What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-30 compared with 2024-07-31 · 162 added, 153 removed, 369 unchanged (46% of the section changed)

14 unchanged sentences

Our drilling opportunities are focused in the Appalachian Basin.

As of June 30, 2024, we held approximately 519,000 net acres in the Appalachian Basin.

As of September 30, 2024, we held approximately 519,000 net acres in the Appalachian Basin.

Financing Highlights

Credit Facility

During the three months ended, June 30, 2024, we achieved an investment grade credit rating from S&P Global Inc.

As a result of this investment grade credit rating, on July 30, 2024, we entered into an amendment and restatement of our senior revolving credit facility with lender commitments of $1.65 billion that matures on July 30, 2029, subject to certain extension terms and conditions.

The New Credit Facility is unsecured and is not guaranteed by any of our subsidiaries.

Unsecured Credit Facility

During the second quarter of 2024, we achieved an investment grade credit rating from S&P Global Inc.

As a result of this investment grade credit rating, on July 30, 2024, we entered into an amended and restated senior revolving credit facility with lender commitments of $1.65 billion that matures on July 30, 2029, subject to certain extension terms and conditions.

Borrowings under the amended and restated facility are unsecured and are not guaranteed by any of our subsidiaries.

See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.

2 unchanged sentences

Prices for natural gas, NGLs and oil that we produce significantly impact our revenues and cash flows.

Natural gas benchmark prices decreased significantly while NGLs and oil benchmark prices increased during the three and six months ended June 30, 2024 as compared to the same period of 2023.

As a result of the lower benchmark natural gas prices, we experienced a decrease in price realizations for natural gas and ethane products during the three and six months ended June 30, 2024.

Benchmark prices for natural gas decreased significantly, while benchmark prices for oil remained consistent and benchmark prices for NGLs increased during the nine months ended September 30, 2024 as compared to the same period of 2023.

As a result of the lower benchmark natural gas prices and higher benchmark NGLs prices in 2024, we experienced a decrease in price realizations for natural gas and ethane products and an increase in price realization for NGLs products during the three and nine months ended September 30, 2024.

We monitor the economic factors that impact natural gas, NGLs and oil prices, including domestic and foreign supply and demand indicators, domestic and foreign commodity inventories, the actions of Organization of Petroleum Exporting Countries and other large producing nations and the current conflicts in Ukraine and in the Middle East, among others.

1 unchanged sentence

This volatility is beyond our control and may adversely impact our business, financial condition, results of operations and future cash flows.

The following table details the average benchmark natural gas and oil prices:

Three Months Ended June 30,

Six Months Ended June 30,

The following table details the average benchmark natural gas, NGLs and oil prices:

Three Months Ended September 30,

Nine Months Ended September 30,

Henry Hub ($/Mcf) (1)

Mont Belvieu Ethane ($/Bbl) (2)

Mont Belvieu C3+ NGLs ($/Bbl) (3)

West Texas Intermediate ($/Bbl) (4)

(1) NYMEX first of month average natural gas price.

(2) Intercontinental Exchange, Inc.

(“ICE”) settlement ethane Oil Price Information Service (“OPIS”) futures average price for the front month contract as published on the last trading day of the month.

(3) ICE settlement propane, isobutane, normal butane and natural gasoline OPIS futures average price for the front month contract as published on the last trading day of the month.

Propane and isobutane reflect TET prices, and normal butane and natural gasoline reflect non-TET prices.

Propane, isobutane, normal butane and natural gasoline futures prices are weighted to approximate Antero Resources’ average C3+ NGLs composition.

(4) NYMEX calendar month average settled futures price.

4 unchanged sentences

Due to our improved liquidity and leverage position as compared to historical levels, the percentage of our expected production that we hedge has decreased.

For the three and six months ended June 30, 2023 and 2024, substantially all of our production was unhedged.

For the three and nine months ended September 30, 2023 and 2024, substantially all of our production was unhedged.

The tables and narrative below exclude derivative instruments attributable to Martica, our consolidated VIE, since all gains or losses from such contracts are fully attributable to the noncontrolling interests in Martica.

As of June 30, 2024, our fixed price NGLs swap positions excluding Martica were as follows:

As of September 30, 2024, our fixed price NGLs swap positions excluding Martica were as follows:

Commodity / Settlement Period

Contracted Volume

July-December 2024

October-December 2024

Mont Belvieu Propane-OPIS TET

As of June 30, 2024, our natural gas basis swap positions settle on the pricing index to basis differential of the Columbia Gas Transmission pipeline (“TCO”) to the NYMEX Henry Hub natural gas price were as follows:

As of September 30, 2024, our natural gas basis swap positions settle on the pricing index to basis differential of the Columbia Gas Transmission pipeline (“TCO”) to the NYMEX Henry Hub natural gas price were as follows:

Weighted Average

3 unchanged sentences

Hedged Differential

July-December 2024

October-December 2024

We have 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 VPP properties.

As of June 30, 2024, our call option and embedded put option arrangements were as follows:

As of September 30, 2024, our call option and embedded put option arrangements were as follows:

Commodity / Settlement Period

Contracted Volume

July-December 2024

October-December 2024

January-December 2025

January-December 2026

As of June 30, 2024, the estimated fair value of our commodity derivative contracts, excluding Martica, was a net liability of $37 million.

As of September 30, 2024, the estimated fair value of our commodity derivative contracts, excluding Martica, was a net liability of $24 million.

See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for more information.

1 unchanged sentence

As such, all gains and losses attributable to Martica’s derivative portfolio are fully attributable to the noncontrolling interests in Martica.

As of June 30, 2024, Martica’s fixed price natural gas and oil swap positions were as follows:

As of September 30, 2024, Martica’s fixed price natural gas and oil swap positions were as follows:

Commodity / Settlement Period

Contracted Volume

July-December 2024

October-December 2024

January-March 2025

July-December 2024

October-December 2024

West Texas Intermediate

1 unchanged sentence

West Texas Intermediate

As of June 30, 2024, the estimated fair value of Martica’s commodity derivative contracts was a net liability of $4 million.

As of September 30, 2024, the estimated fair value of Martica’s commodity derivative contracts was a net liability of $3 million.

See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for more information.

Economic Indicators

The economy experienced elevated inflation levels as a result of global supply and demand imbalances, where global demand outpaced supplies beginning in 2021 and continuing through the second quarter of 2024.

For example, the Consumer Price Index (“CPI”) for all urban consumers increased 3% from June 2022 to June 2023 and an additional 3% from June 2023 to June 2024 as compared to the Federal Reserve’s stated goal of 2%.

For example, the Consumer Price Index (“CPI”) for all urban consumers increased 3.7% from September 2022 to September 2023 and an additional 2.4% from September 2023 to September 2024 as compared to the Federal Reserve’s stated goal of 2%.

In order to manage the inflation risk present in the United States’ economy, the Federal Reserve utilized monetary policy in the form of interest rate increases beginning in March 2022 in an effort to bring the inflation rate in line with its stated goal of 2% on a long-term basis.

Between March 2022 and June 2024, the Federal Reserve increased the federal funds interest rate by 5.25%.

Between March 2022 and July 2023, the Federal Reserve increased the federal funds interest rate by 5.25%.

During the three months ended September 30, 2024, inflation rates began to approach the Federal Reserve’s stated goal of 2%, and the Federal Reserve decreased the federal funds rate by 0.5% in September 2024.

While inflationary pressures in the United States’ economy have begun to subside, we continue to be impacted by the increased federal funds interest rate.

14 unchanged sentences

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

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2024

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2024

The operating results of our reportable segments were as follows (in thousands):

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Equity Method

22 unchanged sentences

Accretion of asset retirement obligations

Contract termination and other operating expenses

Contract termination, loss contingency, settlements and other operating expenses

Loss (gain) on sale of assets

2 unchanged sentences

Equity in earnings of unconsolidated affiliates

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Equity Method

5 unchanged sentences

Natural gas liquids sales

Commodity derivative fair value losses

Commodity derivative fair value gains

Gathering, compression and water handling

13 unchanged sentences

Accretion of asset retirement obligations

Loss (gain) on sale of assets

Contract termination, loss contingency and other operating expenses

Gain on sale of assets

Contract termination, loss contingency, settlements and other operating expenses

Total operating expenses

4 unchanged sentences

Three Months Ended

September 30,

Production data (1) (2) :

30 unchanged sentences

Our calculation of such after effects includes gains (losses) on settlements of commodity derivatives, which do not qualify for hedge accounting because we do not designate or document them as hedges for accounting purposes.

(4) The average realized price for the three months ended June 30, 2023 and 2024 includes $1 million and $0.1 million, respectively, of proceeds related to a take-or-pay contract.

Excluding the effect of these proceeds, the average realized price for ethane before and after the effects of derivatives for the three months ended June 30, 2023 and 2024 would have been $7.65 per Bbl and $8.41 per Bbl, respectively.

(4) The average realized price for the three months ended September 30, 2023 includes $6 million of proceeds related to a take-or-pay contract.

Excluding the effect of these proceeds, the average realized price for ethane before and after the effects of derivatives for the three months ended September 30, 2023 would have been $10.88 per Bbl.

Natural gas sales .

Revenues from sales of natural gas decreased from $437 million for the three months ended June 30, 2023 to $375 million for the three months ended June 30, 2024, a decrease of $62 million, or 14%.

Lower commodity prices (excluding the effects of derivative settlements) during the three months ended June 30, 2024 accounted for an approximate $43 million decrease in year-over-year natural gas sales revenue (calculated as the change in the year-to-year average price times current year production volumes).

Revenues from sales of natural gas decreased from $516 million for the three months ended September 30, 2023 to $426 million for the three months ended September 30, 2024, a decrease of $90 million, or 18%.

Lower commodity prices (excluding the effects of derivative settlements) during the three months ended September 30, 2024 accounted for an approximate $69 million decrease in year-over-year natural gas sales revenue (calculated as the change in the year-to-year average price times current year production volumes).

Lower natural gas production volumes accounted for an approximate $21 million decrease in year-over-year natural gas sales revenue (calculated as the change in year-to-year volumes times the prior year average price).

Revenues from sales of NGLs increased from $398 million for the three months ended June 30, 2023 to $489 million for the three months ended June 30, 2024, an increase of $91 million, or 23%.

Higher commodity prices (excluding the effects of derivative settlements) during the three months ended June 30, 2024 accounted for an approximate $69 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes).

Higher NGLs production volumes accounted for an approximate $22 million increase in year-over-year NGLs revenues (calculated as the change in year-to-year volumes times the prior year average price).

Revenues from sales of oil increased from $58 million for the three months ended June 30, 2023 to $63 million for the three months ended June 30, 2024, an increase of $5 million, or 9%.

Higher commodity prices (excluding the effects of derivative settlements) during the three months ended June 30, 2024 accounted for an approximate $6 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes).

Lower oil production volumes during the three months ended June 30, 2024 accounted for an approximate $1 million decrease in year-over-year oil revenues (calculated as the change in year-to-year volumes times the prior year average price).

Commodity derivative fair value gains (losses).

Revenues from sales of NGLs increased from $483 million for the three months ended September 30, 2023 to $504 million for the three months ended September 30, 2024, an increase of $21 million, or 4%.

Higher commodity prices (excluding the effects of derivative settlements) during the three months ended September 30, 2024 accounted for an approximate $21 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes).

Revenues from sales of oil decreased from $63 million for the three months ended September 30, 2023 to $53 million for the three months ended September 30, 2024, a decrease of $10 million, or 16%.

Lower commodity prices (excluding the effects of derivative settlements) during the three months ended September 30, 2024 accounted for an approximate $6 million decrease in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes).

Lower oil production volumes during the three months ended September 30, 2024 accounted for an approximate $4 million decrease in year-over-year oil revenues (calculated as the change in year-to-year volumes times the prior year average price).

Commodity derivative fair value gains.

Our commodity derivatives included fixed price swap contracts, basis swap contracts, call options and embedded put options.

1 unchanged sentence

Consequently, all mark-to-market gains or losses, as well as cash receipts or payments on settled derivative instruments, are recognized in our statements of operations and comprehensive income.

For the three months ended June 30, 2023 and 2024, our commodity hedges resulted in derivative fair value gains of $8 million and fair value losses of $6 million, respectively.

For the three months ended June 30, 2023 and 2024, commodity derivative fair value gains (losses) included $3 million and $6 million, respectively, of net cash proceeds on settled commodity derivative gains.

For the three months ended September 30, 2023 and 2024, our commodity hedges resulted in derivative fair value gains of $3 million and $18 million, respectively.

For the three months ended September 30, 2023, commodity derivative fair value gains included $6 million of cash payments on settled commodity derivative losses.

For the three months ended September 30, 2024, commodity derivative fair value gains included $4 million of net cash proceeds on settled commodity derivatives gains.

Commodity derivative fair value gains or losses vary based on future commodity prices and have no cash flow impact until the derivative contracts are settled or monetized prior to settlement.

2 unchanged sentences

Amortization of deferred revenue, VPP.

Amortization of deferred revenues associated with the VPP decreased from $8 million for the three months ended June 30, 2023 to $7 million for the three months ended June 30, 2024, a decrease of $1 million, or 12%, primarily due to lower production volumes attributable to the VPP properties between periods.

Amortization of deferred revenues associated with the VPP decreased from $8 million for the three months ended September 30, 2023 to $7 million for the three months ended September 30, 2024, a decrease of $1 million, or 12%, primarily due to lower production volumes attributable to the VPP properties between periods.

Amortization of the deferred revenues associated with the VPP are recognized as the production volumes are delivered at $1.61 per MMBtu over the contractual term.

Lease operating expense .

Lease operating expense remained relatively consistent for the three months ended June 30, 2023 and 2024 at $29 million and $30 million, respectively.

On a per-unit basis, lease operating expense increased from $0.09 per Mcfe for the three months ended June 30, 2023 to $0.10 per Mcfe for the three months ended June 30, 2024 primarily due to increased oilfield services costs between periods.

Lease operating expense decreased from $33 million, or $0.10 per Mcfe, for the three months ended September 30, 2023 to $30 million, or $0.09 per Mcfe, for the three months ended September 30, 2024, a decrease of $3 million primarily due to lower water disposal costs and workover expense between periods.

Gathering, compression, processing and transportation expense.

Gathering, compression, processing and transportation expense remained relatively consistent at $664 million and $663 million for the three months ended June 30, 2023 and 2024, respectively.

Gathering, compression, processing and transportation expense increased from $672 million for the three months ended September 30, 2023 to $685 million for the three months ended September 30, 2024, an increase of $13 million, or 2%.

This was primarily a result of the following:

● Gathering and compression costs increased from $0.68 per Mcfe for the three months ended June 30, 2023 to $0.71 per Mcfe for the three months ended June 30, 2024, primarily due to the expiration of the growth incentive fee rebate program on December 31, 2023 and annual CPI-based adjustments between periods.

During the three months ended June 30, 2023, we earned a fee rebate of $12 million under this program.

● Processing costs increased from $0.85 per Mcfe for the three months ended June 30, 2023 to $0.87 per Mcfe for the three months ended June 30, 2024, primarily due to increased costs for NGLs processing, which includes an annual CPI-based adjustment during the first quarter of 2024 and higher NGLs transportation fees.

● Transportation costs decreased from $0.61 per Mcfe for the three months ended June 30, 2023 to $0.55 per Mcfe for the three months ended June 30, 2024 primarily due to lower demand fees and fuel costs as a result of lower natural gas prices between periods.

● Gathering and compression costs increased from $0.68 per Mcfe for the three months ended September 30, 2023 to $0.72 per Mcfe for the three months ended September 30, 2024, primarily due to the expiration of the growth incentive fee rebate program on December 31, 2023 and annual CPI-based adjustments between periods.

During the three months ended September 30, 2023, we earned a fee rebate of $12 million under this program.

● Processing costs increased from $0.83 per Mcfe for the three months ended September 30, 2023 to $0.88 per Mcfe for the three months ended September 30, 2024, primarily due to increased costs for NGLs processing, which includes an annual CPI-based adjustment during the first quarter of 2024 and higher NGLs transportation fees.

● Transportation costs decreased from $0.60 per Mcfe for the three months ended September 30, 2023 to $0.58 per Mcfe for the three months ended September 30, 2024 primarily due to lower demand fees, as well as lower fuel costs as a result of lower natural gas prices between periods.

Production and ad valorem tax expense.

Production and ad valorem taxes increased from $36 million for the three months ended June 30, 2023 to $42 million for the three months ended June 30, 2024, an increase of $6 million, or 16%, primarily due to higher ad valorem taxes and production volumes between periods, partially offset by lower natural gas prices during the three months ended June 30, 2024.

Production and ad valorem taxes as a percentage of natural gas revenues increased from 8% for the three months ended June 30, 2023 to 11% for the three months ended June 30, 2024, primarily as a result of higher ad valorem taxes, which 2024 ad valorem taxes are based on commodity prices during 2022.

Production and ad valorem taxes increased from $32 million for the three months ended September 30, 2023 to $47 million for the three months ended September 30, 2024, an increase of $15 million, or 47%, primarily due to higher ad valorem taxes, partially offset by lower natural gas prices during the three months ended September 30, 2024.

Production and ad valorem taxes as a percentage of natural gas revenues increased from 6% for the three months ended September 30, 2023 to 11% for the three months ended September 30, 2024, primarily as a result of higher ad valorem taxes, which 2024 ad valorem taxes are based on commodity prices during 2022.

General and administrative expense .

General and administrative expense (excluding equity-based compensation expense) increased from $40 million for the three months ended June 30, 2023 to $42 million for the three months ended June 30, 2024, an increase of $2 million, or 5% , primarily due to higher professional service fees between periods.

General and administrative expense on a per unit basis (excluding equity-based compensation) increased from $0.13 per Mcfe for the three months ended June 30, 2023 to $0.14 per Mcfe for the three months ended June 30, 2024 as a result of higher overall costs between periods.

General and administrative expense (excluding equity-based compensation expense) decreased slightly from $40 million, or $0.13 per Mcfe, for the three months ended September 30, 2023 to $39 million, or $0.12 per Mcfe for the three months ended September 30, 2024 primarily as a result of lower pipeline bond and leased vehicle costs between periods .

Equity-based compensation expense .

Noncash equity-based compensation expense increased from $14 million for the three months ended June 30, 2023 to $17 million for the three months ended June 30, 2024, an increase of $3 million, or 27%.

This increase was primarily due to annual equity-based awards granted during the first quarter of 2024.

Non-cash equity-based compensation expense decreased from $18 million for the three months ended September 30, 2023 to $16 million for the three months ended September 30, 2024, a decrease of $2 million, or 13%.

This decrease was primarily due to lower PSU award expense between periods, partially offset by increased RSU award expense attributable to awards granted in the first quarter of 2024.

See Note 9—Equity-Based Compensation to the unaudited condensed consolidated financial statements for more information.

Depletion, depreciation, and amortization expense (“DD&A expense”) .

DD&A expense remained relatively consistent at $171 million, or $0.56 per Mcfe, and $171 million, or $0.55 per Mcfe, for the three months ended June 30, 2023 and 2024, respectively.

DD&A expense decreased from $176 million, or $0.55 per Mcfe, for the three months ended September 30, 2023 to $170 million, or $0.55 per Mcfe, for the three months ended September 30 2024, a decrease of $6 million, or 3%.

The decrease in total DD&A expense is primarily due to lower production volumes between periods.

Impairment of property and equipment .

Impairment of oil and gas properties of $16 million for the three months ended June 30, 2023 primarily related to expiring leases we no longer plan to utilize.

Impairment of oil and gas properties remained consistent at $13 million for the three months ended September 30, 2023 and 2024.

During both periods, we recognized impairments primarily related to expiring leases as well as design and initial costs related to pads we no longer plan to place into service.

Contract termination, loss contingency, settlements and other operating expenses .

Contract termination, loss contingency, settlements and other operating expenses was a loss of $14 million for the three months ended September 30, 2023 primarily due to a loss contingency.

Contract termination, loss contingency, settlements and other operating expenses was a gain of $1 million for the three months ended September 30, 2024 primarily due to our receipt of 0.1 million shares of Antero Midstream common stock as part of a judgment in a legal proceeding with an unaffiliated third-party.

Marketing Segment

1 unchanged sentence

We have entered into long-term firm transportation agreements for a significant portion of our current and expected future production in order to secure guaranteed capacity to favorable markets.

Net marketing expense for the three months ended June 30, 2023 and 2024 remained relatively consistent at $22 million and $21 million, respectively, or $0.07 per Mcfe.

Net marketing expense for the three months ended September 30, 2023 and 2024 remained relatively consistent at $17 million and $15 million, respectively, or $0.05 per Mcfe.

Marketing revenue.

Marketing revenue increased from $44 million for the three months ended June 30, 2023 to $49 million for the three months ended June 30, 2024, an increase of $5 million, or 13%.

Marketing revenue decreased from $53 million for the three months ended September 30, 2023 to $47 million for the three months ended September 30, 2024, a decrease of $6 million, or 11%.

This fluctuation primarily resulted from the following:

● Natural gas marketing revenue decreased by $16 million between periods primarily due to lower natural gas marketing volumes between periods.

● Oil marketing revenue increased by $21 million between periods primarily due to higher oil marketing volumes and prices.

Higher oil marketing volumes accounted for an $16 million increase in year-over-year marketing revenues (calculated as the change in year-to-year volumes times the prior year average price), and higher oil prices accounted for an $5 million increase in year-over-year marketing revenues (calculated as the change in the year-to-year average price times current year marketing volumes).

● Natural gas marketing revenue decreased by $14 million between periods primarily due to lower natural gas marketing volumes and prices between periods.

Lower natural gas marketing volumes accounted for an $11 million decrease in year-over-year marketing revenues (calculated as the change in year-to-year volumes times the prior year average price), and lower natural gas prices accounted for a $3 million decrease in year-over-year marketing revenues (calculated as the change in the year-to-year average price times current year marketing volumes).

● Oil marketing revenue increased by $8 million between periods primarily due to higher oil marketing volumes, partially offset by lower oil prices.

Higher oil marketing volumes accounted for a $10 million increase in year-over-year marketing revenues (calculated as the change in year-to-year volumes times the prior year average price), and lower oil prices accounted for a $2 million decrease in year-over-year marketing revenues (calculated as the change in the year-to-year average price times current year marketing volumes).

Marketing expense.

Marketing expense increased from $66 million for the three months ended June 30, 2023 to $71 million for the three months ended June 30, 2024, an increase of $5 million, or 7%.

Marketing expense decreased from $70 million for the three months ended September 30, 2023 to $62 million for the three months ended September 30, 2024, a decrease of $8 million, or 11%.

Marketing expense includes the cost of third-party purchased natural gas, NGLs and oil as well as firm transportation costs, including costs related to current excess firm capacity.

The cost of third-party natural gas, oil and NGLs purchases increased $5 million between periods, primarily due to higher oil marketing volumes and prices between periods, partially offset by lower natural gas marketing volumes and prices between periods.

Firm transportation costs remained consistent at $27 million for the three months ended June 30, 2023 and 2024.

The cost of third-party natural gas, oil and NGLs purchases remained consistent at $43 million for the three months ended September 30, 2023 and 2024.

Firm transportation costs were $26 million for the three months ended September 30, 2023 and $18 million for the three months ended September 30, 2024, a decrease of $8 million due to the reduction in firm transportation commitments and higher third-party marketing volumes between periods.

Antero Midstream Segment

Antero Midstream revenue.

Revenue from the Antero Midstream segment increased from $258 million for the three months ended June 30, 2023 to $270 million for the three months ended June 30, 2024, an increase of $12 million.

Revenue from the Antero Midstream segment increased from $264 million for the three months ended September 30, 2023 to $270 million for the three months ended September 30, 2024, an increase of $6 million.

This increase is primarily due to higher gathering and processing revenues of $20 million, partially offset by lower water handling revenues of $14 million.

The increased gathering and processing revenues between periods is primarily a result of the expiration of the growth incentive fee rebate program on December 31, 2023, annual CPI-based gathering and compression rate adjustments and increased high pressure gathering throughput between periods.

The decreased water handling revenues between periods was primarily due to lower fresh water delivery volumes, partially offset by higher other fluid handing

volumes and an increased fresh water delivery rate due to an annual CPI-based adjustment during the three months ended June 30, 2024.

The decreased water handling revenues between periods was primarily due to lower fresh water delivery and other fluid handling volumes, partially offset by an increased fresh water delivery rate due to an annual CPI-based adjustment during the first quarter of 2024.

Antero Midstream operating expense.

Total operating expense related to the Antero Midstream segment increased from $113 million for the three months ended June 30, 2023 to $117 million for the three months ended June 30, 2024, an increase of $4 million.

This increase is primarily due to higher direct operating expenses, equity-based compensation expenses and depreciation expense between periods, partially offset by lower interest expense.

Direct operating expenses increased by $3 million between periods primarily due to higher compression expense for the addition of two compressor stations that were acquired during the second quarter of 2024 and increased high pressure gathering volumes, partially offset by increased pipeline maintenance, repair and monitoring activities for the three months ended June 30, 2024.

Total operating expense related to the Antero Midstream segment increased from $102 million for the three months ended September 30, 2023 to $107 million for the three months ended September 30, 2024, an increase of $5 million.

This increase is primarily due to higher general and administrative expense, including equity-based compensation expense, and depreciation expense between periods.

Discussion of Items Not Allocated to Segments

Interest expense.

Interest expense increased from $28 million for the three months ended June 30, 2023 to $33 million for the three months ended June 30, 2024, an increase of $5 million, or 17%, primarily due to higher average Prior Credit Facility borrowings between periods and higher benchmark interest rates during the three months ended June 30, 2024.

Income tax benefit .

For the three months ended June 30, 2023, we had an income tax benefit of $30 million, with an effective tax rate of 31%, due to a loss before income taxes of $98 million.

For the three months ended June 30, 2024, we had an income tax benefit of $13 million, with an effective tax rate of 18%, due to a loss before income taxes of $74 million.

The decrease in income tax benefit between periods of $17 million is primarily due to lower loss before income taxes between periods.

The decrease in the effective tax rate between periods was primarily due to the effects of noncontrolling interests and our loss before income taxes.

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2024

Interest expense decreased from $32 million for the three months ended September 30, 2023 to $28 million for the three months ended September 30, 2024, a decrease of $4 million, or 11%, primarily due to the conversion of $26 million aggregate principal amount of our 2026 Convertible Notes during the first quarter of 2024 and lower benchmark interest rates during the three months ended September 30, 2024, partially offset by higher average Credit Facility borrowings between periods.

Income tax expense .

For the three months ended September 30, 2023, we had an income tax expense of $14 million, with an effective tax rate of 30%, due to income before income taxes of $46 million.

For the three months ended September 30, 2024, we had an income tax expense of $1 million from a loss before income taxes of $9 million primarily due to the net loss before income taxes during the third quarter of 2024, which when taken together with the net loss before taxes during the six months ended June 30, 2024, resulted in a 9% effective tax rate for the nine months ended September 30, 2024.

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2024

The operating results of our reportable segments were as follows (in thousands):

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Equity Method

22 unchanged sentences

Accretion of asset retirement obligations

Contract termination and other operating expenses

Contract termination, loss contingency, settlements and other operating expenses

Loss (gain) on sale of assets

2 unchanged sentences

Equity in earnings of unconsolidated affiliates

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Equity Method

21 unchanged sentences

Accretion of asset retirement obligations

Loss on sale of assets

Contract termination, loss contingency and other operating expenses

Loss (gain) on sale of assets

Contract termination, loss contingency, settlements and other operating expenses

Total operating expenses

3 unchanged sentences

The following table sets forth selected operating data of the exploration and production segment:

Six Months Ended

Nine Months Ended

September 30,

Production data (1) (2) :

30 unchanged sentences

Our calculation of such after effects includes gains (losses) on settlements of commodity derivatives (but do not include payments from the derivative monetizations in 2023), which do not qualify for hedge accounting because we do not designate or document them as hedges for accounting purposes.

(4) The average realized price for the six months ended June 30, 2023 and 2024 includes $7 million and $2 million, respectively, of proceeds related to a take-or-pay contract.

Excluding the effect of these proceeds, the average realized price for ethane before and after the effects of derivatives for the six months ended June 30, 2023 and 2024 would have been $9.17 per Bbl and $8.72 per Bbl, respectively.

(4) The average realized price for the nine months ended September 30, 2023 and 2024 includes $13 million and $2 million, respectively, of proceeds related to a take-or-pay contract.

Excluding the effect of these proceeds, the average realized price for ethane before and after the effects of derivatives for the nine months ended September 30, 2023 and 2024 would have been $9.77 per Bbl and $8.48 per Bbl, respectively.

Natural gas sales .

Revenues from sales of natural gas decreased from $1.1 billion for the six months ended June 30, 2023 to $849 million for the six months ended June 30, 2024, a decrease of $257 million, or 23%.

Lower commodity prices (excluding the effects of derivative settlements) during the six months ended June 30, 2024 accounted for an approximate $255 million decrease in year-over-year natural gas sales revenue (calculated as the change in the year-to-year average price times current year production volumes).

Higher natural gas production volumes accounted for an approximate $2 million increase in year-over-year natural gas sales revenue (calculated as the change in year-to-year volumes times the prior year average price).

Revenues from sales of NGLs increased from $893 million for the six months ended June 30, 2023 to $1.0 billion for the six months ended June 30, 2024, an increase of $114 million, or 13%.

Higher commodity prices (excluding the effects of derivative settlements) during the six months ended June 30, 2024 accounted for an approximate $54 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes).

Revenues from sales of natural gas decreased from $1.6 billion for the nine months ended September 30, 2023 to $1.3 billion for the nine months ended September 30, 2024, a decrease of $0.3 billion, or 21%.

Lower commodity prices (excluding the effects of derivative settlements) during the nine months ended September 30, 2024 accounted for an approximate $323 million decrease in year-over-year natural gas sales revenue (calculated as the change in the year-to-year average price times current year production volumes).

Lower natural gas production volumes accounted for an approximate $24 million decrease in year-over-year natural gas sales revenue (calculated as the change in year-to-year volumes times the prior year average price).

Revenues from sales of NGLs increased from $1.4 billion for the nine months ended September 30, 2023 to $1.5 billion for the nine months ended September 30, 2024, an increase of $0.1 billion, or 10%.

Higher commodity prices (excluding the effects of derivative settlements) during the nine months ended September 30, 2024 accounted for an approximate $76 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes).

Higher NGLs production volumes accounted for an approximate $60 million increase in year-over-year NGLs revenues (calculated as the change in year-to-year volumes times the prior year average price).

Revenues from sales of oil increased from $110 million for the six months ended June 30, 2023 to $128 million for the six months ended June 30, 2024, an increase of $18 million, or 17%.

Revenues from sales of oil increased from $172 million for the nine months ended September 30, 2023 to $181 million for the nine months ended September 30, 2024, an increase of $9 million, or 5%.

Higher oil prices, excluding the effects of derivative settlements, accounted for an approximate $1 million increase in year-over-year oil revenues (calculated as the change in the year-to-year average price times current year production volumes).

Higher oil production volumes during the six months ended June 30, 2024 accounted for an approximate $11 million increase in year-over-year oil revenues (calculated as the change in year-to-year volumes times the prior year average price).

Higher oil production volumes during the nine months ended September 30, 2024 accounted for an approximate $8 million increase in year-over-year oil revenues (calculated as the change in year-to-year volumes times the prior year average price).

Commodity derivative fair value gains.

2 unchanged sentences

Consequently, all mark-to-market gains or losses, as well as cash receipts or payments on settled derivative instruments, are recognized in our statements of operations.

For the six months ended June 30, 2023 and 2024, our commodity hedges resulted in derivative fair value gains of $134 million and $4 million, respectively.

For the six months ended June 30, 2023, commodity derivative fair value gains included $11 million of cash payments on settled commodity derivative losses and a $202 million cash payment for the early settlement of our swaption.

For the six months ended June 30, 2024, commodity derivative fair value gains included $7 million of net cash proceeds for settled derivative gains.

For the nine months ended September 30, 2023 and 2024, our commodity hedges resulted in derivative fair value gains of $138 million and $22 million, respectively.

For the nine months ended September 30, 2023, commodity derivative fair value gains included $17 million of cash payments on settled commodity derivative losses and a $202 million cash payment for the early settlement of our swaption.

For the nine months ended September 30, 2024, commodity derivative fair value gains included $12 million of net cash proceeds for settled derivative gains.

Commodity derivative fair value gains or losses vary based on future commodity prices and have no cash flow impact until the derivative contracts are settled or monetized prior to settlement.

2 unchanged sentences

Amortization of deferred revenue, VPP.

Amortization of deferred revenues associated with the VPP decreased from $15 million for the six months ended June 30, 2023 to $13 million for the six months ended June 30, 2024, a decrease of $2 million or 11%, primarily due to lower production volumes attributable to the VPP properties between periods.

Amortization of deferred revenues associated with the VPP decreased from $23 million for the nine months ended September 30, 2023 to $20 million for the nine months ended September 30, 2024, a decrease of $3 million or 11%, primarily due to lower production volumes attributable to the VPP properties between periods.

Amortization of the deferred revenues associated with the VPP are recognized as the production volumes are delivered at $1.61 per MMBtu over the contractual term.

Lease operating expense .

Lease operating expense increased from $58 million for the six months ended June 30, 2023 to $59 million for the six months ended June 30, 2024, primarily due to higher oilfield service costs.

On a per-unit basis, lease operating expenses decreased from $0.10 per Mcfe for the six months ended June 30, 2023 to $0.09 per Mcfe for the six months ended June 30, 2024, primarily due to higher production volumes between periods, partially offset by higher overall costs during the six months ended June 30, 2024.

Lease operating expense decreased from $92 million, or $0.10 per Mcfe, for the nine months ended September 30, 2023 to $88 million, or $0.09 per Mcfe, for the nine months ended September 30, 2024, primarily due to lower water disposal costs and workover expense during the nine months ended September 30, 2024, partially offset by higher oilfield service costs between periods.

Gathering, compression, processing and transportation expense.

Gathering, compression, processing and transportation expense remained consistent at $1.3 billion for the six months ended June 30, 2023 and 2024.

Gathering, compression, processing and transportation expense remained consistent at $2.0 billion for the nine months ended September 30, 2023 and 2024.

This was primarily a result of the following:

● Gathering and compression costs on a per unit basis increased from $0.70 per Mcfe for the six months ended June 30 , 2023 to $0.72 per Mcfe for the six months ended June 30, 2024, primarily due to the expiration of the growth incentive fee rebate program on December 31, 2023 and annual CPI-based adjustments between periods.

During the six months ended June 30, 2023, we earned fee rebates of $24 million under this program.

● Processing costs on a per unit basis increased from $0.83 per Mcfe for the six months ended June 30, 2023 to $0.84 per Mcfe for the six months ended June 30, 2024, primarily due to increased costs for NGLs processing and transportation, which includes an annual CPI-based adjustment during the first quarter of 2024 and higher NGLs transportation fees.

● Transportation costs on a per unit basis decreased from $0.64 per Mcfe for the six months ended June 30, 2023 to $0.58 per Mcfe for the six months ended June 30, 2024 primarily due to lower demand fees and lower fuel costs as a result of lower natural gas prices between periods.

● Gathering and compression costs on a per unit basis increased from $0.69 per Mcfe for the nine months ended September 30, 2023 to $0.72 per Mcfe for the nine months ended September 30, 2024, primarily due to the expiration of the growth incentive fee rebate program on December 31, 2023 and annual CPI-based adjustments between periods.

During the nine months ended September 30, 2023, we earned fee rebates of $36 million under this program.

● Processing costs on a per unit basis increased from $0.83 per Mcfe for the nine months ended September 30, 2023 to $0.86 per Mcfe for the nine months ended September 30, 2024, primarily due to increased costs for NGLs processing and transportation, which includes an annual CPI-based adjustment during the first quarter of 2024 and higher NGLs transportation fees.

● Transportation costs on a per unit basis decreased from $0.62 per Mcfe for the nine months ended September 30, 2023 to $0.58 per Mcfe for the nine months ended September 30, 2024 primarily due to lower demand fees and lower fuel costs as a result of lower natural gas prices between periods.

Production and ad valorem tax expense.

Production and ad valorem taxes increased from $85 million for the six months ended June 30, 2023 to $100 million for the six months ended June 30, 2024, an increase of $15 million, or 17%, primarily due to higher ad valorem taxes and production volumes between periods, partially offset by lower natural gas prices during the six months ended June 30, 2024.

Production and ad valorem taxes as a percentage of natural gas revenues increased

from 8% for the six months ended June 30, 2023 to 12% for the six months ended June 30, 2024, primarily as a result of higher ad valorem taxes, which 2024 West Virginia ad valorem taxes are based on commodity prices during 2022.

Production and ad valorem taxes increased from $118 million for the nine months ended September 30, 2023 to $148 million for the nine months ended September 30, 2024, an increase of $30 million, or 25%, primarily due to higher ad valorem taxes and production volumes between periods, partially offset by lower natural gas prices during the nine months ended September 30, 2024.

Production and ad valorem taxes as a percentage of natural gas revenues increased from 7% for the nine months ended September 30, 2023 to 12% for the nine months ended September 30,

2024, primarily as a result of higher ad valorem taxes, which 2024 West Virginia ad valorem taxes are based on commodity prices during 2022.

General and administrative expense .

General and administrative expense (excluding equity-based compensation expense) decreased from $85 million for the six months ended June 30, 2023 to $82 million for six months ended June 30, 2024, a decrease of $3 million, or 3%, primarily due to lower professional service fees between periods.

General and administrative expense on a per unit basis (excluding equity-based compensation) decreased from $0.14 per Mcfe for the six months ended June 30, 2023 to $0.13 per Mcfe for the six months ended June 30, 2024 as a result of lower overall costs and increased production volumes between periods.

General and administrative expense (excluding equity-based compensation expense) decreased from $125 million for the nine months ended September 30, 2023 to $121 million for nine months ended September 30, 2024, a decrease of $4 million, or 3%, primarily due to lower professional service fees between periods.

General and administrative expense on a per unit basis (excluding equity-based compensation) remained consistent at $0.13 per Mcfe for the nine months ended September 30, 2023 and 2024.

Equity-based compensation expense .

Noncash equity-based compensation expense increased from $27 million for the six months ended June 30, 2023 to $33 million for the six months ended June 30, 2024, an increase of $6 million, or 25%.

This increase was primarily due to annual equity-based awards granted in the first quarters of 2023 and 2024, partially offset by equity-based awards granted in prior years that were fully vested between periods.

Non-cash equity-based compensation expense increased from $45 million for the nine months ended September 30, 2023 to $49 million for the nine months ended September 30, 2024, an increase of $4 million, or 10%.

This increase was primarily due to RSU award expense attributable to awards granted in the fourth quarter of 2023 and first quarter of 2024, partially offset by lower PSU award expense between periods and equity-based awards granted in prior years that were fully vested between periods.

See Note 9—Equity-Based Compensation to the unaudited condensed consolidated financial statements for more information.

Depletion, depreciation and amortization expense.

DD&A expense increased from $339 million for the six months ended June 30, 2023 to $344 million for the six months ended June 30, 2024, an increase of $5 million, or 1%, primarily due to higher production volumes between periods.

On a per unit basis, DD&A expense remained relatively consistent at $0.56 and $0.55 per Mcfe for the six months ended June 30, 2023 and 2024, respectively.

DD&A expense remained relatively consistent at $515 million, or $0.56 per Mcfe, and $514 million, or $0.55 per Mcfe, for the nine months ended September 30, 2023 and 2024, respectively.

Impairment of property and equipment .

Impairment of oil and gas properties decreased from $31 million for the six months ended June 30, 2023 to $6 million for the six months ended June 30, 2024, a decrease of $25 million, primarily due to lower impairments of expiring leases between periods.

Impairment of oil and gas properties decreased from $45 million for the nine months ended September 30, 2023 to $19 million for the nine months ended September 30, 2024, a decrease of $26 million, primarily due to lower impairments of expiring leases between periods.

During both periods, we recognized impairments primarily related to expiring leases as well as design and initial costs related to pads we no longer plan to place into service.

Contract termination, loss contingency and other operating expenses .

Contract termination, loss contingency and other operating expenses attributable to our exploration and production segment decreased from $10 million for the six months ended June 30, 2023 to $5 million for the six months ended June 30, 2024.

This decrease was primarily due to lower expense associated with the early termination of certain completion contracts between periods.

Contract termination, loss contingency, settlements and other operating expenses .

Contract termination, loss contingency, settlements and other operating expenses attributable to our exploration and production segment decreased from $24 million for the nine months ended September 30, 2023 to $4 million for the nine months ended September 30, 2024.

This decrease was primarily due to a loss contingency recorded in the third quarter of 2023 and lower expense associated with the early termination of certain completion contracts between periods, partially offset by our receipt of 0.1 million shares of Antero Midstream common stock during the third quarter of 2024 as part of a judgment in a legal proceeding with an unaffiliated third-party.

Marketing Segment

1 unchanged sentence

We have entered into long-term firm transportation agreements for a significant portion of our current and expected future production in order to secure guaranteed capacity to favorable markets.

Net marketing expense decreased from $45 million, or $0.07 per Mcfe, for the six months ended June 30, 2023 to $33 million, or $0.05 per Mcfe, for the six months ended June 30, 2024, primarily due to lower firm transportation commitments between periods.

Net marketing expense decreased from $62 million, or $0.07 per Mcfe, for the nine months ended September 30, 2023 to $48 million, or $0.05 per Mcfe, for the nine months ended September 30, 2024, primarily due to lower firm transportation commitments between periods.

M arketing revenue.

Marketing revenue decreased from $102 million for the six months ended June 30, 2023 to $98 million for the six months ended June 30, 2024, a decrease of $4 million, or 4%.

Marketing revenue decreased from $155 million for the nine months ended September 30, 2023 to $145 million for the nine months ended September 30, 2024, a decrease of $10 million, or 7%.

This fluctuation primarily resulted from the following:

3 unchanged sentences

Higher oil marketing volumes accounted for a $35 million increase in year-over-year marketing revenues (calculated as the change in year-to-year volumes times the prior year average price), and higher oil prices accounted for a $10 million increase in year-over-year marketing revenues (calculated as the change in the year-to-year average price times current year marketing volumes).

● NGLs marketing revenues were $3 million for the six months ended June 30, 2024.

There were no NGLs marketing revenues for the six months ended June 30, 2023.

● NGLs marketing revenues were $4 million for the nine months ended September 30, 2024.

There were no NGLs marketing revenues for the nine months ended September 30, 2023.

Marketing expense.

Marketing expense decreased from $148 million for the six months ended June 30, 2023 to $131 million for the six months ended June 30, 2024, a decrease of $17 million, or 11%.

Marketing expense decreased from $217 million for the nine months ended September 30, 2023 to $193 million for the nine months ended September 30, 2024, a decrease of $24 million, or 11%.

Marketing expense includes the cost of third-party purchased natural gas, NGLs and oil as well as firm transportation costs, including costs related to current excess firm capacity.

The cost of third-party natural gas purchases decreased $39 million, partially offset by oil and NGLs purchases increase of $31 million and $3 million, respectively.

The total cost of third-party commodity purchases decreased primarily due to lower natural gas marketing volumes and prices between periods, partially offset by higher oil prices and marketing volumes during the six months ended June 30, 2024.

Firm transportation costs decreased $12 million from $55 million for the six months ended June 30, 2023 to $43 million for the six months ended June 30, 2024, due to the reduction in firm transportation commitments between periods.

Contract termination, loss contingency and other operating expenses .

Contract termination, loss contingency and other operating expenses attributable to our marketing segment for the six months ended June 30, 2023, relate to a $24 million payment for the early termination of our firm transportation commitment of 200,000 MMBtu per day on the Equitrans pipeline.

Our marketing segment did not incur any contract termination, loss contingency and other operating expenses for the six months ended June 30, 2024.

The cost of third-party natural gas purchases decreased $47 million between periods, partially offset by increased oil and NGLs purchases of $38 million and $4 million, respectively.

Firm transportation costs decreased $19 million from $82 million for the nine months ended September 30, 2023 to $63 million for the nine months ended September 30, 2024, primarily due to the reduction in firm transportation commitments between periods.

Contract termination, loss contingency, settlements and other operating expenses .

Contract termination, loss contingency, settlements and other operating expenses attributable to our marketing segment for the nine months ended September 30, 2023, relate to a $24 million payment for the early termination of our firm transportation commitment of 200,000 MMBtu per day on the Equitrans pipeline.

Our marketing segment did not incur any contract termination, loss contingency, settlements and other operating expenses for the nine months ended September 30, 2024.

Antero Midstream Segment

Antero Midstream revenue.

Revenue from the Antero Midstream segment increased from $518 million for the six months ended June 30, 2023 to $549 million for the six months ended June 30, 2024, an increase of $31 million.

Revenue from the Antero Midstream segment increased from $782 million for the nine months ended September 30, 2023 to $819 million for the nine months ended September 30, 2024, an increase of $37 million.

This increase is primarily due to higher gathering and processing revenues of $66 million, partially offset by lower water handling revenues of $29 million.

The increased gathering and processing revenues between periods is primarily a result of the expiration of the growth incentive fee rebate program on December 31, 2023, increased throughput and annual CPI-based gathering and compression rate adjustments between periods.

The decreased water handling revenues between periods is primarily due to lower fresh water delivery volumes and lower water handling volumes that are billed at cost plus 3%, partially offset by higher blending volumes and an increased fresh water delivery rate due to an annual CPI-based adjustment during the six months ended June 30, 2024.

Antero Midstream operating expense.

Total operating expense related to the Antero Midstream segment increased from $224 million for the six months ended June 30, 2023 to $230 million for the six months ended June 30, 2024, an increase of $6 million.

This increase is primarily due to higher equity-based compensation expense and depreciation expense between periods, partially offset by lower interest expense during the six months ended June 30, 2024.

Total operating expense related to the Antero Midstream segment increased from $325 million for the nine months ended September 30, 2023 to $337 million for the nine months ended September 30, 2024, an increase of $12 million.

This increase is primarily due to higher general and administrative expense, including equity-based compensation expense, and depreciation expense between periods as well as lower gains on asset sale during the nine months ended September 30, 2024.

Items Not Allocated to Segments

Interest expense.

Interest expense increased from $54 million for the six months ended June 30, 2023 to $63 million for the six months ended June 30, 2024, an increase of $9 million or 17%, primarily due to higher average Prior Credit Facility borrowings between periods and higher benchmark interest rates during the six months ended June 30, 2024.

Interest expense increased from $85 million for the nine months ended September 30, 2023 to $91 million for the nine months ended September 30, 2024, an increase of $6 million or 7%, primarily due to higher average Credit Facility borrowings between periods and higher benchmark interest rates during the nine months ended September 30, 2024.

Income tax expense (benefit) .

For the six months ended June 30, 2023, we had income tax expense of $32 million, with an effective tax rate of 14%, related to our income before income taxes of $226 million.

For the six months ended June 30, 2024, we had an income tax benefit of $3 million, with an effective tax rate of 21%, related to our loss before income taxes of $15 million.

The increase in the effective tax rate between periods was primarily due to the effects of noncontrolling interests and our income (loss) before income taxes.

For the nine months ended September 30, 2023, we had income tax expense of $46 million, with an effective tax rate of 17%, related to our income before income taxes of $272 million.

For the nine months ended September 30, 2024, we had an income tax benefit of $2 million, with an effective tax rate of 9%, related to our loss before income taxes of $25 million.

The decrease in the effective tax rate between periods was primarily due to the effects of noncontrolling interests and our loss before income taxes during the nine months ended September 30, 2024.

Capital Resources and Liquidity

4 unchanged sentences

Our future success in developing our proved reserves and production will be highly dependent on net cash provided by operating activities and the capital resources available to us.

Based on strip prices as of June 30, 2024, we believe that net cash provided by operating activities and available borrowings under the Credit Facility will be sufficient to meet our cash requirements, including normal operating needs, debt service obligations, capital expenditures and commitments and contingencies for at least the next 12 months.

Based on strip prices as of September 30, 2024, we believe that net cash provided by operating activities and available borrowings under the Credit Facility will be sufficient to meet our cash requirements, including normal operating needs, debt service obligations, capital expenditures and commitments and contingencies for at least the next 12 months.

The following table summarizes our cash flows (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by operating activities

3 unchanged sentences

Operating activities.

Net cash provided by operating activities was $499 million and $405 million for the six months ended June 30, 2023 and 2024, respectively.

Net cash provided by operating activities decreased between periods primarily due to lower natural gas prices, changes in working capital and higher gathering, compression, processing and transportation expenses, partially offset by a $202 million payment for early settlement of our swaption agreement in the six months ended June 30, 2023.

Net cash provided by operating activities was $682 million and $571 million for the nine months ended September 30, 2023 and 2024, respectively.

Net cash provided by operating activities decreased between periods primarily due to lower natural gas prices, changes in working capital and higher interest expense, partially offset by lower net marketing expense and higher NGLs and oil revenues between periods and a $202 million payment for early settlement of our swaption agreement in the nine months ended September 30, 2023.

Our net operating cash flows are sensitive to many variables, the most significant of which is the volatility of natural gas, NGLs and oil prices, as well as volatility in the cash flows attributable to settlement of our commodity derivatives.

3 unchanged sentences

Investing activities.

Net cash used in investing activities decreased from $638 million for the six months ended June 30, 2023 to $414 million for the six months ended June 30, 2024, primarily due to a decrease in drilling and completions activity as a result of lower rig and completion crew counts between periods, and decreased leasing activity during the six months ended June 30, 2024.

Net cash used in investing activities decreased from $914 million for the nine months ended September 30, 2023 to $588 million for the nine months ended September 30, 2024, primarily due to lower well completions between periods, decreased drilling activity as a result of a lower rig count during the nine months ended September 30, 2024 and decreased leasing activity during the nine months ended September 30, 2024.

Financing activities.

Net cash provided by financing activities decreased from $139 million for the six months ended June 30, 2023 to $9 million for the six months ended June 30, 2024.

The decrease between periods is primarily due to lower net borrowings on our Prior Credit Facility of $246 million, partially offset by decreased share repurchases of $75 million and decreased distributions to the noncontrolling interests in Martica of $40 million between periods.

Net cash provided by financing activities decreased from $232 million for the nine months ended September 30, 2023 to $17 million for the nine months ended September 30, 2024.

The decrease between periods is primarily due to lower net borrowings on our Credit Facility of $330 million and payment of debt issuance costs for our Unsecured Credit Facility of $6 million, partially offset by decreased share repurchases of $75 million and decreased distributions to the noncontrolling interests in Martica of $46 million between periods.

2024 Capital Budget and Capital Spending

5 unchanged sentences

We periodically review our capital expenditures and adjust our budget and its allocation based on liquidity, drilling results, leasehold acquisition opportunities and commodity prices.

For the three months ended June 30, 2024, our total consolidated capital expenditures were $188 million, including drilling and completion costs of $164 million, leasehold acquisitions of $21 million and other capital expenditures of $3 million.

For the six months ended June 30, 2024, our total consolidated capital expenditures were $407 million, including drilling and completion costs of $351 million, leasehold acquisitions of $47 million and other capital expenditures of $9 million.

On October 30, 2024, we announced a decrease in our net capital budget for drilling and completion to a range of $640 million to $660 million to reflect operational efficiencies and the deferral of a drilled but uncompleted pad due to low natural gas prices.

Our revised net capital budget for 2024 is $715 million to $760 million.

For the three months ended September 30, 2024, our total consolidated capital expenditures were $172 million, including drilling and completion costs of $148 million, leasehold acquisitions of $23 million and other capital expenditures of $1 million.

For the nine months ended September 30, 2024, our total consolidated capital expenditures were $578 million, including drilling and completion costs of $499 million, leasehold acquisitions of $69 million and other capital expenditures of $10 million.

Debt Agreements

4 unchanged sentences

Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been included in Note 2—Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements.

The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that

affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent liabilities.

The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent liabilities.

Accounting estimates and assumptions are considered to be critical if there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used.

5 unchanged sentences

If the carrying amount of our proved properties exceeds the estimated undiscounted future net cash flows (measured using futures prices at the balance sheet date), we further evaluate our proved properties and record an impairment charge if the carrying amount of our proved properties exceeds the estimated fair value of the properties.

Based on future prices as of June 30, 2024, the estimated undiscounted future net cash flows exceeded the carrying amount and no further evaluation was required.

We have not recorded any impairment expenses associated with our proved properties during the three and six months ended June 30, 2023 and 2024.

Based on future prices as of September 30, 2024, the estimated undiscounted future net cash flows exceeded the carrying amount and no further evaluation was required.

We have not recorded any impairment expenses associated with our proved properties during the three and nine months ended September 30, 2023 and 2024.

We believe that the estimates and assumptions related to our undiscounted future net cash flows and the fair value of our proved properties are critical because different natural gas, NGLs and oil pricing, cost assumptions or discount rates, as applicable, may affect the recognition, timing and amount of an impairment and, if changed, could have a material effect on the Company's financial position and results of operations.

4 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 2. Management’s Discussion and Analysis