What changed in this filing

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Item 1. Financial Statements

2021-07-28 compared with 2021-04-28 · 359 added, 201 removed, 807 unchanged (41% of the section changed)

6 unchanged sentences

Unregistered Sales of Equity Securities

Other Information

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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We caution investors that these forward-looking statements are subject to all of the risks and uncertainties incidental to our business, most of which are difficult to predict and many of which are beyond our control.

These risks include, but are not limited to, commodity price volatility, inflation, availability of drilling, completion, and production equipment and services, environmental risks, drilling and completion and other operating risks, marketing and transportation risks, regulatory changes, the uncertainty inherent in estimating natural gas, NGLs, and oil reserves and in projecting future rates of production, cash flows and access to capital, the timing of development expenditures, conflicts of interest among our stockholders, impacts of world health events (including the COVID-19 pandemic) and the other risks described or referenced under the heading “Item 1A.

These risks include, but are not limited to, commodity price volatility, inflation, availability of drilling, completion, and production equipment and services, environmental risks, drilling and completion and other operating risks, marketing and transportation risks, regulatory changes, the uncertainty inherent in estimating natural gas, NGLs, and oil reserves and in projecting future rates of production, cash flows and access to capital, the timing of development expenditures, conflicts of interest among our stockholders, impacts of world health events (including the COVID-19 pandemic), cybersecurity risks and the other risks described or referenced under the heading “Item 1A.

Risk Factors” herein, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”), which is on file with the Securities and Exchange Commission (“SEC”).

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Current assets:

Cash and cash equivalents

Accounts receivable

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authorized - 1,000,000 shares;

268,672 shares and 301,190 shares issued and outstanding as of December 31, 2020 and March 31, 2021, respectively

268,672 shares and 313,527 shares issued and outstanding as of December 31, 2020 and June 30, 2021, respectively

Additional paid-in capital

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(In thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Revenue and other:

1 unchanged sentence

Natural gas liquids sales

Commodity derivative fair value losses

Amortization of deferred revenue, VPP

Gain on sale of assets

Other income (loss)

Total revenue

Operating expenses:

Lease operating

Gathering, compression, processing, and transportation

Production and ad valorem taxes

Impairment of oil and gas properties

Depletion, depreciation, and amortization

Accretion of asset retirement obligations

General and administrative (including equity-based compensation expense of $ 7,973 and $ 4,249 in 2020 and 2021, respectively)

Contract termination and rig stacking

Total operating expenses

Operating loss

Other income (expense):

Equity in earnings of unconsolidated affiliate

Transaction expense

Interest expense, net

Gain (loss) on early extinguishment of debt

Loss on convertible note equitization

Total other income (expense)

Loss before income taxes

Provision for income tax benefit

Net loss and comprehensive loss including noncontrolling interests

net income (loss) and comprehensive income (loss) attributable to noncontrolling interests

Net loss and comprehensive loss attributable to Antero Resources Corporation

Loss per share—basic

Loss per share—diluted

Weighted average number of shares outstanding:

See accompanying notes to unaudited condensed consolidated financial statements.

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

Six Months Ended June 30,

Revenue and other:

Natural gas sales

Natural gas liquids sales

Commodity derivative fair value gains (losses)

( 1,009,596 )

Amortization of deferred revenue, VPP

Gain on sale of assets

Total revenue

9 unchanged sentences

Total operating expenses

Operating income

Operating loss

Other income (expense):

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Gain (loss) on early extinguishment of debt

Loss on convertible note equitization

Loss on convertible note equitizations

Impairment of equity method investment

2 unchanged sentences

Loss before income taxes

( 1,054,267 )

Provision for income tax benefit

Net loss and comprehensive loss including noncontrolling interests

net income and comprehensive income attributable to noncontrolling interests

net income (loss) and comprehensive income (loss) attributable to noncontrolling interests

Net loss and comprehensive loss attributable to Antero Resources Corporation

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Balances, March 31, 2020

Issuance of common units in Martica Holdings, LLC

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

Distributions to noncontrolling interest

Repurchases and retirements of common stock

Equity-based compensation

Net income (loss) and comprehensive income (loss)

Balances, June 30, 2020

Balances, December 31, 2020

7 unchanged sentences

Balances, March 31, 2021

Issuance of common shares

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

Distributions to noncontrolling interest

Equity-based compensation

Net loss and comprehensive loss

Balances, June 30, 2021

See accompanying notes to unaudited condensed consolidated financial statements.

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(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows provided by (used in) operating activities:

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Commodity derivative fair value losses (gains)

Gains on settled commodity derivatives

Gains (losses) on settled commodity derivatives

Payments for derivative monetizations

Gain on sale of assets

Equity-based compensation expense

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(Gain) loss on early extinguishment of debt

Loss on convertible note equitization

Loss on convertible note equitizations

Changes in current assets and liabilities:

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Settlement of water earnout

Proceeds from asset sales

Change in other liabilities

5 unchanged sentences

Repayment of senior notes

( 1,234,698 )

Borrowings (repayments) on bank credit facilities, net

( 1,017,000 )

Payment of debt issuance costs

Sale of noncontrolling interest

Distributions to noncontrolling interests in Martica Holdings LLC

Employee tax withholding for settlement of equity compensation awards

Convertible note equitization

Net cash used in financing activities

Net decrease in cash and cash equivalents

Convertible note equitizations

Net cash provided by (used in) financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

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Cash paid during the period for interest

Increase in accounts payable and accrued liabilities for additions to property and equipment

Increase (decrease) in accounts payable and accrued liabilities for additions to property and equipment

See accompanying notes to unaudited condensed consolidated financial statements.

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The Company targets large, repeatable resource plays where horizontal drilling and advanced fracture stimulation technologies provide the means to economically develop and produce natural gas, NGLs, and oil from unconventional formations.

The Company’s corporate headquarters are located in Denver, Colorado.

The Company’s corporate headquarters is located in Denver, Colorado.

(2) Summary of Significant Accounting Policies

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These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, and, accordingly, do not include all of the information and footnotes required by GAAP for complete consolidated financial statements.

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Company’s financial position as of December 31, 2020 and March 31, 2021 and its results of operations and cash flows for the three months ended March 31, 2020 and 2021.

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Company’s financial position as of December 31, 2020 and June 30, 2021 and its results of operations for the three and six months ended June 30, 2020 and 2021 and cash flows for the six months ended June 30, 2020 and 2021.

The Company has no items of other comprehensive income or loss;

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

Operating results for the period ended March 31, 2021 are not necessarily indicative of the results that may be expected for the full year because of the impact of fluctuations in prices received for natural gas, NGLs, and oil, natural production declines, the uncertainty of exploration and development drilling results, fluctuations in the fair value of derivative instruments, the impacts of COVID-19 and other factors.

Operating results for the period ended June 30, 2021 are not necessarily indicative of the results that may be expected for the full year because of the impact of fluctuations in prices received for natural gas, NGLs, and oil, natural production declines, the uncertainty of exploration and development drilling results, fluctuations in the fair value of derivative instruments, the impacts of COVID-19 and other factors.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Antero Resources Corporation, its wholly owned subsidiaries, any entities in which the Company owns a controlling interest, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary, including Martica Holdings LLC (“Martica”).

The noncontrolling interest reflected in the Company’s unaudited condensed consolidated financial statements for the three months ended March 31, 2021 represents the Company’s interest in Martica owned by third parties.

The accompanying unaudited condensed consolidated financial statements include the accounts of Antero Resources Corporation, its wholly owned subsidiaries, and its variable interest entity (“VIE”), Martica Holdings LLC, (“Martica”), for which the Company is the primary beneficiary.

The noncontrolling interest reflected in the Company’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2020 and 2021 represents the Company’s interest in Martica owned by third parties.

See Note 3—Transactions to the unaudited condensed consolidated financial statements for more information on Martica.

Cash and Cash Equivalents

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

As of March 31, 2021, the book overdrafts included within accounts payable and revenue distributions payable were $ 12 million and $ 23 million, respectively.

As of December 31, 2020, the book overdrafts included within accounts payable and revenue distributions payable were $ 11 million and $ 15 million, respectively.

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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—diluted for each period is computed after giving consideration to the potential dilution from outstanding equity awards and shares of common stock issuable upon conversion of the 2026 Convertible Notes (as defined below in Note 7—Long-Term Debt), calculated using the treasury stock method.

The Company includes restricted stock unit (“RSUs”) awards, performance share unit (“PSUs”) awards and stock

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options in the calculation of diluted weighted average shares outstanding based on the number of common shares that would be issuable if the end of the period was also the end of the performance period required for the vesting of the awards.

During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all equity awards is anti-dilutive.

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 effects of all equity awards and the 2026 Convertible Notes are anti-dilutive.

The following is a reconciliation of the Company’s basic weighted average shares outstanding to diluted weighted average shares outstanding during the periods presented (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Basic weighted average number of shares outstanding

7 unchanged sentences

2026 Convertible Notes

(1) The potential dilutive effects of these awards were excluded from the computation of diluted earnings (loss) per common share because the inclusion of these awards would have been anti-dilutive.

(1) The potential dilutive effects of these awards were excluded from the computation of diluted earnings (loss) per common share because the inclusion of these awards would have been anti-dilutiv e.

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

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

During the three months ended June 30, 2021, West Virginia enacted a new tax law that is effective January 1, 2022 on a prospective basis that is expected to reduce the Company’s net income or loss that is apportioned to West Virginia.

As a result of this tax law change, the Company’s deferred income tax liability was reduced by $ 34 million as of June 30, 2021, which includes a $ 48 million increase in deferred tax assets, partially offset by a $ 14 million increase in valuation allowance.

Recently Issued Accounting Standards

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The Company is evaluating the transition method it plans to use for adoption on January 1, 2022.

Upon adoption of this new standard, the Company expects to reclassify $ 15 million, net of deferred income taxes and equity issuance costs, to long-term debt and deferred income tax liability, as applicable, from stockholders’ equity, which amount is subject to adjustment for any conversions or other transactions until adoption of this new standard.

Additionally, 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 three months ended March 31, 2021 and the weighted average diluted shares outstanding will increase from 15 million for the three months ended March 31, 2021 to 32 million shares under the if-converted method (defined below in Note 7—Long-Term Debt) .

However, the Company has utilized the modified retrospective approach to quantify the expected impact of this standard on its financial statements.

Upon adoption of this new standard, the Company expects to reclassify between $ 15 million and $ 30 million, net of deferred income taxes and equity issuance costs, to long-term debt and deferred income tax liability, as applicable, from stockholders’ equity, which amount is subject to adjustment for any conversions or other transactions until adoption of this new standard.

Additionally,

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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 three and six months ended June 30, 2021.

T he Company does not believe that adoption of the standard will impact its operational strategies or development prospects.

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The Company adopted this ASU on January 1, 2021, and it did not have a material impact on the Company's unaudited condensed consolidated financial statements .

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(3) Transactions

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The Company met the applicable production thresholds related to the third quarter of 2020 and first quarter of 2021 as of September 31, 2020 and March 31, 2021, respectively.

The Company received a $ 51 million cash distribution during the fourth quarter of 2020 and expects to receive an additional $ 51 million cash distribution that will be paid during the second quarter of 2021.

The Company received a $ 51 million cash distribution during each of the fourth quarter of 2020 and the second quarter of 2021.

The ORRIs include an overriding royalty interest of 1.25 % of the Company’s working interest in all of its proved operated developed properties in West Virginia and Ohio, subject to certain excluded wells (the “Initial PDP Override”), and an overriding royalty interest of 3.75 % of the Company’s working interest in all of its undeveloped properties in West Virginia and Ohio (the “Development Override”).

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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, Extractive Activities—Oil and Gas (“ASC 932”), and the net proceeds were recorded as deferred revenue in the unaudited condensed consolidated balance sheets.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Deferred revenue is recognized as volumes are delivered using the units-of-production method over the term of the VPP.

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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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

instrument recorded at fair value.

See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for more information on the Company’s derivative instruments.

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The Company has accounted for the drilling partnership as a conveyance under ASC 932 and such conveyances are recorded in the unaudited condensed consolidated financial statements as QL obtains its proportionate working interest in each well.

No gain or loss was recognized for the interests conveyed during the three months ended March 31, 2021.

No gain or loss was recognized for the interests conveyed during the three and six months ended June 30, 2021.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Disaggregation of Revenue

1 unchanged sentence

See Note 16—Reportable Segments for more information on reportable segments.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Reportable Segment

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Total revenue from contracts with customers

Income from derivatives, deferred revenue and other sources

Income (loss) from derivatives, deferred revenue and other sources

Total revenue

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Transaction Price Allocated to Remaining Performance Obligations

6 unchanged sentences

Accordingly, the Company’s contracts do not give rise to contract assets or liabilities.

As of December 31, 2020 and March 31, 2021, the Company’s receivables from contracts with customers were $ 425 million and $ 447 million, respectively.

As of December 31, 2020 and June 30, 2021, the Company’s receivables from contracts with customers were $ 425 million and $ 494 million, respectively.

(5) Equity Method Investment

Summary of Equity Method Investment

As of March 31, 2021, Antero owned approximately 29.2 % of Antero Midstream Corporation’s common stock, which is reflected in Antero’s unaudited condensed consolidated financial statements using the equity method of accounting.

The following table sets forth a reconciliation of Antero’s investment in unconsolidated affiliate for the three months ended March 31, 2021 (in thousands):

As of June 30, 2021, Antero owned approximately 29.2 % of Antero Midstream Corporation’s common stock, which is reflected in Antero’s unaudited condensed consolidated financial statements using the equity method of accounting.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The following table sets forth a reconciliation of Antero’s investment in unconsolidated affiliate for the six months ended June 30, 2021 (in thousands):

Balance as of December 31, 2020 (1)

Equity in loss of unconsolidated affiliate

Equity in earnings of unconsolidated affiliate

Dividends from unconsolidated affiliate

Elimination of intercompany profit

Balance as of March 31, 2021 (1)

(1) The Company’s investment in Antero Midstream Corporation as of December 31, 2020 and March 31, 2021 was $ 1.1 billion and $ 1.3 billion, respectively, based on the quoted market share price of Antero Midstream Corporation .

Balance as of June 30, 2021 (1)

(1) The Company’s investment in Antero Midstream Corporation as of December 31, 2020 and June 30, 2021 was $ 1.1 billion and $ 1.4 billion, respectively, based on the quoted market share price of Antero Midstream Corporation .

Summarized Financial Information of Antero Midstream Corporation

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Total liabilities and stockholders' equity

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Statement of Operations

Three Months Ended March 31,

Six Months Ended June 30,

Operating expenses

Income (loss) from operations

Income (loss) attributable to the equity method investment

Net income (loss)

(6) Accrued Liabilities

Accrued liabilities as of December 31, 2020 and March 31, 2021 consisted of the following items (in thousands):

Accrued liabilities as of December 31, 2020 and June 30, 2021 consisted of the following items (in thousands):

Capital expenditures

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Interest expense, net

Accrued taxes

Accrued production and ad valorem taxes

Derivative settlements payable

Total accrued liabilities

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(7) Long-Term Debt

Long-term debt as of December 31, 2020 and March 31, 2021 consisted of the following items (in thousands):

Long-term debt as of December 31, 2020 and June 30, 2021 consisted of the following items (in thousands):

Credit Facility (a)

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7.625 % senior notes due 2029 (f)

4.25 % convertible senior notes due 2026 (g)

5.375 % senior notes due 2030 (g)

4.25 % convertible senior notes due 2026 (h)

Total principal

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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.

As of March 31, 2021, the borrowing base under the Credit Facility was $ 2.85 billion and lender commitments were $ 2.64 billion.

As of June 30, 2021, the borrowing base under the Credit Facility was $ 2.85 billion and lender commitments were $ 2.64 billion.

The borrowing base was re-affirmed in the semi-annual redetermination in April 2021.

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

Antero Resources was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2020 and March 31, 2021.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

As of March 31, 2021, Antero Resources had an outstanding balance under the Credit Facility of $ 143 million, with a weighted average interest rate of 3.13 %, and outstanding letters of credit of $ 742 million.

Antero Resources was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2020 and June 30, 2021.

As of June 30, 2021, Antero Resources did not have an outstanding balance under the Credit Facility and had outstanding letters of credit of $ 742 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.

11 unchanged sentences

On March 17, 2015, Antero Resources issued $ 750 million of 5.625 % senior notes due June 1, 2023 (the “2023 Notes”) at par .

The Company repurchased $ 176 million of the 2023 Notes from time to time during 2020, and as of March 31, 2021, $ 574 million principal amount of the 2023 Notes remained outstanding.

The 2023 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

The 2023 Notes rank pari passu to Antero Resources’ other outstanding senior notes.

The 2023 Notes are guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ existing subsidiaries that guarantee the Credit Facility and certain of its future restricted subsidiaries.

Interest on the 2023 Notes is payable on June 1 and December 1 of each year.

Antero Resources may redeem all or part of the 2023 Notes at any time at redemption prices ranging from 101.406 % currently to 100.00 % on or after June 1, 2021.

If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2023 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101 % of the principal amount of the 2023 Notes, plus accrued and unpaid interest.

The Company repurchased or otherwise fully redeemed all of the 2023 Notes between 2020 and the second quarter of 2021.

The 2023 Notes were unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

The 2023 Notes ranked pari passu to Antero Resources’ other outstanding senior notes.

The 2023 Notes were guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ existing subsidiaries that

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

guarantee the Credit Facility and certain of its future restricted subsidiaries.

Interest on the 2023 Notes was payable on June 1 and December 1 of each year.

See “—Debt Repurchase Program” below for further details on 2023 Notes repurchases and redemption.

(d) 5.00 % Senior Notes Due 2025

On December 21, 2016, Antero Resources issued $ 600 million of 5.00 % senior notes due March 1, 2025 (the “2025 Notes”) at par .

The Company repurchased $ 10 million of the 2025 Notes from time to time during 2020, and as of March 31, 2021, $ 590 million principal amount of the 2023 Notes remained outstanding.

The Company repurchased $ 10 million of the 2025 Notes from time to time during 2020, and as of June 30, 2021, $ 590 million principal amount of the 2025 Notes remained outstanding.

The 2025 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

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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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

the 2026 Notes, plus accrued and unpaid interest.

In addition, on or before January 15, 2024, Antero Resources may redeem up to 35 % of the aggregate principal amount of the 2026 Notes, but in an amount not greater than 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.

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Antero 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.

In addition, on or before February 1, 2024, Antero Resources may redeem up to 35 % of the aggregate principal amount of the 2029 Notes, but in an amount not greater than 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.

(g) 4.25 % Convertible Senior Notes Due 2026

(g) 5.375 % Senior Notes Due 2030

On June 1, 2021, Antero Resources issued $ 600 million of 5.375 % senior notes due March 1, 2030 (the “2030 Notes”) at par .

The 2030 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

The 2030 Notes rank pari passu to Antero Resources’ other outstanding senior notes.

The 2030 Notes are

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ existing subsidiaries that guarantee the Credit Facility and certain of its future restricted subsidiaries.

Interest on the 2030 Notes is payable on March 1 and September 1 of each year.

Antero Resources may redeem all or part of the 2030 Notes at any time on or after March 1, 2025 at redemption prices ranging from 102.688 % on or after March 1, 2025 to 100.00 % on or after March 1, 2028.

In addition, on or before March 1, 2025, Antero Resources may redeem up to 35 % of the aggregate principal amount of the 2030 Notes, but in an amount not greater than the net cash proceeds of certain equity offerings, if certain conditions are met, at a redemption price of 105.375 % of the principal amount of the 2030 Notes, plus accrued and unpaid interest.

At any time prior to March 1, 2025, Antero Resources may also redeem the 2030 Notes, in whole or in part, at a price equal to 100 % of the principal amount of the 2030 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 2030 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 2030 Notes, plus accrued and unpaid interest.

(h) 4.25% Convertible Senior Notes Due 2026

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

On September 2, 2020, Antero Resources issued an additional $ 37.5 million of the 2026 Convertible Notes.

During the six months ended June 30, 2021, the Company completed the equitization transactions described below under “—Partial Equitizations of 2026 Convertible Notes,” that extinguished $ 206 million principal amount of the 2026 Convertible Notes, and as of June 30, 2021, $ 82 million principal amount of the 2026 Convertible Notes remained outstanding.

The 2026 Convertible Notes were issued pursuant to an indenture and are senior, unsecured obligations of Antero Resources.

3 unchanged sentences

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 March 31, 2020, the if-converted value of the 2026 Convertible Notes was $ 323 million, which exceeded the principal amount of the 2026 Convertible Notes by $ 185 million.

As of June 30, 2021, the if-converted value of the 2026 Convertible Notes was $ 283 million, which exceeded the principal amount of the 2026 Convertible Notes by $ 201 million.

The 2026 Convertible Notes will mature on September 1, 2026, unless earlier repurchased, redeemed or converted.

3 unchanged sentences

● 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;

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

● upon the occurrence of certain specified corporate events as set forth in the indenture governing the 2026 Convertible Notes.

From and after May 1, 2026, noteholders may convert their 2026 Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

Upon conversion, Antero Resources may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash, shares of Antero Resources’ common stock or a combination of cash and shares of Antero Resources’ common stock, at Antero Resources’ election, in the manner and subject to the terms and conditions provided in the indenture governing the 2026 Convertible Notes.

Antero Resources’ current intent is to settle the remaining principal amount of the 2026 Convertible Notes in cash upon conversion.

The 2026 Convertible Notes have met the Stock Price Condition allowing holders of the 2026 Convertible Notes to exercise their conversion right as of March 31, 2021.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The 2026 Convertible Notes have met the Stock Price Condition allowing holders of the 2026 Convertible Notes to exercise their conversion right as of June 30, 2021.

The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture governing the 2026 Convertible Notes.

11 unchanged sentences

Issuance costs attributable to the equity component were recorded as a charge to additional paid-in capital within the unaudited condensed consolidated balance sheet and statement of stockholders’ equity.

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.

The Company accounted for this transaction as an inducement of the 2026 Convertible Notes, and as a result, the Company recorded a $ 39 million loss on convertible note equitization in the unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2021 for the consideration paid in excess of the original terms of the 2026 Convertible Notes.

Additionally, the Equitization Transactions resulted in a loss on early extinguishment of debt of $ 43 million in the unaudited condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2021.

Partial Equitizations of 2026 Convertible Notes

On January 12, 2021, the Company completed a registered direct offering (the “January 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 January 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 “January Convertible Note Repurchase,” and, collectively with the January Share Offering, the “January 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 January Equitization Transactions had the effect of increasing this conversion rate to 275.3525 shares of common stock per $1,000 principal amount.

The Company accounted for this transaction as an inducement of the 2026 Convertible Notes, and as a result, the Company recorded a $ 39 million loss on convertible note equitization in the unaudited condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2021 for the consideration paid in excess of the original terms of the 2026 Convertible Notes.

Additionally, the January Equitization Transactions resulted in a loss on early extinguishment of debt of $ 41 million in the unaudited condensed consolidated statement of operations and comprehensive loss for the six months ended June 30, 2021.

On May 13, 2021, the Company completed a registered direct offering (the “May Share Offering”) of an aggregate of 11.6 million shares of its common stock at a price of $ 11.01 per share to certain holders of the 2026 Convertible Notes.

The Company used the proceeds from the May Share Offering and approximately $ 26 million of borrowings under the Credit Facility to repurchase from such holders $ 56 million aggregate principal amount of the 2026 Convertible Notes in privately negotiated transactions (the “May Convertible Note Repurchase,” and, collectively with the May Share Offering, the “May 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 May Equitization Transactions had the effect of increasing this conversion rate to 245.2802 shares of common stock per $1,000 principal amount.

The Company accounted for this transaction as an inducement of the 2026 Convertible Notes, and as a result, the Company recorded a $ 12 million loss on convertible note equitization in the unaudited condensed consolidated statements

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

of operations and comprehensive loss for the three and six months ended June 30, 2021 for the consideration paid in excess of the original terms of the 2026 Convertible Notes.

Additionally, the May Equitization Transactions resulted in a loss on early extinguishment of debt of $ 21 million in the unaudited condensed consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2021.

The 2026 Convertible Notes consist of the following (in thousands):

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Equity component (1)

(1) As of December 31, 2020, the equity component of the 2026 Convertible Notes was recorded in additional paid-in capital, net of $ 3 million of issuance costs and $ 28 million of deferred taxes.

As a result of the Equitization Transactions during the first quarter of 2021, the Company repurchased a portion of the equity component for $ 116 million, net of $ 14 million of deferred taxes.

Interest expense recognized on the 2026 Convertible Notes related to the stated interest rate, amortization of the debt discount and debt issuance costs totaled $ 4.4 million for the three months ended March 31, 2021.

(h) Debt Repurchase Program

During the three months ended March 31, 2020, Antero Resources repurchased $ 383 million principal amount of debt at a weighted average discount of 21 % .

The Company recognized a gain of $ 81 million for the three months ended March 31, 2020 on the early extinguishment of the debt repurchased.

During the three months ended March 31, 2021, the Company redeemed the remaining $ 661 million of the 2022 Notes at par, which included a portion of the Company’s 5.375 % senior notes due 2021 and the 2022 Notes, plus accrued and unpaid interest, and as a result, the 2022 Notes were fully retired as of February 10, 2021.

(1) As of December 31, 2020, the equity component attributable to the outstanding 2026 Convertible Notes was recorded in additional paid-in capital, net of $ 3 million of issuance costs and $ 28 million of deferred taxes.

As of June 30, 2021, the equity component attributable to the outstanding 2026 Convertible Notes was recorded in additional paid-in capital net of $ 1 million of issuance costs and $ 8 million of deferred taxes.

Interest expense recognized on the 2026 Convertible Notes related to the stated interest rate, amortization of the debt discount and debt issuance costs totaled $ 2.8 million and $ 7.2 million for the three and six months ended June 30, 2021, respectively.

(i) Debt Repurchase Program

During the three and six months ended June 30, 2020, Antero Resources repurchased $ 236 million and $ 619 million, respectively, principal amount of debt at a weighted average discount of 17 % and 19 % , respectively.

The Company recognized a gain of $ 39 million and $ 120 million for the three and six months ended June 30, 2020, respectively, on the early extinguishment of the debt repurchased.

During the first quarter of 2021, the Company redeemed the remaining $ 661 million of the 2022 Notes at par, plus accrued and unpaid interest, and as a result, the 2022 Notes were fully retired as of February 10, 2021.

The Company redeemed the remaining $ 574 million of the 2023 Notes at par, plus accrued and unpaid interest, during the second quarter of 2021.

The 2023 Notes were fully retired as of June 1, 2021.

(j) Subsequent Event

On July 1, 2021, Antero Resources redeemed $ 175 million of the principal amount of its 2026 Notes at a redemption price of 108.375 % of the principal amount thereof, plus accrued and unpaid interest.

Immediately following the redemption, there were $ 325 million aggregate principal amount of 2026 Notes outstanding.

The $ 15 million premium to the principal amount redeemed along with the write-off of a proportional amount of unamortized debt issuance costs will be included in the Company’s loss on early debt extinguishment during the third quarter of 2021.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(8) Asset Retirement Obligations

The following table sets forth a reconciliation of the Company’s asset retirement obligations for the three months ended March 31, 2021 (in thousands):

The following table sets forth a reconciliation of the Company’s asset retirement obligations for the six months ended June 30, 2021 (in thousands):

Asset retirement obligations—December 31, 2020

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Accretion expense

Asset retirement obligations—March 31, 2021

Revisions to prior estimates

Asset retirement obligations—June 30, 2021

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

7 unchanged sentences

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.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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 7,928,770 shares were available for future grant under the 2020 Plan as of March 31, 2021.

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 7,677,911 shares were available for future grant under the 2020 Plan as of June 30, 2021.

Antero Midstream Partners LP’s (“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 include Antero Resources).

Antero Resources deconsolidated Antero Midstream Partners on March 12, 2019, and on such date each outstanding phantom unit award under the AMP Plan, was assumed by Antero Midstream Corporation and converted into 1.8926 RSUs under the Antero Midstream Corporation Long Term Incentive Plan (the “AMC Plan”).

Antero Resources deconsolidated Antero Midstream Partners on March 12, 2019, and on such date each outstanding phantom unit award under the AMP Plan, was assumed by Antero Midstream Corporation and converted into 1.8926 RSUs (all such RSUs, the “Converted AM RSU Awards”) under the Antero Midstream Corporation Long Term Incentive Plan (the “AMC Plan”).

Each RSU award under the AMC Plan represents a right to receive one share of Antero Midstream Corporation common stock.

The Company’s equity-based compensation expense, by type of award, was as follows for the three months ended March 31, 2020 and 2021 (in thousands):

Three Months Ended March 31,

Antero Midstream Partners phantom unit awards (1)

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The Company’s equity-based compensation expense, by type of award, was as follows for the three and six months ended June 30, 2020 and 2021 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Converted AM RSU Awards (1)

Equity awards issued to directors

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Restricted Stock Unit Awards

A summary of RSU award activity for the three months ended March 31, 2021 is as follows:

A summary of RSU award activity for the six months ended June 30, 2021 is as follows:

Total awarded and unvested—December 31, 2020

( 2,987,376 )

Total awarded and unvested—March 31, 2021

As of March 31, 2021, there was approximately $ 20 million of unamortized equity-based compensation expense related to unvested RSUs.

Total awarded and unvested—June 30, 2021

As of June 30, 2021, there was approximately $ 28 million of unamortized equity-based compensation expense related to unvested RSUs.

That expense is expected to be recognized over a weighted average period of approximately 2.7 years.

Performance Share Unit Awards

PSU Awards Based on Absolute Total Shareholder Return (“TSR”)

In April 2021, 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, 2022, April 15, 2023, and April 15, 2024, and one cumulative three-year performance period ending on April 15, 2024, in each case, subject to the executive officer’s continued employment through April 15, 2024.

The number of shares of common stock that may ultimately be earned following the end of the cumulative three-year performance period with respect to the TSR PSUs ranges from zero to 200 % of the target number of TSR PSUs originally granted.

Expense related to these PSUs is recognized on a graded-vested basis over the term of each performance period.

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

PSU Awards Based on Leverage Ratio

In April 2021, the Company granted PSUs to certain of its executive officers that vest based on the Company’s total debt less cash and cash equivalents divided by the Company’s Adjusted EBITDAX (as defined and described in Item 2 below under “Non-GAAP Financial Measures”) determined as of the last day of each of three one-year performance periods ending on December 31, 2021, December 31, 2022, and December 31, 2023, in each case, subject to the executive officer’s continued employment through December 31, 2023 (“Leverage Ratio PSUs”).

The number of shares of common stock that may ultimately be earned with respect to the Leverage Ratio PSUs ranges from zero to 200 % of the target number of Leverage Ratio PSUs originally granted.

Expense related to the Leverage Ratio PSUs is recognized based on the number of shares of common stock that are expected to be issued at the end of

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Stock Options

A summary of stock option activity for the three months ended March 31, 2021 is as follows:

(in thousands)

Outstanding—December 31, 2020

Outstanding—March 31, 2021

Vested—March 31, 2021

Exercisable —March 31, 2021

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

As of March 31, 2021, all stock options were fully vested resulting in no unamortized equity-based compensation expense.

Performance Share Unit Awards

A summary of PSUs activity for the three months ended March 31, 2021 is as follows:

each measurement period, and such expense is reversed if the likelihood of achieving the performance condition becomes improbable.

As of June 30, 2021, the likelihood of achieving the performance conditions related to the Leverage Ratio PSUs was probable.

A summary of PSU award activity for the six months ended June 30, 2021 is as follows:

Average Grant

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Cancelled (unearned)

Total awarded and unvested—March 31, 2021

As of March 31, 2021, there was approximately $ 6 million of unamortized equity-based compensation expense related to unvested PSUs.

( 1,112,639 )

Total awarded and unvested—June 30, 2021

The following table presents information regarding the weighted average fair values for market-based PSUs granted during the six months ended June 30, 2021, and the assumptions used to determine the fair values:

Dividend yield

Risk-free interest rate

Weighted average fair value of awards granted—Absolute TSR

As of June 30, 2021, there was approximately $ 9 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 2.2 years.

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 in the aggregate of $ 2.6 million to certain non-executive employees under the 2020 Plan that vest ratably over four years .

As of March 31, 2021, the Company has recorded approximately $ 2.4 million in Other liabilities in the unaudited condensed consolidated balance sheet related to cash awards.

Stock Options

A summary of stock option activity for the six months ended June 30, 2021 is as follows:

(in thousands)

Outstanding—December 31, 2020

Outstanding—June 30, 2021

Vested—June 30, 2021

Exercisable—June 30, 2021

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

As of June 30, 2021, all stock options were fully vested resulting in no unamortized equity-based compensation expense.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Antero Midstream Corporation Restricted Stock Unit Awards

A summary of Antero Midstream Corporation RSU awards for the three months ended March 31, 2021 is as follows:

Converted AM RSU Awards

A summary of the Converted AM RSU Awards for the six months ended June 30, 2021 is as follows:

Total awarded and unvested—December 31, 2020

Total awarded and unvested—March 31, 2021

As of March 31, 2021, there was approximately $ 1.6 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 less than 1.0 year, and the Company’s proportionate share will be allocated to it as it is recognized.

Total awarded and unvested—June 30, 2021

As of June 30, 2021, there was less than $ 1.0 million of unamortized equity-based compensation expense related to unvested Converted AM RSU Awards.

Such expense is expected to be recognized over a weighted average period of 0.7 years, and the Company’s proportionate share will be allocated to it as it is recognized.

In July 2020, the Company granted additional cash awards in the aggregate of $ 2.6 million to certain non-executive employees under the 2020 Plan that vest ratably over four years .

As of June 30, 2021, the Company has recorded approximately $ 2.2 million in Other liabilities in the unaudited condensed consolidated balance sheet related to unvested cash awards.

(10) Fair Value

The carrying values of accounts receivable and accounts payable as of December 31, 2020 and March 31, 2021 approximated market values because of their short-term nature.

The carrying values of the amounts outstanding under the Credit Facility as of December 31, 2020 and March 31, 2021 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, 2020 and March 31, 2021 is as follows (in thousands):

The carrying values of accounts receivable and accounts payable as of December 31, 2020 and June 30, 2021 approximated market values because of their short-term nature.

The carrying values of the amounts outstanding under the Credit Facility as of December 31, 2020 and June 30, 2021 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, 2020 and June 30, 2021 as follows (in thousands):

December 31, 2020

March 31, 2021

June 30, 2021

5.125 % senior notes due 2022

3 unchanged sentences

7.625 % senior notes due 2029

5.375 % senior notes due 2030

4.25 % convertible senior notes due 2026

2 unchanged sentences

See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for information regarding the fair value of derivative financial instruments.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(11) Derivative Instruments

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To the extent that changes occur in the market prices of natural gas, NGLs, and oil, the Company is exposed to market risk on these open contracts.

This market risk

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

exposure is generally offset by the change in market prices of natural gas, NGLs, and oil recognized upon the ultimate sale of the Company’s production.

The Company was party to various fixed price commodity swap contracts that settled during the three months ended March 31, 2020 and 2021.

This market risk exposure is generally offset by the change in market prices of natural gas, NGLs, and oil recognized upon the ultimate sale of the Company’s production.

The Company was party to various fixed price commodity swap contracts that settled during the three and six months ended June 30, 2020 and 2021.

The Company enters into these swap contracts when management believes that favorable future sales prices for the Company’s production can be secured.

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In addition, the Company has entered into basis swap contracts in order to hedge the difference between the New York Mercantile Exchange (“NYMEX”) index price and a local index price.

The Company also entered into NGL derivative contracts, which establish a contractual price for the settlement month as a fixed percentage of the West Texas Intermediate Crude Oil index (“WTI”) price for the settlement month.

When the percentage of the contractual price is above the contracted percentage, the Company pays the difference to the counterparty.

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

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

therefore, all gains and losses are recognized in the Company’s statements of operations.

As of March 31, 2021, the Company’s fixed price natural gas, oil and NGL swap positions excluding Martica, the Company’s consolidated VIE, were as follows:

As of June 30, 2021, the Company’s fixed price natural gas, oil and NGL swap positions excluding Martica, the Company’s consolidated VIE, were as follows:

Commodity / Settlement Period

Contracted Volume

April-December 2021

July-December 2021

January-December 2022

January-December 2023

April-December 2021

July-October 2021

Mont Belvieu Propane-OPIS TET

April-December 2021

July-December 2021

Mont Belvieu Butane-OPIS Non-TET

April-December 2021

July-December 2021

Mont Belvieu Butane-OPIS TET

Natural Gasoline

April-December 2021

July-December 2021

Mont Belvieu Natural Gasoline-OPIS Non-TET

April-June 2021

July-December 2021

Mont Belvieu Isobutane-OPIS Non-TET

April-December 2021

July-December 2021

West Texas Intermediate

2 unchanged sentences

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 March 31, 2021, 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:

As of June 30, 2021, 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

3 unchanged sentences

Hedged Differential

April-December 2021

July-December 2021

January-December 2022

1 unchanged sentence

January-December 2024

As of March 31, 2021, the Company had natural gas and NGL contracts that fix the Mont Belvieu index price for natural gasoline to percentages of WTI as follows:

When the percentage of the contractual price is above the contracted percentage, the Company pays the difference to the counterparty.

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

As of June 30, 2021, the Company had natural gas and NGL contracts that fix the Mont Belvieu index price for natural gasoline to percentages of WTI as follows:

Weighted Average

2 unchanged sentences

Contracted Volume

April-December 2021

July-December 2021

Mont Belvieu Natural Gasoline to WTI

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

As of March 31, 2021, the Company’s fixed price natural gas, oil and NGL swap positions for Martica, the Company’s consolidated VIE, were as follows:

As of June 30, 2021, the Company’s fixed price natural gas, oil and NGL swap positions for Martica, the Company’s consolidated VIE, were as follows:

Commodity / Settlement Period

Contracted Volume

April-December 2021

July-December 2021

January-December 2022

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January-March 2025

April-December 2021

July-December 2021

Mont Belvieu Purity Ethane-OPIS

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Mont Belvieu Purity Ethane-OPIS

April-December 2021

July-December 2021

Mont Belvieu Propane-OPIS Non-TET

2 unchanged sentences

Natural Gasoline

April-December 2021

July-December 2021

Mont Belvieu Natural Gasoline-OPIS Non-TET

3 unchanged sentences

Mont Belvieu Natural Gasoline-OPIS Non-TET

April-December 2021

July-December 2021

West Texas Intermediate

12 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

The following table presents a summary of the fair values in thousands of the Company’s derivative instruments and where such values are recorded in the unaudited condensed consolidated balance sheets as of December 31, 2020 and March 31, 2021.

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

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Net derivatives assets (liabilities)

(1) As of March 31, 2021, approximately $ 23 million of commodity derivative liabilities, including $ 13 million of current commodity derivatives and $ 10 million of noncurrent commodity derivatives, are attributable to the Company’s consolidated VIE, Martica.

(1) As of June 30, 2021 , approximately $ 50 million of commodity derivative liabilities, including $ 29 million of current commodity derivatives and $ 21 million of noncurrent commodity derivatives, are attributable to the Company’s consolidated VIE, Martica.

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.

1 unchanged sentence

December 31, 2020

March 31, 2021

June 30, 2021

Net Amounts of

15 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

The following is a summary of derivative fair value gains and losses and where such values are recorded in the unaudited condensed consolidated statements of operations for the three March 31, 2020 and 2021 (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Commodity derivative fair value gains (losses) (1)

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(a) Supplemental Balance Sheet Information Related to Leases

The Company’s lease assets and liabilities as of December 31, 2020 and March 31, 2021 consisted of the following items (in thousands):

The Company’s lease assets and liabilities as of December 31, 2020 and June 30, 2021 consisted of the following items (in thousands):

Balance Sheet Classification

26 unchanged sentences

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, 2020 and March 31, 2021 .

(1) Gas gathering lines and compressor stations leases includes $ 1.1 billion and $ 1.0 billion related to Antero Midstream Corporation as of December 31, 2020 and June 30, 2021, respectively.

See “—Related party lease disclosure” for additional discussion.

(2) Financing lease assets are recorded net of accumulated amortization of $ 3 million as of both December 31, 2020 and March 31, 2021.

(2) Financing lease assets are recorded net of accumulated amortization of $ 3 million as of both December 31, 2020 and June 30, 2021.

The processing plants, gathering lines and compressor stations that are classified as lease liabilities are classified as such under ASC 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.

(b) Supplemental Information Related to Leases

Costs associated with operating leases were included in the unaudited condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2020 and 2021 (in thousands):

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Three Months Ended

(b) Supplemental Information Related to Leases

Costs associated with operating leases were included in the unaudited condensed consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2020 and 2021 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Classification

7 unchanged sentences

Statement of operations

Contract termination and rig stacking

Operating lease cost

Statement of operations

Lease operating

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Depletion, depreciation, and amortization

Interest on lease liabilities

Statement of operations

Interest expense

Total finance lease cost

2 unchanged sentences

The following is the Company’s supplemental cash flow information related to leases for the three months ended March 31, 2020 and 2021 (in thousands):

Three Months Ended March 31,

The following is the Company’s supplemental cash flow information related to leases for the six months ended June 30, 2020 and 2021 (in thousands):

Six Months Ended June 30,

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

4 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease obligations

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(d) Maturities of Lease Liabilities

The table below is a schedule of future minimum payments for operating and financing lease liabilities as of March 31, 2021 (in thousands):

The table below is a schedule of future minimum payments for operating and financing lease liabilities as of June 30, 2021 (in thousands):

Operating Leases

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( 1,592,681 )

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(e) Lease Term and Discount Rate

The following table sets forth the Company’s weighted-average remaining lease term and discount rate as of December 31, 2020 and March 31, 2021:

The following table sets forth the Company’s weighted average remaining lease term and discount rate as of December 31, 2020 and June 30, 2021:

December 31, 2020

March 31, 2021

June 30, 2021

Operating Leases

5 unchanged sentences

(f) Related Party Lease Disclosure

The Company has a gathering and compression agreement with Antero Midstream Corporation, whereby Antero Midstream Corporation receives a low-pressure gathering fee per Mcf, a high-pressure gathering fee per Mcf and a compression fee per Mcf, in each case subject to adjustments based on the consumer price index.

If and to the extent the Company requests that Antero Midstream Corporation construct new high pressure lines and compressor stations, the gathering and compression agreement contains minimum volume commitments that require Antero Resources to utilize or pay for 75 % of the gathering capacity and 70 % of the compression capacity of the requested capacity of such new construction for 10 years .

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 high pressure gathering capacity and 70 % of the compression capacity of the requested capacity of such new construction for 10 years .

In December 2019, the Company and Antero Midstream Corporation agreed to extend the initial term of the gathering and compression agreement to 2038 and established a growth incentive fee program whereby low pressure gathering fees will be reduced from 2020 through 2023 to the extent the Company achieves certain volumetric targets at certain points during such time.

Upon completion of the initial contract term, the gathering and compression agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an anniversary of the effective date of the agreement, by either the Company or Antero Midstream Corporation on or before the 180 th day prior to the anniversary of such effective date.

The Company achieved the volumetric targets during the first quarter of 2020, and Antero Midstream Corporation provided a rebate of $ 12 million for the three months ended March 31, 2020.

The Company did no t achieve the volumetric target during the first quarter of 2021.

For the three months ended March 31, 2020 and 2021, gathering and compression fees paid by Antero related to this agreement were $ 156 million and $ 177 million, respectively.

As of December 31, 2020 and March 31, 2021, $ 55 million and $ 63 million were included within Accounts payable, related parties, respectively, on the unaudited condensed consolidated balance sheet as due to Antero Midstream Corporation related to this agreement.

The Company achieved the volumetric targets during each of the first and second quarter of 2020, and Antero Midstream Corporation provided a rebate of $ 12 million and $ 24 million for the three and six months ended June 30, 2020, respectively.

The Company did no t achieve the volumetric target during either the first or second quarters of 2021.

For the three and six months ended June 30, 2020, gathering and compression fees paid by Antero related to this agreement were $ 166 million and $ 321 million, respectively.

For the three and six months ended June 30, 2021, gathering and compression fees paid by Antero related to this agreement were $ 184 million and $ 361 million, respectively.

As of December 31, 2020 and June 30, 2021, $ 55 million and $ 66 million were included within Accounts payable, related parties, respectively, on the unaudited condensed consolidated balance sheets as due to Antero Midstream Corporation related to this agreement.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(13) Commitments

The following table sets forth a schedule of future minimum payments for firm transportation, drilling rig and completion services, processing, gathering and compression, and office and equipment agreements, which include leases that have remaining lease terms in excess of one year as of March 31, 2021 (in thousands).

Gathering and

6 unchanged sentences

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

These contracts commit the Company to transport minimum daily natural gas or NGLs volumes at negotiated

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

rates or pay for any deficiencies at specified reservation fee rates.

These contracts commit the Company to transport minimum daily natural gas or NGLs volumes at negotiated rates or pay for any deficiencies at specified reservation fee rates.

The amounts in this table are based on the Company’s minimum daily volumes at the reservation fee rate.

17 unchanged sentences

Refer to Note 12—Leases to the unaudited condensed consolidated financial statements for more information on the Company’s operating and finance leases.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(14) Contingencies

5 unchanged sentences

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

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

The Company continues to negotiate with the EPA 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.

5 unchanged sentences

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

recover damages that WGL refused to pay.

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.

3 unchanged sentences

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 is party to various other legal proceedings and claims in the ordinary course of its business, including, but not limited to, royalty claims.

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 unaudited condensed consolidated financial position, results of operations, or cash flows.

6 unchanged sentences

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

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;

All of the Company’s assets are located in the United States and substantially all of its production revenues are attributable to customers located

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

in the United States;

however, some of the Company’s production revenues are attributable to customers who then transport the Company’s production to foreign countries for resale or consumption.

5 unchanged sentences

Accounting policies for each segment are the same as the Company’s accounting policies described in Note 2—Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements.

The operating results and assets of the Company’s reportable segments were as follows for the three months ended June 30, 2020 and 2021 (in thousands):

Three Months Ended June 30, 2020

Elimination of

Sales and revenues:

Operating expenses:

Lease operating

Gathering, compression, processing, and transportation

Impairment of oil and gas properties

Depletion, depreciation, and amortization

General and administrative

Operating income (loss)

Equity in earnings of unconsolidated affiliates

Investments in unconsolidated affiliates

Segment assets

( 5,715,055 )

Capital expenditures for segment assets

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The operating results and assets of the Company’s reportable segments were as follows for the three months ended March 31, 2020 and 2021 (in thousands):

Three Months Ended March 31, 2020

Three Months Ended June 30, 2021

Equity Method

8 unchanged sentences

Impairment of oil and gas properties

Depletion, depreciation, and amortization

General and administrative

Operating income (loss)

Equity in earnings of unconsolidated affiliates

Investments in unconsolidated affiliates

Segment assets

( 5,540,742 )

Capital expenditures for segment assets

The operating results and assets of the Company’s reportable segments were as follows for the six months ended June 30, 2020 and 2021 (in thousands):

Six Months Ended June 30, 2020

Equity Method

Elimination of

Investment in

Transactions and

Unconsolidated

Sales and revenues:

Operating expenses:

Lease operating

Gathering, compression, processing, and transportation

Impairment of oil and gas properties

Impairment of midstream assets

9 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Equity Method

11 unchanged sentences

General and administrative

Operating income

Operating income (loss)

Equity in earnings of unconsolidated affiliates

13 unchanged sentences

Balance Sheet

March 31, 2021

December 31, 2020

June 30, 2021

Parent (Antero)

and Guarantor Subsidiaries

Accounts receivable, non-guarantor subsidiaries

10 unchanged sentences

Statement of Operations

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Parent (Antero)

1 unchanged sentence

Operating expenses

Income from operations

Loss from operations

Net loss and comprehensive loss including noncontrolling interests

1 unchanged sentence

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-Q

Item 1. Financial Statements