companies and investments and broad knowledge of the oil and gas industry.

We believe his background and skill set make Mr.

Keenan well-suited to serve as a member of our board of directors.

Korus has served as a director since December 2018.

He is Chairman of our Audit Committee and is a member of our Audit and Nominating & Governance Committees.

Korus previously served on the Board of Directors and Audit Committee of the general partner of Antero Midstream Partners from January 2019 to March 2019.

Korus was also appointed to the Board of Directors of SRC Energy Inc.

in 2016, which was acquired by PDC Energy, Inc.

in January 2020.

In connection with such acquisition, Mr.

Korus was appointed to serve on the Board of Directors of PDC Energy, Inc.

In September 2015, Mr.

Korus retired as senior vice president and Chief Financial Officer of Cimarex Energy Co., a position he had held since 1999.

His responsibilities there included management of accounting, treasury, internal audit, investor relations, capital markets and financial planning and analysis.

Between 1995 and 1999 he was an equity research analyst with Petrie Parkman & Co., a boutique energy investment banking firm that subsequently merged into Merrill Lynch.

From 1982 to 1995 Mr.

Korus was with Apache Corporation, where he held positions of increasing responsibility in management information systems, corporate planning and investor relations.

Korus began his business career in 1980 with a large public accounting firm (Arthur Andersen) as a management information systems consultant.

Korus previously served as Chairman of the University of North Dakota (UND) Business School Advisory Council.

Paul graduated from UND with a Bachelor's of Science degree in Economics in 1978 and a Master's of Science degree in Accounting in 1980.

He is currently a member of the National Association of Corporate Directors.

Korus has extensive knowledge of the energy industry as a former executive officer and current director of a public energy company, and he also has experience in technical accounting and auditing matters.

We believe his background and skill set make Mr.

Korus well suited to serve as a member of our board of directors.

McConnell has served as a director since February 2018 and is a member of our Nominating & Governance Committee.

She has served as the President of Colorado State University since March 2019.

She was previously Provost and Vice President for Academic Affairs at West Virginia University from 2014 to 2019, where she was responsible for the administration of all academic policies, programs, facilities and budgetary matters.

From 2008 to 2014, she served as Dean of the West Virginia University College of Law, where she helped raise $36 million in capital campaign funds, expand multidisciplinary opportunities and develop experiential and clinical programs and facilities.

As Dean, she also helped implement energy research initiatives including the Energy and Sustainable Development and Land Use Sustainability Clinic at the College of Law, West Virginia University’s Energy Institute and the Energy finance emphasis in West Virginia University’s College of Business & Economics.

McConnell currently serves on the National Collegiate Athletic Association Division One Committee on Infractions and as Chair of the Board of Trustees of the Nature Conservancy in West Virginia.

From 2016 to 2017, Ms.

McConnell served as President of the West Virginia Bar Association.

McConnell holds a B.A.

from The Evergreen State College, a J.D.

from Antioch School of Law and LL.M.

from Georgetown University Law Center.

McConnell’s has broad legal and management experience and deep local ties to the West Virginia community in which the Company operates.

We believe his background and skill set make Ms.

McConnell well-suited to serve as a member of the board of directors.

Vicky Sutil has served as a director since October 2019 and is a member of our Compensation Committee and our Nominating & Governance Committee.

Since 2017, Ms.

Sutil has served as Strategic Planning Advisor to SK E&P Company, prior to which she served as Vice President of Commercial Analysis for CRC Marketing, Inc., an affiliate of California Resources Corporation, from 2014 to 2016.

Prior to that, Ms.

Sutil worked for Occidental Petroleum in a variety of corporate and asset level capacities, both upstream and midstream, from 2000 to 2014.

She began her career serving in a number of project management and commercial roles across both the upstream and downstream businesses at ARCO and Mobil Oil between 1988 and 2000.

Sutil served as Occidental’s representative on the boards of the general partners of Plains All American Pipeline, L.P.

and Plains GP Holdings, L.P.

until 2015, and currently serves on the board and as a member of the audit committee of Delek U.S.

Sutil received a Bachelor of Science in Mechanical Engineering with a petroleum emphasis from the University of California at Berkeley and a Master of Business Administration degree from the Pepperdine University School of Business and Management.

Sutil has significant experience in the oil and natural gas industry.

We believe her background and skill set make Ms.

Sutil well-suited to serve as a member of our board of directors.

has served as a director since October 2019 and is a member of our Audit Committee and our Compensation Committee.

Tyree is currently the Chairman of Northwoods Energy LLC, an upstream oil and gas company that he founded in January 2018.

Previously, Mr.

Tyree was a co-founder and served as President, Chief Financial Officer and a Board member of Vantage Energy, LLC from 2006 until its sale to Rice Energy Inc.

in October 2016.

Prior to Vantage, he served as Chief Financial Officer of Bill Barrett Corporation from 2003 through 2006.

Before transitioning to the oil and gas industry at Bill Barrett Corporation, Mr.

Tyree was an investment banker at Goldman, Sachs & Co.

from 1989 to 2003, focused on strategic advisory and financing transactions primarily with energy and industrial companies.

Tyree currently serves on the board of Bonanza Creek Energy, an oil and gas company focused on the DJ Basin of Colorado.

He received his Bachelor of Arts from Colgate University and currently serves as a member of the Colgate Board of Trustees.

Tyree received a Master of Business Administration degree from the Wharton School at the University of Pennsylvania.

Tyree has significant experience in the oil and natural gas industry.

We believe his background and skill set make Mr.

Tyree well-suited to serve as a member of our board of directors.

Code of Ethics

8 unchanged sentences

Exhibits and Financial Statement Schedules

EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

(a)(1) and (a)(2) Financial Statements and Financial Statement Schedules

6 unchanged sentences

001-36120) filed on October 17, 2013) .

Description of Exhibit

Amended and Restated Bylaws of Antero Resources Corporation (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K (Commission File No.

001-36120) filed on October 17, 2013).

Indenture related to the 5.375% Senior Notes due 2021, dated as of November 5, 2013, by and among Antero Resources Finance Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (Commission File No.

001-36120) filed on November 7, 2013).

Form of 5.375% Senior Note due 2021 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (Commission File No.

001-36120) filed on November 7, 2013).

First Supplemental Indenture related to the 5.375% Senior Notes due 2021, dated as of December 31, 2013, by and among Antero Resources Finance Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.17 to the Company's Annual Report on Form 10-K (Commission File No.

001-36120) filed on February 27, 2014).

Second Supplemental Indenture related to the 5.375% Senior Notes due 2021, dated as of March 18, 2014, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on May 7, 2014).

Third Supplemental Indenture related to the 5.375% Senior Notes due 2021, dated November 24, 2014, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee.

Fourth Supplemental Indenture related to the 5.375% Senior Notes due 2021, dated January 21, 2015, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee.

Fifth Supplemental Indenture related to the 5.375% Senior Notes due 2021, dated March 12, 2019, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on May 1, 2019).

Indenture related to the 5.125% Senior Notes due 2022, dated as of May 6, 2014, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (Commission File No.

4 unchanged sentences

333-200605) filed on November 26, 2014).

Second Supplemental Indenture related to the 5.125% Senior Notes due 2022, dated as of January 21, 2015, by and

Description of Exhibit

among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.6 to the Company's Registration Statement on Form S-4 (Commission File No.

Second Supplemental Indenture related to the 5.125% Senior Notes due 2022, dated as of January 21, 2015, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.6 to the Company's Registration Statement on Form S-4 (Commission File No.

333-200605) filed on January 22, 2015).

1 unchanged sentence

001-36120) filed on May 1, 2019).

Fourth Supplemental Indenture related to the 5.125% Senior Notes due 2022, dated June 3, 2020, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on July 29, 2020).

Indenture related to the 5.625% Senior Notes due 2023, dated as of March 17, 2015, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (Commission File No.

4 unchanged sentences

001-36120) filed on May 1, 2019).

Second Supplemental Indenture related to the 5.625% Senior Notes due 2023, dated June 3, 2020, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on July 29, 2020).

Indenture related to the 5.0% Senior Notes due 2025, dated as of December 21, 2016, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (Commission File No.

4 unchanged sentences

001-36120) filed on May 1, 2019).

Second Supplemental Indenture related to the 5.0% Senior Notes due 2025, dated June 3, 2020, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on July 29, 2020).

Indenture related to the 4.25% Convertible Senior Notes due 2026, dated as of August 21, 2020, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee

Description of Exhibit

(incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (Commission File No.

001-36120) filed on August 21, 2020).

Form of 4.25% Convertible Senior Note due 2026 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (Commission File No.

001-36120) filed on August 21,2020).

Indenture related to the 8.375% Senior Notes due 2026, dated as of January 4, 2021, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (Commission File No.

001-36120) filed on January 4, 2021).

Form of 8.375% Senior Note due 2026 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Commission File No.

001-36120) filed on January 4, 2021).

Registration Rights Agreement, dated as of October 16, 2013, by and among Antero Resources Corporation and the owners of the membership interests in Antero Resources Investment LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission File No.

001-36120) filed on October 17, 2013).

Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended.

Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.20 to the Company’s Annual Report on Form 10-K (Commission File No.

001-36120) filed on February 12, 2020).

Indenture related to the 7.625% Senior Notes due 2029, dated as of January 26, 2021, by and among Antero Resources Corporation, the several guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (Commission File No.

001-36120) filed on February 1, 2021).

Form of 7.625% Senior Note due 2029 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Commission File No.

001-36120) filed on February 1, 2021).

Contribution Agreement, dated as of October 16, 2013, by and between Antero Resources Corporation and Antero Resources Midstream LLC (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (Commission File No.

4 unchanged sentences

333-164876) filed on October 11, 2013).

Second Amended and Restated Gathering and Compression Agreement, dated as of December 8, 2019, by and between Antero Resources Corporation and Antero Midstream LLC.

Second Amended and Restated Gathering and Compression Agreement, dated as of December 8, 2019, by and between Antero Resources Corporation and Antero Midstream LLC (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K (Commission File No.

001-36120) filed on February 12, 2020).

Second Amended and Restated Right of First Offer Agreement, dated as of February 13, 2018, by and between Antero Resources Corporation and Antero Midstream LLC (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q (Commission File No.

2 unchanged sentences

001-36719) filed on November 17, 2014).

Amended and Restated Secondment Agreement, effective as of March 13, 2019, by and between Antero Midstream Corporation, Antero Midstream Partners LP, Antero Midstream Partners GP LLC, Antero Midstream LLC, Antero Water LLC, Antero Treatment LLC and Antero Resources Corporation.

Amended and Restated Water Services Agreement dated as of February 12, 2019, by and between Antero Resources Corporation and Antero Water LLC (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on

Description of Exhibit

Form 10-K (Commission File No.

001-36120) filed on February 12, 2020).

Fifth Amended and Restated Credit Agreement, dated as of October 26, 2017, by and among Antero Resources Corporation, the lenders party thereto, and JPMorgan Chase Bank N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (Commission File No.

Second Amended and Restated Services Agreement, effective as of March 13, 2019, by and among Antero Midstream Partners LP, Antero Midstream Corporation, Antero Midstream Partners GP LLC and Antero Resources Corporation (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K (Commission File No.

001-36120) filed on February 12, 2020).

001-36120) filed on February 13, 2019).

Description of Exhibit

reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on November 1, 2017).

1 unchanged sentence

001-36120) filed on December 28, 2018).

Lender Certificate, dated October 29, 2019, delivered by Royal Bank of Canada, and agreed to and accepted by JPMorgan Chase Bank, N.A., as Administrative Agent, and Antero Resources Corporation.

Second Amendment to Fifth Amended and Restated Credit Agreement, dated as of December 20, 2019, among Antero Resources Corporation, as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.

Lender Certificate, dated October 29, 2019, delivered by Royal Bank of Canada, and agreed to and accepted by JPMorgan Chase Bank, N.A., as Administrative Agent, and Antero Resources Corporation (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K (Commission File No.

001-36120) filed on February 12, 2020).

Third Amendment to Fifth Amended and Restated Credit Agreement, dated as of April 29, 2020, among Antero Resources Corporation, as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on April 29, 2020).

Fourth Amendment to Fifth Amended and Restated Credit Agreement, dated as of June 5, 2020, among Antero Resources Corporation, as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on July 29, 2020).

Fifth Amendment to Fifth Amended and Restated Credit Agreement, dated as of June 12, 2020, among Antero Resources Corporation, as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on July 29, 2020).

Form of Amended and Restated Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission File No.

12 unchanged sentences

001-36120) filed on July 31, 2019).

Voting Agreement, dated as of October 9, 2018, by and between Antero Midstream GP LP and Antero Resources Corporation (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (Commission File No.

001-36120) filed on October 10, 2018).

Amendment No.

1 to the Voting Agreement by and between Antero Midstream GP LP and Antero Resources Corporation, dated as of March 11, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission File No.

001-36120) filed on March 13, 2019).

Stockholders’ Agreement, dated as of October 9, 2018, by and among Antero Midstream GP LP, Arkrose Subsidiary Holdings LLC, Warburg Pincus Private Equity X O&G, L.P., Warburg Pincus X Partners, L.P., Warburg Pincus Private Equity VIII, LP, Warburg Pincus Netherlands Private Equity VIII C.V.I, WP-WPVIII Investors, L.P., Yorktown Energy Partners V, L.P., Yorktown Energy Partners VI, L.P., Yorktown Energy Partners VII, L.P., Yorktown Energy Partners VIII, L.P., Paul M.

Form of Stock Award Grant Notice and Stock Award Agreement (Form for Non-Employee Directors) under the Antero Resources Corporation 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form S-8 (Commission File No.

001-36120) filed on July 9, 2020).

WP-WPVIII Investors, L.P., Yorktown Energy Partners V, L.P., Yorktown Energy Partners VI, L.P., Yorktown Energy Partners VII, L.P., Yorktown Energy Partners VIII, L.P., Paul M.

Rady, Mockingbird Investment, LLC, Glen C.

1 unchanged sentence

001-36120) filed on October 10, 2018).

Description of Exhibit

Registration Rights Agreement, dated March 12, 2019, by and among Antero Midstream Corporation, the Company, Arkrose Subsidiary Holdings LLC, Glen C.

2 unchanged sentences

001-36120) filed on March 13, 2019).

Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (Form for Special Retention Awards) under the Antero Resources Corporation Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on April 29, 2020).

Form of Retention Award Grant Notice and Retention Award Agreement under the Antero Resources Corporation Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on April 29, 2020).

Antero Resources Corporation 2020 Long-Term Incentive Plan, effective June 17, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission File No.

001-36120) filed on June 23, 2020).

Form of Retention Award Grant Notice and Retention Award Agreement under the Antero Resources Corporation 2020 Long-Term Incentive Plan (Employees) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on October 28, 2020).

Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the Antero Resources Corporation 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on October 28, 2020).

Form of Performance Share Unit Grant Notice and Performance Share Unit Agreement under the Antero Resources Corporation 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (Commission File No.

001-36120) filed on October 28, 2020).

Subsidiaries of Antero Resources Corporation.

List of Guarantor Subsidiaries.

Consent of KPMG LLP.

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Consent of DeGolyer and MacNaughton.

Certification of the Company’s Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (18

Description of Exhibit

Certification of the Company’s Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C.

Section 7241).

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February 17, 2021

/s/ JACQUELINE C.

February 17, 2021

Jacqueline C.

/s/ VICKY SUTIL

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Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Equity

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

To the Stockholders and the Board of Directors

Antero Resources Corporation:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Antero Resources Corporation and subsidiaries (the Company) as of December 31, 2018 and 2019, the related consolidated statements of operations and comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framew ork (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have audited the accompanying consolidated balance sheets of Antero Resources Corporation and subsidiaries (the Company) as of December 31, 2019 and 2020, the related consolidated statements of operations and comprehensive loss, equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S.

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Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting within Item 9A.

Controls and Procedures .

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of the adoption of ASC 842, Leases

As discussed in Note 12 to the consolidated financial statements, the Company adopted ASU 2016-02, Leases (Topic 842) on January 1, 2019.

As a result of this adoption the Company recognized $3,437,685 thousand of right of use assets and liabilities on its balance sheet as of January 1, 2019.

We identified the assessment of the adoption of Topic 842, Leases as a critical audit matter.

There was subjectivity and complexity in the determination of an appropriate method and model used to calculate the Company’s incremental borrowing rates, which were used to discount the unpaid lease payments to present value.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s process over implementing the new accounting standard, including controls related to the determination of the Company’s incremental borrowing rates.

We involved valuation professionals with specialized skills and knowledge who assisted in:

● evaluating the methodology used by the Company to determine the incremental borrowing rates;

● comparing the assumptions used to determine the incremental borrowing rates to publicly available market data;

● checking the Company’s application of these assumptions to the calculation of its incremental borrowing rates.

Assessment of the impact of estimated oil and gas reserves on depletion expense related to proved oil and gas properties

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Estimated oil and gas reserves on depletion expense related to proved oil and gas properties

As discussed in Note 2 to the consolidated financial statements, the Company calculates depletion expense related to proved oil and gas properties using the units-of-production method.

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Complex auditor judgment was required in evaluating the Company’s estimate of total proved oil and gas reserves, which is an input in the depletion expense calculation.

Auditor judgment was also required to evaluate the assumptions used by the Company related to forecasted production, operating costs, and forecasted oil and gas prices inclusive of market differentials.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s depletion calculation process, and the estimation of proved oil and gas reserves, including

controls related to selection of inputs to the reserves estimate.

We evaluated the competence, capabilities, and objectivity of the internal reservoir engineers who estimated the proved oil and gas reserves and the external reservoir engineering specialists engaged by the Company.

We analyzed and recalculated the depletion expense for compliance with industry and regulatory standards.

Auditor judgment was also required to evaluate the significant assumptions used by the Company related to forecasted production, estimated future operating costs, and oil and gas prices inclusive of market differentials because changes to these assumptions could have a significant impact on the estimated oil and gas reserves.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s depletion expense process, including certain controls related to the estimation of proved oil and gas reserves used in the depletion expense calculation.

We evaluated (1) the professional qualifications of the Company’s internal reservoir engineers as well as the external reservoir engineering specialists and external engineering firm, (2) the knowledge, skill, and ability of the Company’s internal and external reservoir engineers, and (3) the relationship of the external reservoir engineering specialists and external engineering firm to the Company.

We analyzed and recalculated depletion expense for compliance with industry and regulatory standards.

We assessed the methodology used by the Company’s internal reservoir engineers to estimate proved oil and gas reserves and the methodology used by the external reservoir engineering specialists to evaluate those reserve estimates for compliance with industry and regulatory standards.

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We read and considered the findings of the Company’s external reservoir engineering specialists in connection with our evaluation of the Company’s reserve estimates.

Assessment of the fair value of proved and unproved oil and gas properties in the Utica Shale

As discussed in Note 1 to the consolidated financial statements, the Company determined that certain oil and gas properties were impaired and recorded impairment charges related to proved properties of $881 million and related to unproved properties of $393 million.

Specifically, the Company estimated the fair value of its Utica Shale proved and unproved oil and gas properties based on sales of other comparable properties.

For the Utica Shale proved oil and gas properties, the Company also adjusted the comparable properties for estimated future commodity prices to take into account changes in the commodity pricing environment.

We identified the assessment of the fair value of proved and unproved oil and gas properties in the Utica Shale as a critical audit matter.

Complex auditor judgment was required in evaluating the Company’s estimated fair value of proved and unproved oil and gas properties in the Utica Shale, specifically in evaluating the Company’s valuation methodology as well as the comparable transactions selected by the Company for use in the calculation.

Additionally, auditor judgment was required in evaluating the estimated future commodity pricing adjustments used by the Company to determine fair value of the Utica Shale proved oil and gas properties.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s process for determining the fair value of its Utica Shale proved and unproved oil and gas properties, including the methodology used, the comparable transactions selected and the pricing adjustments applied to comparable transactions for those proved oil and gas properties.

We checked the pricing adjustments related to changes in the commodity pricing environment based on publicly available pricing information.

We also evaluated the sales of other comparable proved and unproved oil and gas properties used in the valuation.

We involved valuation professionals with specialized skills and knowledge to evaluate the methodology used by the Company, to evaluate the comparable transactions selected and to assess the pricing adjustments made to those comparable transactions for those proved oil and gas properties.

We have served as the Company’s auditor since 2003.

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Consolidated Balance Sheets

December 31, 2018 and 2019

(In thousands, except per share amounts)

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Proved properties

Water handling and treatment systems

Gathering systems and facilities

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Derivative instruments

Investments in unconsolidated affiliates

Investment in unconsolidated affiliate

Liabilities and Equity

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Short-term lease liabilities

Deferred revenue, VPP

Other current liabilities

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Long-term lease liabilities

Deferred revenue, VPP

Other liabilities

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Additional paid-in capital

Accumulated earnings

Accumulated earnings (deficit)

Total stockholders' equity

Noncontrolling interests in consolidated subsidiary

Noncontrolling interests

Total liabilities and equity

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ANTERO RESOURCES CORPORATION

Consolidated Statements of Operations and Comprehensive Income (Loss)

Years Ended December 31, 2017, 2018 and 2019

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

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Gathering, compression, water handling and treatment

Marketing derivative fair value gains (losses)

Total revenue and other

Marketing derivative fair value gains

Amortization of deferred revenue, VPP

Total revenue

Operating expenses:

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Depletion, depreciation, and amortization

Loss on sale of assets

Accretion of asset retirement obligations

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Contract termination and rig stacking

Loss on sale of assets

Total operating expenses

Operating income (loss)

Other income (expenses):

Water earnout

Other income (expense):

Interest expense, net

Equity in earnings (loss) of unconsolidated affiliates

Loss on the sale of equity investment shares

Impairment of equity investments

Gain on early extinguishment of debt

Gain on deconsolidation of Antero Midstream Partners LP

Interest expense, net

Gain (loss) on early extinguishment of debt

Water earnout

Loss on the sale of equity method investment shares

Impairment of equity method investment

Transaction expense

Total other income (expenses)

Income (loss) before income taxes

Loss before income taxes

( 1,657,893 )

Provision for income tax benefit

Net income (loss) and comprehensive income (loss) including noncontrolling interests

Net loss and comprehensive loss including noncontrolling interests

( 1,260,411 )

net income and comprehensive income attributable to noncontrolling interests

Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation

Income (loss) per common share—basic

Income (loss) per common share—assuming dilution

Net loss and comprehensive loss attributable to Antero Resources Corporation

( 1,267,897 )

Loss per share—basic

Loss per share—diluted

Weighted average number of shares outstanding:

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Consolidated Statements of Equity

Years Ended December 31, 2017, 2018 and 2019

(In thousands)

Additional paid-

Noncontrolling

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Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes

Issuance of common units by Antero Midstream Partners LP, net of underwriter discounts and offering costs

Issuance of common units by Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes

Sale of common units of Antero Midstream Partners LP held by Antero Resources Corporation, net of tax

Equity-based compensation

Net income and comprehensive income

Effects of changes in ownership interests in consolidated subsidiaries

( 1,005,196 )

Distributions to noncontrolling interests

Repurchases and retirements of common stock

Equity-based compensation

Net income (loss) and comprehensive income (loss)

Balances, December 31, 2018

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Issuance of common units by Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes

Effect of deconsolidation of Antero Midstream Partners LP

( 1,120,916 )

Distributions to noncontrolling interest

Repurchases and retirements of common stock

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Net income (loss) and comprehensive income (loss)

Effects of changes in ownership interests in consolidated subsidiaries

Distributions to noncontrolling interests

Balances, December 31, 2019

Issuance of common units in Martica Holdings, LLC

Equity component of 2026 Convertible Notes, net

Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes

Issuance of common units by Antero Midstream Partners LP upon vesting of equity-based compensation awards, net of units withheld for income taxes

Distributions to noncontrolling interest

Repurchases and retirements of common stock

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Net income (loss) and comprehensive income (loss)

Distributions to noncontrolling interests

Effect of deconsolidation of Antero Midstream Partners LP

( 1,267,897 )

( 1,260,411 )

Balances, December 31, 2020

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Consolidated Statements of Cash Flows

Years Ended December 31, 2017, 2018 and 2019

(In thousands)

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Cash flows provided by (used in) operating activities:

Net income (loss) and comprehensive income (loss) including noncontrolling interests

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net loss including noncontrolling interests

( 1,260,411 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depletion, depreciation, amortization, and accretion

Commodity derivative fair value (gains) losses

Commodity derivative fair value losses (gains)

Gains on settled commodity derivatives

Premium paid on derivative contracts

Premium paid on derivative contract

Proceeds from derivative monetizations

Marketing derivative fair value gains

Gains on settled marketing derivatives

Deferred income tax benefit

Marketing derivative fair value gains

Loss on sale of assets

Equity-based compensation expense

Loss (gain) on early extinguishment of debt

Loss on sale of Antero Midstream Corporation shares

Deferred income tax benefit

Gain on early extinguishment of debt

Loss on the sale of equity method investment shares

Equity in (earnings) loss of unconsolidated affiliates

Water earnout

Distributions/dividends of earnings from unconsolidated affiliates

Gain on deconsolidation of Antero Midstream Partners LP

( 1,406,042 )

Distributions/dividends of earnings from unconsolidated affiliates

Amortization of deferred revenue

Amortization of debt issuance costs, debt discount, debt premium and other

Changes in current assets and liabilities:

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Cash flows provided by (used in) investing activities:

Additions to proved properties

Additions to unproved properties

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( 1,254,118 )

Additions to water handling and treatment systems

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Additions to other property and equipment

Settlement of water earnout

Investments in unconsolidated affiliates

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Proceeds from the Antero Midstream Partners LP Transactions

Change in other assets

Proceeds from asset sales

Proceeds from VPP sale, net

Change in other assets

Net cash used in investing activities

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( 1,041,490 )

Cash flows provided by (used in) financing activities:

Issuance of common units by Antero Midstream Partners LP

Proceeds from sale of common units of Antero Midstream Partners LP held by Antero Resources Corporation

Repurchases of common stock

Issuance of senior notes by Antero Midstream Partners LP

Issuance of convertible notes

Repayment of senior notes

Borrowings on bank credit facilities, net

Payments of deferred financing costs

( 1,219,019 )

Borrowings (repayments) on bank credit facilities, net

Payment of debt issuance costs

Sale of noncontrolling interest

Distributions to noncontrolling interests in Antero Midstream Partners LP

Distributions to noncontrolling interests in Martica Holdings LLC

Employee tax withholding for settlement of equity compensation awards

Net cash provided by financing activities

Antero Midstream Partners LP cash at deconsolidation

Net cash provided by (used in) financing activities

Effect of deconsolidation of Antero Midstream Partners LP

Net decrease in cash and cash equivalents

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Consolidated Statements of Cash Flows

Years Ended December 31, 2017, 2018 and 2019

(In thousands)

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Notes to Consolidated Financial Statements

Years Ended December 31, 2017, 2018 and 2019

(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.

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 development, production, exploration 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.

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therefore, its net income or loss is equal to its comprehensive income or loss.

Operating results for the year ended December 31, 2019 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, and other factors.

(b) Principles of Consolidation

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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 to the consolidated financial statements), our ownership of Antero Midstream Partners common units represented approximately a 53 % limited partner interest in Antero Midstream Partners, and we consolidated Antero Midstream Partners’ financial position and results of operations into our consolidated financial statements.

The Transactions (defined in Note 3 to the consolidated financial statements) resulted in the exchange of the limited partner interest we owned in Antero Midstream Partners for common stock of Antero Midstream Corporation representing an approximate 31 % interest as of March 13, 2019.

As a result, we no longer hold a controlling interest in Antero Midstream Partners and we now have an interest in Antero Midstream Corporation that provides significant influence, but not control, over Antero Midstream Corporation.

Prior to the Closing (defined in Note 3—Deconsolidation of Antero Midstream Partners LP to the 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 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 representing an approximate 31 % interest as of March 13, 2019.

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.

On December 16, 2019, the Company sold 19,377,592 shares of Antero Midstream Corporation’s common stock to Antero Midstream at a price of $ 5.1606 per share, which shares were thereafter cancelled by Antero Midstream Corporation, resulting in aggregate proceeds to the Company of $ 100 million.

This reduced Antero’s interest in Antero Midstream Corporation to approximately 28.7 % at December 31, 2019.

See Note 3 to the consolidated financial statements for further discussion of the Transactions.

All significant intercompany accounts and transactions have been eliminated in the Company’s consolidated financial statements.

The noncontrolling interest in the Company’s consolidated financial statements represents the interests in Antero Midstream Partners, which were owned by the public prior to the Transactions, and the incentive distribution rights in Antero Midstream Partners, in both cases during the periods prior to the Transactions.

Noncontrolling interests in consolidated subsidiaries is included as a component of equity in the Company’s consolidated balance sheets.

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

As of December 31, 2019 and 2020, the Company had a 28.7 % and 29.2 % interest, respectively, in Antero Midstream Corporation.

See Note 6—Equity Method Investments and Note 3—Deconsolidation of Antero Midstream Partners LP to the consolidated financial statements for further discussion on equity method investments and the Transactions, respectively.

For the year ended December 31, 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 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);

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

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 Investments in unconsolidated affiliates on the Company’s consolidated balance sheets.

Income from investees that are accounted for under the equity method is included in Equity in earnings of unconsolidated affiliates on the Company’s consolidated statements of operations and cash flows.

When Antero records its proportionate share of net income, it increases equity income in the statements of operations and comprehensive income (loss) 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 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.

● 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 consolidated financial statements.

The noncontrolling interest in the Company’s consolidated financial statements for the years ended December 31, 2018 and 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 consolidated financial statements for the year ended December 31, 2020 represents the interest in Martica owned by third parties.

See Note 4—Transactions to the consolidated financial statements 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 method 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 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 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 method 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.

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The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect revenues, expenses, assets, and liabilities, as well as the disclosure of contingent assets and liabilities.

The preparation of 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.

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Reserve estimates, by their nature, are inherently imprecise.

Other items in the Company’s 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.

Other items in the Company’s consolidated financial statements that involve the use of significant estimates include derivative assets and liabilities, accrued revenue, deferred and current income taxes, asset retirement obligations and commitments and contingencies.

(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 transportation capacity to other regions of the country, the level of imports to and exports from the United States, and various other factors.

Price fluctuations can result from variations in weather, levels of production, availability of storage capacity 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.

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The Company classifies book overdrafts in accounts payable and revenue distributions payable within its consolidated balance sheets, and classifies the change in accounts payable associated with book overdrafts as an operating activity within its consolidated statements of cash flows.

As of December 31, 2019, the book overdraft included within accounts payable and revenue distributions payable were $ 7 million and $ 18 million, respectively.

As of December 31, 2020, the book overdraft included within accounts payable and

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

revenue distributions payable were $ 11 million and $ 15 million, respectively.

As of December 31, 2019, the book overdraft included within accounts payable and revenue distributions payable were $ 7 million and $ 18 million, respectively.

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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,

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

but charged to expense if the Company determines that the well does not contain reserves in commercially viable quantities.

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 years ended December 31, 2017 and 2018.

During the year ended December 31, 2019, we 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.

During the year ended December 31, 2019, the Company recorded an impairment expense of $ 26 million for design and initial costs related to pads that are no longer planned to be placed into service.

The Company incurred no such expenses during the years ended December 31, 2018 and 2020.

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.

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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, and future plans to develop acreage, as well as drilling results, and reservoir performance of wells in the area.

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.

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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 charge 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, future commodity prices, future production estimates, and anticipated capital expenditures, using a commensurate discount rate.

During the year ended December 31, 2019, the carrying amount of the Utica Shale exceeded the estimated undiscounted future cash flows based on future commodity prices at September 30, 2019.

We estimated the fair value of the Utica Shale assets based on sales of other properties.

As a result, the Company recorded an impairment charge of $ 881 million related to proved properties in the Utica Shale during the year ended December 31, 2019.

The Company did not record any impairment expenses associated with its proved properties during the years ended December 31, 2017 and 2018, nor did it incur any impairment expenses related to proved properties in the Marcellus Shale during the year ended December 31, 2019.

At December 31, 2019, the Company did not have capitalized costs related to exploratory wells-in-progress that have been deferred for longer than one year pending determination of proved reserves.

The provision for depletion of oil and gas properties is calculated on a geological reservoir basis using the units-of- production method.

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.

The carrying amount of the Company’s proved properties in the Utica 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 third quarter of 2019.

The Company did not incur any impairment expenses related to proved properties in the Utica Shale for the years ended December 31, 2018 and 2020.

The Company did not record any impairment expenses associated with its proved properties in the Marcellus Shale during the years ended December 31, 2018, 2019 and 2020.

As of December 31, 2020, the Company did not have capitalized costs related to exploratory wells-in-progress that have been deferred for longer than one year pending determination of proved reserves.

Depletion of oil and gas properties is calculated on a geological reservoir basis using the units-of- production method.

Depletion expense for oil and gas properties was $ 832 million, $ 884 million, and $ 854 million for the years ended December 31, 2018, 2019 and 2020, respectively.

(g) Gathering Pipelines, Compressor Stations, and Water Handling and Treatment Systems

Expenditures for construction, installation, major additions, and improvements to property, plant, and equipment that are not directly related to production are capitalized, whereas minor replacements, maintenance, and repairs are expensed as incurred.

Gathering pipelines and compressor stations are depreciated using the straight-line method over their estimated useful lives of 50 years .

Water handling and treatment systems are depreciated using the straight-line method over their estimated useful lives of 5 to 20 years .

Depreciation expense for gathering pipelines, compressor stations, and water handling and treatment systems was $ 120 million, $ 131 million, and $ 22 million for the years ended December 31, 2017, 2018 and 2019, respectively.

A gain or loss is recognized upon the sale or disposal of property and equipment.

Due to the deconsolidation of Antero Midstream Partners, effective March 13, 2019, gathering pipelines, compressor stations, and water handling and treatment systems owned by Antero Midstream Partners are no longer included in the consolidated financial statements.

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.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

(h) Impairment of Long-Lived Assets Other than Oil and Gas Properties

(g) Impairment of Long-Lived Assets Other than Oil and Gas Properties

The Company evaluates its long- lived assets other than oil and gas properties for impairment when events or changes in circumstances indicate that the related carrying values of the assets may not be recoverable.

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If the carrying values of the assets are deemed not recoverable, the carrying values are reduced to the estimated fair values, which are based on discounted future cash flows using assumptions as to revenues, costs, and discount rates typical of third party market participants, which is a Level 3 fair value measurement.

Impairment of long-lived assets other than oil and gas properties were $ 23 million, $ 10 million and $ 15 million during the years ended December 31, 2017, 2018 and 2019, respectively, and were associated with midstream assets.

(i) Other Property and Equipment

Other property and equipment assets are depreciated using the straight-line method over their estimated useful lives, which range from 2 to 20 years .

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Impairment of long-lived assets other than oil and gas properties were $ 10 million and $ 15 million for the years ended December 31, 2018 and 2019, respectively, and were associated with midstream assets.

There were no such impairments for the year ended December 31, 2020.

(h) Other Property and Equipment

Other property and equipment assets are depreciated using the straight-line method over their estimated useful lives, which range from two to 20 years .

Depreciation expense for other property and equipment was $ 9 million, $ 8 million, and $ 8 million for the years ended December 31, 2018, 2019 and 2020, respectively.

A gain or loss is recognized upon the sale or disposal of other property and equipment.

(j) Deferred Financing Costs

Deferred financing costs represent loan origination fees and other initial borrowing costs.

Such costs are capitalized and included in Other assets on the consolidated balance sheets if related to the Company’s revolving credit facilities, and are included as a reduction to Long-term debt on the consolidated balance sheets if related to the issuance of the Company’s senior notes.

(i) Debt Issuance Costs

Debt issuance costs represent loan origination fees and other initial borrowing costs.

Such costs are capitalized and included in Other assets on the consolidated balance sheets if related to the Company’s revolving credit facility, and are included as a reduction to Long-term debt on the consolidated balance sheets if related to the issuance of the Company’s senior notes and 2026 Convertible Notes (as defined below in Note 8—Long-Term Debt).

These costs are amortized over the term of the related debt instrument.

The Company charges expense for unamortized deferred financing costs if credit facilities are retired prior to their maturity date.

At December 31, 2019, the Company had $ 7 million of unamortized deferred financing costs included in other long-term assets, and $ 19 million of unamortized deferred financing costs included as a reduction to long-term debt.

The Company charges expense for unamortized debt issuance costs if the credit facility is retired prior to its maturity date.

As of December 31, 2020, the Company had $ 3 million of unamortized debt issuance costs included in other long-term assets, and $ 16 million of unamortized debt issuance costs included as a reduction to long-term debt.

As of December 31, 2019, the Company had $ 7 million of unamortized debt issuance costs included in other long term assets and $ 19 million of unamortized debt issuance costs included as a reduction to long-term debt.

The amounts amortized and the write-off of previously deferred debt issuance costs were $ 13 million, $ 11 million, and $ 8 million for the years ended December 31, 2018, 2019 and 2020, respectively.

(k) Derivative Financial Instruments

(j) 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.

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The Company’s derivatives have not been designated as hedges for accounting purposes.

(l) Asset Retirement Obligations

(k) Asset Retirement Obligations

The Company is obligated to dispose of certain long- lived assets upon their abandonment.

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The liability is accreted at the end of each period through charges to operating expense.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

(m) Environmental Liabilities

(l) Environmental Liabilities

Environmental expenditures that relate to an existing condition caused by past operations, and that do not contribute to current or future revenue generation, are expensed as incurred.

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As of December 31, 2019 and 2020, the Company did not have a material amount accrued for any environmental liabilities, nor has the Company been cited for any environmental violations that it believes are likely to have a material adverse effect on its financial position, results of operations, or cash flows.

(n) Natural Gas, NGLs, and Oil Revenues

On May 28, 2014, the FASB issued Accounting Standards Update (“ASU”) No.

2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.

The ASU replaced most existing revenue recognition guidance in GAAP when it became effective and was incorporated into GAAP as Accounting Standards Codification (“ASC”) Topic 606.

The Company elected the modified retrospective transition method when new standard became effective for the Company on January 1, 2018.

The adoption of ASU 2014-09 did not have a material impact on the Company’s financial results.

Our 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.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

(m) 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 the Company’s natural gas.

Sales of natural gas, NGLs, and oil are recognized when the Company satisfies a performance obligation by transferring control of a product to a customer.

Payment is generally received in the month following the sale.

Under our natural gas sales contracts, we deliver natural gas to the purchaser at an agreed upon delivery point.

Natural gas is transported from our wellheads to delivery points specified under sales contracts.

To deliver natural gas to these points, Antero Midstream Corporation or third parties gather, compress, process and transport our natural gas.

We maintain control of the natural gas during gathering, compression, processing, and transportation.

Our sales contracts provide that we receive a specific index price adjusted for pricing differentials.

We transfer control of the product at the delivery point and recognize revenue based on the contract price.

The costs to gather, compress, process and transport the natural gas are recorded as Gathering, compression, processing and transportation expenses.

NGLs, which are extracted from natural gas through processing, are either sold by us directly or by the processor under processing contracts.

For NGLs sold by us directly, our sales contracts provide that we deliver the product to the purchaser at an agreed upon delivery point and that we receive a specific index price adjusted for pricing differentials.

We transfer control of the product to the purchaser at the delivery point and recognize revenue based on the contract price.

The costs to process and transport NGLs are recorded as Gathering, compression, processing, and transportation expenses.

For NGLs sold by the processor, our processing contracts provide that we transfer control to the processor at the tailgate of the processing plant and we recognize revenue based on the price received from the processor.

Under our oil sales contracts, we generally sell oil to purchasers and collect a contractually agreed upon index price, net of pricing differentials.

We recognize revenue based on the contract price when we transfer control of the product to a purchaser.

(o) Marketing Revenues and Expenses

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.

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.

(n) 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.

We retain control of the purchased natural gas and NGLs prior to delivery to the purchaser.

We have concluded that we are the principal in these arrangements and therefore we recognize 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 our produced natural gas and NGLs.

We satisfy performance obligations to the purchaser by transferring control of the product at the delivery point and recognize revenue based on the price received from the purchaser.

Fees generated from the sale of excess firm transportation marketed to third parties are included in revenue.

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

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.

(o) 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 recorded as deferred revenue due to the Company’s future performance obligations.

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 consolidated statements of operations.

See Note 4—Transactions to the consolidated financial statements for further discussion of the VPP.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

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.

(p) 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.

Substantially all revenues from the gathering, compression, water handling and treatment operations were derived from transactions for services Antero Midstream Partners provided to the Company’s 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 to the consolidated financial statements for further discussion on the Transactions and Note 18 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 satisfies its performance obligations and recognizes revenue when low pressure volumes are delivered to a compressor station, high pressure volumes are delivered to a processing plant or transmission pipeline, and compression volumes are delivered to a high pressure line.

Revenue is 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 satisfies its performance obligations and recognizes revenue when the fresh water volumes have been delivered to the hydration unit of a specified well pad and the wastewater volumes have been delivered to its wastewater treatment facility.

For services contracted through third-party providers, Antero Midstream Partners’ performance obligation is satisfied when the service performed by the third-party provider has been completed.

Revenue is 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.

See Note 3 —Deconsolidation of Antero Midstream Partners LP and Note 18—Segment Information to the consolidated financial statements for further discussion on the Transactions and the Company’s reportable segments, respectively.

The portion of such fees shown in the Company’s 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.

(q) Concentrations of Credit Risk

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The Company’s sales to major customers (purchases in excess of 10% of total sales) for the years ended December 31, 2018, 2019 and 2020 are as follows:

Year Ended December 31, 2018

Mercuria Energy America, Inc.

Tenaska Marketing Ventures

Year Ended December 31, 2019

Sabine Pass Liquefaction LLC

WGL Midstream

Year Ended December 31, 2020

Sabine Pass Liquefaction LLC

WGL Midstream

The Company is also exposed to credit risk on its commodity derivative portfolio.

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The Company has economic hedges in place with 17 different counterparties.

The fair value of the Company’s commodity net derivative contracts is approximately $ 746 million at December 31, 2019 and primarily includes the following net asset values by bank counterparty:

Wells Fargo - $ 215 million;

JP Morgan - $ 134 million;

The fair value of the Company’s commodity net derivative contracts is approximately $ 22 million as of December 31, 2020 and primarily included the following net derivative assets by bank counterparty:

Morgan Stanley - $ 35 million;

Citigroup - $ 117 million;

Scotiabank - $ 58 million;

Canadian Imperial Bank of Commerce - $ 25 million;

PNC - $ 29 million;

BNP Paribas - $ 21 million;

Scotiabank - $ 14 million;

Natixis - $ 5 million;

and SunTrust $ 7 million.

The estimated fair value of commodity derivative assets has been risk-adjusted using a discount rate based upon the respective published credit default swap rates (if available, or if not available, a discount rate based on the applicable Reuters bond rating) at December 31, 2019 for each of the European and American banks.

DNB Capital - $ 2 million;

and Truist $ 1 million.

The estimated fair value of commodity derivative assets has been risk-adjusted using a discount rate based upon the respective published credit default swap rates (if available, or if not available, a discount rate based on the applicable Reuters bond rating) as of December 31, 2020 for each of the European and American banks.

The Company believes that all of these institutions currently are acceptable credit risks.

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Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

(r) Income Taxes

The Company recognizes deferred tax assets and liabilities for temporary differences resulting from net operating loss carryforwards for income tax purposes and the differences between the financial statement and tax basis of assets and liabilities.

The Company recognizes deferred tax assets and liabilities for temporary differences resulting from net operating loss (“NOL”) carryforwards for income tax purposes and the differences between the financial statement and tax basis of assets and liabilities.

The effect of changes in tax laws or tax rates is recognized in income during the period such changes are enacted.

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(s) Fair Value Measurements

FASB ASC Topic 820, Fair Value Measurements and Disclosures , clarifies the definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

The Financial Accounting Standards Board (“FASB”) ASC Topic 820, Fair Value Measurements and Disclosures , clarifies the definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

This guidance also relates to all nonfinancial assets and liabilities that are not recognized or disclosed on a recurring basis (e.g., those measured at fair value in a business combination, the initial recognition of asset retirement obligations, and impairments of proved oil and gas properties and other long- lived assets).

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(1) the exploration, development, and production of natural gas, NGLs, and oil;

(2) marketing and utilization of excess firm transportation capacity, and (3) our equity method investment in Antero Midstream Corporation.

(2) marketing and utilization of excess firm transportation capacity and (3) midstream services through the Company’s equity method investment in Antero Midstream Corporation.

Through March 12, 2019, the results of Antero Midstream Partners were included in the 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.

Effective March 13, 2019, Antero no longer consolidated the results of Antero Midstream Partners in Antero’s results;

however, the Company’s segment disclosures include the Company’s 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 and Note 18—Segment Information to the consolidated financial statements for further discussion on the Transactions and the Company’s reportable segments, respectively.

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;

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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, calculated using the treasury stock method.

The Company includes performance share unit awards 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-

Earnings (loss) per common share—diluted for each period is computed after giving consideration to the potential dilution from (i) outstanding equity awards, calculated using the treasury stock method, and (ii) shares of common stock issuable upon conversion of the 2026 Convertible Notes (as defined below in Note 8—Long-Term Debt), calculated using the if-converted 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.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

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):

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Basic weighted average number of shares outstanding

Dilutive effect of restricted stock units

Dilutive effect of RSUs

Dilutive effect of outstanding stock options

Dilutive effect of performance stock units

Dilutive effect of PSUs

Dilutive effect of 2026 Convertible Notes (2)

Diluted weighted average number of shares outstanding

Weighted average number of outstanding equity awards excluded from calculation of diluted earnings per common share (1) :

Restricted stock units

Weighted average number of outstanding securities excluded from calculation of diluted earnings per common share (1) :

Outstanding stock options

Performance stock units

2026 Convertible Notes (3)

(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 2026 Convertible Notes (as defined below in Note 8—Long-Term Debt).

(3) On January 12, 2021, the Company completed the Equitization Transactions (defined below in Note 8—Long-Term Debt) whereby the Company issued 31.4 million shares and repurchased $ 150 million aggregate principal amount of the 2026 Convertible Notes.

See Note 8—Long-Term Debt to the consolidated financial statements for further discussion on this transaction .

(v) Treasury Share Retirement

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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 issued, to the balance of additional paid-in capital as of retirement.

(w) Recently Issued Accounting Standards

In August 2018, the FASB issued ASU No.

2018-13, “Fair Value Measurement:

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement,” which provides changes to certain fair value disclosure requirements.

This ASU is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those annual periods, with early adoption permitted.

The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.

(x) Equity-Based Compensation

We recognize compensation cost related to all equity-based awards in the financial statements based on their estimated grant date fair value.

We are authorized to grant various types of equity-based compensation awards including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, dividend equivalent awards, and other types of awards.

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.

(w) Equity-Based Compensation

The Company recognizes compensation cost related to all equity-based awards in the financial statements based on their estimated grant date fair value.

The Company is authorized to grant various types of equity-based compensation awards including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, dividend equivalent awards, and other types of awards.

The grant date fair values are determined based on the type of award and may utilize market prices on the date of grant, Black-Scholes option-pricing model, Monte Carlo simulations, or other acceptable valuation methodologies, as appropriate for the type of equity-based award.

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Forfeitures are accounted for as they occur by reversing the expense previously recognized for awards that were forfeited during the period.

See Note 9 for additional information regarding our equity-based compensation.

(3) Deconsolidation of Antero Midstream Partners LP

In 2014, the Company formed Antero Midstream Partners to own, operate, and develop midstream energy assets that service Antero’s production .

Antero Midstream Partners’ assets consist of gathering systems and compression facilities, water handling and treatment facilities, and interests in processing and fractionation plants, through which it provides services to Antero under long-term, fixed-fee contracts.

See Note 10—Equity-Based Compensation and Retention Awards to the consolidated financial statements for additional information regarding the Company’s equity-based compensation.

(x) Recently Issued Accounting Standard

On August 5, 2020, the FASB 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, 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 $ 85 million, net of deferred income taxes and equity issuance costs, to long-term debt and deferred income tax liability, as applicable, from stockholders’ equity as of December 31, 2020, which amount is subject to adjustment for any conversions or other transactions until adoption of this new standard.

Additionally,

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

annual interest expense for the 2026 Convertible Notes will be based on an effective interest rate of 4.8 % as compared to 15.1 % for the year ended December 31, 2020 and the weighted average diluted shares outstanding will increase from zero for the year ended December 31, 2020 to 63 million under the if-converted method after giving effect to the Equitization Transactions (defined below in Note 8—Long-Term Debt).

The Company does not believe that adoption of the standard will impact its operational strategies or development 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’s common stock, par value $ 0.01 per share, in consideration for 98,870,335 common units representing limited partnership interests in Antero Midstream Partners.

Prior to the Closing, the Company’s ownership of Antero Midstream Partners common units represented approximately a 53 % limited partner interest in Antero Midstream Partners, and the Company consolidated Antero Midstream Partners’ financial position and results of operations into its consolidated financial statements.

The Transactions resulted in the exchange of limited partner interests in Antero Midstream Partners owned by Antero for common stock of Antero Midstream Corporation representing an approximate 31 % interest as of March 12, 2019.

As a result, the Company no longer held a controlling interest in Antero Midstream Partners and the Company held an interest in Antero Midstream Corporation that provided significant influence, but not control, over Antero Midstream Corporation.

Thus, effective March 13, 2019, the Company no longer consolidates Antero Midstream Partners in our consolidated financial statements and accounts for its interest in Antero Midstream Corporation using the equity method of accounting.

In addition, 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.

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 5 for further discussion on equity method investments.

See Note 6—Equity Method Investments to the consolidated financial statements for further discussion on equity method investments.

Antero Midstream Partners’ results of operations are no longer consolidated in the Company’s 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 statement of operations and comprehensive income (loss) through March 12, 2019.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Summarized Financial Information of Antero Midstream Partners

4 unchanged sentences

Property and equipment, net

Other noncurrent assets

Noncurrent assets

Current liabilities

2 unchanged sentences

Total liabilities

(a) Disaggregation of Revenue

Revenue is disaggregated by type (in thousands) in the following table.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

(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.

The Company met the applicable production threshold during the third quarter of 2020 and received a $ 51 million cash distribution during the year ended December 31, 2020.

The ORRIs include an overriding royalty interest of 1.25 % of the Company’s working interest in all of its operated proved 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 $ 216 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 recorded as deferred revenue in the consolidated balance sheet.

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 appropriate.

Contemporaneously with the VPP, 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 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.

See Note 12—Derivative Instruments to the consolidated financial statements for more information on the Company’s derivative instruments.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Subsequent Event

Drilling Partnership

On February 17, 2021, Antero Resources announced the formation of a drilling partnership with QL Capital Partners (“QL”), an affiliate of Quantum Energy Partners.

Under the terms of the arrangement, QL will fund 20 % of total development capital spending in 2021 and is expected to fund between 15 % and 20 % of total development capital spending on an annual basis from 2022 through 2024.

All of the wells spud during each calendar year period will be a separate annual tranche.

Capital costs in excess of, and cost savings below, a specified percentage of budgeted amounts for each annual tranche will be for Antero Resources’ account.

For each tranche other than 2021, Antero Resources will propose a capital budget and estimated internal rate of return (“IRR”) for all wells to be spud during the year and, subject to the mutual agreement of the parties that the estimated IRR for each tranche exceeds a specified return, QL will be obligated to participate in such tranche.

For each annual tranche in which QL participates, QL will receive a proportionate working interest percentage in each well spud in such tranche.

If Antero Resources presents a capital budget for an annual tranche with an estimated IRR equal to or exceeding a specified return that QL in good faith believes is less than such specified return and QL elects not to participate, Antero Resources will not be obligated to offer QL the opportunity to participate in subsequent tranches.

No earlier than December 31 following the expiration of each tranche year, Antero Resources will calculate the tranche IRR for such tranche year and, if the tranche IRR exceeds certain specified returns, Antero Resources will receive a carry in the form of a one-time payment from QL for such annual tranche.

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.

See Note 18—Segment Information to the consolidated financial statements for more information on reportable segments.

Year Ended December 31,

Segment to which

revenues relate

(in thousands)

Reportable Segment

Revenues from contracts with customers:

7 unchanged sentences

Gathering and compression (1)

Equity method investment in AMC

Equity method investment in Antero Midstream Corporation

Water handling and treatment (1)

Equity method investment in AMC

Revenue from derivatives and other sources

Total revenue and other

Equity method investment in Antero Midstream Corporation

Total revenue from contracts with customers

Income from derivatives, deferred revenue and other sources

Total revenue

Gathering and compression and water handling and treatment revenues were included through March 12, 2019.

See Note 3 to the consolidated financial statements for further discussion on the Transactions.

(b) Transaction Price Allocated to Remaining Performance Obligations

For our product sales that have a contract term greater than one year, we have utilized the practical expedient in ASC 606, 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 our product sales contracts, each unit of product delivered to the customer represents a separate performance obligation;

See Note 3—Deconsolidation of Antero Midstream Partners LP to the consolidated financial statements for further discussion on the Transactions.

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 in ASC 606, 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 our product sales that have a contract term of one year or less, we have utilized the practical expedient in ASC 606, 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.

For the Company’s product sales that have a contract term of one year or less, the Company utilized the practical expedient in ASC 606,

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Under our sales contracts, we invoice customers after our performance obligations have been satisfied, at which point payment is unconditional.

Accordingly, our contracts do not give rise to contract assets or liabilities under ASC 606.

At December 31, 2018 and 2019, our receivables from contracts with customers were $ 475 million and $ 318 million, respectively.

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.

Contract Balances

Under the Company’s sales contracts, the Company invoices customers after its 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.

As of December 31, 2019 and 2020, the Company’s receivables from contracts with customers were $ 318 million and $ 425 million, respectively.

(6) Equity Method Investments

At December 31, 2019, Antero owned approximately 28.7 % of Antero Midstream Corporation’s common stock, which is reflected in the Company’s consolidated financial statements using the equity method of accounting.

See Note 3 to the consolidated financial statements for further discussion on the Transactions.

Prior to March 13, 2019, our consolidated results included two equity method investments held by Antero Midstream Partners:

a 15 % equity interest in Stonewall Gas Gathering LLC (“Stonewall”), which operates a regional gathering pipeline on which the Company is an anchor shipper, and a 50 % interest in the joint venture entered into on February 6, 2017 between Antero Midstream Partners and MarkWest Energy Partners, L.P.

(a) Summary of Equity Method Investments

As of December 31, 2020, Antero 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 LP to the consolidated financial statements for further discussion on the Transactions.

Prior to March 13, 2019, Antero’s consolidated results included two equity method investments held by Antero Midstream Partners:

a 15 % equity interest in Stonewall Gas Gathering LLC (“Stonewall”), which operates a regional gathering pipeline on which the Company is an anchor shipper, and a 50 % interest in the joint venture entered into between Antero Midstream Partners and MarkWest Energy Partners, L.P.

(“MarkWest”), a wholly owned subsidiary of MPLX, LP, to develop processing and fractionation assets in Appalachia (the “Joint Venture”).

Effective March 13, 2019, the equity in earnings of these investments are accounted for in the equity in earnings of Antero Midstream Corporation.

At December 31, 2019, we determined that events and circumstances indicated that the carrying value had experienced an other-than-temporary decline and we recorded an impairment of $ 468 million.

The fair value of the equity method investment in Antero Midstream Corporation was based on the quoted market share price of Antero Midstream Corporation at December 31, 2019 (Level 1).

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

The following table is a reconciliation of investments in unconsolidated affiliates for the years ending December 31, 2018 and 2019 in thousands):

Antero Midstream

Effective March 13, 2019, the equity in earnings of these investments are accounted for in the equity in earnings (loss) of Antero Midstream Corporation.

The following table is a reconciliation of investments in unconsolidated affiliates for the years ended December 31, 2019 and 2020 in thousands):

Stonewall (1)

1 unchanged sentence

Corporation (2)

Balance at December 31, 2017

Investments (3)

Equity in net income of unconsolidated affiliates

Distributions from unconsolidated affiliates

Balance at December 31, 2018

Balances as of December 31, 2018

Investments (3)

5 unchanged sentences

Effects of deconsolidation (6)

Balance at December 31, 2019

Balances as of December 31, 2019

Equity in loss of unconsolidated affiliates

Distributions/dividends from unconsolidated affiliates

Impairment (5)

Elimination of intercompany profit

Balances as of December 31, 2020 (7)

(1) Distributions are net of operating and capital requirements retained by Stonewall.

(2) As adjusted for the amortization of 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 and as adjusted for the return of investment.

(2) As adjusted for the amortization of the difference between the cost of the equity method 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 and as adjusted for the return of investment.

(3) Investments in the Joint Venture during the year ended December 31, 2019 relate to capital contributions for construction of additional processing facilities.

(4) In December 2019, Antero Midstream Corporation repurchased $ 100 million of its shares of common stock from the Company resulting in a return of investment.

(4) On December 16, 2019, Antero Midstream Corporation repurchased $ 100 million of its shares of common stock from the Company resulting in a return of investment.

The Company recorded an $ 109 million loss on investment due to the carrying value exceeding the fair value of the stock repurchased.

(5) Other-than-temporary impairment in Antero Midstream Corporation recorded as of December 31, 2019 to reduce the carrying value to fair value.

(5) Other-than-temporary impairment of the Company’s investment in Antero Midstream Corporation to reduce the carrying value of such investment to fair value, which was based on the quoted market share price of Antero Midstream Corporation as of December 31, 2019 and March 31, 2020, respectively (Level 1).

(6) Effective March 13, 2019, the equity in earnings of Stonewall and the Joint Venture are accounted for in the equity in earnings of Antero Midstream Corporation.

Summarized Financial Information of Antero Midstream Corporation

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

(7) The Company’s investment in Antero Midstream Corporation as of December 31, 2020, based on the quoted market share price of Antero Midstream Corporation on such date, was $ 1.1 billion.

(b) Summarized Financial Information of Antero Midstream Corporation

The following tables present summarized financial information of Antero Midstream Corporation.

Summarized financial information is presented from March 13, 2019.

Balance Sheet

5 unchanged sentences

Stockholders' equity

Total liabilities and equity

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Total liabilities and stockholders' equity

Statement of Operations

3 unchanged sentences

December 31, 2019

December 31, 2020

Operating expenses

Loss from operations

Net loss attributable to the equity method investments

Loss attributable to the equity method investment

(7) Accrued Liabilities

4 unchanged sentences

Interest expense, net

Accrued taxes

Total accrued liabilities

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

(8) Long-Term Debt

Long-term debt as of December 31, 2019 and 2020 consisted of the following items (in thousands):

Antero Resources:

Credit Facility (a)

3 unchanged sentences

5.00 % senior notes due 2025 (e)

Net unamortized premium

Net unamortized debt issuance costs

Long-term debt

Antero Midstream Partners:

Midstream Credit Facility

5.375 % senior notes due 2024

Net unamortized debt issuance costs

4.25 % convertible senior notes due 2026 (f)

Total principal

Unamortized premium (discount), net

Unamortized debt issuance costs

Long-term debt

Consolidated long-term debt

(1) At December 31, 2018, Antero Midstream Partners’ indebtedness was included in the consolidated financial statements of Antero.

At December 31, 2019, following the deconsolidation, Antero Midstream Partners’ outstanding indebtedness is no longer reflected in Antero Resources’ consolidated financial statements.

See Note 3 to the consolidated financial statements for further discussion on the Transactions.

(a) Senior Secured Revolving Credit Facility

Senior Secured Revolving Credit Facility

Antero Resources has a senior secured revolving credit facility (the “Credit Facility”) with a consortium of bank lenders.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

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 annual redeterminations.

The borrowing base and lender commitments were each reaffirmed in the annual redetermination in April 2019.

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 and lender commitments were each reaffirmed in the semi-annual redetermination in October 2020.

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.

In October 2019, lender commitments under the Credit Facility were increased from $ 2.5 billion to $ 2.64 billion.

At December 31, 2019, the borrowing base under the Credit Facility was $ 4.5 billion and lender commitments were $ 2.64 billion.

Under the Credit Facility, “Investment Grade Period” is a period that, as long as no event of default has occurred, commences when Antero Resources elects to give notice to the Administrative Agent that Antero Resources has received at least one of (i) a BBB- or better rating from Standard & Poor’s and (ii) a Baa3 or better rating from Moody’s (an “Investment Grade Rating”).

An Investment Grade Period can end at Antero Resources’ election.

During any period that is not an Investment Grade Period, the Credit Facility is ratably secured by mortgages on substantially all of Antero Resources’ properties, Antero Resources’ and Antero Subsidiary Holdings LLC’s ownership interests in Antero Midstream Corporation, Antero Resources’ ownership interests in Antero Subsidiary Holdings LLC and Monroe Pipeline LLC, and guarantees from Antero Resources’ restricted subsidiaries, as applicable.

During an Investment Grade Period, the liens securing the obligations under the Credit Facility shall be automatically released (subject to the provisions of the Credit Facility).

The Credit Facility contains certain covenants, including restrictions on indebtedness and dividends, and requirements with respect to working capital and interest coverage ratios.

During any period that is not an Investment Grade Period, interest is payable at a variable rate based on LIBOR or the prime rate determined by Antero Resources’ election at the time of borrowing, plus an applicable rate based on Antero Resources’ borrowing base utilization which ranges from 25 basis points to 225 basis points.

During an Investment Grade Period, interest is payable at a variable rate based on LIBOR or the prime rate determined by Antero Resources’ election at the time of borrowing, plus an applicable rate based on Antero Resources’ credit rating which ranges from 12.5 basis points to 175 basis points.

The Credit Facility is scheduled to mature on October 26, 2022.

As of December 31, 2020, the borrowing base under the Credit Facility was $ 2.85 billion and lender commitments were $ 2.64 billion.

Antero Resources was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2019 and 2020.

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.

As of December 31, 2020, Antero Resources had an outstanding balance under the Credit Facility of $ 1.0 billion with a weighted average interest rate of 3.26 %, 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 (i) 0.300 % to 0.375 % (during any period that is not an Investment Grade Period) of the unused portion based on utilization and (ii) 0.150 % to 0.300 % (during an Investment Grade Period) of the unused portion based on Antero Resources’ credit rating.

(b) 5.375 % Senior Notes Due 2021

Commitment fees on the unused portion of the Credit Facility are due quarterly at rates ranging from (i) 0.300 % to 0.375 % (subject to certain exceptions) of the unused portion based on utilization.

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 Resources 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.

The 2021 Notes were unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

The 2021 Notes ranked pari passu to Antero Resources’ other outstanding senior notes.

The 2021 Notes were 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 was payable on May 1 and November 1 of each year.

The Company repurchased or otherwise redeemed all of the 2021 Notes from time to time during the years ended December 31, 2019 and 2020.

See —Debt Repurchase Program below for further details on 2021 Notes repurchases.

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 .

4 unchanged sentences

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 redemption prices ranging from 101.281 % currently to 100.00 % on or after June 1, 2020.

Antero Resources may redeem all or part of the 2022 Notes 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.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

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

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 .

5 unchanged sentences

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

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 .

7 unchanged sentences

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) Treasury Management Facility

Antero Resources has a revolving note with a lender that is also part of the Credit Facility lending consortium that provides for up to $ 25 million of cash management obligations in order to facilitate Antero Resources’ daily treasury management.

Borrowings under the revolving note are secured by the collateral for the Credit Facility.

Borrowings under the revolving note bear interest at the lender’s prime rate plus 1.0 % .

The note matures on June 1, 2020.

At December 31, 2018, there was $ 5.4 million included in “Other current liabilities” on the Company’s Consolidated Balance Sheet, and at December 31, 2019, there were no outstanding borrowings under the revolving note.

(g) Debt Repurchase Program

During the fourth quarter of 2019, we repurchased $ 225 million principal amount of debt at a 17 % weighted average discount, including a portion of our 2021 notes and our 2022 notes.

4.25 % Convertible Senior Notes Due 2026

On August 21, 2020, Antero Resources issued $ 250 million in aggregate principal amount of 4.25 % senior unsecured convertible notes (the “2026 Convertible Notes”).

On September 2, 2020, Antero Resources issued an additional $ 37.5 million aggregate principal amount of 2026 Convertible Notes pursuant to the partial exercise of the initial purchasers’ option to purchase additional 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 $ 278.5 million, net of initial purchasers’ fees and issuance cost of $ 9 million.

Each capitalized term used in this subsection but not otherwise defined in this Annual on Form 10-K 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.

As of December 31, 2020, the if-converted value of the 2026 Convertible Notes was $ 361 million, which exceeded the principal amount of the 2026 Convertible Notes by $ 73 million.

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;

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

● 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;

● 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 is to settle the principle amount of the 2026 Convertible Notes in cash upon conversion except as it relates to the Equitization Transactions discussed in Note 8(h) below.

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, together with debt issuance costs, over the term of the 2026 Convertible Notes using the effective interest method, with an effective interest rate of 15.1 % per annum.

As of the issuance date, the fair value of the 2026 Convertible Notes was estimated at $ 172 million, resulting in a debt discount at inception of $ 116 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 consolidated balance sheet and 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 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 consolidated balance sheet and statement of stockholders’ equity.

The 2026 Convertible Notes consist of the following as of December 31, 2020 (in thousands):

Liability component:

unamortized note discount

unamortized debt issuance costs

Net carrying value

Equity component (1)

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

(1) Recorded in additional paid-in capital, net of $ 3 million of issuance costs and $ 28 million of deferred taxes .

Debt Repurchase Program

During the year ended December 31, 2019, Antero Resources repurchased $ 225 million principal amount of debt at a 17 % weighted average discount, including a portion of its 2021 Notes and 2022 Notes.

The Company recognized a gain of approximately $ 36 million on the early extinguishment of the debt repurchased.

During the year ended December 31, 2020, Antero Resources repurchased $ 1.4 billion aggregate principal amount of debt at a weighted average discount of 13 % , which purchases included a portion of the 2021 Notes, 2022 Notes, 2023 Notes and 2025 Notes.

The Company recognized a gain of approximately $ 176 million for the year ended December 31, 2020 on the early extinguishment of the debt repurchased.

Repurchases of the principal amount of debt during year ended December 31, 2020 include repurchases of $ 367 million aggregate principal amount of the 2021 Notes, 2022 Notes and 2023 Notes through previously disclosed tender offers at a weighted average discount of 10 %.

Subsequent Events

Issuance of 8.375 % Senior Notes Due 2026

On January 4, 2021, Antero Resources issued $ 500 million of 8.375 % senior notes due July 15, 2026 (the “2026 Notes”) at par .

The 2026 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

The 2026 Notes rank pari passu to Antero Resources’ other outstanding senior notes.

The 2026 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 2026 Notes is payable on January 15 and July 15 of each year.

Antero Resources may redeem all or part of the 2026 Notes at any time on or after January 15, 2024 at redemption prices ranging from 104.188 % on or after January 15, 2024 to 100.00 % on or after January 15, 2026.

In addition, on or before January 15, 2024, Antero Resources may redeem up to 35 % of the aggregate principal amount of the 2026 Notes with the net cash proceeds of certain equity offerings, if certain conditions are met, at a redemption price of 108.375 % of the principal amount of the 2026 Notes, plus accrued and unpaid interest.

At any time prior to January 15, 2024, Antero Resources may also redeem the 2026 Notes, in whole or in part, at a price equal to 100 % of the principal amount of the 2026 Notes plus a “make-whole” premium and accrued and unpaid interest.

If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2026 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 2026 Notes, plus accrued and unpaid interest.

Partial Equitization of 2026 Convertible Notes

On January 12, 2021, the Company completed a registered direct offering (the “Share Offering”) of an aggregate of 31.4 million shares of its common stock at a price of $ 6.35 per share to certain holders of the 2026 Convertible Notes.

The Company used the proceeds from the Share Offering and approximately $ 63 million of borrowings under the Credit Facility to repurchase from such holders $ 150 million aggregate principal amount of the 2026 Convertible Notes in privately negotiated transactions (the “Convertible Note Repurchase,” and, collectively with the Share Offering, the “Equitization Transactions”).

The 2026 Convertible Notes have an initial conversion rate of 230.2026 shares of the Company’s common stock per $1,000 principal amount, and the Equitization Transactions had the effect of increasing this conversion rate to 275.3525 shares of common stock per $1,000 principal amount.

Redemption of 2022 Notes

On January 16, 2021, the Company completed a partial redemption of $ 350 million of the 2022 Notes at par, plus accrued and unpaid interest.

On February 10, 2021, the Company redeemed $ 311 million of 2022 Notes that remained outstanding at par, plus accrued and unpaid interest, and as a result, the 2022 Notes were fully retired as of February 10, 2021.

Issuance of 7.625 % Senior Notes Due 2029

On January 26, 2021, Antero Resources issued $ 700 million of 7.625 % senior notes due February 1, 2029 (the “2029 Notes”) at par .

The 2029 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

The 2029 Notes rank pari passu to Antero Resources’ other outstanding senior notes.

The 2029 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 2029 Notes is payable on February 1 and August 1 of each year.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Resources may redeem all or part of the 2029 Notes at any time on or after February 1, 2024 at redemption prices ranging from 103.813 % on or after February 1, 2024 to 100.00 % on or after February 1, 2027.

In addition, on or before February 1, 2024, Antero Resources may redeem up to 35 % of the aggregate principal amount of the 2029 Notes with the net cash proceeds of certain equity offerings, if certain conditions are met, at a redemption price of 107.625 % of the principal amount of the 2029 Notes, plus accrued and unpaid interest.

At any time prior to February 1, 2024, Antero Resources may also redeem the 2029 Notes, in whole or in part, at a price equal to 100 % of the principal amount of the 2029 Notes plus a “make-whole” premium and accrued and unpaid interest.

If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2029 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 2029 Notes, plus accrued and unpaid interest.

(9) Asset Retirement Obligations

The following is a reconciliation of the Company’s asset retirement obligations for the years ended December 31, 2019 and 2020 (in thousands):

Asset retirement obligations—December 31, 2018

Obligations settled

Beginning balances

Obligations incurred

Revisions to prior estimates

Accretion expense

Settlement of obligations

Revisions to prior estimates

Effect of deconsolidation of Antero Midstream Partners LP (1)

Asset retirement obligations—December 31, 2019

(1) Effective March 13, 2019, Antero Midstream Partners is no longer consolidated in Antero Resources’ results.

Revisions to prior estimates in 2019 are primarily due to a decrease in well lives.

Ending balances

(1) Effective March 13, 2019, Antero no longer consolidates Antero Midstream Partners in its results.

Revisions to prior estimates in 2020 are primarily due to an increase in estimated well lives.

Revisions to prior estimates in 2019 are primarily due to an increase in estimated abandonment costs for vertical wells.

Asset retirement obligations are included in other liabilities on the Company’s consolidated balance sheets.

(9) Equity-Based Compensation

Antero Resources is authorized to grant up to 16,906,500 shares of common stock to employees and directors of the Company under the Antero Resources Corporation Long- Term Incentive Plan (the “Plan”).

The Plan allows equity- based compensation awards to be granted in a variety of forms, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, dividend equivalent awards, and other types of awards.

(10) Equity-Based Compensation and Retention Awards

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 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 6,921,638 shares were available for future grant under the 2020 Plan as of December 31, 2020.

In January 2020, a total of 4,644,934 shares were granted as restricted stock unit awards to employees and equity awards to directors.

Antero Midstream Partner’s 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 include Antero Resources).

As part of the Transactions, each outstanding phantom units awards under the AMP Plan was assumed by Antero Midstream Corporation and converted into 1.8926 restricted stock units under the Antero Midstream Corporation Long Term Incentive Plan (the “AMC Plan”).

Each restricted stock unit award under the AMC Plan represents a right to receive one shares of Antero Midstream Corporation’s Common Stock, par value $ 0.01 per share (“Antero Midstream Corporation Common Stock”).

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

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

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 years ended December 31, 2018, 2019 and 2020 (in thousands):

Year Ended December 31,

Restricted stock unit awards

Stock options

Performance share unit awards

Antero Midstream Partners phantom unit awards (1)

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Total expense

(1) Antero Resources recognized compensation expense for equity awards granted under both the 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.

(1) Antero Resources recognized compensation expense for equity awards granted under the 2013 Plan, 2020 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.

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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 to the consolidated financial statements for further discussion on the Transactions.

Restricted Stock Unit Awards

Restricted stock unit awards vest subject to the satisfaction of service requirements.

Expense related to each restricted stock unit award is recognized on a straight-line basis over the requisite service period of the entire award.

See Note 3—Deconsolidation of Antero Midstream Partners LP to the consolidated financial statements for further discussion on the Transactions.

(a) Restricted Stock Unit Awards

RSU awards vest subject to the satisfaction of service requirements.

Expense related to each RSU award is recognized on a straight-line basis over the requisite service period of the entire award.

Forfeitures are accounted for as they occur by reversing the expense previously recognized for awards that were forfeited during the period.

The grant date fair values of these awards are determined based on the closing price of Antero Resources’ common stock on the date of the grant.

A summary of restricted stock unit award activity for the year ended December 31, 2019 is as follows:

A summary of RSU award activity for the year ended December 31, 2020 is as follows:

Intrinsic Value

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That expense is expected to be recognized over a weighted average period of approximately 2.2 years.

Stock Options

(b) Stock Options

Stock options granted under the 2013 Plan have a maximum contractual life of 10 years .

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Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

A summary of stock option activity for the year ended December 31, 2020 is as follows:

(in thousands)

Outstanding at December 31, 2018

Expired/Cancelled

Outstanding at December 31, 2019

Vested or expected to vest as of December 31, 2019

Exercisable at December 31, 2019

Intrinsic values are based on the exercise price of the options and the closing price of Antero Resources’ stock on the referenced dates.

Outstanding—December 31, 2019

Outstanding—December 31, 2020

Vested—December 31, 2020

Exercisable —December 31, 2020

Intrinsic values are based on the exercise price of the options and the closing price of Antero Resources’ common stock on the referenced dates.

A Black-Scholes option- pricing model is used to determine the grant-date fair value of stock options.

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A dividend yield of zero was assumed.

As of December 31, 2019, all stock options were fully vested resulting in no unamortized equity-based compensation expense.

Performance Share Unit Awards

Performance Share Unit Awards Based on Stock Price Targets

In 2016, the Company granted performance share unit awards (“PSUs”) to certain of its executive officers that are based on stock price targets.

In 2016, the Company granted PSUs to certain of its executive officers that are based on stock price targets.

The vesting of these PSUs is conditioned on the closing price of Antero Resources’ common stock achieving specific price thresholds over 10 -day periods, subject to the following vesting restrictions:

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Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

In 2020, the Company granted PSU awards to certain of its executive officers that vest based on Antero Resources’ absolute 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 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.

Performance Share Unit Awards Based on TSR and Return on Capital Employed (“ROCE”)

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Expense related to the ROCE PSUs is recognized based on the number of shares of common stock that are expected to be issued at the end of the measurement period, and is reversed if the likelihood of achieving the performance condition decreases.

As of December 31, 2019, the likelihood of achieving the performance conditions related to the ROCE PSUs decreased to a level below probable and therefore, expense has not been recognized in the current quarter and will not be recognized unless the likelihood of achieving the performance condition becomes probable.

As of December 31, 2019, the likelihood of achieving the performance conditions related to the ROCE PSUs decreased to a level below probable and therefore, expense has not been recognized in the current year and will not be recognized unless the likelihood of achieving the performance condition becomes probable.

Summary Information for Performance Share Unit Awards

A summary of PSU activity for the year ended December 31, 2020 is as follows:

Weighted average

Average Grant

Date Fair Value

Total awarded and unvested—December 31, 2019

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The grant-date fair value for the ROCE-based PSUs is based on the closing price of Antero Resources’ common stock on the date of the grant, assuming the achievement of the performance condition.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

The following table presents information regarding the weighted average fair values for market-based PSUs granted during the years ended December 31, 2018, 2019 and 2020, and the assumptions used to determine the fair values:

2 unchanged sentences

Risk-free interest rate

Weighted average fair value of awards granted

Weighted average fair value of awards granted—Absolute TSR

Weighted average fair value of awards granted—Relative TSR

As of December 31, 2020, there was $ 8 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 1.2 years.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Antero Midstream Partners Phantom Unit Awards and Antero Midstream Corporation Restricted Stock Unit Awards

(d) Cash Retention 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 December 31, 2020, the Company has accrued approximately $ 3.2 million in Other liabilities in the consolidated balance sheet related to cash awards.

(e) Antero Midstream Corporation Restricted Stock Unit Awards

Phantom units granted by Antero Midstream Partners vested subject to the satisfaction of service requirements, upon the completion of which common units in Antero Midstream Partners were delivered to the holder of the phantom units.

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The grant date fair values of these awards were determined based on the closing price of Antero Midstream Partners’ common units on the date of grant.

In connection with the closing of the Transactions, the Board of Antero Midstream Corporation adopted the AMC Plan.

In connection with the closing of the Transactions, the Board of Directors of Antero Midstream Corporation adopted the AMC Plan.

In accordance with the terms of the Transactions, each outstanding phantom unit under the AMP Plan was assumed by Antero Midstream Corporation and converted into 1.8926 restricted stock units under the AMC Plan.

A summary of phantom unit awards and Antero Midstream Corporation restricted stock unit awards resulting from the conversion activity for the year ended December 31, 2019 is as follows:

average grant

A summary of Antero Midstream Corporation RSU awards for the year ended December 31, 2020 is as follows:

Intrinsic Value

date fair value

(in thousands)

Total awarded and unvested—December 31, 2019

AMP Plan Units awarded and unvested—March 12, 2019

Effect of conversion (1)

Total awarded and unvested—December 31, 2020

(1) Effective March 12, 2019, all outstanding phantom units under the AMP Plan were assumed by Antero Midstream Corporation and converted into restricted stock units under the AMC Plan.

Intrinsic values are based on the closing price of shares of Antero Midstream Corporation’s common stock or Antero Midstream Partners’ common units, as applicable, on the referenced dates.

As of December 31, 2020, there was $ 2.2 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 1.7 years.

(10) Financial Instruments

The carrying values of accounts receivable and accounts payable at December 31, 2018 and 2019 approximated market values because of their short- term nature.

The carrying values of the amounts outstanding under the Credit Facility and Antero Midstream Partners’ credit facility at December 31, 2018 and the Credit Facility at December 31, 2019 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 $ 3.9 billion and $ 2.8 billion at December 31, 2018 and 2019, respectively.

See Note 11 to the consolidated financial statements for information regarding the fair value of derivative financial instruments.

That expense is expected to be recognized over a weighted average period of approximately 1.0 years, and the Company’s proportionate share will be allocated to it as it is recognized.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

(11) Fair Value

The carrying values of accounts receivable and accounts payable as of December 31, 2019 and 2020 approximated market values because of their short- term nature.

The carrying values of the amounts outstanding under the Credit Facility as of December 31, 2019 and 2020 approximated fair value because the variable interest rates are reflective of current market conditions.

The fair value and carrying value of the senior notes and 2026 Convertible Notes as of December 31, 2019 and 2020 are as follows (in thousands):

December 31, 2019

December 31, 2020

5.375 % senior notes due 2021

5.125 % senior notes due 2022

5.625 % senior notes due 2023

5.00 % senior notes due 2025

4.25 % convertible senior notes due 2026 (3)

(1) Fair values are based on Level 2 market data inputs.

(2) Carrying values are presented net of unamortized debt issuance costs and debt discounts or premiums.

(3) Carrying value excludes the equity component of $ 116 million recorded to additional paid-in-capital for the 2026 Convertible Notes.

See Note 12—Derivative Instruments to the consolidated financial statements for information regarding the fair value of derivative financial instruments.

(12) Derivative Instruments

(a) Commodity Derivative Positions

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.

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.

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When it is below the contracted percentage, the Company receives the difference from the counterparty.

In addition, the Company has historically also entered into natural gas collar contracts, which establish ceiling and floor prices for the sale of notional volumes of natural gas as specified in the collar contracts.

Under these contracts, the Company pays the difference between the ceiling price and the published index price in the event the published index price is above the ceiling price.

When the published index price is below the floor price, the Company receives the difference between the floor price and the published index price.

No amounts are paid or received if the index price is between the floor and the ceiling prices.

The index prices in our collars are consistent with the index prices used to sell our production.

The Company’s derivative contracts have not been designated as hedges for accounting purposes;

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Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

As of December 31, 2019, the Company’s fixed price natural gas, oil and NGL swap positions from January 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;

ARA Propane = European Propane CIF ARA;

FEI Propane = Propane Far East Asia Index;

Mont Belvieu Butane Non-TET = Mont Belvieu Butane;

Mont Belvieu Propane Non-TET = Mont Belvieu Propane;

NYMEX-WTI = West Texas Intermediate):

average index

Three months ending March 31, 2020:

FEI Propane ($/Gal)

Mont Belvieu Butane Non-TET ($/Gal)

Mont Belvieu Propane Non-TET ($/Gal)

Year ending December 31, 2020:

NYMEX ($/MMBtu)

ARA Propane ($/Gal)

NYMEX-WTI ($/Bbl)

Year ending December 31, 2021:

NYMEX ($/MMBtu)

Year ending December 31, 2023:

NYMEX ($/MMBtu)

As of December 31, 2019, 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, and NGL basis swap positions, which settle on the pricing index to basis differential of Mont Belvieu Butane to the European Butane CIF ARA natural gas liquids price, were as follows:

average hedged

Three months ending March 31, 2020:

ARA to Mont Belvieu Non-TET ($/Gal)

Three months ending June 30, 2020:

ARA to Mont Belvieu Non-TET ($/Gal)

Year ending December 31, 2020:

NYMEX to TCO ($/MMBtu)

Year ending December 31, 2021:

NYMEX to TCO ($/MMBtu)

Year ending December 31, 2022:

NYMEX to TCO ($/MMBtu)

Year ending December 31, 2023:

NYMEX to TCO ($/MMBtu)

Year ending December 31, 2024:

NYMEX to TCO ($/MMBtu)

As of December 31, 2020, the Company’s fixed price natural gas, oil and NGL swap positions from January 1, 2021 through December 31, 2023 were as follows:

Commodity / Settlement Period

Contracted Volume

January-December 2021

January-December 2022

January-December 2023

OPIS Ethane Mt Belv

January-March 2021

Mont Belvieu Purity Ethane-OPIS

January-December 2021

West Texas Intermediate

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 December 31, 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 Average

Commodity / Settlement Period

Index to Basis Differential

Contracted Volume

Hedged Differential

January-December 2021

January-December 2022

January-December 2023

January-December 2024

As of December 31, 2020, the Company had natural gas and NGL contracts for January 1, 2021 through December 31, 2021 that fix the Mont Belvieu index price to percentages of WTI as follows:

Weighted Average

Commodity / Settlement Period

Index to Basis Differential

Contracted Volume

January-December 2021

Mont Belvieu Natural Gasoline to WTI

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

As of December 31, 2019, the Company had natural gas and NGL contracts for January 1, 2020 through December 31, 2021 that fix the Mont Belvieu index price to percentages of WTI as follows:

average payout

Three months ending March 31, 2020:

Mont Belvieu Propane to NYMEX-WTI

Year ending December 31, 2020:

Mont Belvieu Natural Gasoline to NYMEX-WTI

Year ending December 31, 2021:

Mont Belvieu Natural Gasoline to NYMEX-WTI

(b) Marketing Derivatives

As of December 31, 2020, the Company’s fixed price natural gas, oil and NGL swap positions from January 1, 2021 through March 31, 2025 for Martica, the Company’s consolidated VIE, were as follows:

Commodity / Settlement Period

Contracted Volume

January-December 2021

January-December 2022

January-December 2023

January-December 2024

January-March 2025

OPIS Propane Mt Belv Non-TET

January-December 2021

Mont Belvieu Propane-OPIS

January-December 2022

Mont Belvieu Propane-OPIS

OPIS Natural Gasoline Mt Belv Non-TET

January-December 2021

Mont Belvieu Natural Gasoline-OPIS

January-December 2022

Mont Belvieu Natural Gasoline-OPIS

OPIS Ethane Mt Belv

January-December 2021

Mont Belvieu Purity Ethane-OPIS

January-March 2022

Mont Belvieu Purity Ethane-OPIS

January-December 2021

West Texas Intermediate

January-December 2022

West Texas Intermediate

January-December 2023

West Texas Intermediate

January-December 2024

West Texas Intermediate

January-March 2025

West Texas Intermediate

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 111,743,000 MMBtu remaining through December 31, 2026 at a weighted average strike price of $ 2.60 per MMBtu.

The embedded put option is not clearly and closely related to the host contract, and therefore, the Company bifurcated this derivative instrument and reflected it at fair value in the consolidated financial statements.

Marketing Derivatives

In 2017, due to delay of the in-service date for a pipeline on which the Company is to be an anchor shipper, the Company realized it would not be able to fulfill its delivery obligations under a 2018 natural gas sales contract.

4 unchanged sentences

The Company determined that these gas purchase and sales agreements should be accounted for as derivatives and measured at fair value at the end of each period.

The Company recognized a fair value loss for the year ended December 31, 2017 of $ 21 million.

For the year ended December 31, 2018, the Company recognized a fair value gain of $ 94 million and realized proceeds of $ 73 million.

There were no marketing derivative fair value gains or losses for the year ended December 31, 2019.

For the year ended December 31, 2018, the Company recognized a fair value gain of $ 94

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

million and realized proceeds of $ 73 million.

There were no marketing derivative fair value gains or losses for the years ended December 31, 2019 and 2020.

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 2020.

None of the Company’s derivative instruments are designated as hedges for accounting purposes.

December 31, 2018

December 31, 2019

Balance Sheet

Balance sheet

(In thousands)

Asset derivatives not designated as hedges for accounting purposes:

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Derivative instruments

Embedded derivatives—current

Derivative instruments

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Derivative instruments

Embedded derivatives—noncurrent

Derivative instruments

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Derivative instruments

Commodity derivatives—noncurrent (1)

Derivative instruments

Total liability derivatives

Net derivatives

Net derivatives assets

(1) As of December 31, 2020, approximately $ 14 million of commodity derivative liabilities, including $ 7 million of current commodity derivatives and $ 7 million of noncurrent commodity derivatives, are attributable to the Company’s 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):

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December 31, 2020

amounts offset on

Net Amounts of

Gross Amounts

(Liabilities) on

amounts offset on

(Liabilities) on

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Commodity derivative assets

Embedded derivative assets

Commodity derivative liabilities

The following is a summary of derivative fair value gains and losses and where such values are recorded in the consolidated statements of operations for the years ended December 31, 2018, 2019 and 2020 (in thousands):

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Year Ended December 31,

Commodity derivative fair value gains (losses)

Marketing derivative fair value gains (losses)

Embedded derivative fair value gains (losses)

Commodity derivative fair value gains (losses) for the years ended December 31, 2018 and 2020, include gains of $ 370 million and $ 9 million, respectively, related to certain natural gas derivatives that were monetized prior to their contractual settlement dates.

1 unchanged sentence

There were no commodity derivatives monetizations in the year ended December 31, 2019.

The 2017 monetizations were effected by reducing the average fixed index prices on certain natural gas swap contracts maturing from 2018 through 2022 while maintaining the total volumes hedged.

The 2018 monetizations were affected by the early

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

settlement of April through December 2019 swaps and reducing the average fixed index prices on certain natural gas swap contracts maturing in 2020 while maintaining the total volumes hedged.

The 2018 monetizations were affected by the early settlement of April through December 2019 swaps and reducing the average fixed index prices on certain natural gas swap contracts maturing in 2020 while maintaining the total volumes hedged.

The April through December 2019 swaps were replaced with collar agreements for which the Company paid a $ 13 million premium.

The Company’s commodity derivative position presented in Note 11(a) reflects the volume and adjusted fixed price indices after the monetization.

The fair value of derivative instruments was determined using Level 2 inputs.

The Company’s commodity derivative position presented in Note 12(a) above reflects the volume and adjusted fixed price indices after the 2020 monetization.

On February 25, 2016, the FASB issued ASU No.

2016-02, Leases , which requires lessees to record lease liabilities and right-of-use assets as of the date of adoption and was incorporated into GAAP as ASC Topic 842.

2016-02, Leases , which requires lessees to record lease liabilities and right-of-use assets as of the date of adoption and was incorporated into GAAP as ASC Topic 842, Leases .

The new lease standard does not substantially change accounting by lessors.

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The Company is a lessee to both operating and finance lease arrangements.

The standard resulted in an increase in assets and liabilities related to our operating leases.

The standard resulted in an increase in assets and liabilities related to the Company’s operating 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.

5 unchanged sentences

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 has elected the effective date method for adoption of the new leasing standard under Topic 842.

This method allows the Company to not make retrospective adjustments for leases that were in effect prior to the adoption date of January 1, 2019 when disclosing comparable prior periods, but instead, account for the prior period leases under Topic 840, which was the guidance in place at the time of the original reporting.

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 under Topic 842.

The Company elected the effective date method for adoption of the new leasing standard.

This method allows the Company to not make retrospective adjustments for leases that were in effect prior to the adoption date of January 1, 2019 when disclosing comparable prior periods, but instead, account for the prior period leases under ASC Topic 840, which was the guidance in place at the time of the original reporting.

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.

2 unchanged sentences

If an implicit rate is not determinable, a collateralized incremental borrowing rate is used at the date of commencement.

The Company used the collateralized incremental borrowing rate, adjusted for length of lease term, for all of its present value calculations at the initial adoption of Topic 842.

Additionally, 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.

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.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

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.

1 unchanged sentence

Currently, the Company is only applying this expedient to certain office space agreements.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Supplemental Balance Sheet Information Related to Leases

The Company’s lease assets as of December 31, 2019 consisted of the following items (in thousands):

December 31, 2019

The Company’s lease assets and liabilities as of December 31, 2019 and 2020 consisted of the following items (in thousands):

Balance Sheet Classification

Operating Leases

Finance Leases

Right-of-use Assets:

Operating lease right-of-use assets:

Processing plants

Operating lease right-of-use assets

Drilling rigs and completion services

Operating lease right-of-use assets

Gas gathering lines and compressor stations (1)

Operating lease right-of-use assets

Other office and field equipment

Total right-of-use assets

(1) Gas gathering lines and compressor stations leases includes $ 1.1 billion related to Antero Midstream Corporation.

(2) Financing lease assets are recorded net of accumulated amortization of $ 9 million as of December 31, 2019.

The Company’s lease liabilities as of December 31, 2019 consisted of the following items (in thousands):

December 31, 2019

Operating Leases

Operating lease right-of-use assets

Total operating lease right-of-use assets

Short-term operating lease obligation

Short-term lease liabilities

Long-term operating lease obligation

Long-term lease liabilities

Total operating lease obligation

Finance Leases

Location on the balance sheet:

Finance lease right-of-use assets:

Other property and equipment

Other office and field equipment

Other property and equipment

Total finance lease right-of-use assets (2)

Short-term finance lease obligation

Short-term lease liabilities

Long-term finance lease obligation

Long-term lease liabilities

Total lease liabilities

The processing plants, gathering lines and compressor stations that are classified as lease liabilities are classified as such under ASC 842 because the Company is the sole customer of the assets and because the Company makes the decisions that most impact the economic performance of the assets.

Total finance lease obligation

(1) Gas gathering lines and compressor stations leases includes $ 1.1 billion related to Antero Midstream Corporation as of December 31, 2019 and 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 2020, respectively.

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.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Supplemental Information Related to Leases

Costs associated with operating leases were included in the statement of operations and comprehensive income (loss) for the year ended December 31, 2019 (in thousands):

Statement of Operations Location

Year ended December 31, 2019

Costs associated with operating leases were included in the consolidated statement of operations and comprehensive loss for the years ended December 31, 2019 and 2020 (in thousands):

Classification

Operating lease cost

Statement of operations

Gathering, compression, processing, and transportation

Operating lease cost

Statement of operations

General and administrative

Operating lease cost

Statement of operations

Contract termination and rig stacking

Total Lease Expense

Costs associated with finance leases of less than $ 1 million for the year ended December 31, 2019.

We capitalized $ 195 million of costs related to operating leases and less than $ 1 million of costs related to finance leases during the year ended December 31, 2019.

Short-term lease costs that are more than one month but less than 12 months are excluded from the above amounts and total $ 163 million at December 31, 2019.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Operating lease cost

Balance sheet

Proved properties (1)

Total operating lease cost

Finance lease cost:

Amortization of right-of-use assets

Statement of operations

Depletion, depreciation, and amortization

Interest on lease liabilities

Statement of operations

Interest expense

Total finance lease cost

Short-term lease payments

(1) Capitalized costs related to drilling and completion activities.

Supplemental Cash Flow Information Related to Leases

The following is the Company’s supplemental cash flow information related to leases for year ended December 31, 2019 (in thousands):

The following is the Company’s supplemental cash flow information related to leases for years ended December 31, 2019 and 2020 (in thousands):

Year Ended December 31,

Operating Leases

Finance Leases

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash out flows related to operating leases

Investing cash out flows related to operating leases

Financing cash out flows related to financing leases

Operating cash flows from operating leases

Operating cash flows from finance leases

Investing cash flows from operating leases

Financing cash flows from finance leases

Noncash activities:

Right of use assets obtained in exchange for operating lease liabilities

Right of use assets obtained in exchange for financing lease liabilities

ROU assets obtained in exchange for new operating lease obligations

Maturities of Lease Liabilities

7 unchanged sentences

( 1,770,580 )

As of December 31, 2019, the following future minimum payments were required for office and equipment leases:

(in thousands)

Office Leases

Equipment Leases

Total lease payments

imputed interest

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Lease Term and Discount Rate

5 unchanged sentences

Weighted-average discount rate

As of December 31, 2019, the Company had requested additional processing capacity that will be accounted for as lease modifications when the processing capacity becomes available in 2020.

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 we request 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 .

For the year ended December 31, 2019, gathering and compression fees paid by Antero Resources related to this agreement were $ 643 million.

As of December 31, 2019, $ 57 million was included within accounts payable, related parties on the Condensed Balance Sheet as due to Antero Midstream Corporation related to this agreement.

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 % of the gathering capacity and 70 % of the compression 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 during the year ended December 31, 2020.

Antero Midstream Corporation has provided rebates of $ 48 million for the year ended December 31, 2020.

For the years ended December 31, 2019 and 2020, gathering and compression fees paid by Antero related to this agreement were $ 643 million and $ 679 million, respectively.

As of December 31, 2019 and 2020, $ 57 million and $ 55 million was included within Accounts payable, related parties, respectively, on the consolidated balance sheet as due to Antero Midstream Corporation related to this agreement.

(14) Income Taxes

For the years ended December 31, 2017, 2018 and 2019, income tax expense (benefit) consisted of the following (in thousands):

For the years ended December 31, 2018, 2019 and 2020, income tax benefit consisted of the following (in thousands):

Year Ended December 31,

Current income tax expense (benefit)

Deferred income tax benefit

Federal income tax expense (benefit)

State income tax expense (benefit), net of federal benefit

Total income tax benefit

1 unchanged sentence

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Income tax expense (benefit) differs from the amount that would be computed by applying the U.S.

statutory federal income tax rate of 35 % to the year ended December 31, 2017 and 21 % to the years ended December 31, 2018 and 2019 to income or loss before taxes as a result of the following (in thousands):

statutory federal income tax rate of 21 % to the years ended December 31, 2018, 2019 and 2020 to income or loss before taxes as a result of the following (in thousands):

Year Ended December 31,

1 unchanged sentence

State income tax expense (benefit), net of federal benefit

Change in Federal tax rate, net of state benefit (1)

Change in state tax rate, net of federal effect

1 unchanged sentence

Dividends received deduction

Noncontrolling interest in Antero Midstream Partners

Noncontrolling interest

Deconsolidation adjustment

1 unchanged sentence

Total income tax benefit

(1) The change in the Federal tax rate was due to the passage of Public Law No.

115-97, commonly referred to as the Tax Cuts and Jobs Act.

The passage of this legislation resulted in the Company generating a deferred tax benefit in 2017 primarily due to the reduction in the U.S.

statutory rate from 35 % to 21 % .

Deferred income taxes reflect the impact of temporary differences between assets and liabilities for financial reporting purposes and such amounts as measured by tax laws.

The tax effect of the temporary differences giving rise to net deferred tax assets and liabilities at December 31, 2018 and 2019 is as follows (in thousands):

The tax effect of the temporary differences giving rise to net deferred tax assets and liabilities as of December 31, 2019 and 2020 is as follows (in thousands):

Deferred tax assets:

Net operating loss carryforwards

NOL carryforwards

Equity-based compensation

6 unchanged sentences

Oil and gas properties

Investment in Antero Midstream Partners

Investment in Martica

2026 Convertible Notes

Total deferred tax liabilities

3 unchanged sentences

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Based upon the projections of future taxable income over the periods in which the deferred tax assets are deductible, management believes that the Company will not realize the benefits of certain of these deductible differences and has recorded a valuation allowance of approximately $ 45 million and $ 47 million at December 31, 2018 and 2019, respectively, related to state net operating loss (“NOL”) carryforwards.

The increase in the valuation allowance from $ 45 million at December 31, 2018 to $ 47 million at December 31, 2019, is due to an increase in Colorado NOLs, resulting from tax return amendments, against which a full valuation allowance has been previously established.

Based upon the projections of future taxable income over the periods in which the deferred tax assets are deductible, management believes that the Company will not realize the benefits of certain of these deductible differences and has recorded a valuation allowance of approximately $ 47 million and $ 46 million as of December 31, 2019 and 2020, respectively.

The valuation allowance for each of the years ended December 31, 2019 and 2020, relates to Colorado and Oklahoma state NOL carryforwards and is primarily the result of expected future reduced income tax apportionment in those states.

The amount of the deferred tax asset considered realizable could be further reduced in the near term if estimates of future taxable income during the carryforward period are revised.

The calculation of the Company’s tax liabilities involves uncertainties in the application of complex tax laws and regulations.

The Company gives financial statement recognition to those tax positions that it believes are more-likely-than-not to be sustained upon

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

The calculation of the Company’s tax liabilities involves uncertainties in the application of complex tax laws and regulations.

The Company gives financial statement recognition to those tax positions that it believes are more-likely-than- not to be sustained upon examination by the Internal Revenue Service or state revenue authorities.

The Company monitors potential uncertain tax positions but does not anticipate any changes within the next year.

examination by the Internal Revenue Service or state revenue authorities.

The Company monitors potential uncertain tax positions but does not anticipate any changes in 2021.

The Company has no unrecognized tax benefit balances through December 31, 2020.

As of December 31, 2020, the Company has U.S.

federal and state NOL carryforwards of $ 2.2 billion and $ 2.0 billion, respectively.

The federal, Colorado, and West Virginia NOL carryforwards generated in tax years prior to 2018 expire between 2032 and 2037.

The 2018 NOL carryforwards generated in these jurisdictions have no expiration date.

federal and state NOL carryforwards of $ 2.3 billion and $ 2.0 billion, respectively, exclusive of the valuation allowances discussed above.

federal and West Virginia NOL carryforwards generated in tax years prior to 2018 expire between 2032 and 2037.

The Colorado NOL carryforwards generated in tax years prior to 2018 expire between 2025 and 2037.

For tax years 2018 and thereafter, NOL carryforwards generated in these jurisdictions have no expiration date.

The Pennsylvania NOL carryforwards expire between 2037 and 2040.

9 unchanged sentences

Financing Leases

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

(a) Firm Transportation

Firm Transportation

The Company has entered into firm transportation agreements with various pipelines in order to facilitate the delivery of its production to market.

3 unchanged sentences

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

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Processing, Gathering, and Compression Service Commitments

The Company has entered into various long-term gas processing, gathering and compression service agreements.

3 unchanged sentences

however, the Company will record in the consolidated financial statements its proportionate share of costs based on its working interest.

Land Payment Obligations

The Company has entered into various land acquisition agreements.

2 unchanged sentences

None of these agreements were determined to be leases.

(d) Leases, including imputed interest

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 we are committed to pay;

however, we will record in our financial statements our proportionate share of costs based on our working interests.

Refer to Note 12 to the consolidated financial statements for more information on the Company’s operating and finance 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.

See Note 13—Leases to the consolidated financial statements for more information on the Company’s operating and finance leases.

Contract Terminations 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 years ended December 31, 2018, 2019 and 2020 (in thousands):

Year Ended December 31,

Contract termination and rig stacking

(16) 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.

In June 2018, the Company 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.

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.

We have separately received an NOV from West Virginia Department of Environmental Protection (“WVDEP”) alleging violations relating to the same 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.

In March 2015 and December 2017, the Company filed lawsuits against South Jersey Gas Company and South Jersey Resources Group, LLC (collectively, “SJGC”) in United States District Court in Colorado seeking relief for breach of contracts and damages for amounts that SJGC short paid the Company.

The contractual price for gas was based on specified indices in the contracts and SJGC began short paying the Company based on price indices unilaterally selected by SJGC and not the applicable index

Separately, in June 2018, the Company 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, the West Virginia Department of Environmental Protection (“WVDEP”), and EPA Region V (covering Ohio facilities) each conducted its own inspections, and the Company has separately received NOVs from WVDEP and EPA Region V related to similar issues being investigated by the EPA Region III.

The Company continues to negotiate with EPA overall and WVDEP to resolve the issues alleged in the NOVs and the information request.

The Company’s operations at these facilities are not suspended, and management does not expect these matters to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

specified in the contracts.

The contractual price for gas was based on specified indices in the contracts and SJGC began short paying the Company based on price indices unilaterally selected by SJGC and not the applicable index specified in the contracts.

On May 8, 2017, a jury in the United States District Court in Colorado returned a unanimous verdict finding in favor of Antero Resources’ positions in the initial lawsuit against SJGC and the Tenth Circuit Court of Appeals affirmed the judgment of the trial court.

SJGC declined further appeal and stipulated to the liability in the second suit.

During the year ended December 31, 2019, the Company and our royalty owners received a gross settlement of $ 82 million from SJGC, which was in full satisfaction and discharge of judgments entered in favor of the Company in the above described lawsuits.

During the year ended December 31, 2019, the Company and its royalty owners received a gross settlement of $ 82 million from SJGC, which was in full satisfaction and discharge of judgments entered in favor of the Company in the above described lawsuits.

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 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 filed a notice of appeal of the judgment.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Effective February 1, 2018, as a result of a recent 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.

(collectively, “WGL”) were involved in multiple contractual disputes involving firm gas sales contracts executed June 20, 2014 (the “Contracts”) that the Company began delivering gas under in January 2016.

In late 2015, WGL asserted that the natural gas index price specified in the Contracts was no longer appropriate and sought to invoke an alternative index clause in the Contracts.

This dispute was referred to arbitration.

In January 2017, the arbitration panel ruled in the Company’s favor and found that the natural gas index price specified in the Contracts should remain.

In March of 2017, WGL filed a lawsuit against the Company in Colorado district court claiming that the Company breached contractual obligations by failing to deliver “TCO pool” gas, ultimately seeking damages of more than $ 40 million.

Subsequently, after WGL failed to take certain volumes of gas required under the Contracts, the Company filed a separate lawsuit against WGL to recover damages that WGL refused to pay.

These two lawsuits were consolidated and tried in June 2019.

On June 20, 2019, the Company was awarded a jury verdict of approximately $ 96 million in damages against WGL.

In addition, the jury rejected WGL’s claim against the Company, finding that the Company did not breach the Contracts.

On December 10, 2020, the Colorado Court of Appeals affirmed the judgment of the trial court in favor of the Company.

In February 2021, the Company and its royalty owners received a gross payment of approximately $ 107 million from WGL, which was in full satisfaction and discharge of the June 2019 judgment entered in favor of the Company.

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

During the year ended December 31, 2019, the Company incurred $ 14 million of costs for the delay or cancellation of drilling and completion contracts with third-party contractors.

(17) Related Parties

1 unchanged sentence

Effective March 13, 2019, Antero Resources accounts for Antero Midstream Corporation as an equity method investment.

See Note 3 to the consolidated financial statements for more discussion on the Transactions.

See Note 3—Deconsolidation of Antero Midstream Partners LP to the consolidated financial statements for more discussion on the Transactions.

Substantially all of the revenues for Antero Midstream Partners or Antero Midstream Corporation were and are derived from transactions with Antero Resources.

See Note 18 to the consolidated financial statements for the operating results of the Company’s reportable segments.

See Note 18—Segment Information to the consolidated financial statements for the operating results of the Company’s reportable segments.

(18) Segment Information

See Note 2(t) to the 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’ result;

however, the Company’s segment disclosures include the results of our unconsolidated affiliates due to their significance to the Company’s operations.

See Note 3 to the consolidated financial statements for further discussion on the Transactions.

See Note 2(t)—Summary of Significant Accounting Policies—Industry Segments and Geographic Information to the consolidated financial statements for a description of the Company’s determination of its reportable segments.

Revenues from midstream services 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, Antero Resources included the results of Antero Midstream Partners in its consolidated financial statements.

Effective March 13, 2019, Antero no longer consolidates the results of Antero Midstream in its 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

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Partners LP to the 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.

4 unchanged sentences

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 to the consolidated financial statements.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

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 consolidated financial statements.

The operating results and assets of the Company’s reportable segments were as follows for the years ended December 31, 2018, 2019 and 2020 (in thousands):

12 unchanged sentences

Segment assets

( 1,044,842 )

Capital expenditures for segment assets

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Equity Method

Elimination of

Investment in

Transactions and

Unconsolidated

Corporation (1)

Year Ended December 31, 2019

7 unchanged sentences

General and administrative

( 1,261,890 )

Operating income (loss)

Equity in earnings of unconsolidated affiliates

Equity in earnings (loss) of unconsolidated affiliates

Investments in unconsolidated affiliates

Segment assets

1 unchanged sentence

Capital expenditures for segment assets

(1) Includes the consolidated results of Antero Midstream Partners through March 12, 2019 and results of the Company’s equity method investment in Antero Midstream Corporation effective March 13, 2019.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Equity Method

3 unchanged sentences

Unconsolidated

and production

Year Ended December 31, 2020

8 unchanged sentences

( 1,018,357 )

Operating income (loss)

Operating loss

Equity in earnings (loss) of unconsolidated affiliates

3 unchanged sentences

Capital expenditures for segment assets

(19) Condensed Consolidating Financial Information

(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 the Company (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 the Company or a restricted subsidiary of the Company, 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 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 the Company 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 Condensed Consolidating Balance Sheets at December 31, 2018 and 2019, and the related Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) and Condensed Consolidating Statements of Cash Flows for the years ended December 31, 2017, 2018 and 2019, present financial information for Antero Resources on a stand-alone basis (carrying its investment in subsidiaries using the equity method), financial information for the subsidiary guarantors, financial information for the non-guarantor subsidiaries, and the consolidation and elimination entries necessary to arrive at the information for the Company on a consolidated basis.

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.

1 unchanged sentence

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Condensed Consolidating Balance Sheet

December 31, 2018

(In thousands)

Non-Guarantor

Current assets:

Accounts receivable, net

Intercompany receivables

Accrued revenue

Derivative instruments

Other current assets

Total current assets

Property and equipment:

Oil and gas properties, at cost (successful efforts method):

Unproved properties

Proved properties

Water handling and treatment systems

Gathering systems and facilities

Other property and equipment

Less accumulated depletion, depreciation, and amortization

( 3,654,392 )

( 4,153,725 )

Property and equipment, net

Derivative instruments

Investment in Antero Midstream Partners

Contingent acquisition consideration

Investments in unconsolidated affiliates

Liabilities and Equity

Current liabilities:

Accounts payable

Intercompany payable

Accrued liabilities

Revenue distributions payable

Derivative instruments

Short-term lease liabilities

Other current liabilities

Total current liabilities

Long-term liabilities:

Long-term debt

Deferred income tax liability

Contingent acquisition consideration

Long-term lease liabilities

Other liabilities

Total liabilities

Stockholders' equity:

Partners' capital

( 1,691,508 )

Additional paid-in capital

Accumulated earnings

Total stockholders' equity

Noncontrolling interests in consolidated subsidiary

Total liabilities and equity

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Condensed Consolidating Balance Sheet

December 31, 2019

Balance Sheet

Parent (Antero)

(in thousands)

Non-Guarantor

Current assets:

Accounts receivable, net

Accounts receivable, non-guarantor subsidiaries

Accounts receivable, related parties

Accrued revenue

Derivative instruments

Other current assets

Total current assets

Property and equipment:

Oil and gas properties, at cost (successful efforts method):

Unproved properties

Proved properties

Gathering systems and facilities

Other property and equipment

Less accumulated depletion, depreciation, and amortization

( 3,327,629 )

Property and equipment, net

Operating leases right-of-use assets

Derivative instruments

Investments in unconsolidated affiliates

Investments in consolidated affiliates

( 1,111,579 )

Liabilities and Equity

Current liabilities:

Accounts payable

Noncurrent assets

Accounts payable, non-guarantor subsidiaries

Accounts payable, related parties

Accrued liabilities

Revenue distributions payable

Derivative instruments

Short-term lease liabilities

Other current liabilities

Total current liabilities

Long-term liabilities:

Long-term debt

Deferred income tax liability

Derivative instruments

Long-term lease liabilities

Other liabilities

Noncurrent liabilities

Total liabilities

Stockholders' equity:

Additional paid-in capital

Accumulated earnings

Total stockholders' equity

Total liabilities and equity

( 1,111,579 )

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Condensed Consolidating Statement of Operations and Comprehensive Income

Year Ended December 31, 2017

(In thousands)

Non-Guarantor

Revenue and other:

Natural gas sales

Natural gas liquids sales

Commodity derivative fair value gains

Gathering, compression, water handling and treatment

Marketing derivative loss

Total revenue and other

Operating expenses:

Lease operating

Gathering, compression, processing, and transportation

Production and ad valorem taxes

Impairment of unproved properties

Impairment of gathering systems and facilities

Depletion, depreciation, and amortization

Accretion of asset retirement obligations

General and administrative

Change in fair value of contingent acquisition consideration

Total operating expenses

Operating income

Other income (expenses):

Equity in earnings of unconsolidated affiliates

Loss on early extinguishment of debt

Equity in earnings (loss) of Antero Midstream

Total other expenses

Income before income taxes

Provision for income tax benefit

Net income and comprehensive income including noncontrolling interests

Net income and comprehensive income attributable to noncontrolling interests

Net income and comprehensive income attributable to Antero Resources Corporation

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Year Ended December 31, 2018

(In thousands)

Non-Guarantor

Revenue and other:

Natural gas sales

Natural gas liquids sales

Commodity derivative fair value losses

Gathering, compression, water handling and treatment

( 1,006,595 )

Marketing derivative fair value gains

Gain on sale of assets

Total revenue and other

Operating expenses:

Lease operating

Gathering, compression, processing, and transportation

Production and ad valorem taxes

Impairment of oil and gas properties

Impairment of midstream assets

Depletion, depreciation, and amortization

Accretion of asset retirement obligations

General and administrative

Accretion of contingent acquisition consideration

Total operating expenses

Operating income (loss)

Other income (expenses):

Equity in earnings of unconsolidated affiliates

Interest expense, net

Equity in earnings (loss) of consolidated subsidiaries

Total other expenses

Income (loss) before income taxes

Provision for income tax benefit

Net income (loss) and comprehensive income (loss) including noncontrolling interests

Net income and comprehensive income attributable to noncontrolling interests

Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Year Ended December 31, 2019

Statement of Operations

Parent (Antero)

(in thousands)

Non-Guarantor

Revenue and other:

Natural gas sales

Natural gas liquids sales

Commodity derivative fair value gains

Gathering, compression, water handling and treatment

Total revenue and other

Operating expenses

Lease operating

Gathering, compression, processing, and transportation

Production and ad valorem taxes

Impairment of oil and gas properties

Impairment of midstream assets

Depletion, depreciation, and amortization

Loss on sale of assets

Accretion of asset retirement obligations

General and administrative

Contract termination and rig stacking

Accretion of contingent acquisition consideration

Total operating expenses

Operating income (loss)

( 1,053,610 )

Other income (expenses):

Water earnout

Equity in earnings (loss) of unconsolidated affiliates

Equity in earnings of affiliates

Loss on the sale of equity investment shares

Impairment of equity investments

Gain on deconsolidation of Antero Midstream Partners LP

Interest expense, net

Gain on early extinguishment of debt

Total other income (expenses)

Income before income taxes

Provision for income tax expense

Net income (loss) and comprehensive income (loss) including noncontrolling interests

Net income and comprehensive income attributable to noncontrolling interests

Net income and comprehensive income attributable to Antero Resources Corporation

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2017

(In thousands)

Non-Guarantor

Cash flows provided by (used in) operating activities:

Net income including noncontrolling interests

Adjustment to reconcile net income to net cash

provided by operating activities:

Depletion, depreciation, amortization, and accretion

Change in fair value of contingent acquisition consideration

Impairment of oil and gas properties

Impairment of midstream assets

Commodity derivative fair value gains

Gains on settled commodity derivatives

Proceeds from derivative monetizations

Marketing derivative losses

Deferred income tax benefit

Gain on sale of assets

Equity-based compensation expense

Loss on early extinguishment of debt

Equity in earnings of Antero Midstream

Equity in earnings of unconsolidated affiliates

Distributions of earnings from unconsolidated affiliates

Distributions from subsidiaries

Changes in current assets and liabilities

Net cash provided by operating activities

Cash flows provided by (used in) investing activities:

Additions to proved properties

Additions to unproved properties

Drilling and completion costs

( 1,455,554 )

( 1,281,985 )

Additions to water handling and treatment systems

Additions to gathering systems and facilities

Additions to other property and equipment

Investments in unconsolidated affiliates

Change in other assets

Net cash used in investing activities

( 1,856,041 )

( 2,461,630 )

Cash flows provided by (used in) financing activities:

Issuance of common units by Antero Midstream

Sale of common units in Antero Midstream by Antero Resources Corporation

Borrowings (repayments) on bank credit facility, net

Payments of deferred financing costs

Distributions

Employee tax withholding for settlement of equity compensation awards

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2018

(In thousands)

Non-Guarantor

(Antero Midstream)

Cash flows provided by (used in) operating activities:

Net income (loss) including noncontrolling interests

Adjustment to reconcile net income (loss) to net cash provided by operating activities:

Depletion, depreciation, amortization, and accretion

Changes in fair value of contingent acquisition consideration

Impairment of oil and gas properties

Impairment of midstream assets

Commodity derivative fair value losses

Gains on settled commodity derivatives

Premium paid on derivative contracts

Proceeds from derivative monetizations

Marketing derivative fair value gains

Gains on settled marketing derivatives

Deferred income tax benefit

Gain on sale of assets

Equity-based compensation expense

Equity in earnings (loss) of consolidated subsidiaries

Equity in earnings of unconsolidated affiliates

Distributions of earnings from unconsolidated affiliates

Distributions from Antero Midstream

Changes in current assets and liabilities

Net cash provided by operating activities

Cash flows provided by (used in) investing activities:

Additions to unproved properties

Drilling and completion costs

( 1,743,587 )

( 1,488,573 )

Additions to water handling and treatment systems

Additions to gathering systems and facilities

Additions to other property and equipment

Investments in unconsolidated affiliates

Change in other assets

Change in other liabilities

Net cash used in investing activities

( 1,923,384 )

( 2,350,724 )

Cash flows provided by (used in) financing activities:

Repurchases of common stock

Borrowings (repayments) on bank credit facility, net

Payments of deferred financing costs

Distributions

Employee tax withholding for settlement of equity compensation awards

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2019

(In thousands)

Non-Guarantor

(Antero Midstream)

Cash flows provided by (used in) operating activities:

Net income (loss) including noncontrolling interests

Adjustment to reconcile net income (loss) to net cash provided by operating activities:

Depletion, depreciation, amortization, and accretion

Commodity derivative fair value gains

Gains on settled commodity derivatives

Deferred income tax benefit

Loss on sale of assets

Equity-based compensation expense

Gain on early extinguishment of debt

Loss on sale of equity investment shares

Equity in earnings of affiliates

Equity in (earnings) loss of unconsolidated affiliates

Water earnout

Distributions/dividends of earnings from unconsolidated affiliates

Gain on deconsolidation of Antero Midstream Partners LP

( 1,205,705 )

( 1,406,042 )

Distributions from Antero Midstream Partners LP

Changes in current assets and liabilities

Net cash provided by operating activities

Cash flows provided by (used in) investing activities:

Additions to unproved properties

Drilling and completion costs

( 1,274,683 )

Loss from operations

Net loss and comprehensive loss including noncontrolling interests

( 1,267,897 )

Additions to water handling and treatment systems

Additions to gathering systems and facilities

Additions to other property and equipment

Investments in unconsolidated affiliates

Proceeds from sale of common stock of Antero Midstream Corporation

Proceeds from the Antero Midstream Partners LP Transactions

Change in other assets

Proceeds from sale of assets

Net cash investing activities

Net loss and comprehensive loss attributable to Antero Resources Corporation

( 1,267,897 )

Cash flows provided by (used in) financing activities:

Repurchases of common stock

Issuance of senior notes

Repayment of senior notes

Borrowings (repayments) on bank credit facilities, net

Payments of deferred financing costs

Distributions to noncontrolling interests in Antero Midstream Partners LP

Employee tax withholding for settlement of equity compensation awards

Net cash provided by (used in) financing activities

Antero Midstream Partners LP cash at deconsolidation

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

(20) Quarterly Financial Information (Unaudited)

The Company’s quarterly consolidated financial information for the years ended December 31, 2019 and 2020 is summarized in the tables below (in thousands, except per share amounts).

The Company’s quarterly operating results are affected by the volatility of commodity prices and the resulting effect on our production revenues and the fair value of commodity derivatives.

The Company’s quarterly operating results are affected by the volatility of commodity prices and the resulting effect on the Company’s production revenues and the fair value of commodity derivatives.

Year Ended December 31, 2019

2 unchanged sentences

Operating income (loss)

Gain on deconsolidation of Antero Midstream Partners LP

Net income (loss) and comprehensive income (loss) including noncontrolling interest

2 unchanged sentences

Earnings (loss) per common share—basic

Earnings (loss) per common share—assuming dilution

Earnings (loss) per common share—diluted

Year Ended December 31, 2020

2 unchanged sentences

Operating income (loss)

Gain on deconsolidation of Antero Midstream Partners LP

Net income (loss) and comprehensive income (loss) including noncontrolling interest

Net income attributable to noncontrolling interest

Net income (loss) attributable to noncontrolling interest

Net income (loss) attributable to Antero Resources Corporation

Earnings (loss) per common share

Earnings (loss) per common share—basic

Earnings (loss) per common share—diluted

Operating income is calculated as operating revenues minus operating expenses.

During the third and fourth quarters of 2019, operating expenses were impacted by impairments for proved properties, unproved properties and equity investments that were material to the quarters as presented.

See Note 2 to the consolidated financial statement for more information

During the third and fourth quarters of 2019, operating expenses were impacted by impairments for proved properties, unproved properties and equity method investments that were material to the quarters as presented.

See Note 2—Summary of Significant Accounting Policies to the consolidated financial statement for more information.

(21) Supplemental Information on Oil and Gas Producing Activities (Unaudited)

6 unchanged sentences

Unproved properties

Total oil and gas properties

Accumulated depletion and depreciation

4 unchanged sentences

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

(b) Costs Incurred in Certain Oil and Gas Activities

14 unchanged sentences

Depletion and depreciation

Impairment of oil and gas properties

Impairment of unproved properties

Results of operations before income tax (expense) benefit

12 unchanged sentences

The Company estimates proved reserves using average prices received for the previous 12 months .

Proved undeveloped reserves include drilling locations that are more than one offset location away from productive wells and are reasonably certain of containing proved reserves and which are scheduled to be drilled within five years under the Company’s development plans.

The Company’s development plans for drilling scheduled over the next five years are subject to many

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

The Company’s development plans for drilling scheduled over the next five years are subject to many uncertainties and variables, including availability of capital, future commodity prices, cash flows from operations, future drilling and completion costs, and other economic factors.

uncertainties and variables, including availability of capital, future commodity prices, net cash provided by operating activities, future drilling and completion costs, and other economic factors.

Proved reserves:

9 unchanged sentences

December 31, 2020 (1)

Proved reserves for the noncontrolling interest in Martica as of December 31, 2020 were 254 Bcfe, which consists of 159 Bcf of natural gas, 15 MMBbl of NGLs and 0.5 MMBbl of oil and condensate.

Proved developed reserves:

6 unchanged sentences

December 31, 2020 (2)

Significant items included in the categories of proved developed and undeveloped reserve changes for the years 2017, 2018 and 2019 in the above table include the following:

2017 Changes in Reserves

● Extensions, discoveries, and other additions of 2,148 Bcfe resulted from delineation and development drilling in both the Marcellus and Utica Shales.

● Purchases of 373 Bcfe related to the acquisition of developed and undeveloped leasehold acreage in both the Marcellus and Utica Shales.

● Net upward revisions of 176 Bcfe include:

● Upward revisions of 345 Bcfe related to improved well performance.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

● Net downward revisions of 188 Bcfe related to revisions to our five-year development plan.

This figure includes upward revisions of 2,092 Bcfe for previously proved undeveloped properties reclassified from non-proved properties at December 31, 2016 to proved undeveloped at December 31, 2017 due to their addition to our five-year development plan, and downward revisions of 2,280 Bcfe for locations that were not developed within five years of initial booking as proved reserves.

● Upward revisions of 132 Bcfe were due to increases in prices for natural gas, NGLs, and oil.

● Downward revisions of 113 Bcfe are due to a decrease in our assumed future ethane recovery.

● We produced 822 Bcfe during the year ended December 31, 2017.

(1) Proved developed reserves for the noncontrolling interest in Martica as of December 31, 2020 were 181 Bcfe, which consists of 110 Bcf of natural gas, 11 MMBbl of NGLs and 0.3 MMBbl of oil and condensate.

(2) Proved undeveloped reserves for the noncontrolling interest in Martica as of December 31, 2020 were 73 Bcfe, which consists of 49 Bcf of natural gas, 4 MMBbl of NGLs and 0.2 MMBbl of oil and condensate.

Significant items included in the categories of proved developed and undeveloped reserve changes for the years ended December 31, 2018, 2019 and 2020 in the above table include the following:

2018 Changes in Reserves

● Extensions, discoveries, and other additions of 2,781 Bcfe resulted from delineation and development drilling in both the Marcellus and Utica Shales.

● Extensions, discoveries, and other additions of 2,781 Bcfe resulted from delineation and development drilling in the Appalachian Basin.

● Net downward revisions of 1,042 Bcfe include:

● Downward revisions of 433 Bcfe related to well performance.

● Net downward revisions of 742 Bcfe related to optimization to our five-year development plan.

This figure includes upward revisions of 1,722 Bcfe for previously proved undeveloped properties reclassified from non-proved properties due to their addition to our five-year development plan, and downward revisions of 2,464 Bcfe for locations that were not developed within five years of initial booking as proved reserves.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

● Net downward revisions of 742 Bcfe related to optimization to the Company’s five-year development plan.

This figure includes upward revisions of 1,722 Bcfe for previously proved undeveloped properties reclassified from non-proved properties due to their addition to the Company’s five-year development plan, and downward revisions of 2,464 Bcfe for locations that were not developed within five years of initial booking as proved reserves.

● Upward revisions of 18 Bcfe were due to increases in prices for natural gas, NGLs, and oil.

● Upward revisions of 115 Bcfe are due to an increase in our assumed future ethane recovery.

We produced 989 Bcfe during the year ended December 31, 2018.

● Upward revisions of 115 Bcfe are due to an increase in the Company’s assumed future ethane recovery.

The Company produced 989 Bcfe during the year ended December 31, 2018.

2019 Changes in Reserves

● Extensions, discoveries, and other additions of 3,705 Bcfe resulted from delineation and development drilling in both the Marcellus and Utica Shales.

● Extensions, discoveries, and other additions of 3,705 Bcfe resulted from delineation and development drilling in the Appalachian Basin.

● Net downward revisions of 1,648 Bcfe include:

● Upward revisions of 63 Bcfe related to well performance.

● Net downward revisions of 1,705 Bcfe related to optimization to our five-year development plan.

This figure includes upward revisions of 595 Bcfe for previously proved undeveloped properties reclassified from non-proved properties due to their addition to our five-year development plan, and downward revisions of 2,300 Bcfe for locations that were not developed within five years of initial booking as proved reserves.

● Net downward revisions of 1,705 Bcfe related to optimization to the Company’s five-year development plan.

This figure includes upward revisions of 595 Bcfe for previously proved undeveloped properties reclassified from non-proved properties due to their addition to the Company’s five-year development plan, and downward revisions of 2,300 Bcfe for locations that were not developed within five years of initial booking as proved reserves.

● Downward revisions of 157 Bcfe were due to increases in prices for natural gas, NGLs, and oil.

● Upward revisions of 315 Bcfe are due to an increase in our assumed future ethane recovery.

● Upward revisions of 315 Bcfe are due to an increase in the Company’s assumed future ethane recovery.

● Downward revisions of 164 Bcfe are due to the deconsolidation of Antero Midstream Partners.

1 unchanged sentence

Prior to deconsolidation, Antero Resources’ consolidated reserves included the elimination of full fees paid by Antero Resources to Antero Midstream Partners and the inclusion of the operating costs and capital incurred by Antero Midstream Partners.

The Company produced 1,175 Bcfe during the year ended December 31, 2019.

2020 Changes in Reserves

● Extensions, discoveries, and other additions of 1,105 Bcfe resulted from delineation and development drilling in the Appalachian Basin.

● Net downward revisions of 940 Bcfe include:

● Net downward revision of 1,126 Bcfe due to decreases in prices for natural gas, NGLs, and oil.

● Net downward revision of 922 Bcfe for locations that were not developed within five years of initial booking as proved reserves.

● Upward revisions of 485 Bcfe are due to an increase in the Company’s assumed future ethane recovery.

● Net upward revision of 132 Bcfe due to schedule optimization primarily driven by previously proved undeveloped properties reclassified from non-proved to proved undeveloped.

● Net upward performance revisions of 491 Bcfe.

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2017, 2018 and 2019

We produced 1,175 Bcfe during the year ended December 31, 2019.

● Sales of reserves of 113 Bcfe related to the VPP.

The Company produced 1,310 Bcfe during the year ended December 31, 2020.

(e) Standardized Measure of Discounted Future Net Cash Flow

The following table sets forth the standardized measure of the discounted future net cash flows attributable to the Company’s proved reserves.

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Standardized measure of discounted future net cash flows (2)

The 12-month weighted average prices used to estimate the Company’s total equivalent reserves were as follows (per Mcfe):

December 31, 2017

December 31, 2018

December 31, 2019

(1) Based on the 12-month average of the first-day-of-the-month prices used in the computation of PV-10 as of December 31, 2020, the future taxable net income generated over the life of the Company’s proved reserves is expected to be less than its NOL carryforward deductions and therefore, under the standardized measure, there is no deduction for federal or state income taxes.

(2) The standardized measure of discounted future net cash flows for the noncontrolling interest in Martica was $ 359 million for the year ended December 31, 2020.

The Company used the following 12-month weighted average prices to estimate its total equivalent reserves (per Mcfe):

Year Ended December 31,

12-month weighted average price

ANTERO RESOURCES CORPORATION

Notes to Consolidated Financial Statements (Continued)

(f) Changes in Standardized Measure of Discounted Future Net Cash Flow

12 unchanged sentences

Beginning of year

(1) Includes $ 3.3 billion in increased production costs due to the deconsolidation of Antero Midstream Partners.

(2) Includes $ 185 million in increased future development costs due to the deconsolidation of Antero Midstream Partners.

End of year (3)

(1) Includes $ 3.3 billion in increased production costs due to the deconsolidation of Antero Midstream Partners for the year ended December 31, 2019.

(2) Includes $ 185 million in increased future development costs due to the deconsolidation of Antero Midstream Partners for the year ended December 31, 2019.

(3) The standardized measure of discounted future net cash flows for the noncontrolling interest in Martica was $ 359 million for the year ended December 31, 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures