What changed in this filing

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Item 1. Financial Statements

2021-10-27 compared with 2021-07-28 · 276 added, 201 removed, 965 unchanged (33% of the section changed)

6 unchanged sentences

Unregistered Sales of Equity Securities

Other Information

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

42 unchanged sentences

(In thousands)

September 30,

Current assets:

Cash and cash equivalents

Accounts receivable

41 unchanged sentences

authorized - 1,000,000 shares;

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

268,672 shares and 313,866 shares issued and outstanding as of December 31, 2020 and September 30, 2021 , respectively

Additional paid-in capital

Accumulated deficit

( 1,518,762 )

Total stockholders' equity

3 unchanged sentences

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Loss

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(In thousands, except per share amounts)

Three Months Ended June 30,

Three Months Ended September 30,

Revenue and other:

2 unchanged sentences

Commodity derivative fair value losses

( 1,250,466 )

Amortization of deferred revenue, VPP

Gain on sale of assets

Other income (loss)

Total revenue

11 unchanged sentences

Other income (expense):

Equity in earnings of unconsolidated affiliate

Transaction expense

Interest expense, net

Equity in earnings of unconsolidated affiliate

Gain (loss) on early extinguishment of debt

Loss on convertible note equitization

Transaction expense

Total other income (expense)

2 unchanged sentences

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 noncontrolling interests

Net loss and comprehensive loss attributable to Antero Resources Corporation

4 unchanged sentences

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Loss

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(In thousands, except per share amounts)

Six Months Ended June 30,

Nine Months Ended September 30,

Revenue and other:

1 unchanged sentence

Natural gas liquids sales

Commodity derivative fair value gains (losses)

Commodity derivative fair value losses

( 2,260,062 )

13 unchanged sentences

Operating loss

( 1,098,598 )

( 1,232,484 )

Other income (expense):

5 unchanged sentences

Transaction expense

Total other expenses

Total other expense

Loss before income taxes

( 1,776,891 )

( 1,449,698 )

Provision for income tax benefit

Net loss and comprehensive loss including noncontrolling interests

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

( 1,355,724 )

( 1,112,130 )

net loss and comprehensive loss attributable to noncontrolling interests

Net loss and comprehensive loss attributable to Antero Resources Corporation

( 1,337,727 )

( 1,088,284 )

Loss per share—basic

3 unchanged sentences

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Stockholders’ Equity

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In thousands)

13 unchanged sentences

Balances, June 30, 2020

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

Distributions to noncontrolling interest

Equity-based compensation

Net loss and comprehensive loss

Balances, September 30, 2020

See accompanying notes to unaudited condensed consolidated financial statements.

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) (Continued)

(In thousands)

Noncontrolling

Balances, December 31, 2020

14 unchanged sentences

Balances, June 30, 2021

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, September 30, 2021

( 1,518,762 )

See accompanying notes to unaudited condensed consolidated financial statements.

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows provided by (used in) operating activities:

Net loss including noncontrolling interests

( 1,355,724 )

( 1,112,130 )

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

Depletion, depreciation, amortization, and accretion

Commodity derivative fair value losses (gains)

Commodity derivative fair value losses

Gains (losses) on settled commodity derivatives

Payments for derivative monetizations

Proceeds from (payments for) derivative monetizations

Gain on sale of assets

22 unchanged sentences

Proceeds from asset sales

Proceeds from VPP sale, net

Change in other liabilities

4 unchanged sentences

Issuance of senior notes

Issuance of convertible notes

Repayment of senior notes

1 unchanged sentence

Borrowings (repayments) on bank credit facilities, net

( 1,017,000 )

Payment of debt issuance costs

3 unchanged sentences

Convertible note equitizations

Net cash provided by (used in) financing activities

Net cash used in financing activities

Net increase in cash and cash equivalents

16 unchanged sentences

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 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.

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 September 30, 2021 and its results of operations for the three and nine months ended September 30, 2020 and 2021 and cash flows for the nine months ended September 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 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.

Operating results for the period ended September 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, 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.

The noncontrolling interest reflected in the Company’s unaudited condensed consolidated financial statements for the three and nine months ended September 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.

3 unchanged sentences

From time to time, the Company may be in the position of a “book overdraft” in which outstanding checks exceed cash and cash equivalents.

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

The Company classifies book overdrafts in accounts payable and revenue distributions payable within its 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 December 31, 2020, the book overdrafts included within accounts payable and revenue distributions payable were $ 11 million and $ 15 million, respectively.

As of September 30, 2021, the book overdrafts included within accounts payable and revenue distributions payable were $ 37 million and $ 31 million, respectively.

Earnings (Loss) Per Common Share

Earnings (loss) per common share—basic for each period is computed by dividing net income (loss) attributable to Antero by the basic weighted average number of shares outstanding during the period.

Earnings (loss) per common share—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 if-converted method.

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

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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.

issuable upon conversion of the 2026 Convertible Notes (as defined below in Note 7—Long-Term Debt).

The Company includes restricted stock unit (“RSU”) awards, performance share unit (“PSU”) 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.

The potential dilutive effect of the 2026 Convertible Notes is calculated using the (i) treasury stock method for the three and nine months ended September 30, 2020 as a result of the Company’s intent to settle the principal amount of such convertible notes in cash upon conversion during the nine months ended September 30, 2020, and (ii) if-converted method for the three and nine months ended September 30, 2021, as a result of the partial equitizations of the 2026 Convertible Notes during the nine months ended September 30, 2021.

See Note 7—Long-Term Debt for further discussion on the equitization transactions.

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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Basic weighted average number of shares outstanding

Dilutive effect of RSUs

Dilutive effect of outstanding stock options

Dilutive effect of PSUs

Dilutive effect of outstanding stock options

Dilutive effect of 2026 Convertible Notes

3 unchanged sentences

2026 Convertible Notes (2)

(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.

(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.

(2) Under the treasury stock method, only the amount by which the conversion value exceeds the aggregate principal amount of the 2026 Convertible Notes is considered in the diluted earnings per share computation.

As of September 30, 2020, the conversion value did not exceed the principal amount of the notes, and accordingly, there was no impact to diluted earnings per share for the three and nine months ended September 30, 2020.

Under the if-converted method, the weighted average number of shares outstanding for the three and nine months ended September 30, 2020, would have been 28 million and 10 million, respectively, all of which would have been anti-dilutive.

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.

1 unchanged sentence

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.

On April 9, 2021, West Virginia enacted new tax laws related to its apportionment and sourcing methodologies.

The newly enacted laws are effective January 1, 2022 on a prospective basis and are 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 net deferred income tax liability was reduced by $ 34

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

million as of September 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

6 unchanged sentences

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.

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 and nine months ended September 30, 2021.

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

16 unchanged sentences

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.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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.

6 unchanged sentences

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.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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 sheet as of the transaction closing.

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 condensed consolidated balance sheet as of the transaction closing.

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

14 unchanged sentences

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 annual tranches.

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 and six months ended June 30, 2021.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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

Disaggregation of Revenue

1 unchanged sentence

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Reportable Segment

8 unchanged sentences

Total revenue from contracts with customers

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

Loss from derivatives, deferred revenue and other sources, net

( 1,237,993 )

( 2,222,851 )

Total revenue

7 unchanged sentences

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

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

As of December 31, 2020 and September 30, 2021, the Company’s receivables from contracts with customers were $ 425 million and $ 653 million, respectively.

(5) Equity Method Investment

Summary of Equity Method Investment

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.

As of September 30, 2021, Antero owned approximately 29.1 % 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):

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

Balance as of December 31, 2020 (1)

2 unchanged sentences

Elimination of intercompany profit

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 .

Balance as of September 30, 2021 (1)

(1) The Company’s investment in Antero Midstream Corporation as of December 31, 2020 and September 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

1 unchanged sentence

Balance Sheet

September 30,

Current assets

5 unchanged sentences

Statement of Operations

Six Months Ended June 30,

Nine Months Ended September 30,

Operating expenses

2 unchanged sentences

(6) Accrued Liabilities

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

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

September 30,

Capital expenditures

8 unchanged sentences

(7) Long-Term Debt

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

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

September 30,

Credit Facility (a)

11 unchanged sentences

(a) 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 has a senior secured revolving credit facility with a consortium of bank lenders.

On October 26, 2021, Antero Resources entered into an amended and restated senior secured revolving credit facility.

References in the notes to the condensed consolidated financial statements to the (i) “Prior Credit Facility” refers to the senior secured revolving credit facility in effect for periods before October 26, 2021, (ii) “New Credit Facility” refers to the senior secured revolving credit facility in effect on or after October 26, 2021 and (iii) “Credit Facility” refers to Prior Credit Facility and New Credit Facility, collectively.

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 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.

The next redetermination of the borrowing base is scheduled to occur in October 2021.

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 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.

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

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

As of October 26, 2021, the New Credit Facility had a borrowing base of $ 3.5 billion and lender commitments were $ 1.5 billion.

The next redetermination of the borrowing base is scheduled to occur in April 2022.

The maturity date of the Credit Facility is the earlier of (i) October 26, 2026 and (ii) the date that is 180 days prior to the earliest stated redemption date of any series of the Company’s senior notes.

The Credit Facility contains requirements with respect to leverage and current ratios, and certain covenants, including restrictions on our ability to incur debt and limitations on our ability to pay dividends unless certain customary conditions are met, in each case, subject to customary carve-outs and exceptions.

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

The Prior Credit Facility provides for borrowing under either an Alternate Base Rate or as a Eurodollar Loan (as each term is defined in the Prior Credit Facility), and the New Credit Facility provides for borrowing under either an Adjusted Term Secured Overnight Financing Rate (“SOFR”), an Adjusted Daily Simple SOFR or an Alternate Base Rate (each as defined in the New Credit Facility).

The Credit Facility provides for interest only payments until maturity at which time all outstanding borrowings are due.

Interest is payable at a variable rate based on (i) LIBOR or the prime rate, determined by Antero Resources’ election at the time of borrowing, plus an applicable margin rate under the Prior Credit Facility and (ii) SOFR or prime rate, determined by Antero Resources’ election at the time of borrowing, plus an applicable margin rate under the New Credit Facility.

Interest at the time of borrowing is determined with reference to the Antero Resources’ then-current leverage ratio subject to certain exceptions.

Commitment fees on the unused portion of the Credit Facility are due quarterly at rates ranging from (i) 0.300 % to 0.375 % with respect to the Prior Credit Facility, determined with reference to borrowing base utilization and (ii) 0.375 % to 0.500 % with respect to the New Credit Facility, determined with reference to borrowing base utilization, both rates subject to certain exceptions based on the leverage ratio then in effect.

The New Credit Facility includes fall away covenants, lower interest rates and reduced collateral requirements that Antero Resources may elect if Antero Resources is assigned an Investment Grade Rating (as defined in the New Credit Facility).

As of September 30, 2021, Antero Resources had an outstanding balance under the Credit Facility of $ 98 million, with a weighted average interest rate of 3.40 %, and had outstanding letters of credit of $ 742 million.

As of December 31, 2020, Antero

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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.

(b) 5.125 % Senior Notes Due 2022

12 unchanged sentences

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.

The 2023 Notes were 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 was payable on June 1 and December 1 of each year.

2 unchanged sentences

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 June 30, 2021, $ 590 million principal amount of the 2025 Notes remained outstanding.

The Company repurchased $ 10 million of the 2025 Notes from time to time during 2020, and as of September 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.

6 unchanged sentences

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

The Company redeemed $ 175 million of the 2026 Notes on July 1, 2021, and as of September 30, 2021, $ 325 million principal amount of the 2026 Notes remained outstanding.

See “—Debt Repurchase Program” below for further details on the 2026 Notes redemption.

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.

3 unchanged sentences

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, 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.

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.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(f) 7.625 % Senior Notes Due 2029

5 unchanged sentences

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, 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, which option the Company partially exercised on October 18, 2021 with its notice to redeem $ 116 million aggregate principal amount of outstanding 2029 Notes.

See “—Subsequent Event” below for further details on the 2029 Notes redemption.

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.

4 unchanged sentences

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.

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

6 unchanged sentences

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.

During the nine months ended September 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 September 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 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.

As of September 30, 2021, the if-converted value of the 2026 Convertible Notes was $ 353 million, which exceeded the principal amount of the 2026 Convertible Notes by $ 272 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:

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

● 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 (the “Stock Price Condition”);

3 unchanged sentences

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

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 2026 Convertible Notes have met the Stock Price Condition allowing holders of the 2026 Convertible Notes to exercise their conversion right as of September 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.

7 unchanged sentences

The equity component, representing the value of the conversion option, was computed by deducting the fair value of the liability component from the initial proceeds of the 2026 Convertible Notes issuance.

This equity component was recorded, net of deferred taxes and issuance costs, in additional paid-in capital within the unaudited condensed 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.

This equity component was recorded, net of deferred taxes and issuance costs, in additional paid-in capital within the condensed 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 unaudited condensed consolidated balance sheet and are amortized over the term of the 2026 Convertible Notes using the effective interest method.

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

Issuance costs attributable to the liability component were recorded within debt issuance costs on the condensed 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 condensed consolidated balance sheet and statement of stockholders’ equity.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Partial Equitizations of 2026 Convertible Notes

2 unchanged sentences

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.

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 nine months ended September 30, 2021 for the consideration paid in excess of the original terms of the 2026 Convertible Notes.

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.

1 unchanged sentence

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.

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

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

September 30,

Liability component:

4 unchanged sentences

(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.

As of September 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 $ 2.3 million and $ 1.5 million for the three months ended September 30, 2020 and 2021, respectively, and $ 2.3 million and $ 8.7 million for the nine months ended September 30, 2020 and 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 three and nine months ended September 30, 2020, Antero Resources repurchased $ 461 million and $ 1.1 billion, respectively, principal amount of debt at a weighted average discount of 13 % and 17 %, respectively .

The Company recognized a gain of $ 56 million and $ 175 million for the three and nine months ended September 30, 2020 on the early extinguishment of the debt repurchased.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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.

1 unchanged sentence

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

During the third quarter of 2021, the Company 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, and recognized a loss on early debt extinguishment of $ 17 million during the three months ended September 30, 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

On October 18, 2021, Antero Resources issued a notice of partial redemption with respect to the 2029 Notes.

On November 2, 2021, the Company will redeemd $ 116 million of the aggregate principal amount of its 2029 Notes at a redemption price of 107.625 % of the principal amount thereof, plus accrued and unpaid interest.

Immediately following the redemption, there will be $ 584 million aggregate principal amount of 2029 Notes outstanding.

The $ 9 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 fourth quarter of 2021.

(8) Asset Retirement Obligations

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

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

Asset retirement obligations—December 31, 2020

1 unchanged sentence

Accretion expense

Settlement of obligations

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.

Asset retirement obligations—September 30, 2021

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

(9) Equity-Based Compensation and Cash Awards

7 unchanged sentences

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.

A total of 7,888,490 shares were available for future grant under the 2020 Plan as of September 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 (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.

Antero Resources deconsolidated Antero Midstream Partners on March 12, 2019, and on such date each outstanding phantom unit award under the AMP Plan, was

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,

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 and nine months ended September 30, 2020 and 2021 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Converted AM RSU Awards (1)

4 unchanged sentences

Restricted Stock Unit Awards

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

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

Total awarded and unvested—December 31, 2020

( 3,546,654 )

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.

Total awarded and unvested—September 30, 2021

As of September 30, 2021, there was approximately $ 24 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 2.6 years.

6 unchanged sentences

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

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:

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

As of September 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 nine months ended September 30, 2021 is as follows:

Average Grant

3 unchanged sentences

( 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:

Total awarded and unvested—September 30, 2021

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

Dividend yield

1 unchanged sentence

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.

As of September 30, 2021, there was approximately $ 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 2.0 years.

Stock Options

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

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

(in thousands)

Outstanding—December 31, 2020

Outstanding—June 30, 2021

Vested—June 30, 2021

Exercisable—June 30, 2021

Outstanding—September 30, 2021

Vested—September 30, 2021

Exercisable—September 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.

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

ANTERO RESOURCES CORPORATION

1 unchanged sentence

Converted AM RSU Awards

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

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

Total awarded and unvested—December 31, 2020

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.

Total awarded and unvested—September 30, 2021

As of September 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 0.6 years, and the Company’s proportionate share will be allocated to it as it is recognized.

1 unchanged sentence

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.

As of December 31, 2020 and September 30, 2021, the Company has recorded approximately $ 3.2 million and $ 2.0 million, respectively, in Other liabilities in the condensed consolidated balance sheets related to unvested cash awards.

(10) Fair Value

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):

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

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

December 31, 2020

June 30, 2021

5.125 % senior notes due 2022

5.625 % senior notes due 2023

5.00 % senior notes due 2025

8.375 % senior notes due 2026

7.625 % senior notes due 2029

5.375 % senior notes due 2030

4.25 % convertible senior notes due 2026

September 30, 2021

2026 Convertible Notes

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

11 unchanged sentences

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 was party to various fixed price commodity swap contracts that settled during the three and nine months ended September 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.

4 unchanged sentences

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

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:

As of September 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

July-December 2021

October-December 2021

January-December 2022

January-December 2023

July-October 2021

Mont Belvieu Propane-OPIS TET

July-December 2021

October-December 2021

Mont Belvieu Butane-OPIS Non-TET

July-December 2021

October-December 2021

Mont Belvieu Butane-OPIS TET

Natural Gasoline

July-December 2021

October-December 2021

Mont Belvieu Natural Gasoline-OPIS Non-TET

July-December 2021

October-December 2021

Mont Belvieu Isobutane-OPIS Non-TET

July-December 2021

October-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.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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:

As of September 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

July-December 2021

October-December 2021

January-December 2022

4 unchanged sentences

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:

As of September 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

July-December 2021

October-December 2021

Mont Belvieu Natural Gasoline to WTI

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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:

As of September 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

July-December 2021

October-December 2021

January-December 2022

2 unchanged sentences

January-March 2025

July-December 2021

October-December 2021

Mont Belvieu Purity Ethane-OPIS

1 unchanged sentence

Mont Belvieu Purity Ethane-OPIS

July-December 2021

October-December 2021

Mont Belvieu Propane-OPIS Non-TET

2 unchanged sentences

Natural Gasoline

July-December 2021

October-December 2021

Mont Belvieu Natural Gasoline-OPIS Non-TET

3 unchanged sentences

Mont Belvieu Natural Gasoline-OPIS Non-TET

July-December 2021

October-December 2021

West Texas Intermediate

7 unchanged sentences

West Texas Intermediate

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Embedded Derivatives

1 unchanged sentence

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 unaudited condensed consolidated financial statements.

ANTERO RESOURCES CORPORATION

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 June 30, 2021.

The table below presents a summary of the fair values of the Company’s derivative instruments and where such values are recorded in the condensed consolidated balance sheets as of December 31, 2020 and September 30, 2021 (in thousands).

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

Balance Sheet

September 30,

Asset derivatives not designated as hedges for accounting purposes:

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Net derivatives assets (liabilities)

(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.

( 1,752,401 )

(1) As of September 30, 2021, approximately $ 87 million of commodity derivative liabilities, including $ 53 million of current commodity derivatives and $ 34 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.

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 unaudited condensed consolidated balance sheets as of the dates presented, all at fair value (in thousands):

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 condensed consolidated balance sheets as of the dates presented, all at fair value (in thousands):

December 31, 2020

June 30, 2021

September 30, 2021

Net Amounts of

13 unchanged sentences

Commodity derivative liabilities

( 1,786,108 )

( 1,767,862 )

ANTERO RESOURCES CORPORATION

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 and six months ended June 30, 2020 and 2021 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Commodity derivative fair value gains (losses) (1)

The following is a summary of derivative fair value gains and losses and where such values are recorded in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2020 and 2021 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Commodity derivative fair value losses (1)

( 1,238,384 )

( 2,228,076 )

Embedded derivative fair value gains (losses) (1)

19 unchanged sentences

(a) Supplemental Balance Sheet Information Related to Leases

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

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

September 30,

Balance Sheet Classification

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Total finance lease obligation

(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.

(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 September 30, 2021 .

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 June 30, 2021.

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

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.

2 unchanged sentences

(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,

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

Three Months Ended

Nine Months Ended

September 30,

Classification

23 unchanged sentences

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,

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

Nine Months Ended September 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

Increase (decrease) to existing right-of-use assets and lease obligations from operating lease modifications, net (1)

(1) During the nine months ended September 30, 2020, the weighted average discount rate for remeasured operating leases increased from 10.0 % as of December 31, 2019 to 14.4 % as of September 30, 2020.

During the nine months ended September 30, 2021, the weighted average discount rate for remeasured operating leases decreased from 14.4 % as of December 31, 2020 to 5.5 % as of September 30, 2021.

ANTERO RESOURCES CORPORATION

1 unchanged sentence

(d) Maturities of Lease Liabilities

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

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

Operating Leases

6 unchanged sentences

(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 June 30, 2021:

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

December 31, 2020

June 30, 2021

September 30, 2021

Operating Leases

9 unchanged sentences

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 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.

The Company achieved the volumetric targets during each of the first, second and third quarters of 2020, and Antero Midstream Corporation provided a rebate of $ 12 million and $ 36 million for the three and nine months ended September 30, 2020, respectively.

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

For the three and nine months ended September 30, 2020, gathering and compression fees paid by Antero related to this agreement were $ 181 million and $ 503 million, respectively.

For the three and nine months ended September 30, 2021, gathering and compression fees paid by Antero related to this agreement were $ 178 million and $ 539 million, respectively.

As of December 31, 2020 and September 30, 2021, $ 55 million and $ 62 million were included within Accounts payable, related parties, respectively, on the condensed consolidated balance sheets as due to Antero Midstream Corporation related to this agreement.

ANTERO RESOURCES CORPORATION

1 unchanged sentence

(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 June 30, 2021 (in thousands).

Gathering and

69 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

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

Three Months Ended September 30, 2020

Equity Method

Elimination of

Investment in

Transactions and

Unconsolidated

Sales and revenues:

Total revenue

Operating expenses:

4 unchanged sentences

General and administrative

Total operating expenses

Operating income (loss)

6 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Equity Method

4 unchanged sentences

Sales and revenues:

Total revenue

Operating expenses:

4 unchanged sentences

General and administrative

Total operating expenses

Operating income (loss)

4 unchanged sentences

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

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

Nine Months Ended September 30, 2020

Equity Method

4 unchanged sentences

Sales and revenues:

Total revenue

Operating expenses:

5 unchanged sentences

General and administrative

Operating income (loss)

Total operating expenses

Operating loss

( 1,098,598 )

Equity in earnings (loss) of unconsolidated affiliates

5 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Equity Method

4 unchanged sentences

Sales and revenues:

Total revenue

Operating expenses:

2 unchanged sentences

Impairment of oil and gas properties

Impairment of midstream assets

Depletion, depreciation, and amortization

General and administrative

Total operating expenses

Operating income (loss)

( 1,167,590 )

( 1,232,484 )

Equity in earnings of unconsolidated affiliates

4 unchanged sentences

(17) Subsidiary Guarantors

Each of the Company’s wholly owned subsidiaries has fully and unconditionally guaranteed Antero Resources’ senior notes.

Antero Resources’ senior notes are fully and unconditionally guaranteed by Antero Resources’ existing subsidiaries that guarantee the Credit Facility.

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.

7 unchanged sentences

December 31, 2020

June 30, 2021

September 30, 2021

Parent (Antero)

14 unchanged sentences

Statement of Operations

Six Months Ended June 30, 2021

Nine Months Ended

September 30, 2021

Parent (Antero)

2 unchanged sentences

Loss from operations

( 1,208,637 )

Net loss and comprehensive loss including noncontrolling interests

( 1,088,283 )

Net loss and comprehensive loss attributable to Antero Resources Corporation

( 1,088,283 )

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