Antero Resources Receives Investment Grade Credit Rating

Rhea-AI Summary

Antero Resources (NYSE: AR) has been upgraded to an investment grade credit rating of BBB- from BB+ by S&P Global Ratings, effective May 15, 2024. This upgrade follows the investment grade rating by Fitch Ratings since September 2022. The new rating is expected to significantly reduce letters of credit tied to Antero's firm transportation portfolio and lower interest expenses.

Michael Kennedy, CFO of Antero Resources, attributed this achievement to the company's development program and debt reduction strategy, which has cut over $2 billion in debt since late 2019. Antero Resources is a leading operator in the Appalachian Basin, focusing on natural gas and liquids production.

Positive

• S&P Global Ratings upgraded Antero Resources to BBB-.
• Maintained investment grade rating from Fitch Ratings since September 2022.
• Expected reduction in letters of credit associated with the firm transportation portfolio.
• Anticipated decrease in interest expenses.
• Successful debt reduction of over $2 billion since Q4 2019.
• Strong development program and commitment to debt reduction.
• Peer-leading capital efficiency and low breakeven costs.
• Positioned as a premier operator in the Appalachian Basin.

Negative

• Debt reduction efforts required significant financial resources.
• Increased financial scrutiny and pressure to maintain investment grade ratings.
• Potential adverse impacts on stock performance if credit ratings are downgraded in the future.

Financial Analyst

Antero Resources' upgrade to an investment grade credit rating from S&P to BBB- is a significant milestone. Investment grade ratings generally mean lower borrowing costs, stronger investor confidence and more favorable terms for credit facilities. This upgrade comes on top of the investment grade rating from Fitch, further solidifying Antero's financial standing.

For investors, this translates to reduced interest expenses and potentially higher profitability. Additionally, the reduction in letters of credit associated with its firm transportation portfolio could free up liquidity, enhancing financial flexibility and enabling further investment or debt reduction. This move could also attract institutional investors who are often restricted to investment-grade securities.

Analyzing the company's ongoing debt reduction strategy, which has successfully cut down more than $2 billion in debt since late 2019, it’s clear that Antero is positioning itself to operate more efficiently with lower capital costs. This commitment to deleveraging, alongside their capital efficiency and low breakeven costs, paints a positive picture for long-term stability and growth.

The broader impact on the natural gas sector is noteworthy too. As a major operator in the Appalachian Basin, Antero's strengthening financial position might encourage other companies in the sector to follow suit and focus on debt reduction and operational efficiency.

Market Research Analyst

The investment grade rating upgrade for Antero Resources could indicate a turning point in the company’s market perception. A stable outlook as provided by S&P's rating suggests confidence in Antero's ability to maintain its current financial health over the coming periods. This can have an immediate impact on the stock price as market participants reassess the risk profile of Antero, potentially leading to upward revisions in stock valuations.

One key aspect for investors to watch is how Antero leverages this improved credit rating. The rating upgrade could lower the cost of new debt and provide better terms on refinancing existing debt. This could be important for funding future projects or acquisitions without significantly straining the company's balance sheet.

Additionally, Antero's focus on

DENVER, May 15, 2024 /PRNewswire/ -- Antero Resources Corporation (NYSE: AR) ("Antero Resources," "Antero," or the "Company") today announced that it has received an investment grade credit rating of BBB- from S&P Global Ratings ("S&P").    

On May 15^th, 2024, S&P upgraded Antero's corporate and issuer credit ratings to BBB- from BB+ with a stable outlook. The Company has maintained an investment grade credit rating from Fitch Ratings since September of 2022. With these two investment grade credit ratings, Antero expects a substantial reduction in letters of credit associated with its firm transportation portfolio and reduced interest expense.

Michael Kennedy, CFO of Antero Resources said, "Antero's investment grade credit rating reinforces the strength of our company, driven by the success of our development program and commitment to debt reduction over the last several years. Since the start of our debt reduction program in the fourth quarter of 2019, we have reduced debt by more than $2 billion. This reduction, combined with our peer-leading capital efficiency and low breakeven costs, positions Antero Resources as the premier operator in Appalachia."

Antero Resources is an independent natural gas and natural gas liquids company engaged in the acquisition, development and production of unconventional properties located in the Appalachian Basin in West Virginia and Ohio. In conjunction with its affiliate, Antero Midstream Corporation (NYSE: AM), Antero is one of the most integrated natural gas producers in the U.S. The Company's website is located at www.anteroresources.com.

This release includes "forward-looking statements." Such forward-looking statements are subject to a number of risks and uncertainties, many of which are not under Antero Resources' control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Resources expects, believes or anticipates will or may occur in the future, such as those regarding anticipated reductions in letters of credit and interest expense, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking statements speak only as of the date of this release. Although Antero Resources believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Except as required by law, Antero Resources expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.

Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil, most of which are difficult to predict and many of which are beyond the Antero Resources' 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, cybersecurity risks, our ability to achieve Net Zero Scope 1 and Scope 2 GHG emissions and the costs associated therewith, the state of markets for, and availability of, verified quality carbon offsets and the other risks described under the heading "Item 1A. Risk Factors" in Antero Resources' Annual Report on Form 10-K for the year ended December 31, 2023 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

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SOURCE Antero Resources Corporation

FAQ

What is the new credit rating for Antero Resources as of May 15, 2024?

Antero Resources has been upgraded to a BBB- credit rating by S&P Global Ratings.

What impact is expected from Antero Resources' new investment grade credit rating?

The new investment grade rating is expected to reduce letters of credit and lower interest expenses.

How much debt has Antero Resources reduced since late 2019?

Antero Resources has reduced its debt by more than $2 billion since the fourth quarter of 2019.

What are the benefits of Antero Resources' investment grade credit ratings from S&P and Fitch?

The investment grade ratings from S&P and Fitch are expected to lower financial costs and enhance the company's creditworthiness.

How does Antero Resources' development program contribute to its credit rating upgrade?

Antero's development program, combined with its debt reduction strategy, has strengthened the company and contributed to the credit rating upgrade.