What changed in this filing

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Item 1. Financial Statements

2023-07-26 compared with 2023-04-26 · 221 added, 120 removed, 854 unchanged (29% of the section changed)

20 unchanged sentences

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

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

● impacts of geopolitical events, including the Russia-Ukraine conflict, and world health events;

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

16 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, 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.

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, 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”).

56 unchanged sentences

authorized - 1,000,000 shares;

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

297,393 shares issued and 297,359 outstanding as of December 31, 2022, and 300,359 shares issued and outstanding as of June 30, 2023

Additional paid-in capital

1 unchanged sentence

Treasury stock, at cost;

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

34 shares and zero shares as of December 31, 2022 and June 30, 2023, respectively

Total stockholders' equity

5 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Revenue and other:

2 unchanged sentences

Commodity derivative fair value gains (losses)

( 1,011,380 )

Amortization of deferred revenue, VPP

12 unchanged sentences

Loss (gain) on sale of assets

Other operating expense

Total operating expenses

4 unchanged sentences

Loss on early extinguishment of debt

Loss on convertible note inducement

Total other expense

2 unchanged sentences

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

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

net income and comprehensive income attributable to noncontrolling interests

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

4 unchanged sentences

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(In thousands, except per share amounts)

Six Months Ended June 30,

Revenue and other:

Natural gas sales

Natural gas liquids sales

Commodity derivative fair value gains (losses)

( 1,277,042 )

Amortization of deferred revenue, VPP

Other revenue and income

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 $ 12,820 and $ 26,530 in 2022 and 2023, respectively)

Depletion, depreciation and amortization

Impairment of property and equipment

Accretion of asset retirement obligations

Contract termination

Loss (gain) on sale of assets

Other operating expense

Total operating expenses

Operating income

Other income (expense):

Interest expense, net

Equity in earnings of unconsolidated affiliate

Loss on early extinguishment of debt

Loss on convertible note inducement

Total other expense

Income before income taxes

Income tax expense

Net income and comprehensive income including noncontrolling interests

net income and comprehensive income attributable to noncontrolling interests

Net income and comprehensive income attributable to Antero Resources Corporation

Income per share—basic

Income 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)

11 unchanged sentences

Balances, March 31, 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 interests

Net income and comprehensive income

Balances, June 30, 2022

See accompanying notes to unaudited condensed consolidated financial statements.

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In thousands)

Treasury Stock

Noncontrolling

Balances, December 31, 2022

6 unchanged sentences

Balances, March 31, 2023

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, June 30, 2023

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows provided by (used in) operating activities:

Net income (loss) including noncontrolling interests

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

Net income including noncontrolling interests

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

Depletion, depreciation, amortization and accretion

2 unchanged sentences

Payments for derivative monetizations

Deferred income tax expense (benefit)

Deferred income tax expense

Equity-based compensation expense

31 unchanged sentences

Net cash provided by (used in) financing activities

( 1,013,551 )

Net increase in cash and cash equivalents

16 unchanged sentences

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

In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Company’s financial position as of December 31, 2022 and March 31, 2023, results of operations and cash flows for the three months ended March 31, 2022 and 2023.

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 June 30, 2023, results of operations for the three and six months ended June 30, 2022 and 2023 and cash flows for the six months ended June 30, 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 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.

Operating results for the period ended June 30, 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 March 31, 2023, the book overdrafts included within accounts payable and revenue distributions payable were $ 46 million and $ 31 million, respectively.

As of June 30, 2023, the book overdrafts included within accounts payable and revenue distributions payable were $ 33 million and $ 16 million, respectively.

Income (Loss) Per Common Share

7 unchanged sentences

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,

Three Months Ended June 30,

Six Months Ended June 30,

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

7 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Basic weighted average number of shares outstanding

27 unchanged sentences

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

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.

As of March 31, 2023, the portion of the Incremental Override that may be re-conveyed to the Company as a result of achieving certain production targets was 76 % and the portion that will remain with Martica was 24 % .

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 24 % of all distributions in respect of the Incremental Override, and the Company will receive 76 % of all 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.

16 unchanged sentences

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 months ended March 31, 2022 and 2023.

No gain or loss was recognized for the interests conveyed during the three and six months ended June 30, 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Reportable Segment

21 unchanged sentences

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

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

As of December 31, 2022 and June 30, 2023, the Company’s receivables from contracts with customers were $ 708 million and $ 323 million, respectively.

ANTERO RESOURCES CORPORATION

2 unchanged sentences

Summary of Equity Method Investment

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.

As of June 30, 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 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 .

Balance as of June 30, 2023 (1)

(1) The fair value of the Company’s investment in Antero Midstream as of December 31, 2022 and June 30, 2023 was $ 1.5 billion and $ 1.6 billion, respectively, based on the quoted market share price of Antero Midstream .

(6) Accrued Liabilities

21 unchanged sentences

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.

As of December 31, 2022 and June 30, 2023, the Credit Facility had a borrowing base of $ 3.5 billion and lender commitments of $ 1.5 billion.

The borrowing base was re-

3 unchanged sentences

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 March 31, 2023, the Credit Facility had an available borrowing capacity of $ 816 million.

As of June 30, 2023, the Credit Facility had an available borrowing capacity of $ 638 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, 2022 and March 31, 2023.

Antero Resources was in compliance with all of the financial covenants under the Credit Facility as of December 31, 2022 and June 30, 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).

5 unchanged sentences

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.

As of June 30, 2023, Antero Resources had an outstanding balance under the Credit Facility of $ 360 million, with a weighted average interest rate of 7.44 %, and outstanding letters of credit of $ 502 million.

(b) 5.00 % Senior Notes Due 2025

5 unchanged sentences

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

The Company redeemed 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.

The Company redeemed or otherwise repurchased $ 403 million principal amount of the 2026 Notes during 2021 and 2022, and as of June 30, 2023, $ 97 million principal amount of the 2026 Notes remained outstanding.

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

8 unchanged sentences

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 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.

The Company redeemed or otherwise repurchased $ 293 million principal amount of the 2029 Notes during 2021 and 2022, and as of June 30, 2023, $ 407 million principal amount of the 2029 Notes remained outstanding.

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

1 unchanged sentence

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

future restricted subsidiaries.

restricted subsidiaries.

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

18 unchanged sentences

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.

In addition, between 2022 and the second 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.

As of June 30, 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.

2 unchanged sentences

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

As of March 31, 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.

As of June 30, 2023, the if-converted value of the 2026 Convertible Notes was $ 209 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.

9 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 March 31, 2023.

The 2026 Convertible Notes have met the Stock Price Condition allowing holders of the 2026 Convertible Notes to exercise their conversion right as of June 30, 2023.

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

16 unchanged sentences

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.

During the first quarter of 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.

There were no conversions of the 2026 Convertible Notes during the second quarter of 2023 or the first or second quarters of 2022.

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

1 unchanged sentence

Net carrying value

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.

Interest expense recognized on the 2026 Convertible Notes related to the stated interest rate, amortization of the debt discount and debt issuance costs totaled $ 1 million and $ 0.5 million for the three months ended June 30, 2022 and 2023, respectively, and $ 2 million and $ 1 million for the six months ended June 30, 2022 and 2023, respectively.

(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.

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 of its 2026 Notes and $ 50 million of its 2029 Notes at a weighted average premium of 106 % and recognized a loss on early debt extinguishment of $ 4 million.

There were no debt repurchases or redemptions during the first or second quarters of 2023.

(8) Asset Retirement Obligations

5 unchanged sentences

Revisions to prior estimates

Asset retirement obligations—March 31, 2023

Asset retirement obligations—June 30, 2023

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

6 unchanged sentences

The 2020 Plan provides for the reservation of 10,050,000 shares of the Company’s common stock, plus the number of certain shares that become available again for delivery from the 2013 Plan in accordance with the share recycling provisions described below.

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

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

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.

otherwise terminated without actual delivery of the shares to be considered not delivered and thus, available for new awards under the 2020 Plan.

Further, any shares withheld or surrendered in payment of any taxes relating to awards that were outstanding under either the 2013 Plan as of June 17, 2020 or are granted under the 2020 Plan (other than stock options and stock appreciation rights), will again be available for new awards under the 2020 Plan.

A total of 6,835,261 shares were available for future grant under the 2020 Plan as of June 30, 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).

1 unchanged sentence

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.

As of June 30, 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

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.

As of June 30, 2023, all Converted AM RSU Awards were fully vested, and there is no remaining unamortized expense attributable to these awards.

Restricted Stock Unit Awards

1 unchanged sentence

Total awarded and unvested—December 31, 2022

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.

( 2,202,895 )

Total awarded and unvested—June 30, 2023

As of June 30, 2023, there was $ 76 million of unamortized equity-based compensation expense related to unvested RSUs.

That expense is expected to be recognized over a weighted average period of 2.3 years.

1 unchanged sentence

Performance Share Unit Awards Based on Total Shareholder Return

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

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 (“TSR”) 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”).

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Absolute TSR PSUs originally granted.

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

8 unchanged sentences

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

As of June 30, 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 activity is as follows:

Average Grant

Date Fair Value

Total awarded and unvested—December 31, 2022

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.

Total awarded and unvested—June 30, 2023

(1) During the three months ended June 30, 2023, the PSUs granted in 2020 that were based on absolute TSR and relative TSR met the performance criteria to achieve vesting at 112 % and 126 % of target, respectively, and converted into approximately 0.4 million shares of the Company’s common stock.

As of June 30, 2023, there was $ 29 million of unamortized equity-based compensation expense related to unvested PSUs.

That expense is expected to be recognized over a weighted average period of 1.7 years.

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

Converted AM RSU Awards

1 unchanged sentence

Total awarded and unvested—December 31, 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

Total awarded and unvested—June 30, 2023

As of June 30, 2023, all Converted AM RSU Awards were fully vested resulting in no unamortized equity-based compensation expense.

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, 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.

As of December 31, 2022 and June 30, 2023, the Company has recorded $ 1 million and $ 0.4 million, respectively, in Accrued 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, 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 carrying values of accounts receivable and accounts payable as of December 31, 2022 and June 30, 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 June 30, 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

March 31, 2023

June 30, 2023

2026 Convertible Notes

6 unchanged sentences

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

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(a) Commodity Derivative Positions

3 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 months ended March 31, 2022 and 2023.

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

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.

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.

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.

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

As of June 30, 2023, the Company’s fixed price swap positions excluding Martica, the Company’s consolidated VIE, were as follows:

Commodity / Settlement Period

Contracted Volume

April-December 2023

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

As of June 30, 2023, the Company’s call option and embedded put option arrangements were as follows:

Commodity / Settlement Period

Contracted Volume

April-December 2023

July-December 2023

January-December 2024

1 unchanged sentence

January-December 2026

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:

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

As of June 30, 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

April-December 2023

July-December 2023

January-December 2024

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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

As of June 30, 2023, the Company’s fixed price swap positions for Martica, the Company’s consolidated VIE, were as follows:

Commodity / Settlement Period

Contracted Volume

April-December 2023

July-December 2023

January-December 2024

1 unchanged sentence

Natural Gasoline

April-December 2023

July-December 2023

Mont Belvieu Natural Gasoline-OPIS Non-TET

April-December 2023

July-December 2023

West Texas Intermediate

6 unchanged sentences

Asset derivatives not designated as hedges for accounting purposes:

Commodity derivatives—current

Derivative instruments

Embedded derivatives—current

12 unchanged sentences

(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.

As of June 30, 2023, $ 17 million of commodity derivative liabilities, including $ 10 million of current commodity derivatives and $ 7 million of noncurrent commodity derivatives, are attributable to the Company’s consolidated VIE, Martica.

ANTERO RESOURCES CORPORATION

2 unchanged sentences

December 31, 2022

March 31, 2023

June 30, 2023

Net Amounts of

10 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Commodity derivative fair value gains (losses) (1)

( 1,232,163 )

Embedded derivative fair value gains (losses) (1)

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

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.

Commodity derivative fair value gains (losses) for the six months ended June 30, 2023, includes a loss of $ 202 million related to the early settlement of the Company’s natural gas swaption agreement during the first quarter of 2023.

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

33 unchanged sentences

Total operating lease right-of-use assets

Short-term operating lease obligation

Operating lease liabilities:

Short-term operating lease liabilities

Short-term lease liabilities

Long-term operating lease obligation

Long-term operating lease liabilities

Long-term lease liabilities

Total operating lease obligation

Total operating lease liabilities

Finance Leases

2 unchanged sentences

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

Short-term finance lease obligation

Finance lease liabilities:

Short-term finance lease liabilities

Short-term lease liabilities

Long-term finance lease obligation

Long-term finance lease liabilities

Long-term lease liabilities

Total finance lease obligation

(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.

Total finance lease liabilities

(1) Gas gathering lines and compressor stations includes $ 1.4 billion related to Antero Midstream as of December 31, 2022 and June 30, 2023.

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

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

(2) Financing lease assets are recorded net of accumulated amortization of $ 1 million as of December 31, 2022 and June 30, 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Classification

27 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

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

6 unchanged sentences

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.

(1) During the six months ended June 30, 2022, the weighted average discount rate for remeasured operating leases increased from 4.5 % as of December 31, 2021 to 5.1 % as of June 30, 2022.

During the six months ended June 30, 2023, the weighted average discount rate for remeasured operating leases increased from 5.2 % as of December 31, 2022 to 5.8 % as of June 30, 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 March 31, 2023 (in thousands):

The table below is a schedule of future minimum payments for operating and financing lease liabilities as of June 30, 2023 (in thousands):

Operating Leases

5 unchanged sentences

December 31, 2022

March 31, 2023

June 30, 2023

Operating Leases

19 unchanged sentences

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.

The Company achieved the volumetric targets during each of the first and second quarters of 2022 and 2023, and earned fee rebates of $ 12 million for the three months ended June 30, 2022 and 2023 and $ 24 million for the six months ended June 30, 2022 and 2023.

Gathering and compression fees paid by Antero related to these agreements were $ 164 million and $ 185 million for the three months ended June 30, 2022 and 2023, respectively.

For the six months ended June 30, 2022 and 2023, gathering and compression fees paid by Antero related to this agreement were $ 327 million and $ 361 million, respectively.

As of December 31, 2022 and June 30, 2023, $ 59 million and $ 69 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 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

30 unchanged sentences

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

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.

During the six months ended June 30, 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 June 30, 2023.

(14) Contingencies

9 unchanged sentences

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.

In addition, pending litigation against the Company and other similarly situated peer operators could have an impact on the methods for determining the amount of permitted post-production costs and types of costs that have been, and may be, deducted from royalty payments, among other things.

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.

34 unchanged sentences

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

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Equity Method

14 unchanged sentences

Capital expenditures for segment assets

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Equity Method

16 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

Six Months Ended June 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 property and equipment

Total operating expenses

Operating income (loss)

Equity in earnings of unconsolidated affiliates

Capital expenditures for segment assets

Six Months Ended June 30, 2023

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 property and equipment

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

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

As of December 31, 2022

Elimination of

Equity Method

Investment in

Transactions and

Elimination of

Unconsolidated

1 unchanged sentence

( 5,791,320 )

As of March 31, 2023

Elimination of

As of June 30, 2023

Equity Method

Investment in

Transactions and

Elimination of

Unconsolidated

12 unchanged sentences

December 31, 2022

March 31, 2023

June 30, 2023

Current assets

6 unchanged sentences

Statement of Operations

Three Months Ended

March 31, 2023

Six Months Ended

June 30, 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