What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-04-27 compared with 2021-10-27 · 276 added, 506 removed, 735 unchanged (52% of the section changed)

6 unchanged sentences

Unregistered Sales of Equity Securities

Other Information

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

9 unchanged sentences

● our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness;

● ability to execute our share repurchase program;

● natural gas, natural gas liquids (“NGLs”) and oil prices;

● impacts of world health events, including the coronavirus (“COVID-19”) pandemic;

● impacts of geopolitical events and world health events, including the coronavirus (“COVID-19”) pandemic;

● timing and amount of future production of natural gas, NGLs and oil;

2 unchanged sentences

● our future drilling plans;

● our projected well costs and cost savings initiatives, including with respect to water handling services provided by Antero Midstream Corporation;

● competition and government regulations;

● our projected well costs, including with respect to water handling services provided by Antero Midstream Corporation (“Antero Midstream”);

● competition;

● government regulations and changes in laws;

● pending legal or environmental matters;

2 unchanged sentences

● costs of developing our properties;

● operations of Antero Midstream Corporation;

● operations of Antero Midstream;

● our ability to achieve our greenhouse gas reduction targets and the costs associated therewith;

● general economic conditions;

3 unchanged sentences

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), cybersecurity risks 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 or changes in law, 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, the state of markets for, and availability of, verified quality carbon offsets 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, 2021 (the “2021 Form 10-K”), which is on file with the Securities and Exchange Commission (“SEC”).

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(In thousands)

September 30,

Current assets:

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Long-term debt

Deferred income tax liability

Deferred income tax liability, net

Derivative instruments

3 unchanged sentences

Total liabilities

Commitments and contingencies (Notes 13 and 14)

Commitments and contingencies

Stockholders' equity:

3 unchanged sentences

authorized - 1,000,000 shares;

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

313,930 shares and 311,020 shares issued and outstanding as of December 31, 2021 and March 31, 2022, respectively

Additional paid-in capital

Accumulated deficit

( 1,518,762 )

Total stockholders' equity

5 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended September 30,

Three Months Ended March 31,

Revenue and other:

4 unchanged sentences

Amortization of deferred revenue, VPP

Gain on sale of assets

Total revenue

3 unchanged sentences

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 $ 5,642 and $ 4,649 in 2021 and 2022, respectively)

Contract termination and rig stacking

Total operating expenses

Operating loss

Other income (expense):

Interest expense, net

Equity in earnings of unconsolidated affiliate

Gain (loss) on early extinguishment of debt

Transaction expense

Total other income (expense)

Loss before income taxes

Provision for income tax benefit

Net loss and comprehensive loss including noncontrolling interests

net loss and comprehensive 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 (Unaudited)

(In thousands, except per share amounts)

Nine Months Ended September 30,

Revenue and other:

Natural gas sales

Natural gas liquids sales

Commodity derivative fair value losses

( 2,260,062 )

Amortization of deferred revenue, VPP

Gain on sale of assets

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

Impairment of oil and gas properties

Accretion of asset retirement obligations

General and administrative (including equity-based compensation expense of $ 17,001 and $ 15,189 in 2020 and 2021, respectively)

Contract termination and rig stacking

Contract termination

Loss on sale of assets

Total operating expenses

Operating loss

( 1,098,598 )

( 1,232,484 )

Operating income (loss)

Other income (expense):

Interest expense, net

Equity in earnings (loss) of unconsolidated affiliate

Gain (loss) on early extinguishment of debt

Loss on convertible note equitizations

Impairment of equity method investment

Equity in earnings of unconsolidated affiliate

Loss on early extinguishment of debt

Loss on convertible note equitization

Transaction expense

1 unchanged sentence

Loss before income taxes

( 1,776,891 )

( 1,449,698 )

Provision for income tax benefit

Income tax benefit

Net loss and comprehensive loss including noncontrolling interests

( 1,355,724 )

( 1,112,130 )

net loss and comprehensive loss 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

( 1,337,727 )

( 1,088,284 )

Loss per share—basic

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Balances, December 31, 2020

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

Repurchases and retirements of common stock

Equity-based compensation

Net loss and comprehensive loss

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

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

Issuance of common shares

6 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

Balances, December 31, 2021

Equity component of 2026 Convertible Notes, net

1 unchanged sentence

Distributions to noncontrolling interest

Repurchases and retirements of common stock

Equity-based compensation

Net loss and comprehensive loss

Balances, September 30, 2021

( 1,518,762 )

Balances, March 31, 2022

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

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:

2 unchanged sentences

Gains (losses) on settled commodity derivatives

Proceeds from (payments for) derivative monetizations

Gain on sale of assets

Equity-based compensation expense

Deferred income tax benefit

Equity in (earnings) loss of unconsolidated affiliate

Equity-based compensation expense

Equity in earnings of unconsolidated affiliate

Dividends of earnings from unconsolidated affiliate

Amortization of deferred revenue

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

(Gain) loss on early extinguishment of debt

Amortization of debt issuance costs, debt discount and debt premium

Settlement of asset retirement obligations

Loss on sale of assets

Loss on early extinguishment of debt

Loss on convertible note equitizations

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Additions to other property and equipment

Settlement of water earnout

Proceeds from asset sales

Proceeds from VPP sale, net

Change in other liabilities

Change in other assets

Change in other liabilities

Net cash used in investing activities

2 unchanged sentences

Issuance of senior notes

Issuance of convertible notes

Repayment of senior notes

( 1,424,354 )

Borrowings (repayments) on bank credit facilities, net

Payment of debt issuance costs

Sale of noncontrolling interest

Distributions to noncontrolling interests in Martica Holdings LLC

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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 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.

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, 2021 and March 31, 2022 and its results of operations and cash flows for the three months ended March 31, 2021 and 2022.

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

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

Operating results for the period ended September 30, 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 March 31, 2022 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 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.

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

Cash and Cash Equivalents

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As of December 31, 2021, the book overdrafts included within accounts payable and revenue distributions payable were $ 5 million and $ 52 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.

As of March 31, 2022, the book overdrafts included within accounts payable and revenue distributions payable were $ 47 million and $ 41 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

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).

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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

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.

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 months ended March 31, 2021 as a result of the Company’s intent to settle the principal amount of such convertible notes in cash upon conversion, and (ii) if-converted method for the three months ended March 31, 2022, as a result of the partial equitizations of the 2026 Convertible Notes during 2021.

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

1 unchanged sentence

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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Basic weighted average number of shares outstanding

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(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.

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.

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

Convertible Instruments

Recently Issued Accounting Standard

Convertible Debt Instruments

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which eliminates the cash conversion model in Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options , that require separate accounting for conversion features, and instead, allows the debt instrument and conversion features to be accounted for as a single debt instrument.

The new standard becomes effective for the Company on January 1, 2022, and early adoption is permitted.

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

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, 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.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which eliminates the cash conversion model in Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options , that required separate accounting for conversion features, and instead, allows the debt instrument and conversion features to be accounted for as a single debt instrument.

It is effective for interim and annual reporting periods beginning after December 31, 2021.

The Company adopted the standard effective January 1, 2022 under the modified retrospective transition method, which impacts only the debt instruments outstanding on the adoption date.

Upon adoption of this new standard, the Company reclassified $ 24 million, net of deferred income taxes and equity issuance costs, from additional paid-in capital and increased long-term debt by $ 27 million, reduced deferred income tax liability by $ 6 million and reduced accumulated deficit by $ 3 million as of January 1, 2022.

Additionally, annual interest expense for the 2026 Convertible Notes beginning January 1, 2022 is based on an effective interest rate of 4.9 % as compared to 15.1 % for the three months ended March 31, 2021.

In December 2019, the FASB issued ASU No.

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This ASU removes certain exceptions to the general principles in ASC 740, Income Taxes (“ASC 740”) and also simplifies portions of ASC 740 by clarifying and amending existing guidance.

It is effective for interim and annual reporting periods after December 15, 2020.

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 .

It is effective for interim and annual reporting periods beginning after December 15, 2020.

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(3) Transactions

3 unchanged sentences

All cash contributed by Sixth Street at the initial closing was distributed to the Company.

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 met the applicable production thresholds related to the third quarter of 2020 and the first quarter of 2021 as of September 30, 2020 and March 31, 2021, respectively.

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”).

Wells turned to sales after April 1, 2020 and prior to the later of (a) the date on which the Company turns to sales 2.2 million lateral feet (net to the Company’s interest) of horizontal wells burdened by the Development Override and (b) the earlier of (i) April 1, 2023 and (ii) the date on which the Company turns to sales 3.82 million lateral feet (net to the Company’s interest) of horizontal wells are subject to the Development Override.

The ORRIs also include an additional overriding royalty interest of 2.00 % of the Company’s working interest in the properties underlying the Initial PDP Override (the “Incremental Override”).

The Incremental Override (or a portion thereof, as applicable) may be re-conveyed to the Company (at the Company’s election) if certain production targets attributable to the ORRIs are achieved through March 31, 2023.

Any portion of the Incremental Override that may not be re-conveyed to the Company based on the Company failing to achieve such production volumes through March 31, 2023 will remain with Martica.

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.

Following Sixth Street achieving the Hurdle, the Company will receive 85 % of the distributions in respect of the ORRIs to which Sixth Street was entitled immediately prior to the Hurdle being achieved.

The conveyance of the ORRIs from the Company to Martica was accounted for as a transaction between entities under common control.

As a result, the contributed ORRIs have been recorded by Martica at their historical cost.

Volumetric Production Payment Transaction

On August 10, 2020, the Company completed a volumetric production payment transaction and received net proceeds of approximately $ 216 million (the "VPP").

In connection with the VPP, the Company entered into a purchase and sale agreement, together with a conveyance agreement and production and marketing agreement, with J.P.

Morgan Ventures Energy Corporation ("JPM-VEC") to convey, effective July 1, 2020, an overriding royalty interest in dry gas producing properties in West Virginia (the "VPP Properties") equal to 136,589,000 MMBtu over the expected seven-year term of the VPP.

The Company has accounted for the VPP as a conveyance under ASC 932, 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.

Under the production and marketing agreement, Antero and its affiliates provide certain marketing services as JPM-VEC’s agent, and any income or expenses related to these services will be recorded as marketing revenue or marketing expenses as appropriate.

Contemporaneously with the VPP, the Company executed a call option related to the production volumes associated with its retained interest in the VPP properties, which is collateralized by a mortgage on the VPP properties.

Additionally, the production and marketing agreement contains an embedded put option related to the production volumes for the Company’s retained interest in the VPP properties, which has been bifurcated from the production and marketing arrangement and accounted for as a derivative instrument recorded at fair value.

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

Drilling Partnership

1 unchanged sentence

Under the terms of the arrangement, each year in which QL participates represents an annual tranche, and QL will be conveyed a working interest in any wells spud by Antero Resources during such tranche year.

For 2021, Antero Resources and QL agreed to a capital budget for such annual tranche, and for each subsequent year through 2024, Antero Resources will propose a capital budget and estimated internal rate of return (“IRR”) for all wells to be spud during such year and, subject to the mutual agreement of the parties that the estimated IRR for the year exceeds a specified return, QL will be obligated to participate in such tranche.

For 2021 and 2022, Antero Resources and QL agreed to the estimated internal rate of return (“IRR”) of the Company’s capital budget for each annual tranche, and QL agreed to participate in the 2021 and 2022 tranches.

For each subsequent year through 2024, Antero Resources will propose a capital budget and estimated IRR for all wells to be spud during such year and, subject to the mutual agreement of the parties that the estimated IRR for the year exceeds a specified return, QL will be obligated to participate in such tranche.

Antero Resources develops and manages the drilling program associated with each tranche, including the selection of wells.

Additionally, for each annual tranche in which QL participates, Antero Resources and QL will enter into an assignment, bill of sale and conveyance pursuant to which QL will be conveyed a proportionate working interest percentage in each well spud in that year, which conveyance will not be subject to any reversion.

Under the terms of the arrangement, QL will fund 20 % of development capital for wells spud in 2021 and is expected to fund between 15 % and 20 % of development capital for wells spud from 2022 through 2024, which funding amounts represent QL’s proportionate working interest in such wells.

Additionally, Antero Resources may receive a carry in the form of a one-time payment from QL for each annual tranche if the IRR for such tranche exceeds certain specified returns, which will be determined no earlier than December 31 following the end of each tranche year.

Additionally, for each annual tranche in which QL participates, Antero Resources and QL will enter into assignments, bills of sale and conveyances pursuant to which QL will be conveyed a proportionate working interest percentage in each well spud in that year, which conveyances will not be subject to any reversion.

Under the terms of the arrangement, QL funded 20 % of development capital for wells spud in 2021, is expected to fund 15 % in 2022 and between 15 % and 20 % of development capital spending for wells spud on an annual basis in 2023 and 2024, which funding amounts represent QL’s proportionate working interest in such wells.

Additionally, Antero Resources may receive a carry in the form of a one-time payment from QL for each annual tranche if the IRR for such tranche exceeds certain specified returns, which will be determined no earlier than October 31 and no later than December 1 following the end of each tranche year.

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

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

1 unchanged sentence

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 months ended March 31, 2021 and 2022.

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

The table set forth below presents revenue disaggregated by type and the reportable segment to which it relates (in thousands).

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

Three Months Ended September 30,

Nine Months Ended September 30,

The table set forth below presents revenue disaggregated by type and reportable segment to which it relates (in thousands).

See Note 16—Reportable Segments to the unaudited condensed financial statements for more information on reportable segments.

Three Months Ended March 31,

Reportable Segment

10 unchanged sentences

( 1,001,589 )

( 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 September 30, 2021, the Company’s receivables from contracts with customers were $ 425 million and $ 653 million, respectively.

As of December 31, 2021 and March 31, 2022, the Company’s receivables from contracts with customers were $ 591 million and $ 661 million, respectively.

(5) Equity Method Investment

Summary of Equity Method Investment

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

As of March 31, 2022, Antero owned approximately 29.1 % of Antero Midstream Corporation’s (“Antero Midstream”) 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 (in thousands):

Balance as of December 31, 2021 (1)

2 unchanged sentences

Elimination of intercompany profit

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

The tables set forth below present summarized financial information of Antero Midstream Corporation (in thousands).

Balance as of March 31, 2022 (1)

(1) The fair value of the Company’s investment in Antero Midstream as of December 31, 2021 and March 31, 2022 was $ 1.3 billion and $ 1.5 billion, respectively, based on the quoted market share price of Antero Midstream.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Summarized Financial Information of Antero Midstream

The tables set forth below present summarized financial information of Antero Midstream (in thousands):

Balance Sheet

September 30,

Current assets

5 unchanged sentences

Statement of Operations

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses

Income (loss) from operations

Net income (loss)

Income from operations

(6) Accrued Liabilities

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

September 30,

Accrued liabilities consisted of the following items (in thousands):

Capital expenditures

4 unchanged sentences

Derivative settlements payable

Accrued general and administrative expense

Total accrued liabilities

2 unchanged sentences

(7) Long-Term Debt

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

September 30,

Long-term debt consisted of the following items (in thousands):

Credit Facility (a)

5.125 % senior notes due 2022 (b)

5.625 % senior notes due 2023 (c)

5.00 % senior notes due 2025 (d)

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Total principal

Unamortized premium (discount), net

Unamortized discount, net

Unamortized debt issuance costs

2 unchanged sentences

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 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.

On October 26, 2021, Antero Resources entered into an amended and restated senior secured revolving credit facility (the “Credit Facility”).

As of December 31, 2021 and March 31, 2022, the Credit Facility had a borrowing base of $ 3.5 billion and lender commitments of $ 1.5 billion.

The borrowing base was re-affirmed in the semi-annual redetermination in April 2022.

As of March 31, 2022, the Credit Facility had an available borrowing capacity of $ 581 million.

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).

Antero Resources was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2021 and March 31, 2022.

The senior secured revolving credit facility agreement in effect prior to October 26, 2021 provided for borrowing under either an Alternate Base Rate or as a Eurodollar Loan (as each term is defined in the agreement), and the Credit Facility provides for borrowing at either an Adjusted Term Secured Overnight Financing Rate (“SOFR”), an Adjusted Daily Simple SOFR or an Alternate Base Rate (each as defined in the 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 was payable at a variable rate based on LIBOR or the Alternative Base Rate (as defined in the agreement), determined by election at the time of borrowing, plus an applicable margin rate under the senior secured revolving credit facility agreement in effect prior to October 26, 2021.

Interest is payable at a variable rate based on SOFR or the Alternate Base Rate, determined by election at the time of borrowing, plus an applicable margin rate under the 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.

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

The 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 Credit Facility).

As of December 31, 2021, Antero Resources had no borrowings under the Credit Facility and outstanding letters of credit of $ 531 million.

As of March 31, 2022, Antero Resources had an outstanding balance under the Credit Facility of $ 388 million, with a weighted average interest rate of 2.73 %, and had outstanding letters of credit of $ 531 million.

(b) 5.125 % Senior Notes Due 2022

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On September 18, 2014, Antero Resources issued an additional $ 500 million of the 2022 Notes at 100.5 % of par.

The Company repurchased or otherwise redeemed all of the 2022 Notes between 2019 and the first quarter of 2021.

The 2022 Notes were unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

The 2022 Notes ranked pari passu to Antero Resources’ other outstanding senior notes.

The 2022 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 2022 Notes was payable on June 1 and December 1 of each year.

The Company repurchased or otherwise fully redeemed all of the 2022 Notes between 2019 and the first quarter of 2021.

Interest on the 2022 Notes

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

was payable on June 1 and December 1 of each year.

See “—Debt Repurchase Program” below for further details on 2022 Notes repurchases.

2 unchanged sentences

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 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 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.

The 2025 Notes rank pari passu to Antero Resources’ other outstanding senior notes.

The 2025 Notes are guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ existing subsidiaries that guarantee the Credit Facility and certain of its future restricted subsidiaries.

Interest on the 2025 Notes is payable on March 1 and September 1 of each year.

Antero Resources may redeem all or part of the 2025 Notes at any time at redemption prices ranging from 102.5 % currently to 100.00 % on or after March 1, 2023.

If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2025 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101 % of the principal amount of the 2025 Notes, plus accrued and unpaid interest.

The Company repurchased or otherwise fully redeemed all of the 2025 Notes between 2020 and the first quarter of 2022.

Interest on the 2025 Notes was payable on March 1 and September 1 of each year.

See “—Debt Repurchase Program” below for further details on 2025 Notes repurchases and redemption.

(e) 8.375 % Senior Notes Due 2026

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

The 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.

The Company redeemed $ 175 million of the 2026 Notes on July 1, 2021, and as of March 31, 2022, $ 325 million principal amount of the 2026 Notes remained outstanding.

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

6 unchanged sentences

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

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

The Company redeemed $ 116 million of the 2029 Notes during the fourth quarter of 2021, and as of March 31, 2022, $ 584 million principal amount of the 2029 Notes remained outstanding.

See “—Debt Repurchase Program” below for further details on the 2029 Notes redemption.

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

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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.

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.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(g) 5.375 % Senior Notes Due 2030

9 unchanged sentences

(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 August 21, 2020, Antero Resources issued $ 250 million in aggregate principal amount of 4.25 % convertible senior notes due September 1, 2026 (the “2026 Convertible Notes”).

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

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.

During 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.

As of March 31, 2022, $ 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 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.

As of March 31, 2022, the if-converted value of the 2026 Convertible Notes was $ 573 million, which exceeded the principal amount of the 2026 Convertible Notes by $ 492 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.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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.

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 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, 2022.

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

4 unchanged sentences

The liability component was recorded at the estimated fair value of a similar debt instrument without the conversion feature.

The difference between the principal amount of the 2026 Convertible Notes and the estimated fair value of the liability component was recorded as a debt discount and will be amortized to interest expense, together with debt issuance costs, over the term of the 2026 Convertible Notes using the effective interest method, with an effective interest rate of 15.1 % per annum.

The difference between the principal amount of the 2026 Convertible Notes and the estimated fair value of the liability component was recorded as a debt discount and was amortized to interest expense, together with debt issuance costs, over the term of the 2026 Convertible Notes using the effective interest method, with an effective interest rate of 15.1 % per annum.

As of the issuance date, the fair value of the 2026 Convertible Notes was estimated at $ 172 million, resulting in a debt discount at inception of $ 116 million.

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

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

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 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 liability component were recorded within debt issuance costs on the condensed consolidated balance sheet and were 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

Effective January 1, 2022, the Company adopted ASU 2020-06 whereby the Company reclassified the equity component of the 2026 Convertible Notes outstanding on such date, net of deferred income taxes and equity issuance costs, from additional paid-in capital to long-term debt.

See Note 2—Summary of Significant Accounting Policies to the 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 nine months ended September 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 nine months ended September 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 three months ended March 31, 2021 for the consideration paid in excess of the original terms of the 2026 Convertible Notes.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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.

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.

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 nine months ended September 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 second quarter of 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:

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(1) As of December 31, 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.

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.

Upon adoption of ASU 2020-06 on January 1, 2022, the equity component was reclassified from additional paid-in capital to long-term debt and fully offset the remaining discount on the 2026 Convertible Notes.

See Note 2—Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements.

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 million and $ 1 million for the three months ended March 31, 2021 and 2022, respectively.

(i) Debt Repurchase Program

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

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.

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.

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 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.

During the three months ended March 31, 2021, the Company redeemed the remaining $ 661 million aggregate principal amount of its 2022 Notes at par, plus accrued and unpaid interest, and as a result, the 2022 Notes were fully retired as of February 10, 2021.

During the three months ended March 31, 2022, the Company redeemed the remaining $ 585 million aggregate principal amount of its 2025 Notes at a redemption price of 101.25 % of the principal amount thereof, plus accrued and unpaid interest and recognized a loss on early debt extinguishment of $ 11 million.

(8) Asset Retirement Obligations

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

The following table presents a reconciliation of the Company’s asset retirement obligations (in thousands):

Asset retirement obligations—December 31, 2021

2 unchanged sentences

Settlement of obligations

Obligations on sold properties

Revisions to prior estimates

Asset retirement obligations—September 30, 2021

Asset retirement obligations—March 31, 2022

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(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 7,888,490 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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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,

A total of 8,503,317 shares were available for future grant under the 2020 Plan as of March 31, 2022.

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 and converted into 1.8926 RSUs (all such RSUs, the “Converted AM RSU Awards”) under the Antero Midstream Long Term Incentive Plan (the “AM Plan”).

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

The Company’s equity-based compensation expense, by type of award, is as follows (in thousands):

Three Months Ended March 31,

Converted AM RSU Awards (1)

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(1) Antero Resources recognized compensation expense for equity awards granted under both the 2013 Plan and the AMP Plan because the awards under the AMP Plan are accounted for as if they are distributed by Antero Midstream Partners to Antero Resources.

Antero Resources allocates a portion of equity-based compensation expense related to grants prior to the deconsolidation of Antero Midstream Partners on March 12, 2019 to Antero Midstream Partners based on its proportionate share of Antero Resources’ labor costs.

Antero Resources allocates a portion of equity-based compensation expense related to grants prior to March 12, 2019 (date of deconsolidation) to Antero Midstream Partners based on its proportionate share of Antero Resources’ labor costs.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Restricted Stock Unit Awards

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

A summary of RSU award activity is as follows:

Total awarded and unvested—December 31, 2021

( 1,356,548 )

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.

Total awarded and unvested—March 31, 2022

As of March 31, 2022, there was approximately $ 18 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 2.4 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,

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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:

A summary of PSU award activity is as follows:

Average Grant

2 unchanged sentences

Cancelled (unearned)

( 1,112,639 )

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

Risk-free interest rate

Weighted average fair value of awards granted—Absolute TSR

As of September 30, 2021, there was approximately $ 8 million of unamortized equity-based compensation expense related to unvested PSUs.

Total awarded and unvested—March 31, 2022

As of March 31, 2022, there was approximately $ 6 million of unamortized equity-based compensation expense related to unvested PSUs.

That expense is expected to be recognized over a weighted average period of approximately 1.9 years.

In 2019, the Company granted PSUs to certain of its employees and executive officers that vest based on Antero Resources’ absolute total shareholder return at the end of a three-year performance period (“Absolute TSR PSUs”).

The number of shares of common stock that could ultimately be earned ranged from zero to 200 % of the target number of PSUs granted.

In April 2022, the market-based performance condition for the Absolute TSR PSUs was met at 200 % of target.

As a result, the Absolute TSR PSUs will convert into approximately 2 million shares during the second quarter of 2022.

Converted AM RSU Awards

A summary of the Converted AM RSU Awards is as follows:

Total awarded and unvested—December 31, 2021

Total awarded and unvested—March 31, 2022

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

As of March 31, 2022, there was $ 0.1 million of unamortized equity-based compensation expense related to unvested Converted AM RSU Awards.

That expense is expected to be recognized over a weighted average period of 0.4 years, and the Company’s proportionate share will be allocated to it as it is recognized.

Stock Options

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

A summary of stock option activity is as follows:

(in thousands) (1)

Outstanding—December 31, 2021

Outstanding—September 30, 2021

Vested—September 30, 2021

Exercisable—September 30, 2021

Outstanding—March 31, 2022

Vested—March 31, 2022

Exercisable—March 31, 2022

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

As of September 30, 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

Converted AM RSU Awards

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—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.

As of March 31, 2022, all stock options were fully vested resulting in no unamortized equity-based compensation expense.

In January 2020, the Company granted cash awards of approximately $ 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 $ 3 million to certain non-executive employees under the 2020 Plan that vest ratably over four years .

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.

As of December 31, 2021 and March 31, 2022, the Company has recorded approximately $ 2 million and $ 1 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 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):

The carrying values of accounts receivable and accounts payable as of December 31, 2021 and March 31, 2022 approximated market values because of their short-term nature.

The carrying values of the amounts outstanding under the Credit Facility as of December 31, 2021 and March 31, 2022 approximated fair value because the variable interest rates are reflective of current market conditions.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The following table sets forth the fair value and carrying value of the senior notes and 2026 Convertible Notes (in thousands):

December 31, 2021

September 30, 2021

March 31, 2022

2026 Convertible Notes

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

6 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 nine months ended September 30, 2020 and 2021.

The Company was party to various fixed price commodity swap contracts that settled during the three months ended March 31, 2021 and 2022.

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 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:

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

As of March 31, 2022, the Company’s fixed price swap positions excluding Martica, the Company’s consolidated VIE, were as follows:

Commodity / Settlement Period

Contracted Volume

October-December 2021

January-December 2022

April-December 2022

January-December 2023

October-December 2021

Mont Belvieu Butane-OPIS Non-TET

October-December 2021

Mont Belvieu Butane-OPIS TET

Natural Gasoline

October-December 2021

Mont Belvieu Natural Gasoline-OPIS Non-TET

October-December 2021

Mont Belvieu Isobutane-OPIS Non-TET

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 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:

In addition, the Company has a swaption agreement, which entitles the counterparty 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, 2022, 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

October-December 2021

January-December 2022

April-December 2022

January-December 2023

January-December 2024

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.

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

Commodity / Settlement Period

Index to Basis Differential

Contracted Volume

October-December 2021

Mont Belvieu Natural Gasoline to WTI

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:

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

As of March 31, 2022, the Company’s fixed price swap positions for Martica, the Company’s consolidated VIE, were as follows:

Commodity / Settlement Period

Contracted Volume

October-December 2021

January-December 2022

April-December 2022

January-December 2023

1 unchanged sentence

January-March 2025

October-December 2021

Mont Belvieu Purity Ethane-OPIS

January-March 2022

Mont Belvieu Purity Ethane-OPIS

October-December 2021

Mont Belvieu Propane-OPIS Non-TET

January-December 2022

April-December 2022

Mont Belvieu Propane-OPIS Non-TET

Natural Gasoline

October-December 2021

Mont Belvieu Natural Gasoline-OPIS Non-TET

January-December 2022

April-December 2022

Mont Belvieu Natural Gasoline-OPIS Non-TET

1 unchanged sentence

Mont Belvieu Natural Gasoline-OPIS Non-TET

October-December 2021

West Texas Intermediate

January-December 2022

April-December 2022

West Texas Intermediate

5 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.

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.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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 (in thousands).

Balance Sheet

September 30,

Asset derivatives not designated as hedges for accounting purposes:

14 unchanged sentences

Total liability derivatives (1)

Net derivatives assets (liabilities)

Net derivatives liability (1)

( 1,452,525 )

(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.

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

(2) As of December 31, 2021 , approximately $ 55 million of commodity derivative liabilities, including $ 31 million of current commodity derivatives and $ 24 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 condensed consolidated balance sheets as of the dates presented, all at fair value (in thousands):

As of March 31, 2022 , approximately $ 100 million of commodity derivative liabilities, including $ 66 million of current commodity derivatives and $ 34 million of noncurrent commodity derivatives, are attributable to the Company’s consolidated VIE, Martica.

The following table sets forth 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, 2021

September 30, 2021

March 31, 2022

Net Amounts of

Gross Amounts

Amounts Offset

(Liabilities) on

Amounts Offset

(Liabilities) on

1 unchanged sentence

Balance Sheet

Commodity derivative assets

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

Three Months Ended September 30,

Nine Months Ended September 30,

The following table sets forth a summary of derivative fair value gains and losses and where such values are recorded in the unaudited condensed consolidated statements of operations (in thousands):

Three Months Ended March 31,

Commodity derivative fair value losses (1)

( 1,238,384 )

( 2,228,076 )

Embedded derivative fair value gains (losses) (1)

Embedded derivative fair value losses (1)

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

18 unchanged sentences

(a) Supplemental Balance Sheet Information Related to Leases

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,

The Company’s lease assets and liabilities 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 and $ 1.0 billion related to Antero Midstream Corporation as of December 31, 2020 and September 30, 2021 .

(1) Gas gathering lines and compressor stations leases includes $ 1.5 billion related to Antero Midstream as of December 31, 2021 and March 31, 2022 .

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

(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.

(2) Financing lease assets are recorded net of accumulated amortization of $ 2 million and $ 1 million as of December 31, 2021 and March 31, 2022 , 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 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,

Costs associated with operating and finance leases were included in the unaudited condensed consolidated statement of operations and comprehensive loss (in thousands):

Three Months Ended March 31,

Classification

7 unchanged sentences

Statement of operations

Contract termination and rig stacking

Operating lease cost

Statement of operations

Lease operating

7 unchanged sentences

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

Nine Months Ended September 30,

The following table presents the Company’s supplemental cash flow information related to leases (in thousands):

Three Months Ended March 31,

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

5 unchanged sentences

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.

(1) No operating leases were remeasured during the three months ended March 31, 2021.

During the three months ended March 31, 2022 , the weighted average discount rate for remeasured operating leases decreased from 6.3 % as of December 31, 2021 to 3.6 % as of March 31, 2022 .

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 September 30, 2021 (in thousands):

The table below is a schedule of future minimum payments for operating and financing lease liabilities as of March 31, 2022 (in thousands):

Operating Leases

3 unchanged sentences

imputed interest

( 1,212,263 )

( 1,212,309 )

(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 September 30, 2021:

The following table sets forth the Company’s weighted average remaining lease term and discount rate:

December 31, 2021

September 30, 2021

March 31, 2022

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 annual 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 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 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.

The Company has a gathering and compression agreement with Antero Midstream, whereby Antero Midstream 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 annual adjustments based on the consumer price index.

If and to the extent the Company requests that Antero Midstream construct new low pressure lines, high pressure lines or compressor stations, the gathering and compression agreement contains options at Antero Midstream’s election for either (i) 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 or (ii) a cost of service fee that allows the Antero Midstream to earn a 13 % rate of return on such new construction over seven years .

In December 2019, the Company and Antero Midstream 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 on or before the 180 th day prior to the anniversary of such effective date.

The Company did no t achieve the quarterly volumetric target for the first quarter of 2021, and therefore, did not earn a rebate for the three months ended March 31, 2021.

During the three months ended March 31, 2022, the Company achieved the quarterly volumetric target, and earned a rebate of $ 12 million.

For the three months ended March 31, 2021 and 2022, gathering and compression fees paid by Antero related to this agreement were $ 177 million and $ 163 million, respectively.

As of December 31, 2021 and March 31, 2022, $ 54 million and $ 56 million was included within Accounts payable, related parties, respectively, on the condensed consolidated balance sheet as due to Antero Midstream 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 September 30, 2021 (in thousands).

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 a lease term in excess of one year as of March 31, 2022 (in thousands)

Gathering and

25 unchanged sentences

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

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

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

Contract Terminations

The Company incurs costs associated with the delay or cancellation of drilling and completion contracts with third-party contractors.

These costs are recorded in Contract termination and included in the statement of operations and comprehensive loss.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

There are no remaining payment obligations related to these delayed or cancelled drilling and completion contracts as of March 31, 2022.

(14) Contingencies

4 unchanged sentences

Separately, in June 2018, the Company received an information request from the EPA Region III pursuant to Section 114(a) of the Clean Air Act relating to the facilities that were inspected in September 2017 as well as additional Antero Resources facilities for the purpose of determining if the additional facilities have the same alleged compliance issues that were identified during the September 2017 inspections.

Subsequently, the West Virginia Department of Environmental Protection (“WVDEP”) and 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.

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 EPA Region V related to similar issues being investigated by the EPA Region III.

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

15 unchanged sentences

(15) Related Parties

Substantially all of Antero Midstream Corporation’s revenues were and are derived from transactions with Antero Resources.

Substantially all of Antero Midstream’s revenues were and are derived from transactions with Antero Resources.

See Note 16—Reportable Segments to the unaudited condensed consolidated financial statements for the operating results of the Company’s reportable segments.

(16) Reportable Segments

Management evaluated how the Company is organized and managed and identified the following segments:

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

(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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

in the United States;

(16) Reportable Segments

Summary of Reportable Segments

The Company’s operations, which are located in the United States, are organized into three reportable segments:

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

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

Substantially all of the Company’s production revenues are attributable to customers located in the United States;

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

Operating segments are evaluated based on their contribution to consolidated results, which is primarily determined by the respective operating income (loss) of each segment.

These segments are monitored separately by management for performance and are consistent with internal financial reporting.

These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations.

Management evaluates the performance of the Company’s business segments based on operating income (loss).

General and administrative expenses were allocated to the midstream segment based on the nature of the expenses and on a combination of the segments’ proportionate share of the Company’s consolidated property and equipment, capital expenditures, and labor costs, as applicable.

3 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 September 30, 2020 and 2021 (in thousands):

Three Months Ended September 30, 2020

Equity Method

Exploration and Production

The exploration and production segment is engaged in the development, production, exploration and acquisition of natural gas, NGLs and oil properties located in the Appalachian Basin.

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

Where feasible, the Company purchases and sells third-party natural gas and NGLs and markets its excess firm transportation capacity, or engages third parties to conduct these activities on the Company’s behalf, in order to optimize the revenues from these transportation agreements.

The Company has entered into long-term firm transportation agreements for a significant portion of its current and expected future production in order to secure guaranteed capacity to favorable markets.

Equity Method Investment in Antero Midstream

The Company receives midstream services through its equity method investment in Antero Midstream.

Antero Midstream owns, operates and develops midstream energy infrastructure primarily to service the Company’s production and completion activity in the Appalachian Basin.

Antero Midstream’s assets consist of gathering pipelines, compressor stations, interests in processing and fractionation plants and water handling assets.

Antero Midstream provides midstream services to Antero Resources under long-term contracts.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Reportable Segments Financial Information

The summarized operating results of the Company’s reportable segments are as follows (in thousands):

Three Months Ended March 31, 2021

Elimination of

Equity Method

Investment in

6 unchanged sentences

Gathering, compression, processing, and transportation

Impairment of oil and gas properties

Depletion, depreciation, and amortization

General and administrative

Depletion, depreciation, and amortization

Impairment of oil and gas properties

Impairment of midstream assets

Total operating expenses

Operating income (loss)

Operating income

Equity in earnings of unconsolidated affiliates

Investments in unconsolidated affiliates

Segment assets

( 5,673,504 )

Capital expenditures for segment assets

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

Three Months Ended September 30, 2021

Equity Method

Three Months Ended March 31, 2022

Elimination of

Equity Method

Investment in

6 unchanged sentences

Gathering, compression, processing, and transportation

Impairment of oil and gas properties

Depletion, depreciation, and amortization

General and administrative

Depletion, depreciation, and amortization

Impairment of oil and gas properties

Total operating expenses

1 unchanged sentence

Equity in earnings of unconsolidated affiliates

Investments in unconsolidated affiliates

Segment assets

( 5,533,633 )

Capital expenditures for segment assets

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

The summarized assets of the Company’s reportable segments are as follows (in thousands):

As of December 31, 2021

Elimination of

Equity Method

Investment in

1 unchanged sentence

Unconsolidated

Sales and revenues:

Total revenue

Operating expenses:

Lease operating

Gathering, compression, processing, and transportation

Impairment of oil and gas properties

Impairment of midstream assets

Depletion, depreciation, and amortization

General and administrative

Total operating expenses

Operating loss

( 1,098,598 )

Equity in earnings (loss) of unconsolidated affiliates

Investments in unconsolidated affiliates

Segment assets

( 5,544,001 )

Capital expenditures for segment assets

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Nine Months Ended September 30, 2021

Equity Method

As of March 31, 2022

Elimination of

Equity Method

Investment in

1 unchanged sentence

Unconsolidated

Sales and revenues:

Total revenue

Operating expenses:

Lease operating

Gathering, compression, processing, and transportation

Impairment of oil and gas properties

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

Investments in unconsolidated affiliates

Segment assets

( 5,580,594 )

Capital expenditures for segment assets

(17) Subsidiary Guarantors

2 unchanged sentences

In addition, a subsidiary guarantor will be released from its obligations under the indentures and its guarantee, upon the release or discharge of the guarantee of other Indebtedness (as defined in the indentures governing the notes) that resulted in the creation of such guarantee, except a release or discharge by or as a result of payment under such guarantee;

if Antero designates such subsidiary as an unrestricted subsidiary and such designation complies with the other applicable provisions of the indentures governing the notes or in connection with any covenant defeasance, legal defeasance or satisfaction and discharge of the notes.

The following tables present summarized financial information of Antero and its guarantor subsidiaries (in thousands).

The Company’s wholly owned subsidiaries are not restricted from making distributions to the Company.

if Antero designates such

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

subsidiary as an unrestricted subsidiary and such designation complies with the other applicable provisions of the indentures governing the notes or in connection with any covenant defeasance, legal defeasance or satisfaction and discharge of the notes.

The tables set forth below present summarized financial information of Antero, as parent, and its guarantor subsidiaries (in thousands).

The Company’s wholly owned subsidiaries are not restricted from making distributions to the Company.

Balance Sheet

December 31, 2021

September 30, 2021

Parent (Antero)

and Guarantor Subsidiaries

March 31, 2022

Accounts receivable, non-guarantor subsidiaries

10 unchanged sentences

Statement of Operations

Nine Months Ended

September 30, 2021

Parent (Antero)

and Guarantor Subsidiaries

Three Months Ended

March 31, 2022

Operating expenses

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