What changed in this filing

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Item 1. Financial Statements

2023-04-26 compared with 2022-10-26 · 226 added, 454 removed, 748 unchanged (48% of the section changed)

17 unchanged sentences

● our financial strategy, liquidity and capital required for our development program;

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

● our ability to execute our share repurchase program;

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

● our ability to execute our return of capital program;

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

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

● impacts of geopolitical events, including the Russia-Ukraine conflict, 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, including with respect to water handling services provided by Antero Midstream Corporation (“Antero Midstream”);

● our projected well costs;

● competition;

4 unchanged sentences

● costs of developing our properties;

● operations of Antero Midstream;

● operations of Antero Midstream Corporation (“Antero Midstream”);

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

4 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 and cost 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.

These risks include, but are not limited to, commodity price volatility, inflation, supply chain or other disruption, availability and cost 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 geopolitical and 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, 2022 (the “2022 Form 10-K”), which is on file with the Securities and Exchange Commission (“SEC”).

11 unchanged sentences

Condensed Consolidated Balance Sheets

(In thousands)

September 30,

(In thousands, except per share amounts)

Current assets:

2 unchanged sentences

Derivative instruments

Other current assets

Prepaid expenses and other current assets

Total current assets

37 unchanged sentences

authorized - 1,000,000 shares;

313,930 shares and 303,131 shares issued and outstanding as of December 31, 2021 and September 30, 2022, respectively

297,393 shares issued and 297,359 outstanding as of December 31, 2022, and 299,321 shares issued and outstanding as of March 31, 2023

Additional paid-in capital

Retained earnings (accumulated deficit)

Retained earnings

Treasury stock, at cost;

34 shares and zero shares as of December 31, 2022 and March 31, 2023, respectively

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:

1 unchanged sentence

Natural gas liquids sales

Commodity derivative fair value losses

Commodity derivative fair value gains (losses)

( 1,011,380 )

Amortization of deferred revenue, VPP

Other revenue and income

Total revenue

6 unchanged sentences

Depletion, depreciation and amortization

Impairment of oil and gas properties

Impairment of property and equipment

Accretion of asset retirement obligations

Contract termination

(Gain) loss on sale of assets

Loss (gain) on sale of assets

Other operating expense

Total operating expenses

5 unchanged sentences

Loss on convertible note inducement

Transaction expense

Total other expense

9 unchanged sentences

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (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 )

( 1,807,565 )

Amortization of deferred revenue, VPP

Total revenue

Operating expenses:

Lease operating

Gathering, compression, processing and transportation

Production and ad valorem taxes

Exploration and mine expenses

General and administrative (including equity-based compensation expense of $ 15,189 and $ 23,222 in 2021 and 2022, respectively)

Depletion, depreciation and amortization

Impairment of oil and gas properties

Accretion of asset retirement obligations

Contract termination

(Gain) loss on sale of assets

Total operating expenses

Operating income (loss)

( 1,232,484 )

Other income (expense):

Interest expense, net

Equity in earnings of unconsolidated affiliate

Loss on early extinguishment of debt

Loss on convertible note inducement and equitizations

Transaction expense

Total other expense

Income (loss) before income taxes

( 1,449,698 )

Income tax benefit (expense)

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

( 1,112,130 )

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

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

( 1,088,284 )

Income (loss) per share—basic

Income (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 Stockholders’ Equity (Unaudited)

(In thousands)

Retained Earnings

Treasury Stock

Noncontrolling

Balances, December 31, 2021

Issuance of common shares

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

Equity-based compensation

Distributions to noncontrolling interests

Net income (loss) and comprehensive income (loss)

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

Equity-based compensation

Distributions to noncontrolling interests

Net loss and comprehensive loss

Balances, June 30, 2021

Equity component of 2026 Convertible Notes, net

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

Distributions to noncontrolling interest

Equity-based compensation

Net loss and comprehensive loss

Balances, September 30, 2021

( 1,518,762 )

Balances, December 31, 2021

Equity component of 2026 Convertible Notes, net

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

Repurchases and retirements of common stock

3 unchanged sentences

Balances, March 31, 2022

Balances, December 31, 2022

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

4 unchanged sentences

Net income and comprehensive income

Balances, June 30, 2022

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

Conversion of 2026 Convertible Notes

Repurchases and retirements of common stock

Equity-based compensation

Distributions to noncontrolling interest

Net income and comprehensive income

Balances, September 30, 2022

Balances, March 31, 2023

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 income (loss) including noncontrolling interests

( 1,112,130 )

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

Depletion, depreciation, amortization and accretion

Commodity derivative fair value losses

Commodity derivative fair value losses (gains)

Losses on settled commodity derivatives

( 1,484,660 )

Payments for derivative monetizations

6 unchanged sentences

Settlement of asset retirement obligations

(Gain) loss on sale of assets

Loss (gain) on sale of assets

Loss on early extinguishment of debt

Loss on convertible note inducement and equitizations

Loss on convertible note inducement

Changes in current assets and liabilities:

13 unchanged sentences

Change in other assets

Change in other liabilities

Net cash used in investing activities

1 unchanged sentence

Repurchases of common stock

Issuance of senior notes

Repayment of senior notes

( 1,424,354 )

( 1,011,313 )

Borrowings (repayments) on bank credit facilities, net

Payment of debt issuance costs

Sale of noncontrolling interest

Borrowings on bank credit facilities, net

Convertible note inducement

Distributions to noncontrolling interests in Martica Holdings LLC

Employee tax withholding for settlement of equity compensation awards

Convertible note inducement and equitizations

Net cash used in financing activities

( 1,857,694 )

Net cash provided by (used in) financing activities

Net increase in cash and cash equivalents

3 unchanged sentences

Cash paid during the period for interest

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

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

See accompanying notes to unaudited condensed consolidated financial statements.

10 unchanged sentences

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

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Company’s financial position as of December 31, 2021 and September 30, 2022, results of operations for the three and nine months ended September 30, 2021 and 2022 and cash flows for the nine months ended September 30, 2021 and 2022.

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, 2022 and March 31, 2023, results of operations and cash flows for the three months ended March 31, 2022 and 2023.

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, 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.

Operating results for the period ended March 31, 2023 are not necessarily indicative of the results that may be expected for the full year because of the impact of fluctuations in prices received for natural gas, NGLs and oil, natural production declines, the uncertainty of exploration and development drilling results, fluctuations in the fair value of derivative instruments and other factors.

Principles of Consolidation

7 unchanged sentences

As of December 31, 2022, the book overdrafts included within accounts payable and revenue distributions payable were $ 28 million and $ 43 million, respectively.

As of September 30, 2022, the book overdrafts included within accounts payable and revenue distributions payable were $ 61 million and $ 159 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 (i) outstanding equity awards using the treasury stock method and (ii) shares of common stock issuable upon conversion of the 2026 Convertible Notes (as defined below in Note 7—Long-Term Debt) using the if-converted method.

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

As of March 31, 2023, the book overdrafts included within accounts payable and revenue distributions payable were $ 46 million and $ 31 million, respectively.

Income (Loss) Per Common Share

Income (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.

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

The Company includes restricted stock unit (“RSU”)

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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

awards, performance share unit (“PSU”) awards and stock options in the calculation of diluted weighted average shares outstanding based on the number of common shares that would be issuable if the end of the period was also the end of the performance period required for the vesting of the awards.

During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effects of all equity awards and the 2026 Convertible Notes are anti-dilutive.

The following is a reconciliation of the Company’s earnings (loss) attributable to common stockholders for basic and diluted earnings (loss) per share (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

The following is a reconciliation of the Company’s income (loss) attributable to common stockholders for basic and diluted income (loss) per share (in thousands):

Three Months Ended March 31,

Net income (loss) attributable to Antero Resources Corporation—common shareholders

( 1,088,284 )

Interest expense for 2026 Convertible Notes

1 unchanged sentence

Net income (loss) attributable to Antero Resources Corporation—common shareholders and assumed conversions

( 1,088,284 )

Income (loss) per share—basic

3 unchanged sentences

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

1 unchanged sentence

Dilutive effect of PSUs

Dilutive effect of stock options

Dilutive effect of 2026 Convertible Notes

Diluted weighted average number of shares outstanding

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

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

Stock options

2026 Convertible Notes

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

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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 July 8, 2022, Pennsylvania enacted new tax laws that are effective January 1, 2023 on a prospective basis that reduce the state’s corporate income tax rate.

As a result of this tax law change, the Company’s net deferred income tax liability was reduced by $ 21 million with a corresponding charge to income tax expense in the unaudited condensed consolidated financial statements during the three and nine months ended September 30, 2022.

Recently Issued Accounting Standards

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

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 required separate accounting for conversion features, and instead, allows the debt instrument and conversion features to be accounted for as a single debt instrument.

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.

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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 and nine months ended September 30, 2021.

In December 2019, the FASB issued ASU No.

2019-12, Simplifying the Accounting for Income Taxes .

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 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.

Additionally, annual interest expense for the 2026 Convertible Notes beginning January 1, 2023 is based on an effective interest rate of 4.9 % as compared to 15.1 % prior to the adoption of this new standard.

(3) Transactions

1 unchanged sentence

On June 15, 2020, the Company announced the consummation of a transaction with an affiliate of Sixth Street Partners, LLC (“Sixth Street”) relating to certain overriding royalty interests across the Company’s existing asset base (the “ORRIs”).

In connection with the transaction, the Company contributed the ORRIs to Martica and Sixth Street contributed $ 300 million in cash (subject to customary adjustments) and agreed to contribute up to an additional $ 102 million in cash if certain production thresholds attributable to the ORRIs are achieved in the third quarter of 2020 and first quarter of 2021.

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

The Company met the applicable production 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 % in all of the Company’s operated proved developed properties in West Virginia and Ohio, subject to certain excluded wells (the “Initial PDP Override”) as of April 1, 2020, and an overriding royalty interest of 3.75 % in all of the Company’s undeveloped properties in West Virginia and Ohio (the “Development Override”) as of April 1, 2020.

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 burdened by the Development Override, are subject to the Development Override.

As of April 1, 2023, the Company had turned to sales over 2.2 million lateral feet and less than 3.82 million lateral feet.

As a result, wells turned to sales on or after April 1, 2023 will not be subject to the ORRIs.

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

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

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

Prior to Sixth Street achieving an internal rate of return of 13 % and 1.5 x cash-on-cash return (the “Hurdle”), Sixth Street will receive all distributions in respect of the Initial PDP Override and the Development Override, and the Company will receive all distributions in respect of the Incremental Override, unless certain production targets are not achieved, in which case Sixth Street will receive some or all of the distributions in respect of the Incremental Override.

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

Drilling Partnership

2 unchanged sentences

For 2021, 2022 and 2023, 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, 2022, and 2023 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

For 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 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 % and 15 % of development capital for wells spud in 2021 and 2022, respectively, and will fund development capital of (i) 15 % for wells spud in 2023 and (ii) if they participate in 2024,

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

tranche, including the selection of wells.

Under the terms of the arrangement, QL funded 20 % of development capital for wells spud in 2021, and will 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.

between 15 % and 20 % for wells spud in 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.

During the year ended December 31, 2022, the Company received a carry of $ 29 million attributable to the 2021 tranche.

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

1 unchanged sentence

Subject to the preceding sentence, for any wells included in a tranche, QL is obligated and responsible for its working interest share of costs and liabilities, and is entitled to its working interest share of revenues, associated with such wells for the life of such wells.

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, Extractive Activities—Oil and Gas , and such conveyances are recorded in the unaudited condensed consolidated financial statements as QL obtains its proportionate working interest in each well.

No gain or loss was recognized for the interests conveyed during the three and nine months ended September 30, 2021 and 2022.

No gain or loss was recognized for the interests conveyed during the three months ended March 31, 2022 and 2023.

Disaggregation of Revenue

1 unchanged sentence

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Reportable Segment

7 unchanged sentences

Exploration and production

Other revenue

Exploration and production

Total revenue from contracts with customers

Loss from derivatives, deferred revenue and other sources, net

( 1,238,532 )

( 2,225,678 )

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

( 1,001,589 )

5 unchanged sentences

For the Company’s product sales that have a contract term of one year or less, the Company utilized the practical expedient in ASC 606, which does not require the disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

1 unchanged sentence

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

As of December 31, 2021 and September 30, 2022, the Company’s receivables from contracts with customers were $ 591 million and $ 924 million, respectively.

As of December 31, 2022 and March 31, 2023, the Company’s receivables from contracts with customers were $ 708 million and $ 379 million, respectively.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(5) Equity Method Investment

Summary of Equity Method Investment

As of September 30, 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.

As of March 31, 2023, Antero owned 29.0 % of Antero Midstream’s common stock, which is reflected in Antero’s unaudited condensed consolidated financial statements using the equity method of accounting.

The following table sets forth a reconciliation of Antero’s investment in unconsolidated affiliate (in thousands):

3 unchanged sentences

Elimination of intercompany profit

Balance as of September 30, 2022 (1)

(1) The fair value of the Company’s investment in Antero Midstream as of December 31, 2021 and September 30, 2022 was $ 1.3 billion based on the quoted market share price of Antero Midstream.

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

Noncurrent assets

Current liabilities

Noncurrent liabilities

Stockholders' equity

Total liabilities and stockholders' equity

Statement of Operations

Nine Months Ended September 30,

Operating expenses

Income from operations

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Balance as of March 31, 2023 (1)

(1) The fair value of the Company’s investment in Antero Midstream as of December 31, 2022 and March 31, 2023 was $ 1.5 billion based on the quoted market share price of Antero Midstream .

(6) Accrued Liabilities

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

September 30,

Capital expenditures

8 unchanged sentences

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

September 30,

Credit Facility (a)

8.375 % senior notes due 2026 (c)

7.625 % senior notes due 2029 (d)

5.375 % senior notes due 2030 (e)

7.625 % senior notes due 2029 (f)

5.375 % senior notes due 2030 (g)

4.25 % convertible senior notes due 2026 (h)

4.25 % convertible senior notes due 2026 (f)

Total principal

Unamortized discount, net

Unamortized debt issuance costs

1 unchanged sentence

(a) Senior Secured Revolving Credit Facility

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 (the “Credit Facility”).

As of December 31, 2021 and September 30, 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 October 2022.

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

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 December 31, 2022 and March 31, 2023, the Credit Facility had a borrowing base of $ 3.5 billion and lender commitments of $ 1.5 billion.

The borrowing base was re-

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

affirmed in the semi-annual redetermination in April 2023.

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 then outstanding senior notes.

As of September 30, 2022, the Credit Facility had an available borrowing capacity of $ 986 million.

As of March 31, 2023, the Credit Facility had an available borrowing capacity of $ 816 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 Credit Facility as of December 31, 2021 and September 30, 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).

Antero Resources was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2022 and March 31, 2023.

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 was payable at a variable rate based on LIBOR or the Alternative Base Rate (as defined in

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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.

2 unchanged sentences

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 September 30, 2022, Antero Resources had an outstanding balance under the Credit Facility of $ 9 million, with a weighted average interest rate of 5.20 %, and had outstanding letters of credit of $ 505 million.

As of December 31, 2022, Antero Resources had an outstanding balance under the Credit Facility of $ 35 million, with a weighted average interest rate of 6.42 %, and outstanding letters of credit of $ 504 million.

As of March 31, 2023, Antero Resources had an outstanding balance under the Credit Facility of $ 180 million, with a weighted average interest rate of 6.91 %, and outstanding letters of credit of $ 504 million.

(b) 5.00 % Senior Notes Due 2025

On May 6, 2014, Antero Resources issued $ 600 million of 5.125 % senior notes due December 1, 2022 (the “2022 Notes”) at par .

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

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

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

See “—Debt Repurchase Program” below for more information.

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

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

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

See “—Debt Repurchase Program” below for more information.

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

The Company repurchased or otherwise redeemed all of the 2025 Notes between 2020 and the first quarter of 2022, and the 2025 Notes were fully retired as of March 1, 2022.

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

See “—Debt Repurchase Program” below for more information.

(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 repurchased $ 221 million of the 2026 Notes during the second and third quarters of 2022, and as of September 30, 2022, $ 104 million principal amount of the 2026 Notes remained outstanding.

The Company redeemed or otherwise repurchased $ 403 million principal amount of the 2026 Notes during 2021 and 2022, and as of March 31, 2023, $ 97 million principal amount of the 2026 Notes remained outstanding.

See “—Debt Repurchase Program” below for more information.

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.

(f) 7.625 % Senior Notes Due 2029

(d) 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 repurchased $ 168 million of the 2029 Notes during the second and third quarters of 2022, and as of September 30, 2022, $ 416 million principal amount of the 2029 Notes remained outstanding.

The Company redeemed or otherwise repurchased $ 293 million principal amount of the 2029 Notes during 2021 and 2022, and as of March 31, 2023, $ 407 million principal amount of the 2029 Notes remained outstanding.

See “—Debt Repurchase Program” below for more information.

The 2029 Notes are unsecured and

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

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

The 2029 Notes are guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ existing subsidiaries that guarantee the Credit Facility and certain of its

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility.

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

future restricted subsidiaries.

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

3 unchanged sentences

If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2029 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101 % of the principal amount of the 2029 Notes, plus accrued and unpaid interest.

(g) 5.375 % Senior Notes Due 2030

(e) 5.375 % Senior Notes Due 2030

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

7 unchanged sentences

If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2030 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101 % of the principal amount of the 2030 Notes, plus accrued and unpaid interest.

(h) 4.25 % Convertible Senior Notes Due 2026

(f) 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 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 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.

During the nine months ended September 30, 2022, $ 20 million aggregate principal amount of the 2026 Convertible Notes were converted pursuant to their terms, and an additional $ 5 million aggregate principal amount of the 2026 Convertible Notes were induced into conversion by the Company.

The Company elected to settle these conversions by issuing approximately 6 million shares of common stock to the noteholders together with a cash inducement premium of $ 0.2 million.

As of September 30, 2022, $ 57 million principal amount of the 2026 Convertible Notes remained outstanding.

Proceeds from the issuance of the 2026 Convertible Notes totaled $ 278.5 million, net of initial purchasers’ fees and issuance cost of $ 9 million.

The Company extinguished $ 206 million principal amount of the 2026 Convertible Notes in 2021.

In addition, between 2022 and the first quarter of 2023, $ 43 million aggregate principal amount of the 2026 Convertible Notes were converted pursuant to their terms or induced into conversion by the Company.

See “—Conversions and Inducements,” for more information.

As of March 31, 2023, $ 39 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.

The 2026 Convertible Notes bear interest at a fixed rate of 4.25 % per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on March 1, 2021.

Proceeds from the issuance of the 2026 Convertible Notes totaled $ 278.5 million, net of initial purchasers’ fees and issuance cost of $ 9 million.

Each capitalized term used in this subsection but not otherwise defined in this Quarterly Report on Form 10-Q has the meaning as set forth in the indenture governing the 2026 Convertible Notes.

The initial conversion rate is 230.2026 shares of Antero Resources’ common stock per $1,000 principal amount of 2026 Convertible Notes, subject to adjustment upon the occurrence of specified events.

As of September 30, 2022, the if-converted value of the 2026 Convertible Notes was $ 400 million, which exceeded the principal amount of the 2026 Convertible Notes by $ 343 million.

As of March 31, 2023, the if-converted value of the 2026 Convertible Notes was $ 210 million, which exceeded the principal amount of the 2026 Convertible Notes by $ 170 million.

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

Before May 1, 2026, noteholders 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”);

● during the five consecutive Business Days immediately after any 10 consecutive trading day period (such 10 consecutive Trading Day period, the “Measurement Period”) if the trading Price per $1,000 principal amount of 2026 Convertible Notes, as determined following a request by a noteholder in accordance with the procedures set forth below, for each trading day of the Measurement Period was less than 98 % of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day;

the 30 consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter (the “Stock Price Condition”);

● during the five consecutive Business Days immediately after any 10 consecutive Trading Day period (such 10 consecutive Trading Day period, the “Measurement Period”) if the Trading Price per $1,000 principal amount of 2026 Convertible Notes, as determined following a request by a noteholder in accordance with the procedures set forth below, for each Trading Day of the Measurement Period was less than 98 % of the product of the Last Reported Sales Price per share of common stock on such Trading Day and the conversion rate on such Trading Day;

● if Antero Resources calls any or all of the 2026 Convertible Notes for redemption, at any time prior to the close of business on the scheduled Trading Day immediately preceding the redemption date;

2 unchanged sentences

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, 2022.

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, 2023.

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

11 unchanged sentences

Issuance costs attributable to the equity component were recorded as a charge to additional paid-in capital within the 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

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

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

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

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

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

The Company used the proceeds from the May Share Offering and approximately $ 26 million of borrowings under the Credit Facility to repurchase from such holders $ 56 million aggregate principal amount of the 2026 Convertible Notes in privately negotiated transactions (the “May Convertible Note Repurchase,” and, collectively with the May Share Offering, the “May Equitization Transactions”).

The 2026 Convertible Notes have an initial conversion rate of 230.2026 shares of the Company’s common stock per $1,000 principal amount, and the May Equitization Transactions had the effect of increasing this conversion rate to 245.2802 shares of common stock per $1,000 principal amount.

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

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 second quarter of 2021.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Conversions and Inducements

During the three months ended March 31, 2023, $ 9 million aggregate principal amount of the 2026 Convertible Notes were converted pursuant to their terms, and an additional $ 9 million aggregate principal amount of the 2026 Convertible Notes were induced into conversion by the Company.

The Company elected to settle these conversions by issuing 4 million shares of common stock to the noteholders together with a cash inducement premium of $ 0.1 million.

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

September 30,

Liability component:

unamortized note discount (1)

unamortized debt issuance costs

Net carrying value

Equity component (1)

(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.

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 $ 2 million and $ 1 million for the three months ended September 30, 2021 and 2022, respectively, and $ 9 million and $ 3 million for the nine months ended September 30, 2021 and 2022, respectively.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(i) Debt Repurchase Program

During the first quarter of 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.

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 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.

During the first quarter of 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.

During the second quarter of 2022, the Company repurchased $ 13 million aggregate principal amount of its 2026 Notes and $ 50 million aggregate principal amount of its 2029 Notes at a weighted average of 106 % of the principal amount thereof and recognized a loss on early debt extinguishment of $ 4 million.

During the third quarter of 2022, the Company repurchased through its previously disclosed tender offer and open market transactions (i) $ 208 million aggregate principal amount of its 2026 Notes at a weighted average of 109 % of the principal amount thereof, plus accrued and unpaid interest, and $ 118 million aggregate principal amount of its 2029 Notes at a weighted average of 107 % of the principal amount thereof, plus accrued and unpaid interest .

For the three and nine months ended September 30, 2022, the Company recognized a loss on early debt extinguishment from these repurchases of $ 30 million and $ 45 million, respectively.

Interest expense recognized on the 2026 Convertible Notes related to the stated interest rate, and amortization of debt issuance costs totaled $ 1 million for each of the three months ended March 31, 2022 and 2023.

(g) Debt Repurchase Program

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

4 unchanged sentences

Settlement of obligations

Obligations on sold properties

Revisions to prior estimates

Asset retirement obligations—September 30, 2022

Asset retirement obligations—March 31, 2023

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

7 unchanged sentences

The share recycling provisions allow for all or any portion of an award (including an award granted under the 2013 Plan that was outstanding as of June 17, 2020) that expires or is cancelled, forfeited, exchanged, settled for cash or otherwise terminated without actual delivery of the shares to be considered not delivered and thus, available for new awards under the 2020 Plan.

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 8,406,240 shares were available for future grant under the 2020 Plan as of September 30, 2022.

Further, any shares withheld or surrendered in payment of any taxes relating to awards that were

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

outstanding under either the 2013 Plan as of June 17, 2020 or are granted under the 2020 Plan (other than stock options and stock appreciation rights), will again be available for new awards under the 2020 Plan.

A total of 6,196,477 shares were available for future grant under the 2020 Plan as of March 31, 2023.

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 includes Antero Resources).

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

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 Corporation Long Term Incentive Plan (the “AM Plan”).

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

As of March 31, 2023, all Converted AM RSU Awards were fully vested.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Converted AM RSU Awards (1)

3 unchanged sentences

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.

As of March 31, 2023, all Converted AM RSU Awards were fully vested, and there is no remaining unamortized expense attributable to these awards.

Restricted Stock Unit Awards

A summary of RSU award activity is as follows:

A summary of RSU activity is as follows:

Total awarded and unvested—December 31, 2022

( 2,564,930 )

Total awarded and unvested—September 30, 2022

As of September 30, 2022, there was approximately $ 41 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.

Total awarded and unvested—March 31, 2023

As of March 31, 2023, there was $ 84 million of unamortized equity-based compensation expense related to unvested RSUs.

That expense is expected to be recognized over a weighted average period of 2.5 years.

Performance Share Unit Awards

Performance Share Unit Awards Based on Total Shareholder Return

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 (“2019 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.

During the second quarter of 2022, the market-based performance condition for the 2019 Absolute TSR PSUs was met at 200 % of target and the 2019 Absolute TSR PSUs were converted into approximately 2 million shares of common stock.

In April 2022, the Company granted PSU awards to certain of its senior management and executive officers that vest based on Antero Resources’ absolute total shareholder return determined as of the last day of each of three one-year performance periods ending on April 15, 2023, April 15, 2024 and April 15, 2025, and one cumulative three-year performance period ending on April 15, 2025, in each case, subject to certain continued employment criteria (“2022 Absolute TSR PSUs”).

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 2022

In March 2023, the Company granted PSU awards to certain of its senior management and executive officers that vest based on Antero Resources’ absolute total shareholder return determined as of the last day of each of three one-year performance periods ending on March 7, 2024, March 7, 2025 and March 7, 2026, and one cumulative three-year performance period ending on March 7, 2026, in each case, subject to certain continued employment criteria (“2023 Absolute TSR PSUs”).

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 2023 Absolute TSR PSUs ranges from zero to 200 % of the target number of 2023

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Absolute TSR PSUs ranges from zero to 200 % of the target number of 2022 Absolute TSR PSUs originally granted.

Absolute TSR PSUs originally granted.

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

5 unchanged sentences

Performance Share Unit Awards Based on Leverage Ratio

In April 2022, the Company granted PSUs to certain of its senior management and 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 in the award agreement ) determined as of the last day of each of three one-year performance periods ending on December 31, 2022, December 31, 2023 and December 31, 2024, in each case, subject to certain continued employment criteria (“Leverage Ratio PSUs”).

In March 2023, the Company granted PSUs to certain of its senior management and 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 in the award agreement) determined as of the last day of each of three one-year performance periods ending on December 31, 2023, December 31, 2024 and December 31, 2025, in each case, subject to certain continued employment criteria (“2023 Leverage Ratio PSUs”).

The number of shares of common stock that may ultimately be earned following the end of the third performance period with respect to the 2023 Leverage Ratio PSUs ranges from zero to 200 % of the target number of 2023 Leverage Ratio PSUs originally granted.

Expense related to the 2023 Leverage Ratio PSUs is recognized on a graded-vested basis over the term of each performance period that reflects 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, 2022, the likelihood of achieving the performance conditions related to the Leverage Ratio PSUs was probable.

As of March 31, 2023, the likelihood of achieving the performance conditions related to the 2023 Leverage Ratio PSUs was probable.

Summary Information for Performance Share Unit Awards

A summary of PSU award activity is as follows:

A summary of PSU activity is as follows:

Average Grant

1 unchanged sentence

Total awarded and unvested—December 31, 2022

( 1,210,712 )

Cancelled (unearned)

Total awarded and unvested—September 30, 2022

As of September 30, 2022, there was approximately $ 15 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 1.6 years.

Total awarded and unvested—March 31, 2023

As of March 31, 2023, there was $ 41 million of unamortized equity-based compensation expense related to unvested PSUs.

That expense is expected to be recognized over a weighted average period of 1.8 years.

Converted AM RSU Awards

1 unchanged sentence

Total awarded and unvested—December 31, 2022

Total awarded and unvested—September 30, 2022

Total awarded and unvested—March 31, 2023

As of March 31, 2023, all Converted AM RSU Awards were fully vested resulting in no unamortized equity-based compensation expense.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

As of September 30, 2022, there was less than $ 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 0.3 years, and the Company’s proportionate share will be allocated to it as it is recognized.

Stock Options

A summary of stock option activity is as follows:

(in thousands) (1)

Outstanding—December 31, 2021

Outstanding—September 30, 2022

Vested—September 30, 2022

Exercisable—September 30, 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, 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 January 2020, the Company granted cash awards of $ 3 million to certain executives under the 2013 Plan, and compensation expense for these awards was 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, 2021 and September 30, 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.

As of December 31, 2022 and March 31, 2023, the Company has recorded $ 1 million 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, 2021 and September 30, 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 September 30, 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 carrying values of accounts receivable and accounts payable as of December 31, 2022 and March 31, 2023 approximated market values because of their short-term nature.

The carrying values of the amounts outstanding under the Credit Facility as of December 31, 2022 and March 31, 2023 approximated fair value because the variable interest rates are reflective of current market conditions.

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

December 31, 2022

September 30, 2022

March 31, 2023

2026 Convertible Notes

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(11) Derivative Instruments

The Company is exposed to certain risks relating to its ongoing business operations, and it uses derivative instruments to manage its commodity price risk.

The Company is exposed to certain risks relating to its ongoing business operations, and it may use derivative instruments to manage its commodity price risk.

In addition, the Company periodically enters into contracts that contain embedded features that are required to be bifurcated and accounted for separately as derivatives.

4 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, 2021 and 2022.

The Company was party to various fixed price commodity swap contracts that settled during the three months ended March 31, 2022 and 2023.

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

1 unchanged sentence

When actual commodity prices upon settlement are less than the contractually provided fixed price, the Company receives the difference from the counterparty.

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

In addition, the Company has entered into basis swap contracts in order to hedge the

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

difference between the New York Mercantile Exchange (“NYMEX”) index price and a local index price.

Under these basis swap agreements, when actual commodity prices upon settlement exceed the fixed price provided by the swap contracts, the Company receives the difference from the counterparty.

2 unchanged sentences

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

As of September 30, 2022, the Company’s fixed price swap positions excluding Martica, the Company’s consolidated VIE, were as follows:

As of March 31, 2023, the Company’s fixed price swap positions excluding Martica, the Company’s consolidated VIE, were as follows:

Commodity / Settlement Period

Contracted Volume

October-December 2022

January-December 2023

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.

The Company also has a call option and an embedded put option tied to NYMEX pricing for the production volumes associated with the Company’s retained interest in the volumetric production payment transaction (“VPP”) properties.

April-December 2023

The Company has a call option and an embedded put option tied to NYMEX pricing for the production volumes associated with the Company’s retained interest in the volumetric production payment transaction (“VPP”) properties.

The put option was embedded within another contract, and since the embedded put option was not clearly and closely related to its host contract, the Company bifurcated this derivative instrument and reflects it at fair value in the unaudited condensed consolidated financial statements.

As of September 30, 2022, the Company’s call option and embedded put option arrangements were as follows:

As of March 31, 2023, the Company’s call option and embedded put option arrangements were as follows:

Commodity / Settlement Period

Contracted Volume

October-December 2022

January-December 2023

April-December 2023

January-December 2024

1 unchanged sentence

January-December 2026

As of September 30, 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:

As of March 31, 2023, 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 2022

January-December 2023

April-December 2023

January-December 2024

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

As of September 30, 2022, the Company’s fixed price swap positions for Martica, the Company’s consolidated VIE, were as follows:

As of March 31, 2023, the Company’s fixed price swap positions for Martica, the Company’s consolidated VIE, were as follows:

Commodity / Settlement Period

Contracted Volume

October-December 2022

January-December 2023

April-December 2023

January-December 2024

January-March 2025

October-December 2022

Mont Belvieu Propane-OPIS Non-TET

Natural Gasoline

October-December 2022

Mont Belvieu Natural Gasoline-OPIS Non-TET

January-December 2023

April-December 2023

Mont Belvieu Natural Gasoline-OPIS Non-TET

October-December 2022

West Texas Intermediate

January-December 2023

April-December 2023

West Texas Intermediate

3 unchanged sentences

West Texas Intermediate

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:

3 unchanged sentences

Derivative instruments

Commodity derivatives—noncurrent

Derivative instruments

Embedded derivatives—noncurrent

8 unchanged sentences

Net derivatives liability (1)

( 1,049,437 )

(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.

As of September 30, 2022, approximately $ 84 million of commodity derivative liabilities, including $ 53 million of current commodity derivatives and $ 31 million of noncurrent commodity derivatives, are attributable to the Company’s consolidated VIE, Martica.

(2) As of December 31, 2022, $ 47 million of commodity derivative liabilities, including $ 28 million of current commodity derivatives and $ 19 million of noncurrent commodity derivatives, are attributable to the Company’s consolidated VIE, Martica.

As of March 31, 2023, $ 19 million of commodity derivative liabilities, including $ 9 million of current commodity derivatives and $ 10 million of noncurrent commodity derivatives, are attributable to the Company’s consolidated VIE, Martica.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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, 2022

September 30, 2022

March 31, 2023

Net Amounts of

9 unchanged sentences

Commodity derivative liabilities

( 1,058,234 )

( 1,057,718 )

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 September 30,

Nine Months Ended September 30,

Commodity derivative fair value losses (1)

( 1,238,384 )

( 2,228,076 )

( 1,732,720 )

Embedded derivative fair value losses (1)

Three Months Ended March 31,

Commodity derivative fair value gains (losses) (1)

Embedded derivative fair value gains (losses) (1)

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Commodity derivative fair value gains (losses) for the three months ended March 31, 2023, includes a loss of $ 202 million related to the early settlement of the Company’s natural gas swaption agreement.

The payment for this early settlement is classified as an operating cash flow on the Company’s condensed consolidated statement of cash flows.

The Company leases certain office space, processing plants, drilling rigs and completion services, gas gathering lines, compressor stations, and other office and field equipment.

11 unchanged sentences

As new leases commence or previous leases are modified the discount rate used in the present value calculation is the current period applicable discount rate.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The Company has made an accounting policy election to adopt the practical expedient for combining lease and non-lease components on an asset class basis.

1 unchanged sentence

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(a) Supplemental Balance Sheet Information Related to Leases

The Company’s lease assets and liabilities consisted of the following items (in thousands):

September 30,

Balance Sheet Classification

26 unchanged sentences

Total finance lease obligation

(1) Gas gathering lines and compressor station leases includes $ 1.5 billion related to Antero Midstream as of December 31, 2021 and September 30, 2022.

(1) Gas gathering lines and compressor stations includes $ 1.4 billion and $ 1.5 billon related to Antero Midstream as of December 31, 2022 and March 31, 2023, respectively.

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

(2) Financing lease assets are recorded net of accumulated amortization of $ 2 million and $ 1 million as of December 31, 2021 and September 30, 2022, respectively.

(2) Financing lease assets are recorded net of accumulated amortization of $ 1 million as of December 31, 2022 and March 31, 2023 .

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

3 unchanged sentences

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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Classification

27 unchanged sentences

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

Nine Months Ended September 30,

Three Months Ended March 31,

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

Operating cash flows from operating leases

Operating cash flows from finance leases

Investing cash flows from operating leases

2 unchanged sentences

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

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

(1) 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.

During the nine months ended September 30, 2022, the weighted average discount rate for remeasured operating leases decreased from 5.6 % as of December 31, 2021 to 5.2 % as of September 30, 2022.

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

(1) 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.

During the three months ended March 31, 2023, the weighted average discount rate for remeasured operating leases increased from 5.2 % as of December 31, 2022 to 5.8 % as of March 31, 2023.

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, 2022 (in thousands):

The table below is a schedule of future minimum payments for operating and financing lease liabilities as of March 31, 2023 (in thousands):

Operating Leases

Financing Leases

Remainder of 2022

Total lease payments

3 unchanged sentences

December 31, 2022

September 30, 2022

March 31, 2023

Operating Leases

5 unchanged sentences

(f) Related Party Lease Disclosure

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 either the first, second or third quarter of 2021, and therefore, did not earn any rebates for the three and nine months ended September 30, 2021.

For the three and nine months ended September 30, 2022, the Company earned rebates of $ 12 million and $ 36 million, respectively, by achieving the quarterly volumetric target during each of the first, second and third quarters of 2022.

Gathering and compression fees paid by Antero related to this agreement were $ 178 million and $ 164 million for the three months ended September 30, 2021 and 2022, respectively.

For the nine months ended September 30, 2021 and 2022, gathering and compression fees paid by Antero related to this agreement were $ 539 million and $ 492 million, respectively.

As of December 31, 2021 and September 30, 2022, $ 54 million and $ 53 million, respectively, was included within Accounts payable, related parties on the condensed consolidated balance sheet as due to Antero Midstream related to this agreement.

The Company has gathering and compression service agreements with Antero Midstream that include:

(i) the second amended and restated gathering and compression agreement dated December 8, 2019 (the “2019 gathering and compression agreement”), (ii) gathering and compression agreements from Antero Midstream’s acquisition of certain Marcellus gathering and compression assets (the “Marcellus gathering and compression agreements”) and (iii) a compression agreement from Antero Midstream’s acquisition of certain Utica compressors (the “Utica compression agreement” and, together with the 2019 gathering and compression agreement and the Marcellus gathering and compression agreements, the “gathering and compression agreements”).

Pursuant to the gathering and compression agreements with Antero Midstream, the Company has dedicated substantially all of its current and future acreage in West Virginia, Ohio and Pennsylvania to Antero Midstream for gathering and compression services.

The 2019 gathering and compression agreement has an initial term through 2038, the Marcellus gathering and compression agreements expire between 2024 and 2031, and the Utica compression agreement has two dedicated areas that expire in 2024 and 2030.

Upon expiration of each of the Marcellus gathering and compression agreements and the Utica compression agreement, Antero Midstream will continue to provide gathering and compression services under the 2019 gathering and compression agreement.

Under the gathering and compression agreements, Antero Midstream receives a low-pressure gathering fee per Mcf, a high-pressure gathering fee per Mcf and a compression fee per Mcf, as applicable, 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 and compressor stations, the 2019 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 addition, certain of the Marcellus gathering and compression agreements provide for a minimum volume commitment that requires the Company to utilize or pay for 25 % of the capacity of new compressor station construction for 10 years .

The 2019 gathering and compression agreement includes a growth incentive fee program whereby low-pressure gathering fees will be reduced from 2020 through 2023 to the extent the Company achieves certain quarterly volumetric targets.

The Company’s throughput gathered under the Marcellus gathering and compression agreements is not considered in low pressure gathering volume targets.

Upon completion of the initial contract term, the 2019 gathering and compression agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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 earned fee rebates for the three months ended March 31, 2022 and 2023 of $ 12 million.

Gathering and compression fees paid by Antero related to these agreements were $ 163 million and $ 176 million for the three months ended March 31, 2022 and 2023, respectively.

As of December 31, 2022 and March 31, 2023, $ 59 million and $ 70 million, respectively, was included within Accounts payable, related parties on the condensed consolidated balance sheet as due to Antero Midstream related to these agreements.

(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 a lease term in excess of one year as of September 30, 2022 (in thousands):

The following table sets forth a schedule of future minimum payments for the Company’s contractual obligations, which include leases that have a lease term in excess of one year as of March 31, 2023 (in thousands):

Operating and

1 unchanged sentence

Transportation

and Water Service

Financing Leases

12 unchanged sentences

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

The Company has entered into various land acquisition agreements.

Certain of these agreements contain minimum payment obligations over various terms.

The values in the table represent the minimum payments due under these arrangements.

None of these agreements were determined to be leases.

(d) Leases, including Imputed Interest

The Company has obligations under contracts for services provided by drilling rigs and completion fleets, processing, gathering, and compression services agreements, and office and equipment leases.

4 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

The Company has entered into various land acquisition and sand supply agreements.

Certain of these agreements contain minimum payment obligations over various terms.

The values in the table represent the minimum payments due under these arrangements.

None of these agreements were determined to be leases.

Contract Terminations

1 unchanged sentence

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

There are no remaining payment obligations related to these delayed or cancelled contracts as of September 30, 2022.

During the three months ended March 31, 2023, the Company executed an early termination of its firm transportation commitment of 200,000 MMBtu per day on the Equitrans pipeline and made a cash payment of $ 24 million.

There are no remaining payment obligations related to these delayed or cancelled contracts as of March 31, 2023.

(14) Contingencies

7 unchanged sentences

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

The Company and Washington Gas Light Company and WGL Midstream, Inc.

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

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

This dispute was referred to arbitration.

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

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

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

These two lawsuits were consolidated and tried in June 2019.

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

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

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

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

The Company is party to various other legal proceedings and claims in the ordinary course of its business.

The Company believes that certain of these matters will be covered by insurance and that the outcome of other matters will not have a material adverse effect on the Company’s unaudited condensed consolidated financial position, results of operations or cash flows.

In addition, pending litigation against operators in the Appalachian Basin, including the Company, could have an impact on the methods for determining the amount of permitted post-production costs and types of costs that may be deducted from royalty payments, among other things, and the Company cannot predict how these issues may ultimately be resolved.

A ruling was recently received in an immaterial case to which the Company is a party, and the Company continues to analyze how this decision may impact other cases to which the Company is a party.

The Company cannot predict how these issues may ultimately be resolved, and therefore is also unable to estimate any potential damages, if any, that may result.

(15) Related Parties

31 unchanged sentences

Reportable Segments Financial Information

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

Three Months Ended September 30, 2021

Equity Method

Investment in

Elimination of

Unconsolidated

Sales and revenues:

Total revenue

Operating expenses:

Lease operating

Gathering, compression, processing, transportation and water handling

General and administrative

Depletion, depreciation and amortization

Impairment of oil and gas properties

Total operating expenses

Operating income (loss)

Equity in earnings of unconsolidated affiliates

Capital expenditures for segment assets

Three Months Ended September 30, 2022

Equity Method

Investment in

Elimination of

Unconsolidated

Sales and revenues:

Total revenue

Operating expenses:

Lease operating

Gathering, compression, processing, transportation and water handling

General and administrative

Depletion, depreciation and amortization

Impairment of oil and gas properties

Total operating expenses

Operating income (loss)

Equity in earnings of unconsolidated affiliates

Capital expenditures for segment assets

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Nine Months Ended September 30, 2021

The operating results and assets of the Company’s reportable segments were as follows (in thousands):

Three Months Ended March 31, 2022

Equity Method

9 unchanged sentences

Depletion, depreciation and amortization

Impairment of oil and gas properties

Impairment of property and equipment

Total operating expenses

Operating income (loss)

( 1,167,590 )

( 1,232,484 )

Equity in earnings of unconsolidated affiliates

Capital expenditures for segment assets

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Equity Method

9 unchanged sentences

Depletion, depreciation and amortization

Impairment of oil and gas properties

Impairment of property and equipment

Total operating expenses

6 unchanged sentences

As of December 31, 2022

Elimination of

Equity Method

Investment in

Elimination of

Transactions and

Unconsolidated

1 unchanged sentence

( 5,791,320 )

As of September 30, 2022

As of March 31, 2023

Elimination of

Equity Method

Investment in

Elimination of

Transactions and

Unconsolidated

12 unchanged sentences

December 31, 2022

September 30, 2022

Accounts receivable, non-guarantor subsidiaries

Accounts receivable, related parties

Other current assets

Total current assets

March 31, 2023

Current assets

Noncurrent assets

Accounts payable, non-guarantor subsidiaries

Accounts payable, related parties

4 unchanged sentences

Statement of Operations

Nine Months Ended

September 30, 2022

Three Months Ended

March 31, 2023

Operating expenses

3 unchanged sentences

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