Fee

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2021~~March 31, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-36120

ANTERO RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		80-0162034
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1615 Wynkoop Street, Denver, Colorado		80202
(Address of principal executive offices)		(Zip Code)

(303) 357-7310

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	AR	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒		Accelerated Filer ☐
Non-accelerated Filer ☐		Smaller Reporting Company ☐
Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ Yes ☒ No

The registrant had ~~313,864,919~~311,085,147 shares of common stock outstanding as of ~~July 23, 2021.~~April 22, 2022.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the information in this Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. Words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward-looking statements, although not all forward-looking statements contain such identifying words. When considering these forward-looking statements, investors should keep in mind the risk factors and other cautionary statements in this Quarterly Report on Form 10-Q. These forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:

●

our ability to execute our business strategy;

●

our production and oil and gas reserves;

●

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

●

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

●

ability to execute our share repurchase program;

●

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

●

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

●

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

●

our hedging strategy and results;

●

our ability to meet minimum volume commitments and to utilize or monetize our firm transportation commitments;

●

our future drilling plans;

●

our projected well costs, ~~and cost savings initiatives,~~ including with respect to water handling services provided by Antero Midstream ~~Corporation;~~Corporation (“Antero Midstream”);

●

~~competition~~competition;

●

government regulations and ~~government regulations;~~changes in laws;

●

pending legal or environmental matters;

●

marketing of natural gas, NGLs and oil;

●

leasehold or business acquisitions;

●

costs of developing our properties;

●

operations of Antero ~~Midstream Corporation;~~Midstream;

●

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

●

general economic conditions;

●

credit markets;

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●

uncertainty regarding our future operating results; and

●

our other plans, objectives, expectations and intentions contained in this Quarterly Report on Form 10-Q.

~~Table of Contents~~

We caution investors that these forward-looking statements are subject to all of the risks and uncertainties incidental to our business, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, inflation, availability of drilling, completion and production equipment and services, environmental risks, drilling and completion and other operating risks, marketing and transportation risks, regulatory changes or changes in law, the uncertainty inherent in estimating natural gas, NGLs and oil reserves and in projecting future rates of production, cash flows and access to capital, the timing of development expenditures, conflicts of interest among our stockholders, impacts of world health events (including the COVID-19 pandemic), cybersecurity risks, the state of markets for, and availability of, verified quality carbon offsets and the other risks described or referenced under the heading “Item 1A. Risk Factors” herein, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (the ~~“2020~~“2021 Form 10-K”), which is on file with the Securities and Exchange Commission (“SEC”).

Reserve engineering is a process of estimating underground accumulations of natural gas, NGLs and oil that cannot be measured in an exact manner. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data, and the price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing, and production activities, or changes in commodity prices, may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of natural gas, NGLs and oil that are ultimately recovered.

Should one or more of the risks or uncertainties described or referenced in this Quarterly Report on Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

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PART I—FINANCIAL INFORMATION

ANTERO RESOURCES CORPORATION

Condensed Consolidated Balance Sheets

(In thousands)


				(Unaudited)					(Unaudited)
		December 31,		June 30,			December 31,		March 31,
		2020		2021			2021		2022
Assets	Assets					Assets
Current assets:
Cash and cash equivalents		$	—		4,541
Accounts receivable			28,457		36,145		$	78,998		45,755
Accrued revenue			425,314		493,740			591,442		660,884
Derivative instruments			105,130		1,056			757		263
Other current assets			15,238		14,958			14,922		17,874
Total current assets			574,139		550,440			686,119		724,776
Property and equipment:
Oil and gas properties, at cost (successful efforts method):
Unproved properties			1,175,178		1,076,562			1,042,118		1,001,420
Proved properties			12,260,713		12,479,785			12,646,303		12,786,692
Gathering systems and facilities			5,802		5,802			5,802		5,802
Other property and equipment			74,361		77,231			116,522		123,824
			13,516,054		13,639,380			13,810,745		13,917,738
Less accumulated depletion, depreciation, and amortization			(3,869,116)		(4,095,539)			(4,283,700)		(4,384,971)
Property and equipment, net			9,646,938		9,543,841			9,527,045		9,532,767
Operating leases right-of-use assets			2,613,603		2,486,044			3,419,912		3,285,337
Derivative instruments			47,293		19,396			14,369		10,516
Investment in unconsolidated affiliate			255,082		237,668			232,399		234,390
Other assets			13,790		10,944			16,684		15,714
Total assets		$	13,150,845		12,848,333		$	13,896,528		13,803,500

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current liabilities:
Accounts payable		$	26,728		39,612		$	24,819		67,769
Accounts payable, related parties			69,860		85,471			76,240		73,259
Accrued liabilities			343,524		433,050			457,244		341,692
Revenue distributions payable			198,117		267,926			444,873		408,347
Derivative instruments			31,242		733,994			559,851		1,152,299
Short-term lease liabilities			266,024		269,611			456,347		455,723
Deferred revenue, VPP			45,257		41,453			37,603		35,864
Other current liabilities			2,302		11,980			11,140		16,099
Total current liabilities			983,054		1,883,097			2,068,117		2,551,052
Long-term liabilities:
Long-term debt			3,001,593		2,415,163			2,125,444		1,959,944
Deferred income tax liability			412,252		214,292
Deferred income tax liability, net								318,126		254,633
Derivative instruments			99,172		204,525			181,806		311,005
Long-term lease liabilities			2,348,785		2,217,336			2,964,115		2,830,175
Deferred revenue, VPP			156,024		137,322			118,366		110,832
Other liabilities			59,694		58,184			54,462		57,175
Total liabilities			7,060,574		7,129,919			7,830,436		8,074,816
Commitments and contingencies (Notes 13 and 14)
Commitments and contingencies
Equity:
Stockholders' equity:
Preferred stock, $0.01 par value; authorized - 50,000 shares; NaN issued			—		—			—		—
Common stock, $0.01 par value; authorized - 1,000,000 shares; 268,672 shares and 313,527 shares issued and outstanding as of December 31, 2020 and June 30, 2021, respectively			2,686		3,135
Common stock, $0.01 par value; authorized - 1,000,000 shares; 313,930 shares and 311,020 shares issued and outstanding as of December 31, 2021 and March 31, 2022, respectively								3,139		3,110
Additional paid-in capital			6,195,497		6,363,774			6,371,398		6,266,506
Accumulated deficit			(430,478)		(969,444)			(617,377)		(795,830)
Total stockholders' equity			5,767,705		5,397,465			5,757,160		5,473,786
Noncontrolling interests			322,566		320,949			308,932		254,898
Total equity			6,090,271		5,718,414			6,066,092		5,728,684
Total liabilities and equity		$	13,150,845		12,848,333		$	13,896,528		13,803,500

See accompanying notes to unaudited condensed consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended June 30,

2020

2021

Revenue and other:

Natural gas sales

$
367,415

626,520

Natural gas liquids sales

212,197

464,381

Oil sales

8,322

51,906

Commodity derivative fair value losses

(168,015)

(831,840)

Marketing

64,285

165,453

Amortization of deferred revenue, VPP

—

11,279

Gain on sale of assets

—

2,288

Other income (loss)

707

(619)

Total revenue

484,911

489,368

Operating expenses:

Lease operating

24,742

21,645

Gathering, compression, processing, and transportation

631,845

641,362

Production and ad valorem taxes

19,992

33,694

Marketing

113,053

198,994

Exploration

231

5,638

Impairment of oil and gas properties

37,350

9,303

Depletion, depreciation, and amortization

214,035

187,330

Accretion of asset retirement obligations

1,111

1,331

General and administrative (including equity-based compensation expense of $7,973 and $4,249 in 2020 and 2021, respectively)

38,403

32,177

Contract termination and rig stacking

11,071

844

Total operating expenses

1,091,833

1,132,318

Operating loss

(606,922)

(642,950)

Other income (expense):

Equity in earnings of unconsolidated affiliate

20,228

17,477

Transaction expense

(6,138)

(185)

Interest expense, net

(51,811)

(49,963)

Gain (loss) on early extinguishment of debt

39,171

(23,065)

Loss on convertible note equitization

—

(11,731)

Total other income (expense)

1,450

(67,467)

Loss before income taxes

(605,472)

(710,417)

Provision for income tax benefit

142,404

175,966

Net loss and comprehensive loss including noncontrolling interests

(463,068)

(534,451)

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

236

(10,984)

Net loss and comprehensive loss attributable to Antero Resources Corporation

$
(463,304)

(523,467)

Loss per share—basic

$
(1.73)

(1.70)

Loss per share—diluted

$
(1.73)

(1.70)

Weighted average number of shares outstanding:

Basic

268,386

307,879

Diluted

268,386

307,879

~~See accompanying notes to unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~ANTERO RESOURCES CORPORATION~~

~~Condensed Consolidated Statements of Operations and Comprehensive Loss~~

~~(Unaudited)~~

~~(In thousands, except per share amounts)~~


	Six Months Ended June 30,				Three Months Ended March 31,
	2020		2021		2021		2022
Revenue and other:
Natural gas sales	$	778,497		1,346,889	$	720,369		995,792
Natural gas liquids sales		469,870		904,700		440,319		660,305
Oil sales		43,968		96,592		44,686		63,294
Commodity derivative fair value gains (losses)		397,818		(1,009,596)
Commodity derivative fair value losses						(177,756)		(1,011,380)
Marketing		110,358		330,243		164,790		69,038
Amortization of deferred revenue, VPP		—		22,429		11,150		9,272
Gain on sale of assets		—		2,288
Other income		1,505		21		640		519
Total revenue		1,802,016		1,693,566		1,204,198		786,840
Operating expenses:
Lease operating		50,386		46,192		24,547		17,780
Gathering, compression, processing, and transportation		1,220,469		1,246,439		605,077		590,278
Production and ad valorem taxes		45,691		78,391		44,697		52,808
Marketing		206,326		361,071		162,077		98,896
Exploration		441		5,857		219		898
General and administrative (including equity-based compensation expense of $5,642 and $4,649 in 2021 and 2022, respectively)						44,074		35,691
Depletion, depreciation, and amortization						194,026		168,388
Impairment of oil and gas properties		126,570		43,365		34,062		22,462
Depletion, depreciation, and amortization		413,712		381,356
Accretion of asset retirement obligations		2,215		2,119		788		2,444
General and administrative (including equity-based compensation expense of $11,302 and $9,891 in 2020 and 2021, respectively)		69,624		76,251
Contract termination and rig stacking		11,071		935
Contract termination						91		8
Loss on sale of assets						—		1,786
Total operating expenses		2,146,505		2,241,976		1,109,658		991,439
Operating loss		(344,489)		(548,410)
Operating income (loss)						94,540		(204,599)
Other income (expense):
Interest expense, net		(104,913)		(92,706)		(42,743)		(37,713)
Equity in earnings (loss) of unconsolidated affiliate		(107,827)		36,171
Gain (loss) on early extinguishment of debt		119,732		(66,269)
Loss on convertible note equitizations		—		(50,777)
Impairment of equity method investment		(610,632)		—
Equity in earnings of unconsolidated affiliate						18,694		25,178
Loss on early extinguishment of debt						(43,204)		(10,654)
Loss on convertible note equitization						(39,046)		—
Transaction expense		(6,138)		(2,476)		(2,291)		—
Total other expenses		(709,778)		(176,057)
Total other expense						(108,590)		(23,189)
Loss before income taxes		(1,054,267)		(724,467)		(14,050)		(227,788)
Provision for income tax benefit		252,389		178,912
Income tax benefit						2,946		53,092
Net loss and comprehensive loss including noncontrolling interests		(801,878)		(545,555)		(11,104)		(174,696)
Less: net income (loss) and comprehensive income (loss) attributable to noncontrolling interests		236		(6,589)		4,395		(18,277)
Net loss and comprehensive loss attributable to Antero Resources Corporation	$	(802,114)		(538,966)	$	(15,499)		(156,419)

Loss per share—basic	$	(2.90)		(1.78)	$	(0.05)		(0.50)
Loss per share—diluted	$	(2.90)		(1.78)	$	(0.05)		(0.50)

Weighted average number of shares outstanding:
Basic		276,306		302,343		296,746		314,081
Diluted		276,306		302,343		296,746		314,081

See accompanying notes to unaudited condensed consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)


					Additional		Accumulated										Additional
	Common Stock				Paid-in		Earnings		Noncontrolling		Total		Common Stock				Paid-in		Accumulated		Noncontrolling		Total
	Shares		Amount		Capital		(Deficit)		Interests		Equity
Balances, December 31, 2019		295,941	$	2,959		6,130,365		837,419		—		6,970,743
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		178		2		(34)		—		—		(32)
Repurchases and retirements of common stock		(27,193)		(272)		(42,418)		—		—		(42,690)
Equity-based compensation		—		—		3,329		—		—		3,329
Net loss and comprehensive loss		—		—		—		(338,810)		—		(338,810)
Balances, March 31, 2020		268,926		2,689		6,091,242		498,609		—		6,592,540
Issuance of common units in Martica Holdings, LLC		—		—		—		—		300,000		300,000
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		464		5		(305)		—		—		(300)
Distributions to noncontrolling interest		—		—		—		—		(3,413)		(3,413)
Repurchases and retirements of common stock		(1,000)		(10)		(743)		—		—		(753)
Equity-based compensation		—		—		7,973		—		—		7,973
Net income (loss) and comprehensive income (loss)		—		—		—		(463,304)		236		(463,068)
Balances, June 30, 2020		268,390	$	2,684		6,098,167		35,305		296,823		6,432,979
													Shares		Amount		Capital		Deficit		Interests		Equity
Balances, December 31, 2020		268,672	$	2,686		6,195,497		(430,478)		322,566		6,090,271		268,672	$	2,686		6,195,497		(430,478)		322,566		6,090,271
Issuance of common shares		31,388		314		238,551		—		—		238,865		31,388		314		238,551		—		—		238,865
Issuance of common units in Martica Holdings, LLC		—		—		—		—		51,000		51,000		—		—		—		—		51,000		51,000
Equity component of 2026 Convertible Notes, net		—		—		(116,381)		—		—		(116,381)		—		—		(116,381)		—		—		(116,381)
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		1,130		11		(5,656)		—		—		(5,645)		1,130		11		(5,656)		—		—		(5,645)
Distributions to noncontrolling interest		—		—		—		—		(24,699)		(24,699)		—		—		—		—		(24,699)		(24,699)
Equity-based compensation		—		—		5,642		—		—		5,642		—		—		5,642		—		—		5,642
Net income (loss) and comprehensive income (loss)		—		—		—		(15,499)		4,395		(11,104)		—		—		—		(15,499)		4,395		(11,104)
Balances, March 31, 2021		301,190		3,011		6,317,653		(445,977)		353,262		6,227,949		301,190		3,011		6,317,653		(445,977)		353,262		6,227,949
Issuance of common shares		11,588		116		125,262		—		—		125,378

Balances, December 31, 2021														313,930	$	3,139		6,371,398		(617,377)		308,932		6,066,092
Equity component of 2026 Convertible Notes, net		—		—		(79,497)		—		—		(79,497)		—		—		(24,411)		3,229		—		(21,182)
Issuance of common stock upon vesting of equity-based compensation awards, net of shares withheld for income taxes		749		8		(3,893)		—		—		(3,885)		780		8		(10,385)		—		—		(10,377)
Distributions to noncontrolling interest		—		—		—		—		(21,329)		(21,329)		—		—		—		—		(35,757)		(35,757)
Repurchases and retirements of common stock														(3,690)		(37)		(74,745)		(25,263)		—		(100,045)
Equity-based compensation		—		—		4,249		—		—		4,249		—		—		4,649		—		—		4,649
Net loss and comprehensive loss		—		—		—		(523,467)		(10,984)		(534,451)		—		—		—		(156,419)		(18,277)		(174,696)
Balances, June 30, 2021		313,527	$	3,135		6,363,774		(969,444)		320,949		5,718,414
Balances, March 31, 2022														311,020	$	3,110		6,266,506		(795,830)		254,898		5,728,684

See accompanying notes to unaudited condensed consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended June 30,				Three Months Ended March 31,
	2020		2021		2021		2022
Cash flows provided by (used in) operating activities:
Net loss including noncontrolling interests	$	(801,878)		(545,555)	$	(11,104)		(174,696)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depletion, depreciation, amortization, and accretion		415,927		383,475		194,814		170,832
Impairments		737,202		43,365		34,062		22,462
Commodity derivative fair value losses (gains)		(397,818)		1,009,596
Commodity derivative fair value losses						177,756		1,011,380
Gains (losses) on settled commodity derivatives		524,838		(64,951)		5,322		(285,386)
Payments for derivative monetizations		—		(4,569)
Gain on sale of assets		—		(2,288)
Deferred income tax benefit						(2,946)		(57,383)
Equity-based compensation expense		11,302		9,891		5,642		4,649
Deferred income tax benefit		(252,389)		(178,912)
Equity in (earnings) loss of unconsolidated affiliate		107,827		(36,171)
Equity in earnings of unconsolidated affiliate						(18,694)		(25,178)
Dividends of earnings from unconsolidated affiliate		85,511		74,040		42,756		31,285
Amortization of deferred revenue		—		(22,429)		(11,150)		(9,272)
Amortization of debt issuance costs, debt discount, debt premium and other		4,433		7,877
(Gain) loss on early extinguishment of debt		(119,732)		66,269
Amortization of debt issuance costs, debt discount and debt premium						4,536		1,451
Settlement of asset retirement obligations						—		(886)
Loss on sale of assets						—		1,786
Loss on early extinguishment of debt						43,204		10,654
Loss on convertible note equitizations		—		50,777		39,046		—
Changes in current assets and liabilities:
Accounts receivable		(27,329)		(7,687)		(7,200)		33,244
Accrued revenue		63,023		(68,425)		(21,199)		(69,442)
Other current assets		789		631		3,593		(2,952)
Accounts payable including related parties		(21,182)		6,681		16,527		37,664
Accrued liabilities		15,722		64,499		(17,779)		(94,456)
Revenue distributions payable		(29,560)		69,809		84,296		(36,526)
Other current liabilities		(46)		16,349		2,249		(3,557)
Net cash provided by operating activities		316,640		872,272		563,731		565,673
Cash flows provided by (used in) investing activities:
Additions to unproved properties		(21,672)		(29,473)		(14,691)		(23,789)
Drilling and completion costs		(552,227)		(273,956)		(105,131)		(184,557)
Additions to other property and equipment		(1,234)		(2,320)		(3,336)		(7,530)
Settlement of water earnout		125,000		—
Proceeds from asset sales		—		2,351		—		195
Change in other assets						262		564
Change in other liabilities		—		(77)		(79)		—
Change in other assets		525		597
Net cash used in investing activities		(449,608)		(302,878)		(122,975)		(215,117)
Cash flows provided by (used in) financing activities:
Repurchases of common stock		(43,443)		—		—		(100,045)
Issuance of senior notes		—		1,800,000		1,200,000		—
Repayment of senior notes		(496,541)		(1,234,698)		(660,516)		(591,943)
Borrowings (repayments) on bank credit facilities, net		374,000		(1,017,000)		(873,800)		387,700
Payment of debt issuance costs		—		(22,440)		(15,370)		—
Sale of noncontrolling interest		300,000		51,000
Distributions to noncontrolling interests in Martica Holdings LLC		—		(46,028)		(24,699)		(35,757)
Employee tax withholding for settlement of equity compensation awards		(331)		(9,530)		(5,645)		(10,377)
Convertible note equitizations		—		(85,648)		(60,461)		—
Other		(717)		(509)		(265)		(134)
Net cash provided by (used in) financing activities		132,968		(564,853)
Net cash used in financing activities						(440,756)		(350,556)
Net increase in cash and cash equivalents		0		4,541		0		0
Cash and cash equivalents, beginning of period		0		0		0		0
Cash and cash equivalents, end of period	$	0		4,541	$	0		0

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	101,885		58,126	$	35,097		80,454
Increase (decrease) in accounts payable and accrued liabilities for additions to property and equipment	$	(61,305)		42,589	$	35,882		(14,449)

See accompanying notes to unaudited condensed consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(1) Organization

Antero Resources Corporation (individually referred to as “Antero” and together with its consolidated subsidiaries “Antero Resources,” or the ~~“Company,”~~“Company”) is engaged in the development, production, exploration and acquisition of natural gas, NGLs and oil properties in the Appalachian Basin in West Virginia and Ohio. The Company targets large, repeatable resource plays where horizontal drilling and advanced fracture stimulation technologies provide the means to economically develop and produce natural gas, NGLs and oil from unconventional formations. The Company’s corporate headquarters is located in Denver, Colorado.

(2) Summary of Significant Accounting Policies

(a)	Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) applicable to interim financial information and should be read in the context of the Company’s December 31, ~~2020~~2021 consolidated financial statements and notes thereto for a more complete understanding of the Company’s operations, financial position and accounting policies. The Company’s December 31, ~~2020~~2021 consolidated financial statements were included in Antero Resources’ ~~2020~~2021 Annual Report on Form 10-K, which was filed with the SEC.

These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, and, accordingly, do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Company’s financial position as of December 31, ~~2020~~2021 and ~~June 30, 2021~~March 31, 2022 and its results of operations ~~for the three and six months ended June 30, 2020 and 2021~~ and cash flows for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 and ~~2021.~~2022. The Company has no items of other comprehensive income or loss; therefore, its net income or loss is equal to its comprehensive income or loss. Operating results for the period ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the full year because of the impact of fluctuations in prices received for natural gas, NGLs and oil, natural production declines, the uncertainty of exploration and development drilling results, fluctuations in the fair value of derivative instruments, the impacts of COVID-19 and other factors.

(b)	Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Antero Resources Corporation, its wholly owned subsidiaries and its variable interest entity (“VIE”), Martica Holdings LLC, (“Martica”), for which the Company is the primary beneficiary. ~~The noncontrolling interest reflected~~All significant intercompany accounts and transactions have been eliminated in the Company’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2020 and 2021 represents the Company’s interest in Martica owned by third parties. See Note 3—Transactions to the unaudited condensed consolidated financial statements for more information on Martica.statements.

(c)	Cash and Cash Equivalents

The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments. From time to time, the Company may be in the position of a “book overdraft” in which outstanding checks exceed cash and cash equivalents. The Company classifies book overdrafts in accounts payable and revenue distributions payable within its ~~unaudited~~ condensed consolidated balance sheets, and classifies the change in accounts payable associated with book overdrafts as an operating activity within its unaudited condensed consolidated statements of cash flows. As of December 31, ~~2020,~~2021, the book overdrafts included within accounts payable and revenue distributions payable were ~~$11~~$5 million and ~~$15~~$52 million, respectively. As of March 31, 2022, the book overdrafts included within accounts payable and revenue distributions payable were $47 million and $41 million, respectively.

(d)	Earnings (Loss) Per Common Share

Earnings (loss) per common share—basic for each period is computed by dividing net income (loss) attributable to Antero by the basic weighted average number of shares outstanding during the period. Earnings (loss) per common share—diluted for each period is computed after giving consideration to the potential dilution from outstanding equity awards and shares of common stock issuable upon conversion of the 2026 Convertible Notes (as defined below in Note 7—Long-Term Debt)~~, calculated using the if-converted method.~~. The Company includes restricted stock unit (“~~RSUs”~~RSU”) awards, performance share unit (“~~PSUs”~~PSU”) awards and stock options in the calculation of diluted weighted average shares outstanding based on the number of common shares that would be issuable if the end of the period was also the end of

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

~~options in the calculation of diluted weighted average shares outstanding based on the number of common shares that would be issuable if the end of the period was also the end of~~ the performance period required for the vesting of the awards. The potential dilutive effect of the 2026 Convertible Notes is calculated using the (i) treasury stock method for the three months ended March 31, 2021 as a result of the Company’s intent to settle the principal amount of such convertible notes in cash upon conversion, and (ii) if-converted method for the three months ended March 31, 2022, as a result of the partial equitizations of the 2026 Convertible Notes during 2021. See Note 7—Long-Term Debt for further discussion on the equitization transactions. During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effects of all equity awards and the 2026 Convertible Notes are anti-dilutive.

The following is a reconciliation of the Company’s basic weighted average shares outstanding to diluted weighted average shares outstanding during the periods presented (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended March 31,
	2020	2021	2020	2021	2021	2022
Basic weighted average number of shares outstanding	268,386	307,879	276,306	302,343	296,746	314,081
Add: Dilutive effect of RSUs	—	—	—	—	—	—
Add: Dilutive effect of PSUs					—	—
Add: Dilutive effect of outstanding stock options	—	—	—	—	—	—
Add: Dilutive effect of PSUs	—	—	—	—
Add: Dilutive effect of 2026 Convertible Notes	—	—	—	—	—	—
Diluted weighted average number of shares outstanding	268,386	307,879	276,306	302,343	296,746	314,081

Weighted average number of outstanding securities excluded from calculation of diluted earnings per common share ⁽¹⁾:
RSUs	6,165	6,642	5,697	6,767	6,455	4,878
PSUs					1,863	3,443
Outstanding stock options	454	380	454	404	427	351
PSUs	1,595	2,769	1,595	2,584
2026 Convertible Notes	—	18,778	—	18,778	15,307	18,778

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

(e)	~~Income Taxes~~

The Company recognizes deferred tax assets and liabilities for temporary differences resulting from net operating loss carryforwards for income tax purposes and the differences between the financial statement and tax basis of assets and liabilities. The effect of changes in tax laws or tax rates is recognized in income during the period such changes are enacted. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

During the three months ended June 30, 2021, West Virginia enacted a new tax law that is effective January 1, 2022 on a prospective basis that is expected to reduce the Company’s net income or loss that is apportioned to West Virginia. As a result of this tax law change, the Company’s deferred income tax liability was reduced by $34 million as of June 30, 2021, which includes a $48 million increase in deferred tax assets, partially offset by a $14 million increase in valuation allowance.

~~(f)~~

Recently Issued Accounting ~~Standards~~Standard

Convertible Debt Instruments

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which eliminates the cash conversion model in Accounting Standards Codification (“ASC”) 470-20, Debt with Conversion and Other Options, that ~~require~~required separate accounting for conversion features, and instead, allows the debt instrument and conversion features to be accounted for as a single debt instrument. ~~The new standard becomes~~It is effective for interim and annual reporting periods beginning after December 31, 2021. The Company adopted the ~~Company on~~standard effective January 1, 2022 ~~and early adoption is permitted. The Company is evaluating the transition method it plans to use for adoption on January 1, 2022. However, the Company has utilized~~ under the modified retrospective ~~approach to quantify~~transition method, which impacts only the ~~expected impact of this standard~~debt instruments outstanding on ~~its financial statements.~~the adoption date.

Upon adoption of this new standard, the Company ~~expects to reclassify between $15 million and $30~~reclassified $24 million, net of deferred income taxes and equity issuance costs, tofrom additional paid-in capital and increased long-term debt ~~and~~by $27 million, reduced deferred income tax liability by $6 million and reduced accumulated deficit by $3 million as ~~applicable, from stockholders’ equity, which amount is subject to adjustment for any conversions or other transactions until adoption~~ of ~~this new standard.~~January 1, 2022. Additionally,

~~Table of Contents~~

~~ANTERO RESOURCES CORPORATION~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

annual interest expense for the 2026 Convertible Notes ~~will be~~beginning January 1, 2022 is based on an effective interest rate of ~~4.8%~~4.9% as compared to 15.1% for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021. T~~he Company does not believe that adoption of the standard will impact its operational strategies or development prospects.~~

Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. This ASU removes certain exceptions to the general principles in ASC 740, Income Taxes (“ASC 740”) and also simplifies portions of ASC 740 by clarifying and amending existing guidance. It is effective for interim and annual reporting periods beginning after December 15, 2020. The Company adopted this ASU on January 1, 2021, and it did not have a material impact on the Company's ~~unaudited condensed~~ consolidated financial statements.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(3) Transactions

(a)	Conveyance of Overriding Royalty Interest

On June 15, 2020, the Company announced the consummation of a transaction with an affiliate of Sixth Street Partners, LLC (“Sixth Street”) relating to certain overriding royalty interests across the Company’s existing asset base (the “ORRIs”). In connection with the transaction, the Company contributed the ORRIs to Martica and Sixth Street contributed $300 million in cash (subject to customary adjustments) and agreed to contribute up to an additional $102 million in cash if certain production thresholds attributable to the ORRIs are achieved in the third quarter of 2020 and first quarter of 2021. All cash contributed by Sixth Street at the initial closing was distributed to the Company. The Company met the applicable production thresholds related to the third quarter of 2020 and the first quarter of 2021 as of September ~~31,~~30, 2020 and March 31, 2021, respectively. The Company received a $51 million cash distribution during each of the fourth quarter of 2020 and the second quarter of 2021.

~~The ORRIs include an overriding royalty interest of 1.25% of the Company’s working interest in all of its proved operated developed~~ ~~properties~~ ~~in West Virginia and Ohio, subject to certain excluded wells (the “Initial PDP Override”), and an overriding royalty interest of 3.75%~~ of the Company’s working interest in all of its undeveloped properties in West Virginia and Ohio (the “Development Override”). Wells turned to sales after April 1, 2020 and prior to the later of (a) the date on which the Company turns to sales 2.2 million lateral feet (net to the Company’s interest) of horizontal wells burdened by the Development Override and (b) the earlier of (i) April 1, 2023 and (ii) the date on which the Company turns to sales 3.82 million lateral feet (net to the Company’s interest) of horizontal wells are subject to the Development Override.

~~The ORRIs also include an additional overriding royalty interest of 2.00%~~ of the Company’s working interest in the properties underlying the Initial PDP Override (the “Incremental Override”). The Incremental Override (or a portion thereof, as applicable) may be re-conveyed to the Company (at the Company’s election) if certain production targets attributable to the ORRIs are achieved through March 31, 2023. Any portion of the ~~Incremental~~ ~~Override that may not be re-conveyed to the Company based on the Company failing to achieve such production volumes through March 31, 2023 will remain with Martica.~~

Prior to Sixth Street achieving an internal rate of return of 13% and 1.5x cash-on-cash return (the “Hurdle”), Sixth Street will receive all distributions in respect of the Initial PDP Override and the Development Override, and the Company will receive all distributions in respect of the Incremental Override, unless certain production targets are not achieved, in which case Sixth Street will receive some or all of the distributions in respect of the Incremental Override. Following Sixth Street achieving the Hurdle, the Company will receive 85% of the distributions in respect of the ORRIs to which Sixth Street was entitled immediately prior to the Hurdle being achieved.

The conveyance of the ORRIs from the Company to Martica was accounted for as a transaction between entities under common control. As a result, the contributed ORRIs have been recorded by Martica at their historical cost.

(b)	~~Volumetric Production Payment Transaction~~

On August 10, 2020, the Company completed a volumetric production payment transaction and received net proceeds of approximately $216 million (the "VPP"). In connection with the VPP, the Company entered into a purchase and sale agreement, together with a conveyance agreement and production and marketing agreement, with J.P. Morgan Ventures Energy Corporation ("JPM-VEC") to convey, effective July 1, 2020, an overriding royalty interest in dry gas producing properties in West Virginia (the "VPP Properties") equal to 136,589,000 MMBtu over the expected seven-year term of the VPP.

~~Table of Contents~~

~~ANTERO RESOURCES CORPORATION~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~The Company has accounted for the VPP as a conveyance under ASC 932,~~ ~~Extractive Activities—Oil and Gas~~ (“ASC 932”), and the net proceeds were recorded as deferred revenue in the unaudited condensed consolidated balance sheet as of the transaction closing. Deferred revenue is recognized as volumes are delivered using the units-of-production method over the term of the VPP. Under the production and marketing agreement, Antero and its affiliates provide certain marketing services as JPM-VEC’s agent, and any income or expenses related to these services will be recorded as marketing revenue or marketing expenses as appropriate.

Contemporaneously with the VPP, the Company executed a call option related to the production volumes associated with its retained interest in the VPP properties, which is collateralized by a mortgage on the VPP properties. Additionally, the production and marketing agreement contains an embedded put option related to the production volumes for the Company’s retained interest in the VPP properties, which has been bifurcated from the production and marketing arrangement and accounted for as a derivative instrument recorded at fair value. See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for more information on the Company’s derivative instruments.

~~(c)~~

Drilling Partnership

On February 17, 2021, Antero Resources announced the formation of a drilling partnership with QL Capital Partners (“QL”), an affiliate of Quantum Energy Partners, for the Company’s 2021 through 2024 drilling program. Under the terms of the arrangement, each year in which QL participates represents an annual tranche, and QL will be conveyed a working interest in any wells spud by Antero Resources during such tranche year. For 2021 and 2022, Antero Resources and QL agreed to athe estimated internal rate of return (“IRR”) of the Company’s capital budget for ~~such~~each annual tranche, and ~~for~~QL agreed to participate in the 2021 and 2022 tranches. For each subsequent year through 2024, Antero Resources will propose a capital budget and estimated ~~internal rate of return (“IRR”)~~IRR for all wells to be spud during such year and, subject to the mutual agreement of the parties that the estimated IRR for the year exceeds a specified return, QL will be obligated to participate in such tranche. Antero Resources develops and manages the drilling program associated with each tranche, including the selection of wells. Additionally, for each annual tranche in which QL participates, Antero Resources and QL will enter into ~~an assignment, bill~~assignments, bills of sale and ~~conveyance~~conveyances pursuant to which QL will be conveyed a proportionate working interest percentage in each well spud in that year, which ~~conveyance~~conveyances will not be subject to any reversion.

Under the terms of the arrangement, QL ~~will fund~~funded 20% of development capital for wells spud in 2021, ~~and~~ is expected to fund 15% in 2022 and between 15% and 20% of development capital spending for wells spud ~~from 2022 through~~on an annual basis in 2023 and 2024, which funding amounts represent QL’s proportionate working interest in such wells. Additionally, Antero Resources may receive a carry in the form of a one-time payment from QL for each annual tranche if the IRR for such tranche exceeds certain specified returns, which will be determined no earlier than October 31 and no later than December 311 following the end of each tranche year. All of the wells spud during each calendar year period will be a separate annual tranche. Capital costs in excess of, and cost savings below, a specified percentage of budgeted amounts for each annual tranche will be for Antero Resources’ account.

Subject to the preceding sentence, for any wells included in a tranche, QL is obligated and responsible for its working interest share of costs and liabilities, and is entitled to its working interest share of revenues, associated with such wells for the life of such wells. If Antero Resources presents a capital budget for an annual tranche with an estimated IRR equal to or exceeding a specified return that QL in good faith believes is less than such specified return and QL elects not to participate, Antero Resources will not be obligated to offer QL the opportunity to participate in subsequent annual tranches.

The Company has accounted for the drilling partnership as a conveyance under ASC 932 and such conveyances are recorded in the unaudited condensed consolidated financial statements as QL obtains its proportionate working interest in each well. NaN gain or loss was recognized for the interests conveyed during the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2021 and 2022.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(4) Revenue

(a)	Disaggregation of Revenue

The table set forth below presents revenue disaggregated by type and ~~the~~ reportable segment to which it relates (in thousands). See Note 16—Reportable Segments to the unaudited condensed financial statements for more information on reportable segments.


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
	2020		2021		2020		2021		Reportable Segment	2021		2022		Reportable Segment
Revenues from contracts with customers:
Natural gas sales	$	367,415		626,520		778,497		1,346,889	Exploration and production	$	720,369		995,792	Exploration and production
Natural gas liquids sales (ethane)		26,644		43,417		53,440		79,527	Exploration and production		36,110		67,063	Exploration and production
Natural gas liquids sales (C3+ NGLs)		185,553		420,964		416,430		825,173	Exploration and production		404,209		593,242	Exploration and production
Oil sales		8,322		51,906		43,968		96,592	Exploration and production		44,686		63,294	Exploration and production
Marketing		64,285		165,453		110,358		330,243	Marketing		164,790		69,038	Marketing
Total revenue from contracts with customers		652,219		1,308,260		1,402,693		2,678,424			1,370,164		1,788,429
Income (loss) from derivatives, deferred revenue and other sources		(167,308)		(818,892)		399,323		(984,858)
Loss from derivatives, deferred revenue and other sources, net											(165,966)		(1,001,589)
Total revenue	$	484,911		489,368		1,802,016		1,693,566		$	1,204,198		786,840

(b)	Transaction Price Allocated to Remaining Performance Obligations

For the Company’s product sales that have a contract term greater than one year, the Company utilized the practical expedient in ASC 606, Revenue from Contracts with Customers (“ASC 606”), which does not require the disclosure of the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under the Company’s product sales contracts, each unit of product delivered to the customer represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. For the Company’s product sales that have a contract term of one year or less, the Company utilized the practical expedient in ASC 606, which does not require the disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

Under the Company’s sales contracts, the Company invoices customers after its performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Company’s contracts do not give rise to contract assets or liabilities. As of December 31, ~~2020~~2021 and ~~June 30, 2021,~~March 31, 2022, the Company’s receivables from contracts with customers were ~~$425~~$591 million and ~~$494~~$661 million, respectively.

(5) Equity Method Investment

(a)	Summary of Equity Method Investment

As of ~~June 30, 2021,~~March 31, 2022, Antero owned approximately ~~29.2%~~29.1% of Antero Midstream Corporation’s (“Antero Midstream”) common stock, which is reflected in Antero’s unaudited condensed consolidated financial statements using the equity method of accounting.

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


Balance as of December 31, 2021 ⁽¹⁾	$	232,399
Equity in earnings of unconsolidated affiliate		25,178
Dividends from unconsolidated affiliate		(31,285)
Elimination of intercompany profit		8,098
Balance as of March 31, 2022 ⁽¹⁾	$	234,390

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

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

~~The following table sets forth a reconciliation of Antero’s investment in unconsolidated affiliate for the six months ended June 30, 2021 (in thousands):~~

Balance as of December 31, 2020 ⁽¹⁾

$
255,082

Equity in earnings of unconsolidated affiliate

36,171

Dividends from unconsolidated affiliate

(74,040)

Elimination of intercompany profit

20,455

Balance as of June 30, 2021 ⁽¹⁾

$
237,668

~~(1)~~

The Company’s investment in Antero Midstream Corporation as of December 31, 2020 and June 30, 2021 was $1.1 billion and $1.4 billion, respectively, based on the quoted market share price of Antero Midstream Corporation.

(b)	Summarized Financial Information of Antero Midstream ~~Corporation~~

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

Balance Sheet

December 31,

June 30,

2020

2021

Current assets

$
93,931

92,438

Noncurrent assets

5,516,981

5,448,304

Total assets

$
5,610,912

5,540,742

Current liabilities

$
94,005

117,837

Noncurrent liabilities

3,098,621

3,094,469

Stockholders' equity

2,418,286

2,328,436

Total liabilities and stockholders' equity

$
5,610,912

5,540,742


			(Unaudited)
	December 31,		March 31,
	2021		2022
Current assets	$	83,804		80,290
Noncurrent assets		5,460,197		5,500,304
Total assets	$	5,544,001		5,580,594

Current liabilities	$	114,009		139,129
Noncurrent liabilities		3,143,294		3,181,511
Stockholders' equity		2,286,698		2,259,954
Total liabilities and stockholders' equity	$	5,544,001		5,580,594

Statement of Operations


	Six Months Ended June 30,				Three Months Ended March 31,
	2020		2021		2021		2022
Revenues	$	463,444		456,908	$	224,121		218,491
Operating expenses		847,882		171,922		90,534		89,337
Income (loss) from operations		(384,438)		284,986
Net income (loss)		(304,492)		163,664
Income from operations						133,587		129,154
Net income					$	83,441		80,040

(6) Accrued Liabilities

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


							(Unaudited)
	December 31,		June 30,		December 31,		March 31,
	2020		2021		2021		2022
Capital expenditures	$	32,372		43,532	$	46,983		34,576
Gathering, compression, processing, and transportation expenses		152,724		150,465		164,900		160,707
Marketing expenses		68,193		75,496		50,589		35,054
Interest expense, net		25,645		64,345		65,093		21,284
Accrued production and ad valorem taxes		37,371		34,404		44,298		26,882
Derivative settlements payable		3,425		29,720		35,202		28,743
Accrued general and administrative expense						27,740		17,732
Other		23,794		35,088		22,439		16,714
Total accrued liabilities	$	343,524		433,050	$	457,244		341,692

1412

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(7) Long-Term Debt

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


							(Unaudited)
	December 31,		June 30,		December 31,		March 31,
	2020		2021		2021		2022
Credit Facility ^(a)	$	1,017,000		—	$	—		387,700
5.125% senior notes due 2022 ^(b)		660,516		—
5.625% senior notes due 2023 ^(c)		574,182		—
5.00% senior notes due 2025 ^(d)		590,000		590,000		584,635		—
8.375% senior notes due 2026 ^(e)		—		500,000		325,000		325,000
7.625% senior notes due 2029 ^(f)		—		700,000		584,000		584,000
5.375% senior notes due 2030 ^(g)		—		600,000		600,000		600,000
4.25% convertible senior notes due 2026 ^(h)		287,500		81,570		81,570		81,570
Total principal		3,129,198		2,471,570		2,175,205		1,978,270
Unamortized premium (discount), net		(111,886)		(29,782)
Unamortized discount, net						(27,772)		—
Unamortized debt issuance costs		(15,719)		(26,625)		(21,989)		(18,326)
Long-term debt	$	3,001,593		2,415,163	$	2,125,444		1,959,944

(a)	Senior Secured Revolving Credit Facility

Antero Resources has a senior secured revolving credit facility ~~(the “Credit Facility”)~~ with a consortium of bank lenders. ~~Borrowings under~~On October 26, 2021, Antero Resources entered into an amended and restated senior secured revolving credit facility (the “Credit Facility”). As of December 31, 2021 and March 31, 2022, the Credit Facility ~~are subject to~~had a borrowing base ~~limitations based on the collateral value~~ of ~~Antero Resources’ assets and are subject to regular semi-annual redeterminations. As of June 30, 2021, the borrowing base under the Credit Facility was $2.85~~$3.5 billion and lender commitments ~~were $2.64~~of $1.5 billion. The borrowing base was re-affirmed in the semi-annual redetermination in April ~~2021.~~2022. The ~~next redetermination~~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, 2022, the Credit Facility had an available borrowing ~~base is scheduled to occur in October 2021.~~ capacity of $581 million.

The Credit Facility ~~is scheduled~~contains requirements with respect to ~~mature~~leverage and current ratios, and certain covenants, including restrictions on ~~October 26, 2022.~~

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, ~~2020~~2021 and ~~June 30,~~March 31, 2022.

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

AsInterest is payable at a variable rate based on SOFR or the Alternate Base Rate, determined by election at the time of ~~June 30, 2021, Antero Resources did not have~~borrowing, plus an ~~outstanding balance~~applicable margin rate under the Credit ~~Facility and had outstanding letters~~Facility. Interest at the time of ~~credit of $742 million. As of December 31, 2020,~~borrowing is determined with reference to the Antero ~~Resources had an outstanding balance under the Credit Facility of $1.0 billion, with a weighted average interest rate of 3.26%, and outstanding letters of credit of $730 million.~~Resources’ then-current leverage ratio subject to certain exceptions. Commitment fees on the unused portion of the Credit Facility are due quarterly at rates ranging from ~~0.300%~~0.375% to ~~0.375% (subject~~0.500% with respect to the Credit Facility, determined with reference to borrowing base utilization, subject to certain ~~exceptions) of the unused portion~~exceptions based on ~~utilization.~~the leverage ratio then in effect. The Credit Facility includes fall away covenants, lower interest rates and reduced collateral requirements that Antero Resources may elect if Antero Resources is assigned an Investment Grade Rating (as defined in the Credit Facility).

As of December 31, 2021, Antero Resources had 0 borrowings under the Credit Facility and outstanding letters of credit of $531 million. As of March 31, 2022, Antero Resources had an outstanding balance under the Credit Facility of $388 million, with a weighted average interest rate of 2.73%, and had outstanding letters of credit of $531 million.

(b)	5.125% Senior Notes Due 2022

On May 6, 2014, Antero Resources issued $600 million of 5.125% senior notes due December 1, 2022 (the “2022 Notes”) at par. On September 18, 2014, Antero Resources issued an additional $500 million of the 2022 Notes at 100.5% of par. The Company repurchased or otherwise fully redeemed all of the 2022 Notes between 2019 and the first quarter of 2021. The 2022 Notes were unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2022 Notes ranked pari passu to Antero Resources’ other outstanding senior notes. The 2022 Notes were guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ existing subsidiaries that guarantee the Credit Facility and certain of its future restricted subsidiaries. Interest on the 2022 Notes

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

was payable on June 1 and December 1 of each year. See “—Debt Repurchase Program” below for further details on 2022 Notes repurchases.

(c)	5.625% Senior Notes Due 2023

On March 17, 2015, Antero Resources issued $750 million of 5.625% senior notes due June 1, 2023 (the “2023 Notes”) at par. The Company repurchased or otherwise fully redeemed all of the 2023 Notes between 2020 and the second quarter of 2021. The 2023 Notes were unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2023 Notes ranked pari passu to Antero Resources’ other outstanding senior notes. The 2023 Notes were guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ existing subsidiaries that

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~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~guarantee the Credit Facility and certain of its future restricted subsidiaries.~~ Interest on the 2023 Notes was payable on June 1 and December 1 of each year. ~~See “—Debt Repurchase Program” below for further details on 2023 Notes repurchases and redemption.~~

(d)	5.00% Senior Notes Due 2025

On December 21, 2016, Antero Resources issued $600 million of 5.00% senior notes due March 1, 2025 (the “2025 Notes”) at par. The Company repurchased ~~$10 million~~or otherwise fully redeemed all of the 2025 Notes ~~from time to time during~~between 2020 and asthe first quarter of June 30, 2021, $590 million principal amount of the 2025 Notes remained outstanding. The 2025 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2025 Notes rank pari passu to Antero Resources’ other outstanding senior notes. The 2025 Notes are guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ existing subsidiaries that guarantee the Credit Facility and certain of its future restricted subsidiaries.2022. Interest on the 2025 Notes iswas payable on March 1 and September 1 of each year. ~~Antero Resources may redeem all or part of the~~See “—Debt Repurchase Program” below for further details on 2025 Notes at any time at redemption prices ranging from 102.5% currently to 100.00% on or after March 1, 2023. If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2025 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101% of the principal amount of the 2025 Notes, plus accruedrepurchases and ~~unpaid interest.~~redemption.

(e)	8.375% Senior Notes Due 2026

On January 4, 2021, Antero Resources issued $500 million of 8.375% senior notes due July 15, 2026 (the “2026 Notes”) at par. The Company redeemed $175 million of the 2026 Notes on July 1, 2021, and as of March 31, 2022, $325 million principal amount of the 2026 Notes remained outstanding. See “—Debt Repurchase Program” below for further details on the 2026 Notes redemption. The 2026 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2026 Notes rank pari passu to Antero Resources’ other outstanding senior notes. The 2026 Notes are guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ existing subsidiaries that guarantee the Credit Facility and certain of its future restricted subsidiaries. Interest on the 2026 Notes is payable on January 15 and July 15 of each year. Antero Resources may redeem all or part of the 2026 Notes at any time on or after January 15, 2024 at redemption prices ranging from 104.188% on or after January 15, 2024 to 100.00% on or after January 15, 2026. ~~In addition, on or before January 15, 2024, Antero Resources may redeem up to~~ 35% of the aggregate principal amount of the 2026 Notes, but in an amount not greater than the net cash proceeds of certain equity offerings, if certain conditions are met, at a redemption price of 108.375% ~~of the principal amount of the 2026 Notes, plus accrued and unpaid interest.~~ At any time prior to January 15, 2024, Antero Resources may also redeem the 2026 Notes, in whole or in part, at a price equal to 100% of the principal amount of the 2026 Notes plus a “make-whole” premium and accrued and unpaid interest. If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2026 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101% of the principal amount of the 2026 Notes, plus accrued and unpaid interest.

(f)	7.625% Senior Notes Due 2029

On January 26, 2021, Antero Resources issued $700 million of 7.625% senior notes due February 1, 2029 (the “2029 Notes”) at par. The Company redeemed $116 million of the 2029 Notes during the fourth quarter of 2021, and as of March 31, 2022, $584 million principal amount of the 2029 Notes remained outstanding. See “—Debt Repurchase Program” below for further details on the 2029 Notes redemption. The 2029 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. 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 future restricted subsidiaries. Interest on the 2029 Notes is payable on February 1 and August 1 of each year. Antero Resources may redeem all or part of the 2029 Notes at any time on or after February 1, 2024 at redemption prices ranging from 103.813% on or after February 1, 2024 to 100.00% on or after February 1, 2027. In addition, on or before February 1, 2024, Antero Resources may redeem up to 35% of the aggregate principal amount of the 2029 Notes, but in an amount not greater than the net cash proceeds of certain equity offerings, if certain conditions are met, at a redemption price of 107.625% of the principal amount of the 2029 Notes, plus accrued and unpaid ~~interest.~~interest, which option the Company partially exercised on October 18, 2021 with its notice to redeem $116 million aggregate principal amount of outstanding 2029 Notes. At any time prior to February 1, 2024, Antero Resources may also redeem the 2029 Notes, in whole or in part, at a price equal to 100% of the principal amount of the 2029 Notes plus a “make-whole” premium and accrued and unpaid interest. If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2029 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101% of the principal amount of the 2029 Notes, plus accrued and unpaid interest.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(g)	5.375% Senior Notes Due 2030

On June 1, 2021, Antero Resources issued $600 million of 5.375% senior notes due March 1, 2030 (the “2030 Notes”) at par. The 2030 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2030 Notes rank pari passu to Antero Resources’ other outstanding senior notes. The 2030 Notes are

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~~Notes to Unaudited Condensed Consolidated Financial Statements~~

guaranteed on a full and unconditional and joint and several senior unsecured basis by Antero Resources’ existing subsidiaries that guarantee the Credit Facility and certain of its future restricted subsidiaries. Interest on the 2030 Notes is payable on March 1 and September 1 of each year. Antero Resources may redeem all or part of the 2030 Notes at any time on or after March 1, 2025 at redemption prices ranging from 102.688% on or after March 1, 2025 to 100.00% on or after March 1, 2028. In addition, on or before March 1, 2025, Antero Resources may redeem up to 35% of the aggregate principal amount of the 2030 Notes, but in an amount not greater than the net cash proceeds of certain equity offerings, if certain conditions are met, at a redemption price of 105.375% of the principal amount of the 2030 Notes, plus accrued and unpaid interest. At any time prior to March 1, 2025, Antero Resources may also redeem the 2030 Notes, in whole or in part, at a price equal to 100% of the principal amount of the 2030 Notes plus a “make-whole” premium and accrued and unpaid interest. If Antero Resources undergoes a change of control followed by a rating decline, the holders of the 2030 Notes will have the right to require Antero Resources to repurchase all or a portion of the notes at a price equal to 101% of the principal amount of the 2030 Notes, plus accrued and unpaid interest.

(h)	4.25% Convertible Senior Notes Due 2026

On August 21, 2020, Antero Resources issued $250 million in aggregate principal amount of 4.25% convertible senior notes due September 1, 2026 (the ~~“ 2026~~“2026 Convertible Notes”). On September 2, 2020, Antero Resources issued an additional $37.5 million of the 2026 Convertible Notes. During ~~the six months ended June 30,~~ 2021, the Company completed the equitization transactions described below under “—Partial Equitizations of 2026 Convertible Notes,” that extinguished $206 million principal amount of the 2026 Convertible ~~Notes, and as~~Notes. As of ~~June 30, 2021,~~March 31, 2022, $82 million principal amount of the 2026 Convertible Notes remained outstanding. The 2026 Convertible Notes were issued pursuant to an indenture and are senior, unsecured obligations of Antero Resources. The 2026 Convertible Notes bear interest at a fixed rate of 4.25% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on March 1, 2021. Proceeds from the issuance of the 2026 Convertible Notes totaled $278.5 million, net of initial purchasers’ fees and issuance cost of $9 million. Each capitalized term used in this subsection but not otherwise defined in this Quarterly Report on Form 10-Q has the meaning as set forth in the indenture governing the 2026 Convertible Notes.

The initial conversion rate is 230.2026 shares of Antero Resources’ common stock per $1,000 principal amount of 2026 Convertible Notes, subject to adjustment upon the occurrence of specified events. As of ~~June 30, 2021,~~March 31, 2022, the if-converted value of the 2026 Convertible Notes was $~~283~~573 million, which exceeded the principal amount of the 2026 Convertible Notes by ~~$201~~$492 million. The 2026 Convertible Notes will mature on September 1, 2026, unless earlier repurchased, redeemed or converted. Before May 1, 2026, note holders will have the right to convert their 2026 Convertible Notes only upon the occurrence of the following events:

●

during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on September 30, 2020, if the Last Reported Sale Price per share of Antero Resources’ common stock exceeds 130% of the Conversion Price for each of at least 20 Trading Days (whether or not consecutive) during the 30 consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter (the “Stock Price Condition”);

●

during the 5 consecutive Business Days immediately after any 10 consecutive trading day period (such 10 consecutive Trading Day period, the “Measurement Period”) if the trading Price per $1,000 principal amount of 2026 Convertible Notes, as determined following a request by a noteholder in accordance with the procedures set forth below, for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day;

●

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

●

upon the occurrence of certain specified corporate events as set forth in the indenture governing the 2026 Convertible Notes.

From and after May 1, 2026, noteholders may convert their 2026 Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

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Notes to Unaudited Condensed Consolidated Financial Statements

Upon conversion, Antero Resources may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash, shares of Antero Resources’ common stock or a combination of cash and shares of Antero Resources’ common stock, at Antero Resources’ election, in the manner and subject to the terms and conditions provided in the indenture governing the 2026 Convertible

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~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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 ~~June 30, 2021.~~March 31, 2022.

The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture governing the 2026 Convertible Notes. In addition, following certain corporate events, as described in the indenture governing the 2026 Convertible Notes, that occur prior to the maturity date, Antero Resources will increase the conversion rate for a holder who elects to convert its 2026 Convertible Notes in connection with such a corporate event.

If certain corporate events that constitute a Fundamental Change occur, then noteholders may require Antero Resources to repurchase their 2026 Convertible Notes at a cash repurchase price equal to the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving Antero Resources and certain de-listing events with respect to Antero Resources’ common stock.

Upon issuance, the Company separately accounted for the liability and equity components of the 2026 Convertible Notes. The liability component was recorded at the estimated fair value of a similar debt instrument without the conversion feature. The difference between the principal amount of the 2026 Convertible Notes and the estimated fair value of the liability component was recorded as a debt discount and ~~will be~~was amortized to interest expense, together with debt issuance costs, over the term of the 2026 Convertible Notes using the effective interest method, with an effective interest rate of 15.1% per annum. As of the issuance date, the fair value of the 2026 Convertible Notes was estimated at $172 million, resulting in a debt discount at inception of $116 million. The equity component, representing the value of the conversion option, was computed by deducting the fair value of the liability component from the initial proceeds of the 2026 Convertible Notes issuance. This equity component was recorded, net of deferred taxes and issuance costs, in additional paid-in capital within the ~~unaudited~~ condensed consolidated balance sheet and statement of stockholders’ equity ~~and will not be remeasured as long as it continues to meet the conditions for equity classification.~~

Transaction costs related to the 2026 Convertible Notes issuance were allocated to the liability and equity components based on their relative fair values. Issuance costs attributable to the liability component were recorded within debt issuance costs on the ~~unaudited~~ condensed consolidated balance sheet and ~~are~~were amortized over the term of the 2026 Convertible Notes using the effective interest method. Issuance costs attributable to the equity component were recorded as a charge to additional paid-in capital within the ~~unaudited~~ condensed consolidated balance sheet and statement of stockholders’ equity.

Effective January 1, 2022, the Company adopted ASU 2020-06 whereby the Company reclassified the equity component of the 2026 Convertible Notes outstanding on such date, net of deferred income taxes and equity issuance costs, from additional paid-in capital to long-term debt. See Note 2—Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements.

Partial Equitizations of 2026 Convertible Notes

On January 12, 2021, the Company completed a registered direct offering (the “January Share Offering”) of an aggregate of 31.4 million shares of its common stock at a price of $6.35 per share to certain holders of the 2026 Convertible Notes. The Company used the proceeds from the January Share Offering and approximately $63 million of borrowings under the Credit Facility to repurchase from such holders $150 million aggregate principal amount of the 2026 Convertible Notes in privately negotiated transactions (the “January Convertible Note Repurchase,” and, collectively with the January Share Offering, the “January Equitization Transactions”). The 2026 Convertible Notes have an initial conversion rate of 230.2026 shares of the Company’s common stock per $1,000 principal amount, and the January Equitization Transactions had the effect of increasing this conversion rate to 275.3525 shares of common stock per $1,000 principal amount. The Company accounted for this transaction as an inducement of the 2026 Convertible Notes, and as a result, the Company recorded a $39 million loss on convertible note equitization in the unaudited condensed consolidated statements of operations and comprehensive loss for the ~~six~~three months ended ~~June 30,~~March 31, 2021 for the consideration paid in excess of the original terms of the 2026 Convertible Notes. Additionally, the January Equitization Transactions resulted in a loss on early extinguishment of debt of $41 million in the unaudited condensed consolidated statement of operations and comprehensive loss for the ~~six~~three months ended ~~June 30,~~March 31, 2021.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

On May 13, 2021, the Company completed a registered direct offering (the “May Share Offering”) of an aggregate of 11.6 million shares of its common stock at a price of $11.01 per share to certain holders of the 2026 Convertible Notes. The Company used the proceeds from the May Share Offering and approximately $26 million of borrowings under the Credit Facility to repurchase from such holders $56 million aggregate principal amount of the 2026 Convertible Notes in privately negotiated transactions (the “May Convertible Note Repurchase,” and, collectively with the May Share Offering, the “May Equitization Transactions”). The 2026 Convertible Notes have an initial conversion rate of 230.2026 shares of the Company’s common stock per $1,000 principal amount, and the May Equitization Transactions had the effect of increasing this conversion rate to 245.2802 shares of common stock per $1,000 principal amount. The Company accounted for this transaction as an inducement of the 2026 Convertible Notes, and as a result, the Company recorded a $12 million loss on convertible note equitization in the unaudited condensed consolidated statements

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~~Notes to Unaudited Condensed Consolidated Financial Statements~~

of operations and comprehensive loss for the ~~three and six months ended June 30,~~second quarter of 2021 for the consideration paid in excess of the original terms of the 2026 Convertible Notes. Additionally, the May Equitization Transactions resulted in a loss on early extinguishment of debt of $21 million in the unaudited condensed consolidated statement of operations and comprehensive loss for the ~~three and six months ended June 30,~~second quarter of 2021.

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


							(Unaudited)
	December 31,		June 30,		December 31,		March 31,
	2020		2021		2021		2022
Liability component:
Principal	$	287,500		81,570	$	81,570		81,570
Less: unamortized note discount		(112,265)		(29,782)
Less: unamortized note discount ⁽¹⁾						(27,772)		—
Less: unamortized debt issuance costs		(5,852)		(1,732)		(1,592)		(1,972)
Net carrying value	$	169,383		50,056	$	52,206		79,598
Equity component ⁽¹⁾	$	115,601		32,779	$	32,799		—

(1)

As of December 31, ~~2020, the equity component attributable to the outstanding 2026 Convertible Notes was recorded in additional paid-in capital, net of $3 million of issuance costs and $28~~ ~~million of deferred taxes. As of June 30,~~ 2021, the equity component attributable to the outstanding 2026 Convertible Notes was recorded in additional paid-in capital net of $1$1 million of issuance costs and $8 million of deferred taxes. Upon adoption of ASU 2020-06 on January 1, 2022, the equity component was reclassified from additional paid-in capital to long-term debt and fully offset the remaining discount on the 2026 Convertible Notes. See Note 2—Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements.

Interest expense recognized on the 2026 Convertible Notes related to the stated interest rate, amortization of the debt discount and debt issuance costs totaled ~~$2.8~~$4 million and ~~$7.2~~$1 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2022, respectively.

(i)	Debt Repurchase Program

During the three ~~and six~~ months ended ~~June 30, 2020, Antero Resources repurchased $236 million and $619 million, respectively, principal amount of debt at a weighted average discount of 17% and 19%, respectively. The Company recognized a gain of~~ ~~$39 million and $120 million for the three and six months ended June~~ ~~30, 2020, respectively, on the early extinguishment of the debt repurchased.~~

~~During the first quarter of~~March 31, 2021, the Company redeemed the remaining $661 million aggregate principal amount of ~~the~~its 2022 Notes at par, plus accrued and unpaid interest, and as a result, the 2022 Notes were fully retired as of February 10, 2021. ~~The~~During the three months ended March 31, 2022, the Company redeemed the remaining $~~574~~585 million ~~of the 2023 Notes at par, plus accrued and unpaid interest, during the second quarter of 2021. The 2023 Notes were fully retired as of June 1, 2021.~~

~~(j)~~

~~Subsequent Event~~

~~On July 1, 2021, Antero Resources redeemed $175 million of the~~aggregate principal amount of its ~~2026~~2025 Notes at a redemption price of ~~108.375%~~101.25% of the principal amount thereof, plus accrued and unpaid ~~interest. Immediately following the redemption, there were~~ ~~$325~~ ~~million aggregate principal amount of 2026 Notes outstanding. The $15 million premium to the principal amount redeemed along with the write-off of~~interest and recognized a ~~proportional amount of unamortized debt issuance costs will be included in the Company’s~~ loss on early debt extinguishment ~~during~~of $11 million.

(8) Asset Retirement Obligations

The following table presents a reconciliation of the ~~third quarter of 2021.~~Company’s asset retirement obligations (in thousands):


Asset retirement obligations—December 31, 2021	$	53,952
Obligations incurred		583
Accretion expense		2,444
Settlement of obligations		(886)
Obligations on sold properties		(42)
Revisions to prior estimates		689
Asset retirement obligations—March 31, 2022	$	56,740

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

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Notes to Unaudited Condensed Consolidated Financial Statements

~~(8) Asset Retirement Obligations~~

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

Asset retirement obligations—December 31, 2020

$
54,452

Obligations incurred

637

Accretion expense

2,119

Revisions to prior estimates

(589)

Asset retirement obligations—June 30, 2021

$
56,619

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

(9) Equity-Based Compensation and Cash Awards

On June 17, 2020, Antero Resources’ stockholders approved the Antero Resources Corporation 2020 Long-Term Incentive Plan (the “2020 Plan”), which replaced the Antero Resources Corporation Long-Term Incentive Plan (the “2013 Plan”), and the 2020 Plan became effective as of such date. The 2020 Plan provides for grants of stock options (including incentive stock options), stock appreciation rights, restricted stock awards, RSU awards, vested stock awards, dividend equivalent awards and other stock-based and cash awards. The terms and conditions of the awards granted are established by the Compensation Committee of Antero Resources’ Board of Directors. Employees, officers, non-employee directors and other service providers of the Company and its affiliates are eligible to receive awards under the 2020 Plan. No further awards will be granted under the 2013 Plan on or after June 17, 2020.

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

A total of ~~7,677,911~~8,503,317 shares were available for future grant under the 2020 Plan as of ~~June 30, 2021.~~March 31, 2022.

Antero Midstream Partners LP’s (“Antero Midstream Partners”) general partner was authorized to grant up to 10,000,000 common units representing limited partner interests in Antero Midstream Partners under the Antero Midstream Partners LP Long-Term Incentive Plan (the “AMP Plan”) to non-employee directors of its general partner and certain officers, employees, and consultants of Antero Midstream Partners and its affiliates (which ~~include~~includes Antero Resources). Antero Resources deconsolidated Antero Midstream Partners on March 12, 2019, and on such date, each outstanding phantom unit award under the AMP Plan was assumed by Antero Midstream ~~Corporation~~ and converted into 1.8926 RSUs (all such RSUs, the “Converted AM RSU Awards”) under the Antero Midstream ~~Corporation~~ Long Term Incentive Plan (the ~~“AMC~~“AM Plan”). Each RSU award under the ~~AMC~~AM Plan represents a right to receive 1 share of Antero Midstream ~~Corporation~~ common stock.

~~Table of Contents~~

~~ANTERO RESOURCES CORPORATION~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

The Company’s equity-based compensation expense, by type of award, ~~was~~is as follows ~~for the three and six months ended June 30, 2020 and 2021~~ (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2020		2021		2020		2021		2021		2022
RSU awards	$	4,080		3,392	$	5,958		6,630	$	3,238		2,720
PSU awards		2,631		223		3,553		1,759		1,536		1,419
Converted AM RSU Awards ⁽¹⁾		1,262		284		1,422		802		518		160
Equity awards issued to directors		—		350		369		700		350		350
Total expense	$	7,973		4,249	$	11,302		9,891	$	5,642		4,649

(1)

Antero Resources recognized compensation expense for equity awards granted under both the 2013 Plan and the AMP Plan because the awards under the AMP Plan are accounted for as if they are distributed by Antero Midstream Partners to Antero Resources. Antero Resources allocates a portion of equity-based compensation expense related to grants prior to ~~the deconsolidation of Antero Midstream Partners on~~ March 12, 2019 (date of deconsolidation) to Antero Midstream Partners based on its proportionate share of Antero Resources’ labor costs.

~~(a)~~

~~Restricted Stock Unit Awards~~

~~A summary of RSU award activity for the six months ended June 30, 2021 is as follows:~~

Weighted

Average

Number of

Grant Date

Shares

Fair Value

Total awarded and unvested—December 31, 2020

8,432,397

$
4.06

Granted

1,425,168

9.50

Vested

(2,987,376)

4.58

Forfeited

(255,284)

4.83

Total awarded and unvested—June 30, 2021

6,614,905

$
4.96

As of June 30, 2021, there was approximately $28 million of unamortized equity-based compensation expense related to unvested RSUs. That expense is expected to be recognized over a weighted average period of approximately ~~2.7 years.~~

~~(b)~~

~~Performance Share Unit Awards~~

~~PSU Awards Based on Absolute Total Shareholder Return (“TSR”)~~

In April 2021, the Company granted PSU awards to certain of its executive officers that vest based on Antero Resources’ absolute TSR determined as of the last day of each of 3 one-year performance periods ending on April 15, 2022, April 15, 2023, and April 15, 2024, and 1 cumulative three-year performance period ending on April 15, 2024, in each case, subject to the executive officer’s continued employment through April 15, 2024. The number of shares of common stock that may ultimately be earned following the end of the cumulative ~~three-year performance period with respect to the TSR PSUs ranges from 0 to 200%~~ of the target number of TSR PSUs originally granted. Expense related to these PSUs is recognized on a graded-vested basis over the term of each performance period. Forfeitures are accounted for as they occur by reversing the expense previously recognized for awards that were forfeited during the period.

~~PSU Awards Based on Leverage Ratio~~

In April 2021, the Company granted PSUs to certain of its executive officers that vest based on the Company’s total debt less cash and cash equivalents divided by the Company’s Adjusted EBITDAX (as defined and described in Item 2 below under “Non-GAAP Financial Measures”) determined as of the last day of each of 3 one-year performance periods ending on December 31, 2021, December 31, 2022, and December 31, 2023, in each case, subject to the executive officer’s continued employment through December 31, 2023 (“Leverage Ratio PSUs”). The number of shares of common stock that may ultimately be earned with respect to the Leverage Ratio PSUs ranges from ~~0 to 200%~~ of the target number of Leverage Ratio PSUs originally granted. Expense related to the Leverage Ratio PSUs is recognized based on the number of shares of common stock that are expected to be issued at the end of

2118

Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(a)	Restricted Stock Unit Awards

~~each measurement period, and such expense~~A summary of RSU award activity is reversed if the likelihood of achieving the performance condition becomes improbable. As of June 30, 2021, the likelihood of achieving the performance conditions related to the Leverage Ratio PSUs was probable.as follows:


		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
Total awarded and unvested—December 31, 2021	5,930,607	$	5.15
Granted	13,764		20.03
Vested	(1,356,548)		2.66
Forfeited	(17,510)		9.37
Total awarded and unvested—March 31, 2022	4,570,313	$	5.92

As of March 31, 2022, there was approximately $18 million of unamortized equity-based compensation expense related to unvested RSUs. That expense is expected to be recognized over a weighted average period of approximately 2.4 years.

(b)	Performance Share Unit Awards

A summary of PSU award activity ~~for the six months ended June 30, 2021~~ is as follows:

Weighted

Number of

Average Grant

Units

Date Fair Value

Total awarded and unvested—December 31, 2020

2,547,798

$
12.66

Granted

437,246

10.36

Forfeited

(67,000)

2.97

Cancelled (unearned)

(1,112,639)

19.19

Total awarded and unvested—June 30, 2021

1,805,405

$
8.44

The following table presents information regarding the weighted average fair values for market-based PSUs granted during the six months ended June 30, 2021, and the assumptions used to determine the fair values:

Dividend yield

—
%

Volatility

85
%

Risk-free interest rate

0.32
%

Weighted average fair value of awards granted—Absolute TSR

$
11.99


		Weighted
	Number of	Average Grant
	Units	Date Fair Value
Total awarded and unvested—December 31, 2021	1,847,279	$	8.31
Granted	—		—
Vested	—		—
Forfeited	—		—
Cancelled (unearned)	—		—
Total awarded and unvested—March 31, 2022	1,847,279	$	8.31

As of ~~June 30, 2021,~~March 31, 2022, there was approximately $9$6 million of unamortized equity-based compensation expense related to unvested PSUs. That expense is expected to be recognized over a weighted average period of approximately ~~2.2~~1.9 years.

In 2019, the Company granted PSUs to certain of its employees and executive officers that vest based on Antero Resources’ absolute total shareholder return at the end of a three-year performance period (“Absolute TSR PSUs”). The number of shares of common stock that could ultimately be earned ranged from 0 to 200% of the target number of PSUs granted. In April 2022, the market-based performance condition for the Absolute TSR PSUs was met at 200% of target. As a result, the Absolute TSR PSUs will convert into approximately 2 million shares during the second quarter of 2022.

(c)	~~Stock Options~~Converted AM RSU Awards

A summary of ~~stock option activity for~~ the ~~six months ended June 30, 2021~~Converted AM RSU Awards is as follows:


				Weighted				Weighted
		Weighted		Average				Average
		Average		Remaining	Intrinsic		Number of	Grant Date
	Stock	Exercise		Contractual	Value		Units	Fair Value
	Options	Price		Life	(in thousands)
Outstanding—December 31, 2020	432,461	$	50.64	4.1	$	—
Total awarded and unvested—December 31, 2021							81,707	$	13.46
Granted	—		—				—		—
Exercised	—		—
Vested							(7,297)		15.08
Forfeited	—		—				—		—
Expired	(75,167)		50.00
Outstanding—June 30, 2021	357,294	$	50.78	3.5	$	—
Vested—June 30, 2021	357,294	$	50.78	3.5	$	—
Exercisable—June 30, 2021	357,294	$	50.78	3.5	$	—
Total awarded and unvested—March 31, 2022							74,410	$	13.30

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

~~As of June 30, 2021, all stock options were fully vested resulting in 0 unamortized equity-based compensation expense.~~

2219

Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

~~(d)~~

~~Converted AM RSU Awards~~

~~A summary of the Converted AM RSU Awards for the six months ended June 30, 2021 is as follows:~~

Weighted

Average

Number of

Grant Date

Units

Fair Value

Total awarded and unvested—December 31, 2020

296,390

$
15.06

Granted

—

Vested

(190,066)

15.56

Forfeited

(2,075)

13.25

Total awarded and unvested—June 30, 2021

104,249

$
14.20

As of ~~June 30, 2021,~~March 31, 2022, there was ~~less than $1.0~~$0.1 million of unamortized equity-based compensation expense related to unvested Converted AM RSU Awards. ~~Such~~That expense is expected to be recognized over a weighted average period of ~~0.7~~0.4 years, and the Company’s proportionate share will be allocated to it as it is recognized.

(d)	Stock Options

A summary of stock option activity is as follows:


				Weighted
		Weighted		Average
		Average		Remaining	Intrinsic
	Stock	Exercise		Contractual	Value
	Options	Price		Life	(in thousands) ⁽¹⁾
Outstanding—December 31, 2021	351,794	$	50.79	3.0	$	—
Granted	—		—
Exercised	—		—
Forfeited	—		—
Expired	(1,000)		50.00
Outstanding—March 31, 2022	350,794	$	50.79	2.8	$	—
Vested—March 31, 2022	350,794	$	50.79	2.8	$	—
Exercisable—March 31, 2022	350,794	$	50.79	2.8	$	—

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

As of March 31, 2022, all stock options were fully vested resulting in 0 unamortized equity-based compensation expense.

(e)	Cash Awards

In January 2020, the Company granted cash awards of approximately ~~$3.3~~$3 million to certain executives under the 2013 Plan, and compensation expense for these awards is recognized ratably over the vesting period for each of 3 tranches through January 20, 2023. In July 2020, the Company granted additional cash awards in the aggregate of ~~$2.6~~$3 million to certain non-executive employees under the 2020 Plan that vest ratably over four years. As of ~~June 30,~~December 31, 2021 and March 31, 2022, the Company has recorded approximately ~~$2.2~~$2 million and $1 million, respectively, in Other liabilities in the ~~unaudited~~ condensed consolidated balance ~~sheet~~sheets related to unvested cash awards.

(10) Fair Value

The carrying values of accounts receivable and accounts payable as of December 31, ~~2020~~2021 and ~~June~~March ~~30, 2021~~31, 2022 approximated market values because of their short-term nature. The carrying values of the amounts outstanding under the Credit Facility as of December 31, ~~2020~~2021 and ~~June 30, 2021~~March 31, 2022 approximated fair value because the variable interest rates are reflective of current market conditions.

Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The following table sets forth the fair value and carrying value of the senior notes and 2026 Convertible Notes ~~as of December 31, 2020 and June 30, 2021 as follows~~ (in thousands):

December 31, 2020

June 30, 2021


Fair

Carrying

Fair

Carrying

Value ⁽¹⁾

Value ⁽²⁾

Value ⁽¹⁾

Value ⁽²⁾

5.125% senior notes due 2022

$
658,468

658,400

—

—

5.625% senior notes due 2023

562,698

571,370

—

—

5.00% senior notes due 2025

560,500

585,440

603,275

585,938

8.375% senior notes due 2026

—

—

566,250

494,463

7.625% senior notes due 2029

—

—

775,250

691,361

5.375% senior notes due 2030

—

—

612,360

593,345

4.25% convertible senior notes due 2026

430,963

169,383

291,384

50,056

Total

$
2,212,629

1,984,593

2,848,519

2,415,163


					(Unaudited)
	December 31, 2021				March 31, 2022
	Fair		Carrying		Fair		Carrying
	Value ⁽¹⁾		Value ⁽²⁾		Value ⁽¹⁾		Value ⁽²⁾
2025 Notes	$	594,866		581,117		—		—
2026 Notes		370,013		321,738		359,190		321,912
2029 Notes		654,080		577,149		630,603		577,335
2030 Notes		641,400		593,234		612,000		593,399
2026 Convertible Notes		331,655		52,206		574,995		79,598
Total	$	2,592,014		2,125,444		2,176,788		1,572,244

(1)	Fair values are based on Level 2 market data inputs.

(2)	Carrying values are presented net of unamortized debt issuance costs and debt discounts or premiums.

See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for information regarding the fair value of derivative financial instruments.

~~Table of Contents~~

~~ANTERO RESOURCES CORPORATION~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

(11) Derivative Instruments

The Company is exposed to certain risks relating to its ongoing business operations, and it uses derivative instruments to manage its commodity price risk. In addition, the Company periodically enters into contracts that contain embedded features that are required to be bifurcated and accounted for separately as derivatives.

(a)	Commodity Derivative Positions

The Company periodically enters into natural gas, NGLs and oil derivative contracts with counterparties to hedge the price risk associated with its production. These derivatives are not entered into for trading purposes. To the extent that changes occur in the market prices of natural gas, NGLs and oil, the Company is exposed to market risk on these open contracts. This market risk exposure is generally offset by the change in market prices of natural gas, NGLs and oil recognized upon the ultimate sale of the Company’s production.

The Company was party to various fixed price commodity swap contracts that settled during the three ~~and six~~ months ended ~~June~~March ~~30, 2020~~31, 2021 and ~~2021.~~2022. The Company enters into these swap contracts when management believes that favorable future sales prices for the Company’s production can be secured. Under these swap agreements, when actual commodity prices upon settlement exceed the fixed price provided by the swap contracts, the Company pays the difference to the counterparty. When actual commodity prices upon settlement are less than the contractually provided fixed price, the Company receives the difference from the counterparty. In addition, the Company has entered into basis swap contracts in order to hedge the difference between the New York Mercantile Exchange (“NYMEX”) index price and a local index price.

The Company’s derivative contracts have not been designated as hedges for accounting purposes; therefore, all gains and losses are recognized in the Company’s statements of operations.

~~As of June 30, 2021, the Company’s fixed price natural gas, oil and NGL swap positions excluding Martica, the Company’s consolidated VIE, were as follows:~~

Weighted

Average

Commodity / Settlement Period

Index

Contracted Volume

Price

Natural Gas

July-December 2021

Henry Hub

2,160,000
MMBtu/day

$
2.77
/MMBtu

January-December 2022

Henry Hub

1,155,486
MMBtu/day

2.50
/MMBtu

January-December 2023

Henry Hub

43,000
MMBtu/day

2.37
/MMBtu

Propane

July-October 2021

Mont Belvieu Propane-OPIS TET

45,650
Bbl/day

$
31.30
/Bbl

Butane

July-December 2021

Mont Belvieu Butane-OPIS Non-TET

5,825
Bbl/day

$
34.07
/Bbl

July-December 2021

Mont Belvieu Butane-OPIS TET

2,900
Bbl/day

$
31.68
/Bbl

Natural Gasoline

July-December 2021

Mont Belvieu Natural Gasoline-OPIS Non-TET

8,875
Bbl/day

$
50.36
/Bbl

Isobutane

July-December 2021

Mont Belvieu Isobutane-OPIS Non-TET

5,150
Bbl/day

$
35.25
/Bbl

Oil

July-December 2021

West Texas Intermediate

3,000
Bbl/day

$
55.16
/Bbl

2421

Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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


				Weighted
				Average
Commodity / Settlement Period	Index	Contracted Volume		Price
Natural Gas
April-December 2022	Henry Hub	1,138,988	MMBtu/day	$	2.49	/MMBtu
January-December 2023	Henry Hub	43,000	MMBtu/day		2.37	/MMBtu

In addition, the Company has a ~~call option~~swaption agreement, which entitles the ~~holder~~counterparty the right, but not the obligation, to enter into a fixed price swap agreement on December 21, 2023 to purchase 427,500 MMBtu per day at a price of $2.77 per MMBtu for the year ending December 31, 2024.

As of ~~June 30, 2021,~~March 31, 2022, the Company’s natural gas basis swap positions, which settle on the pricing index to basis differential of the Columbia Gas Transmission pipeline (“TCO”) to the NYMEX Henry Hub natural gas price were as follows:

Weighted Average

Commodity / Settlement Period

Index to Basis Differential

Contracted Volume

Hedged Differential

Natural Gas

July-December 2021

NYMEX to TCO

40,000
MMBtu/day

$
0.414
/MMBtu

January-December 2022

NYMEX to TCO

60,000
MMBtu/day

0.515
/MMBtu

January-December 2023

NYMEX to TCO

50,000
MMBtu/day

0.525
/MMBtu

January-December 2024

NYMEX to TCO

50,000
MMBtu/day

0.530
/MMBtu

The Company also entered into NGL derivative contracts, which establish a contractual price for the settlement month as a fixed percentage of the West Texas Intermediate Crude Oil index (“WTI”) price for the settlement month. When the percentage of the contractual price is above the contracted percentage, the Company pays the difference to the counterparty. When it is below the contracted percentage, the Company receives the difference from the counterparty. As of June 30, 2021, the Company had natural gas and NGL contracts that fix the Mont Belvieu index price for natural gasoline to percentages of WTI as follows:

Weighted Average

Commodity / Settlement Period

Index to Basis Differential

Contracted Volume

Payout Ratio

Index to Basis Differential

Contracted Volume

Hedged Differential

Gas Liquids

July-December 2021

Mont Belvieu Natural Gasoline to WTI

9,325

Bbl/day

Natural Gas

April-December 2022

NYMEX to TCO

60,000

MMBtu/day

0.515

/MMBtu

January-December 2023

NYMEX to TCO

50,000

MMBtu/day

0.525

/MMBtu

January-December 2024

NYMEX to TCO

50,000

MMBtu/day

0.530

/MMBtu

2522

Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

As of ~~June 30, 2021,~~March 31, 2022, the Company’s fixed price ~~natural gas, oil and NGL~~ swap positions for Martica, the Company’s consolidated VIE, were as follows:

Weighted

Average

Commodity / Settlement Period

Index

Contracted Volume

Price

Index

Contracted Volume

Price

Natural Gas

July-December 2021

Henry Hub

47,119

MMBtu/day

2.61

/MMBtu

January-December 2022

Henry Hub

38,356

MMBtu/day

2.39

/MMBtu

April-December 2022

Henry Hub

40,651

MMBtu/day

2.39

/MMBtu

January-December 2023

Henry Hub

35,616

MMBtu/day

2.35

/MMBtu

Henry Hub

35,616

MMBtu/day

2.35

/MMBtu

January-December 2024

Henry Hub

23,885

MMBtu/day

2.33

/MMBtu

Henry Hub

23,885

MMBtu/day

2.33

/MMBtu

January-March 2025

Henry Hub

18,021

MMBtu/day

2.53

/MMBtu

Henry Hub

18,021

MMBtu/day

2.53

/MMBtu

Ethane

July-December 2021

Mont Belvieu Purity Ethane-OPIS

1,025

Bbl/day

7.01

/Bbl

January-March 2022

Mont Belvieu Purity Ethane-OPIS

521

Bbl/day

6.68

/Bbl

Propane

July-December 2021

Mont Belvieu Propane-OPIS Non-TET

1,115

Bbl/day

18.64

/Bbl

January-December 2022

Mont Belvieu Propane-OPIS Non-TET

934

Bbl/day

19.20

/Bbl

April-December 2022

Mont Belvieu Propane-OPIS Non-TET

974

Bbl/day

19.32

/Bbl

Natural Gasoline

July-December 2021

Mont Belvieu Natural Gasoline-OPIS Non-TET

351

Bbl/day

31.57

/Bbl

January-December 2022

Mont Belvieu Natural Gasoline-OPIS Non-TET

282

Bbl/day

34.37

/Bbl

April-December 2022

Mont Belvieu Natural Gasoline-OPIS Non-TET

294

Bbl/day

34.86

/Bbl

January-December 2023

Mont Belvieu Natural Gasoline-OPIS Non-TET

247

Bbl/day

40.74

/Bbl

Mont Belvieu Natural Gasoline-OPIS Non-TET

247

Bbl/day

40.74

/Bbl

Oil

July-December 2021

West Texas Intermediate

126

Bbl/day

40.81

/Bbl

January-December 2022

West Texas Intermediate

112

Bbl/day

43.51

/Bbl

April-December 2022

West Texas Intermediate

113

Bbl/day

43.44

/Bbl

January-December 2023

West Texas Intermediate

Bbl/day

44.88

/Bbl

West Texas Intermediate

Bbl/day

44.88

/Bbl

January-December 2024

West Texas Intermediate

Bbl/day

44.02

/Bbl

West Texas Intermediate

Bbl/day

44.02

/Bbl

January-March 2025

West Texas Intermediate

Bbl/day

45.06

/Bbl

West Texas Intermediate

Bbl/day

45.06

/Bbl

(b)	Embedded Derivatives

The VPP includes an embedded put option tied to NYMEX pricing for the production volumes associated with the Company’s retained interest in the VPP properties of ~~100,340,000~~83,438,000 MMBtu remaining through December 31, 2026 at a weighted average strike price of ~~$2.58~~$2.54 per MMBtu. The embedded put option is not clearly and closely related to the host contract, and therefore, the Company bifurcated this derivative instrument and reflected it at fair value in the unaudited condensed consolidated financial statements.

2623

Table of Contents

ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(c)

Summary

The ~~following~~ table below presents a summary of the fair values ~~in thousands~~ of the Company’s derivative instruments and where such values are recorded in the ~~unaudited~~ condensed consolidated balance sheets ~~as of December 31, 2020 and June~~ ~~30, 2021. None of the Company’s derivative instruments are designated as hedges for accounting purposes.~~(in thousands).


									(Unaudited)
	Balance Sheet	December 31,		June 30,		Balance Sheet	December 31,		March 31,
	Location	2020		2021		Location	2021		2022
Asset derivatives not designated as hedges for accounting purposes:
Commodity derivatives—current	Derivative instruments	$	97,144		—	Derivative instruments	$	—		—
Embedded derivatives—current	Derivative instruments		7,986		1,056	Derivative instruments		757		263
Commodity derivatives—noncurrent	Derivative instruments		14,689		—	Derivative instruments		—		—
Embedded derivatives—noncurrent	Derivative instruments		32,604		19,396	Derivative instruments		14,369		10,516

Total asset derivatives			152,423		20,452
Total asset derivatives ⁽¹⁾								15,126		10,779

Liability derivatives not designated as hedges for accounting purposes:
Commodity derivatives—current ⁽¹⁾	Derivative instruments		31,242		733,994
Commodity derivatives—noncurrent ⁽¹⁾	Derivative instruments		99,172		204,525
Commodity derivatives—current ⁽²⁾						Derivative instruments		559,851		1,152,299
Commodity derivatives—noncurrent ⁽²⁾						Derivative instruments		181,806		311,005

Total liability derivatives			130,414		938,519
Total liability derivatives ⁽¹⁾								741,657		1,463,304

Net derivatives assets (liabilities)		$	22,009		(918,067)
Net derivatives liability ⁽¹⁾							$	(726,531)		(1,452,525)

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

(2)

As of ~~June 30,~~December 31, 2021, approximately ~~$50~~$55 million of commodity derivative liabilities, including ~~$29~~$31 million of current commodity derivatives and ~~$21~~$24 million of noncurrent commodity derivatives, are attributable to the Company’s consolidated VIE, Martica. As of ~~December~~March 31, ~~2020,~~2022, approximately ~~$14~~$100 million of commodity derivative liabilities, including $7$66 million of current commodity derivatives and $7$34 million of noncurrent commodity derivatives, are attributable to the Company’s consolidated VIE, Martica.

The following table ~~presents~~sets forth the gross values of recognized derivative assets and liabilities, the amounts offset under master netting arrangements with counterparties, and the resulting net amounts presented in the ~~unaudited~~ condensed consolidated balance sheets as of the dates presented, all at fair value (in thousands):


																			(Unaudited)
	December 31, 2020						June 30, 2021						December 31, 2021						March 31, 2022
					Net Amounts of						Net Amounts of						Net Amounts of						Net Amounts of
	Gross		Gross Amounts		Assets		Gross		Gross Amounts		Assets		Gross		Gross		Assets		Gross		Gross		Assets
	Amounts on		Offset on		(Liabilities) on		Amounts on		Offset on		(Liabilities) on		Amounts		Amounts Offset		(Liabilities) on		Amounts		Amounts Offset		(Liabilities) on
	Balance Sheet		Balance Sheet		Balance Sheet		Balance Sheet		Balance Sheet		Balance Sheet		Recognized		Recognized		Balance Sheet		Recognized		Recognized		Balance Sheet
Commodity derivative assets	$	181,375		(69,542)		111,833	$	29,803		(29,803)		—	$	2,177		(2,177)		—		320		(320)		—
Embedded derivative assets	$	40,590		—		40,590	$	20,452		—		20,452	$	15,126		—		15,126		10,779		—		10,779
Commodity derivative liabilities	$	(199,956)		69,542		(130,414)	$	(968,322)		29,803		(938,519)	$	(743,834)		2,177		(741,657)		(1,463,624)		320		(1,463,304)

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

The following istable 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 ~~for the three and six months ended June 30, 2020 and 2021~~ (in thousands):


	Statement of									Statement of
	Operations	Three Months Ended June 30,				Six Months Ended June 30,				Operations	Three Months Ended March 31,
	Location	2020		2021		2020		2021		Location	2021		2022
Commodity derivative fair value gains (losses) ⁽¹⁾	Revenue	$	(168,015)		(819,725)	$	397,818		(989,692)
Embedded derivative fair value gains (losses) ⁽¹⁾	Revenue	$	—		(12,115)	$	—		(19,904)
Commodity derivative fair value losses ⁽¹⁾										Revenue	$	(169,967)		(994,483)
Embedded derivative fair value losses ⁽¹⁾										Revenue	$	(7,789)		(16,897)

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

(12) Leases

The Company leases certain office space, processing plants, drilling rigs and completion services, gas gathering lines, compressor stations, and other office and field equipment. Leases with an initial term of 12 months or less are considered short-term and are not recorded on the balance sheet. Instead, the short-term leases are recognized in expense on a straight-line basis over the lease term.

Most leases include one or more options to renew, with renewal terms that can extend the lease from one to 20 years or more. The exercise of the lease renewal options is at the Company’s sole discretion. The depreciable lives of the leased assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Certain of the Company’s lease agreements include minimum payments based on a percentage of produced volumes over contractual levels and others include rental payments adjusted periodically for inflation.

The Company considers all contracts that have assets specified in the contract, either explicitly or implicitly, that the Company has substantially all of the capacity of the asset, and has the right to obtain substantially all of the economic benefits of that asset, without the lessor’s ability to have a substantive right to substitute that asset, as leased assets. For any contract deemed to include a leased asset, that asset is capitalized on the balance sheet as a right-of-use asset and a corresponding lease liability is recorded at the present value of the known future minimum payments of the contract using a discount rate on the date of commencement. The leased asset classification is determined at the date of recording as either operating or financing, depending upon certain criteria of the contract.

The discount rate used for present value calculations is the discount rate implicit in the contract. If an implicit rate is not determinable, a collateralized incremental borrowing rate is used at the date of commencement. As new leases commence or previous leases are modified the discount rate used in the present value calculation is the current period applicable discount rate.

The Company has made an accounting policy election to adopt the practical expedient for combining lease and non-lease components on an asset class basis. This expedient allows the Company to combine non-lease components such as real estate taxes, insurance, maintenance, and other operating expenses associated with the leased premises with the lease component of a lease agreement on an asset class basis when the non-lease components of the agreement cannot be easily bifurcated from the lease payment. Currently, the Company is only applying this expedient to certain office space agreements.

~~Table of Contents~~

~~ANTERO RESOURCES CORPORATION~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~(a)~~

~~Supplemental Balance Sheet Information Related to Leases~~

~~The Company’s lease assets and liabilities as of December 31, 2020 and June 30, 2021 consisted of the following items (in thousands):~~

December 31,

June 30,

Leases

Balance Sheet Classification

2020

2021

Operating Leases

Operating lease right-of-use assets:

Processing plants

Operating lease right-of-use assets

$
1,302,290

1,256,391

Drilling rigs and completion services

Operating lease right-of-use assets

29,894

20,264

Gas gathering lines and compressor stations ⁽¹⁾

Operating lease right-of-use assets

1,241,090

1,172,477

Office space

Operating lease right-of-use assets

36,879

35,012

Vehicles

Operating lease right-of-use assets

2,704

1,327

Other office and field equipment

Operating lease right-of-use assets

746

573

Total operating lease right-of-use assets

$
2,613,603

2,486,044

Short-term operating lease obligation

Short-term lease liabilities

$
265,178

269,070

Long-term operating lease obligation

Long-term lease liabilities

2,348,425

2,216,974

Total operating lease obligation

$
2,613,603

2,486,044

Finance Leases

Finance lease right-of-use assets:

Vehicles

Other property and equipment

$
1,206

903

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

$
1,206

903

Short-term finance lease obligation

Short-term lease liabilities

$
845

541

Long-term finance lease obligation

Long-term lease liabilities

361

362

Total finance lease obligation

$
1,206

903

~~(1)~~

~~Gas gathering lines and compressor stations leases includes $1.1 billion and $1.0 billion related to Antero Midstream Corporation as of December 31, 2020 and June~~ ~~30, 2021, respectively. See “—Related party lease disclosure” for additional discussion.~~

~~(2)~~

~~Financing lease assets are recorded net of accumulated amortization of $3 million as of both December 31, 2020 and June~~ ~~30, 2021. The processing plants, gathering lines and compressor stations that are classified as lease liabilities are classified as such under ASC 842,~~ ~~Leases~~~~, because Antero is the sole customer of the assets and because Antero makes the decisions that most impact the economic performance of the assets.~~

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(a)	Supplemental Balance Sheet Information Related to Leases

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


				(Unaudited)
		December 31,		March 31,
Leases	Balance Sheet Classification	2021		2022
Operating Leases
Operating lease right-of-use assets:
Processing plants	Operating lease right-of-use assets	$	1,739,550		1,692,126
Drilling rigs and completion services	Operating lease right-of-use assets		9,860		8,531
Gas gathering lines and compressor stations ⁽¹⁾	Operating lease right-of-use assets		1,634,928		1,545,664
Office space	Operating lease right-of-use assets		33,083		32,085
Vehicles	Operating lease right-of-use assets		2,009		1,700
Other office and field equipment	Operating lease right-of-use assets		482		5,231
Total operating lease right-of-use assets		$	3,419,912		3,285,337

Short-term operating lease obligation	Short-term lease liabilities	$	455,950		455,409
Long-term operating lease obligation	Long-term lease liabilities		2,963,962		2,829,928
Total operating lease obligation		$	3,419,912		3,285,337

Finance Leases
Finance lease right-of-use assets:
Vehicles	Other property and equipment	$	550		562
Total finance lease right-of-use assets ⁽²⁾		$	550		562

Short-term finance lease obligation	Short-term lease liabilities	$	397		314
Long-term finance lease obligation	Long-term lease liabilities		153		247
Total finance lease obligation		$	550		561

(1)	Gas gathering lines and compressor stations leases includes $1.5 billion related to Antero Midstream as of December 31, 2021 and March 31, 2022. See “—Related party lease disclosure” for additional discussion.

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

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

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(b)	Supplemental Information Related to Leases

Costs associated with operating and finance leases were included in the unaudited condensed consolidated statement of operations and comprehensive loss ~~for the three and six months ended June 30, 2020 and 2021~~ (in thousands):


			Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended March 31,
Cost	Classification	Location	2020		2021		2020		2021		Classification	Location	2021		2022
Operating lease cost	Statement of operations	Gathering, compression, processing, and transportation	$	350,853		385,022	$	703,496		761,952
Operating lease cost	Statement of operations	General and administrative		2,789		2,736		5,670		5,224	Statement of operations	Gathering, compression, processing, and transportation	$	376,930		365,834
Operating lease cost	Statement of operations	Contract termination and rig stacking		5,841		844		5,841		844	Statement of operations	General and administrative		2,488		2,867
Operating lease cost	Statement of operations	Lease operating		—		44		—		66	Statement of operations	Lease operating		22		45
Operating lease cost	Balance sheet	Proved properties ⁽¹⁾		26,265		28,432		59,259		57,191	Balance sheet	Proved properties ⁽¹⁾		28,759		7,759
Total operating lease cost			$	385,748		417,078	$	774,266		825,277			$	408,199		376,505

Finance lease cost:
Amortization of right-of-use assets	Statement of operations	Depletion, depreciation, and amortization	$	414		132	$	559		259	Statement of operations	Depletion, depreciation, and amortization	$	127		118
Interest on lease liabilities											Statement of operations	Interest expense		28		14
Total finance lease cost			$	414		132	$	559		259			$	155		132

Short-term lease payments			$	29,441		24,456	$	92,158		41,298			$	16,842		48,760

(1)	Capitalized costs related to drilling and completion activities.

(c)	Supplemental Cash Flow Information Related to Leases

The following istable presents the Company’s supplemental cash flow information related to leases ~~for the six months ended June 30, 2020 and 2021~~ (in thousands):


	Six Months Ended June 30,				Three Months Ended March 31,
	2020		2021		2021		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	661,797		716,582	$	388,983		305,841
Investing cash flows from operating leases		63,279		44,747		24,027		6,037
Financing cash flows from finance leases		717		509		265		134

Noncash activities:
Right-of-use assets obtained in exchange for new operating lease obligations	$	113,762		6,849	$	28		5,321
Increase (decrease) to existing right-of-use assets and lease obligations from operating lease modifications, net ⁽¹⁾					$	—		(25,926)

(1)	No operating leases were remeasured during the three months ended March 31, 2021. During the three months ended March 31, 2022, the weighted average discount rate for remeasured operating leases decreased from 6.3% as of December 31, 2021 to 3.6% as of March 31, 2022.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(d)	Maturities of Lease Liabilities

The table below is a schedule of future minimum payments for operating and financing lease liabilities as of ~~June 30, 2021~~March 31, 2022 (in thousands):


	Operating Leases		Financing Leases		Total		Operating Leases		Financing Leases		Total
Remainder of 2021	$	306,812		377		307,189
2022		579,918		424		580,342
Remainder of 2022							$	473,271		316		473,587
2023		574,333		76		574,409		611,202		122		611,324
2024		565,566		67		565,633		600,773		114		600,887
2025		493,563		22		493,585		540,291		68		540,359
2026		442,971		—		442,971		489,589		5		489,594
2027								397,379		—		397,379
Thereafter		1,115,499		—		1,115,499		989,503		—		989,503
Total lease payments		4,078,662		966		4,079,628		4,102,008		625		4,102,633
Less: imputed interest		(1,592,618)		(63)		(1,592,681)		(816,671)		(64)		(816,735)
Total	$	2,486,044		903		2,486,947	$	3,285,337		561		3,285,898

(e)	Lease Term and Discount Rate

The following table sets forth the Company’s weighted average remaining lease term and discount ~~rate as of December 31, 2020 and June 30, 2021:~~rate:


													(Unaudited)
	December 31, 2020				June 30, 2021				December 31, 2021				March 31, 2022
	Operating Leases		Finance Leases		Operating Leases		Finance Leases		Operating Leases		Finance Leases		Operating Leases		Finance Leases
Weighted average remaining lease term	8.0 years		1.5 years		7.5 years		2.0 years		7.6 years		1.9 years		7.4 years		2.4 years
Weighted average discount rate	13.7	%	6.2	%	13.8	%	5.5	%	5.5	%	5.6	%	5.5	%	5.5	%

(f)	Related Party Lease Disclosure

The Company has a gathering and compression agreement with Antero Midstream, ~~Corporation,~~ whereby Antero Midstream ~~Corporation~~ receives a low-pressure gathering fee per Mcf, a high-pressure gathering fee per Mcf and a compression fee per Mcf, in each case subject to annual adjustments based on the consumer price index. If and to the extent the Company requests that Antero Midstream ~~Corporation~~ construct new low pressure lines, high pressure lines ~~and~~or compressor stations, the gathering and compression agreement contains options at Antero Midstream’s election for either (i) minimum volume commitments that require Antero Resources to utilize or pay for 75% of the high pressure gathering capacity and 70% of the compression capacity of the requested capacity of such new construction for 10 years or (ii) a cost of service fee that allows the Antero Midstream to earn a 13% rate of return on such new construction over seven years.

In December 2019, the Company and Antero Midstream ~~Corporation~~ agreed to extend the initial term of the gathering and compression agreement to 2038 and established a growth incentive fee program whereby low pressure gathering fees will be reduced from 2020 through 2023 to the extent the Company achieves certain volumetric targets at certain points during such time. Upon completion of the initial contract term, the gathering and compression agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an anniversary of the effective date of the agreement, by either the Company or Antero Midstream ~~Corporation~~ on or before the 180^th day prior to the anniversary of such effective date. The Company did 0t achieve the quarterly volumetric target for the first quarter of 2021, and therefore, did not earn a rebate for the three months ended March 31, 2021. During the three months ended March 31, 2022, the Company achieved the quarterly volumetric ~~targets during each of the first~~target, and ~~second quarter of 2020, and Antero Midstream Corporation provided~~earned a rebate of $12 ~~million and $24 million for the three and six months ended June 30, 2020, respectively. The Company did 0t achieve the volumetric target during either the first or second quarters of 2021.~~

million.

For the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021 and 2022, gathering and compression fees paid by Antero related to this agreement were ~~$166~~$177 million and ~~$321~~ ~~million, respectively. For the three and six months ended June 30, 2021, gathering and compression fees paid by Antero related to this agreement were~~ ~~$184 million and $361~~$163 million, respectively. As of December 31, ~~2020~~2021 and ~~June 30, 2021,~~ ~~$55~~March 31, 2022, $54 million and ~~$66~~$56 million ~~were~~was included within Accounts payable, related parties, respectively, on the ~~unaudited~~ condensed consolidated balance ~~sheets~~sheet as due to Antero Midstream ~~Corporation~~ related to this agreement.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(13) Commitments

The following table sets forth a schedule of future minimum payments for firm transportation, drilling rig and completion services, processing, gathering and compression, and office and equipment agreements, which include leases that have ~~remaining~~a lease ~~terms~~term in excess of one year as of ~~June 30, 2021~~March 31, 2022 (in thousands).


			Processing,												Processing,
	Firm		Gathering and		Land Payment		Operating and		Imputed Interest				Firm		Gathering and		Land Payment		Operating and		Imputed Interest
	Transportation		Compression		Obligations		Financing Leases		for Leases				Transportation		Compression		Obligations		Financing Leases		for Leases
	(a)		(b)		(c)		(d)		(d)		Total		(a)		(b)		(c)		(d)		(d)		Total
Remainder of 2021	$	541,109		27,403		2,576		138,486		168,703		878,277
2022		1,042,280		52,265		400		269,013		311,329		1,675,287
Remainder of 2022													$	784,307		39,867		1,051		342,866		130,721		1,298,812
2023		1,072,523		59,140		—		300,301		274,108		1,706,072		1,071,563		63,219		—		456,976		154,348		1,746,106
2024		1,045,442		59,262		—		333,935		231,698		1,670,337		1,044,479		59,262		—		470,543		130,344		1,704,628
2025		1,024,783		47,960		—		306,723		186,862		1,566,328		1,023,947		47,960		—		433,548		106,811		1,612,266
2026		1,018,812		14,783		—		299,354		143,617		1,476,566		1,018,345		14,783		—		404,385		85,209		1,522,722
2027														1,016,780		14,783		—		331,516		65,863		1,428,942
Thereafter		6,033,138		98,596		—		839,135		276,364		7,247,233		5,012,734		83,813		—		846,064		143,439		6,086,050
Total	$	11,778,087		359,409		2,976		2,486,947		1,592,681		16,220,100	$	10,972,155		323,687		1,051		3,285,898		816,735		15,399,526

(a)	Firm Transportation

The Company has entered into firm transportation agreements with various pipelines in order to facilitate the delivery of its production to market. These contracts commit the Company to transport minimum daily natural gas or NGLs volumes at negotiated rates or pay for any deficiencies at specified reservation fee rates. The amounts in this table are based on the Company’s minimum daily volumes at the reservation fee rate. The values in the table represent the gross amounts that the Company is committed to pay; however, the Company will record in the unaudited condensed consolidated financial statements its proportionate share of costs based on its working interest.

(b)	Processing, Gathering, and Compression Service Commitments

The Company has entered into various long-term gas processing, gathering and compression service agreements. Certain of these agreements were determined to be leases. The minimum payment obligations under the agreements that are not leases are presented in this column.

The values in the table represent the gross amounts that the Company is committed to pay; however, the Company will record in the unaudited condensed consolidated financial statements its proportionate share of costs based on its working interest.

(c)	Land Payment Obligations

The Company has entered into various land acquisition agreements. Certain of these agreements contain minimum payment obligations over various terms. The values in the table represent the minimum payments due under these arrangements. None of these agreements were determined to be leases.

(d)	Leases, including ~~imputed interest~~Imputed Interest

The Company has obligations under contracts for services provided by drilling rigs and completion fleets, processing, gathering, and compression services agreements, and office and equipment leases. The values in the table represent the gross amounts that Antero Resources is committed to pay; however, the Company will record in its financial statements its proportionate share of costs based on its working interests. ~~Refer to~~See Note 12—Leases to the unaudited condensed consolidated financial statements for more information on the Company’s operating and finance leases.

(e)	Contract Terminations

The Company incurs costs associated with the delay or cancellation of drilling and completion contracts with third-party contractors. These costs are recorded in Contract termination and included in the statement of operations and comprehensive loss.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

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

(14) Contingencies

Environmental

In June 2018, the Company received a Notice of Violation (“NOV”) from the U.S. Environmental Protection Agency (“EPA”) Region III for alleged violations of the federal Clean Air Act and the West Virginia State Implementation Plan. The NOV alleges that combustion devices at these facilities did not meet applicable air permitting requirements. Separately, in June 2018, the Company received an information request from the EPA Region III pursuant to Section 114(a) of the Clean Air Act relating to the facilities that were inspected in September 2017 as well as additional Antero Resources facilities for the purpose of determining if the additional facilities have the same alleged compliance issues that were identified during the September 2017 inspections. Subsequently, the West Virginia Department of Environmental Protection (“WVDEP”) and the EPA Region V (covering Ohio facilities) each conducted its own inspections, and the Company has separately received NOVs from WVDEP and ~~the~~ EPA Region V related to similar issues being investigated by the EPA Region III. The Company continues to negotiate with the EPA and WVDEP to resolve the issues alleged in the NOVs and the information request. The Company’s operations at these facilities are not suspended, and management does not expect these matters to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

WGL

The Company and Washington Gas Light Company and WGL Midstream, Inc. (collectively, “WGL”) were involved in multiple contractual disputes involving firm gas sales contracts executed June 20, 2014 (the “Contracts”) that the Company began delivering gas under in January 2016. In late 2015, WGL asserted that the natural gas index price specified in the Contracts was no longer appropriate and sought to invoke an alternative index clause in the Contracts. This dispute was referred to arbitration. In January 2017, the arbitration panel ruled in the Company’s favor and found that the natural gas index price specified in the Contracts should remain.

In March of 2017, WGL filed a lawsuit against the Company in Colorado district court claiming that the Company breached contractual obligations by failing to deliver “TCO pool” gas, ultimately seeking damages of more than $40 million. Subsequently, after WGL failed to take certain volumes of gas required under the Contracts, the Company filed a separate lawsuit against WGL to recover damages that WGL refused to pay. These 2 lawsuits were consolidated and tried in June 2019. On June 20, 2019, the Company was awarded a jury verdict of approximately $96 million in damages against WGL. In addition, the jury rejected WGL’s claim against the Company, finding that the Company did not breach the Contracts. On December 10, 2020, the Colorado Court of Appeals affirmed the judgment of the trial court in favor of the Company. In February 2021, the Company and its royalty owners received a gross payment of approximately $107 million from WGL, which was in full satisfaction and discharge of the June 2019 judgment entered in favor of the Company.

Other

The Company is party to various other legal proceedings and claims in the ordinary course of its business, including, but not limited to, royalty claims. 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.

(15) Related Parties

Substantially all of Antero ~~Midstream Corporation’s~~Midstream’s revenues were and are derived from transactions with Antero Resources. See Note 16—Reportable Segments to the unaudited condensed consolidated financial statements for the operating results of the Company’s reportable segments.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(16) Reportable Segments

(a)	Summary of Reportable Segments

~~Management evaluated how~~The Company’s operations, which are located in the ~~Company is~~United States, are organized ~~and managed and identified the following~~into 3 reportable segments: (i) the exploration, development, and production of natural gas, NGLs and oil; (ii) marketing and utilization of excess firm transportation capacity and (iii) midstream services through the Company’s equity method investment in Antero ~~Midstream Corporation. All~~Midstream. Substantially all of the Company’s ~~assets are located in the United States and substantially all of its~~ production revenues are attributable to customers located

~~Table of Contents~~

~~ANTERO RESOURCES CORPORATION~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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

~~Operating~~ These segments are ~~evaluated~~monitored separately by management for performance and are consistent with internal financial reporting. These segments have been identified based on ~~their contribution to consolidated results, which is primarily determined by~~ the ~~respective~~differing products and services, regulatory environment and the expertise required for these operations. Management evaluates the performance of the Company’s business segments based on operating income (loss) ~~of each segment.~~. General and administrative expenses were allocated to the midstream segment based on the nature of the expenses and on a combination of the segments’ proportionate share of the Company’s consolidated property and equipment, capital expenditures, and labor costs, as applicable. General and administrative expenses related to the marketing segment are not allocated because they are immaterial. Other income, income taxes, and interest expense are primarily managed and evaluated on a consolidated basis. Intersegment sales were transacted at prices which approximate market. Accounting policies for each segment are the same as the Company’s accounting policies described in Note 2—Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements.

Exploration and Production

The exploration and production segment is engaged in the development, production, exploration and acquisition of natural gas, NGLs and oil properties located in the Appalachian Basin. The Company targets large, repeatable resource plays where horizontal drilling and advanced fracture stimulation technologies provide the means to economically develop and produce natural gas, NGLs and oil from unconventional formations

Marketing

Where feasible, the Company purchases and sells third-party natural gas and NGLs and markets its excess firm transportation capacity, or engages third parties to conduct these activities on the Company’s behalf, in order to optimize the revenues from these transportation agreements. The Company has entered into long-term firm transportation agreements for a significant portion of its current and expected future production in order to secure guaranteed capacity to favorable markets.

Equity Method Investment in Antero Midstream

The Company receives midstream services through its equity method investment in Antero Midstream. Antero Midstream owns, operates and develops midstream energy infrastructure primarily to service the Company’s production and completion activity in the Appalachian Basin. Antero Midstream’s assets consist of gathering pipelines, compressor stations, interests in processing and fractionation plants and water handling assets. Antero Midstream provides midstream services to Antero Resources under long-term contracts.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

(b)	Reportable Segments Financial Information

The summarized operating results ~~and assets~~ of the Company’s reportable segments ~~were~~are as follows ~~for the three months ended June 30, 2020 and 2021~~ (in thousands):


											Three Months Ended March 31, 2021
																	Elimination of
	Three Months Ended June 30, 2020														Equity Method		Intersegment
	Exploration						Elimination of				Exploration				Investment in		Transactions and
	and				Midstream		Intersegment		Consolidated		and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Services		Transactions		Total		Production		Marketing		Midstream		Affiliates		Total
Sales and revenues:
Third-party	$	419,919		64,285		—		—		484,204	$	1,038,768		164,790		—		—		1,203,558
Intersegment		707		—		219,736		(219,736)		707		640		—		224,121		(224,121)		640
Total	$	420,626		64,285		219,736		(219,736)		484,911
Total revenue											$	1,039,408		164,790		224,121		(224,121)		1,204,198

Operating expenses:
Lease operating	$	24,742		—		—		—		24,742	$	24,547		—		—		—		24,547
Gathering, compression, processing, and transportation		631,845		—		42,067		(42,067)		631,845		605,077		—		39,314		(39,314)		605,077
General and administrative												44,074		—		17,930		(17,930)		44,074
Depletion, depreciation, and amortization												194,026		—		26,850		(26,850)		194,026
Impairment of oil and gas properties		37,350		—		—		—		37,350		34,062		—		—		—		34,062
Depletion, depreciation, and amortization		214,035		—		27,745		(27,745)		214,035
General and administrative		38,403		—		12,422		(12,422)		38,403
Impairment of midstream assets												—		—		1,379		(1,379)		—
Other		32,405		113,053		2,776		(2,776)		145,458		45,795		162,077		5,061		(5,061)		207,872
Total		978,780		113,053		85,010		(85,010)		1,091,833
Operating income (loss)	$	(558,154)		(48,768)		134,726		(134,726)		(606,922)
Total operating expenses												947,581		162,077		90,534		(90,534)		1,109,658
Operating income											$	91,827		2,713		133,587		(133,587)		94,540
Equity in earnings of unconsolidated affiliates	$	20,228		—		20,947		(20,947)		20,228	$	18,694		—		20,744		(20,744)		18,694
Investments in unconsolidated affiliates	$	279,805		—		729,823		(729,823)		279,805
Segment assets	$	13,711,749		32,241		5,715,055		(5,715,055)		13,743,990
Capital expenditures for segment assets	$	263,522		—		55,431		(55,431)		263,522	$	123,158		—		28,389		(28,389)		123,158

3432

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements


	Three Months Ended June 30, 2021											Three Months Ended March 31, 2022
					Equity Method			Elimination of										Elimination of
					Investment in			Intersegment								Equity Method		Intersegment
	Exploration				Antero			Transactions and				Exploration				Investment in		Transactions and
	and				Midstream			Unconsolidated		Consolidated		and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Corporation			Affiliates		Total		Production		Marketing		Midstream		Affiliates		Total
Sales and revenues:
Third-party	$	324,534		165,453		250,455			(250,455)		489,987	$	717,283		69,038		236,159		(236,159)		786,321
Intersegment		(619)		—		(17,668)			17,668		(619)		519		—		(17,668)		17,668		519
Total	$	323,915		165,453		232,787			(232,787)		489,368
Total revenue												$	717,802		69,038		218,491		(218,491)		786,840
							��
Operating expenses:
Lease operating	$	21,645		—		—			—		21,645	$	17,780		—		—		—		17,780
Gathering, compression, processing, and transportation		641,362		—		39,555			(39,555)		641,362		590,278		—		42,012		(42,012)		590,278
General and administrative													35,691		—		17,931		(17,931)		35,691
Depletion, depreciation, and amortization													168,388		—		28,300		(28,300)		168,388
Impairment of oil and gas properties		9,303		—		—			—		9,303		22,462		—		—		—		22,462
Depletion, depreciation, and amortization		187,330		—		26,619			(26,619)		187,330
General and administrative		32,177		—		14,251			(14,251)		32,177
Other		41,507		198,994		963			(963)		240,501		57,944		98,896		1,094		(1,094)		156,840
Total		933,324		198,994		81,388			(81,388)		1,132,318
Total operating expenses													892,543		98,896		89,337		(89,337)		991,439
Operating income (loss)	$	(609,409)		(33,541)		151,399			(151,399)		(642,950)	$	(174,741)		(29,858)		129,154		(129,154)		(204,599)
Equity in earnings of unconsolidated affiliates	$	17,477		—		21,515			(21,515)		17,477	$	25,178		—		23,232		(23,232)		25,178
Investments in unconsolidated affiliates	$	237,668		—		707,518			(707,518)		237,668
Segment assets	$	12,788,108		60,225		5,540,742			(5,540,742)		12,848,333
Capital expenditures for segment assets	$	182,591		—		45,976			(45,976)		182,591	$	215,876		—		84,267		(84,267)		215,876

The ~~operating results and~~summarized assets of the Company’s reportable segments ~~were~~are as follows ~~for the six months ended June 30, 2020 and 2021~~ (in thousands):


	As of December 31, 2021
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Investments in unconsolidated affiliates	$	232,399		—		696,009		(696,009)		232,399
Total assets	$	13,864,402		32,126		5,544,001		(5,544,001)		13,896,528

(Unaudited)

As of March 31, 2022

Elimination of

Equity Method

Intersegment

Exploration

Investment in

Transactions and

and

Antero

Unconsolidated

Consolidated

Production

Marketing

Midstream

Affiliates

Total

Investments in unconsolidated affiliates

234,390

—

688,111

(688,111)

234,390

Total assets

13,780,290

23,210

5,580,594

(5,580,594)

13,803,500

Six Months Ended June 30, 2020

Equity Method

Elimination of

Investment in

Intersegment

Exploration

Antero

Transactions and

and

Midstream

Unconsolidated

Consolidated

Production

Marketing

Corporation

Affiliates

Total

Sales and revenues:

Third-party

$
1,690,153

110,358

—

—

1,800,511

Intersegment

1,505

—

463,444

(463,444)

1,505

Total

$
1,691,658

110,358

463,444

(463,444)

1,802,016

Operating expenses:

Lease operating

$
50,386

—

—

—

50,386

Gathering, compression, processing, and transportation

1,220,469

—

90,795

(90,795)

1,220,469

Impairment of oil and gas properties

126,570

—

—

—

126,570

Impairment of midstream assets

—

—

664,544

(664,544)

—

Depletion, depreciation, and amortization

413,712

—

55,088

(55,088)

413,712

General and administrative

69,624

—

25,959

(25,959)

69,624

Other

59,418

206,326

11,496

(11,496)

265,744

Total

1,940,179

206,326

847,882

(847,882)

2,146,505

Operating income (loss)

$
(248,521)

(95,968)

(384,438)

384,438

(344,489)

Equity in earnings (loss) of unconsolidated affiliates

$
(107,827)

—

40,024

(40,024)

(107,827)

Investments in unconsolidated affiliates

$
279,805

—

729,823

(729,823)

279,805

Segment assets

$
13,711,749

32,241

5,715,055

(5,715,055)

13,743,990

Capital expenditures for segment assets

$
575,133

—

123,414

(123,414)

575,133

~~Table of Contents~~

~~ANTERO RESOURCES CORPORATION~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Six Months Ended June 30, 2021

Equity Method

Elimination of

Investment in

Intersegment

Exploration

Antero

Transactions and

and

Midstream

Unconsolidated

Consolidated

Production

Marketing

Corporation

Affiliates

Total

Sales and revenues:

Third-party

$
1,363,302

330,243

—

—

1,693,545

Intersegment

21

—

456,908

(456,908)

21

Total

$
1,363,323

330,243

456,908

(456,908)

1,693,566

Operating expenses:

Lease operating

$
46,192

—

—

—

46,192

Gathering, compression, processing, and transportation

1,246,439

—

78,869

(78,869)

1,246,439

Impairment of oil and gas properties

43,365

—

—

—

43,365

Impairment of midstream assets

—

—

1,379

(1,379)

—

Depletion, depreciation, and amortization

381,356

—

53,469

(53,469)

381,356

General and administrative

76,251

—

32,181

(32,181)

76,251

Other

87,302

361,071

6,024

(6,024)

448,373

Total

1,880,905

361,071

171,922

(171,922)

2,241,976

Operating income (loss)

$
(517,582)

(30,828)

284,986

(284,986)

(548,410)

Equity in earnings of unconsolidated affiliates

$
36,171

—

42,259

(42,259)

36,171

Investments in unconsolidated affiliates

$
237,668

—

707,518

(707,518)

237,668

Segment assets

$
12,788,108

60,225

5,540,742

(5,540,742)

12,848,333

Capital expenditures for segment assets

$
305,749

—

74,365

(74,365)

305,749

(17) Subsidiary Guarantors

~~Each of the Company’s wholly owned subsidiaries has~~Antero Resources’ senior notes are fully and unconditionally guaranteed by Antero Resources’ ~~senior notes.~~existing subsidiaries that guarantee the Credit Facility. In the event a subsidiary guarantor is sold or disposed of (whether by merger, consolidation, the sale of a sufficient amount of its capital stock so that it no longer qualifies as a “Subsidiary” of Antero (as defined in the indentures governing the notes) or the sale of all or substantially all of its assets (other than by lease)) and whether or not the subsidiary guarantor is the surviving entity in such transaction to a person that is not Antero or a restricted subsidiary of Antero, such subsidiary guarantor will be released from its obligations under its subsidiary guarantee if the sale or other disposition does not violate the covenants set forth in the indentures governing the notes.

In addition, a subsidiary guarantor will be released from its obligations under the indentures and its guarantee, upon the release or discharge of the guarantee of other Indebtedness (as defined in the indentures governing the notes) that resulted in the creation of such guarantee, except a release or discharge by or as a result of payment under such guarantee; if Antero designates such subsidiary as an unrestricted subsidiary and such designation complies with the other applicable provisions of the indentures governing the notes or in connection with any covenant defeasance, legal defeasance or satisfaction and discharge of the notes.

The following tables present summarized financial information of Antero and its guarantor subsidiaries (in thousands). The Company’s wholly owned subsidiaries are not restricted from making distributions to the Company.

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ANTERO RESOURCES CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements

��

Balance Sheet

December 31, 2020

June 30, 2021

Parent (Antero)

Parent (Antero)


and Guarantor Subsidiaries

and Guarantor Subsidiaries

Accounts receivable, non-guarantor subsidiaries

$
—

—

Accounts receivable, related parties

—

—

Other current assets

543,841

515,013

Total current assets

543,841

515,013

Noncurrent assets

11,783,502

11,536,439

Total assets

$
12,327,343

12,051,452

Accounts payable, non-guarantor subsidiaries

$
—

—

Accounts payable, related parties

69,860

85,471

Other current liabilities

906,348

1,765,747

Total current liabilities

976,208

1,851,218

Noncurrent liabilities

6,070,388

5,226,192

Total liabilities

$
7,046,596

7,077,410

Statement of Operations

Six Months Ended June 30, 2021

Parent (Antero)




and Guarantor Subsidiaries

Revenues

$
1,679,332

Operating expenses

2,221,153

Loss from operations

(541,821)

Net loss and comprehensive loss including noncontrolling interests

(538,966)

Net loss and comprehensive loss attributable to Antero Resources Corporation

$
(538,966)

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

The tables set forth below present summarized financial information of Antero, as parent, and its guarantor subsidiaries (in thousands). The Company’s wholly owned subsidiaries are not restricted from making distributions to the Company.


Balance Sheet
			(Unaudited)
	December 31, 2021		March 31, 2022
Accounts receivable, non-guarantor subsidiaries	$	—		—
Accounts receivable, related parties		—		—
Other current assets		633,014		673,754
Total current assets		633,014		673,754
Noncurrent assets		12,480,350		12,364,533
Total assets	$	13,113,364		13,038,287

Accounts payable, non-guarantor subsidiaries	$	—		—
Accounts payable, related parties		76,240		73,259
Other current liabilities		1,961,041		2,403,831
Total current liabilities		2,037,281		2,477,090
Noncurrent liabilities		5,737,999		5,489,853
Total liabilities	$	7,775,280		7,966,943

Statement of Operations

			Three Months Ended
			March 31, 2022
Revenues			$	794,004
Operating expenses				980,326
Loss from operations				(186,322)
Net loss and comprehensive loss including noncontrolling interests				(156,419)
Net loss and comprehensive loss attributable to Antero Resources Corporation			$	(156,419)

3734

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results, and the differences can be material. Some of the key factors that could cause actual results to vary from our expectations include changes in natural gas, NGLs and oil prices, the timing of planned capital expenditures, our ability to fund our development programs, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as our ability to access them, impacts of world health events, including the COVID-19 pandemic, ~~potential shut-ins of production due to lack of downstream demand or storage capacity,~~ and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting our business, as well as those factors discussed below, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. See “Cautionary Statement Regarding Forward-Looking Statements.” Also, see the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors.” We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

In this section, references to “Antero,” the “Company,” “we,” “us,” and “our” refer to Antero Resources Corporation and its subsidiaries, unless otherwise indicated or the context otherwise requires.

Our Company

We are an independent oil and natural gas company engaged in the development, production, exploration and acquisition of natural gas, NGLs and oil properties located in the Appalachian Basin. We focus on unconventional reservoirs, which can generally be characterized as fractured shale formations. Our management team has worked together for many years and has a successful track record of reserve and production growth as well as significant expertise in unconventional resource plays. Our strategy is to leverage our team’s experience delineating and developing natural gas resource plays to ~~profitably grow~~develop our reserves and production, primarily on our existing multi-year inventory of drilling locations.

We have assembled a portfolio of long-lived properties that are characterized by what we believe to be low geologic risk and repeatability. Our drilling opportunities are focused in the ~~Marcellus Shale and Utica Shale of the~~ Appalachian Basin. As of ~~June 30, 2021,~~March 31, 2022, we held approximately ~~513,000~~501,000 net acres of rich gas and dry gas properties located in the Appalachian Basin in West Virginia and Ohio. Our corporate headquarters are in Denver, Colorado.

~~2021 Developments and Highlights~~COVID-19 Pandemic

~~COVID-19 Pandemic~~

~~In March 2020,~~Since the ~~World Health Organization declared~~start of the COVID-19 ~~outbreak a pandemic. Governments~~pandemic, governments have tried to slow the spread of the virus by imposing social distancing guidelines, travel restrictions and stay-at-home orders, among other actions, which caused a significant decrease in activity in the global economy and the demand for oil and to a lesser extent natural gas and NGLs. The imbalance between the supply of and demand for oil, as well as the uncertainty around the extent and timing of an economic recovery, caused extreme market volatility and a substantial adverse effect on commodity prices in 2020. As vaccines have become widely available, social distancing guidelines, travel restrictions and stay-at-home orders have eased, activity in the global economy has increased and demand for oil, natural gas and NGLs and related commodity ~~prices have improved.~~pricing, has improved. However, new variants of the virus could cause further commodity market volatility and resulting financial market instability, and these are variables beyond our control that may adversely impact our generation of funds from operating cash flows, distributions from unconsolidated affiliate, available borrowings under our ~~senior secured revolving credit facility (the “Credit~~Credit Facility (defined below in “—Capital Resources and Liquidity—Debt Agreements—Senior Secured Revolving Credit Facility”) and our ability to access the capital markets.

~~As a producer of natural gas, NGLs and oil, we are recognized as an essential business under various federal, state and local regulations related to the COVID-19 pandemic. As such, we~~We have continued to operate throughout the pandemic, ~~as permitted under these~~in some cases subject to federal, state and local regulations, ~~while~~and we are taking steps to protect the health and safety of our ~~employees and contract~~ workers. We have implemented protocols to reduce the risk of an outbreak within our field operations, and these protocols have not reduced our production ~~or efficiency~~and throughput in a significant manner. ~~While a~~A substantial portion of our non-field level employees ~~operated~~currently operate in remote work from home arrangements, ~~through June 30, 2021,~~and we ~~expect to be transitioning to full-time in-office arrangements during the third quarter of 2021.~~

~~Table of Contents~~

We have been able to maintain a consistent level of effectiveness through these arrangements, including maintaining our day-to-day operations, our financial reporting systems and our internal control over financial reporting.

~~Our natural gas, NGLs~~We continue to monitor the COVID-19 environment in order to (i) protect the health and oil producing properties are located in the liquids-rich Appalachian Basin. We have hedged through fixed price contracts the sale of 2.2 Bcf per day of natural gas at a weighted average price of $2.77 per MMBtu for the remainder of 2021. Our hedges cover a substantial majoritysafety of our ~~expected natural gas production for the remainder of 2021. We also have fixed priced contracts for the sale of 45,650 barrels per day of propane at~~employees and contract workers and (ii) to determine when a weighted average price of $31.30 per barrel and 3,000 barrels per day of oil at a weighted average price of $55.16 per barrel for the remainder of 2021. All of our hedges are financial hedges and do not have physical delivery requirements. As such, any decreases in anticipated production, such as a result of decreased development activity,return to in-office working arrangements will ~~not impact our ability to realize the benefits of our hedges.~~be appropriate.

Our supply chain has not experienced any significant ~~interruptions.~~interruptions as a result of the COVID-19 pandemic. The lack of a market or available storage for any one NGL product or oil could result in our having to delay or discontinue well completions and

Table of Contents

commercial production or shut in production for other products because we cannot curtail the production of individual products in a meaningful way without reducing production of other products. Potential impacts of these constraints may include partial shut-in of production, although we are not able to determine the extent of shut-ins or for how long they may last. However, because some of our wells produce rich gas, which is processed, and some produce dry gas, which does not require processing, we can change the mix of products that we produce and wells that we complete to adjust our production to address takeaway capacity constraints for certain products. For example, we can shut-in rich gas wells and still produce from our dry gas wells if processing or storage capacity of NGL products becomes ~~further~~ limited or constrained. Prior to the COVID-19 pandemic, we had developed a diverse set of buyers and destinations, as well as in-field and off-site storage capacity for our condensate volumes. As a result of the pandemic, we have expanded our customer base and ~~its~~our condensate storage capacity within the Appalachian Basin.

~~In April 2021,~~Our natural gas, NGLs and oil producing properties are located in the ~~borrowing base supporting~~liquids-rich Appalachian Basin. We maintain a hedging program designed to mitigate volatility in commodity prices and to protect certain of our ~~Credit Facility was subject~~expected future cash flows for our future operations and capital spending plans. All of our hedges are financial hedges and do not have physical delivery requirements. As such, any decreases in anticipated production, such as a result of decreased development activity, would not impact our ability to ~~its semi-annual redetermination~~realize the benefits of or reduce the obligations for our hedges. For the year ending December 31, 2022, we have hedged through fixed price contracts the sale of 313 Bcf of natural gas at a weighted average price of $2.49 per MMBtu and ~~was re-affirmed at $2.85 billion. Lender commitments remained unchanged at $2.64 billion, providing us~~basis swaps for 17 Bcf with a ~~consistent amount~~weighted average pricing differential of available borrowings. Our next semi-annual borrowing base redetermination is in October 2021, which could impact our available borrowings and liquidity. As of June 30, 2021, we had no borrowings under our Credit Facility ~~and had outstanding letters of credit of $742 million.~~$0.515 per MMBtu.

In addition, our borrowing capacity is directly impacted by the amount of financial assurance that we are required to provide in the form of letters of credit to third parties, primarily pipeline capacity providers. The amount of financial assurance we provided has not increased during the COVID-19 pandemic and, thus far, we have not experienced any losses due to counterparty risk. However, our ability to limit any additional financial assurance we are required to provide, as well as to protect ourselves from the counterparty risk of our financial hedges, may be limited in the future.

As of March 31, 2022, we had $388 million of borrowings under our Credit Facility (defined below in “—Capital Resources and Liquidity—Sources and Uses of Cash”) and had outstanding letters of credit of $531 million. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements and “—Capital Resources and Liquidity—Debt Agreements— Senior Secured Revolving Credit Facility.” Since the onset of the COVID-19 pandemic, we have timely serviced our debt and other ~~obligations, and we have not materially modified the terms of any agreements.~~obligations.

~~Financing~~As the global economy continues to recover from the effects of the COVID-19 pandemic, economic indicators have continued to strengthen. However, the economy has begun to experience elevated inflation levels as a result of global supply and ~~Asset Sales Program Highlights~~demand imbalances. For example, the United States Bureau of Labor and Statistics (“BLS”) Consumer Price Index (“CPI”) for all urban consumers increased 9% from March 2021 to March 2022 as compared to the average historical 10-year rate of 2%. Additionally, employment activity has also begun to strengthen as demonstrated by the United States BLS unemployment rate declining from a high of 15% in April 2020 to 4% in March 2022. Inflationary pressures and labor shortages could result in increases to our operating and capital costs that are not fixed, renegotiation of contracts and/or supply agreements and higher labor costs, among others. These economic variables are beyond our control and may adversely impact our business, financial condition, results of operations and future cash flows.

~~Redemption of Senior Notes~~Financing Highlights

WeDebt Repurchase Program

During the three months ended March 31, 2022, we fully redeemed ~~all~~the remaining $585 million of our remaining outstanding ~~5.125%~~5.00% senior notes due ~~December~~March 1, ~~2022~~2025 (the “2022 Notes”) at par, plus accrued and unpaid interest in the first quarter of 2021. During the second quarter of 2021, we fully redeemed all of our outstanding 5.625% senior notes due June 1, 2023 (the “2023 Notes”) at par, plus accrued and unpaid interest.

~~On July 1, 2021, we redeemed $175 million of the principal amount of our 8.375% senior notes due July 15, 2026 (the “2026~~“2025 Notes”) at a redemption price of ~~108.375%~~101.25% of the principal amount thereof, plus accrued and unpaid interest, which was funded with borrowings on our Credit Facility. Immediately following the redemption, there were $325 million aggregate principal amount of 2026 Notes outstanding. The $15 million premium to the principal amount redeemed along with the write-off of a proportional amount of unamortized debt issuance costs will be included in our loss on early debt extinguishment during the third quarter of 2021.interest. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.

~~Issuance of Senior Notes~~

On January 4, 2021, we issued $500 million of our 2026 Notes at par. On January 26, 2021, we issued $700 million of 7.625% senior notes due February 1, 2029 (the “2029 Notes”) at par. On June 1, 2021, we issued $600 million of 5.375% senior notes due March 1, 2030 (the “2030 Notes”). The 2026 Notes, 2029 Notes and 2030 Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility. The 2026 Notes, 2029 Notes and 2030 Notes rank pari passu to our other outstanding senior notes. The 2026 Notes, 2029 Notes and 2030 Notes are guaranteed on a full and

3936

Table of Contents

~~unconditional~~Share Repurchase Program

On February 15, 2022, our Board of Directors authorized a share repurchase program that allows us to repurchase up to $1.0 billion of outstanding common stock. The shares may be repurchased from time to time in open market transactions, through privately negotiated transactions or by other means in accordance with federal securities laws. The timing, as well as the number and ~~joint~~value of shares repurchased under the program, will be determined by us at our discretion and ~~several senior unsecured basis by our existing subsidiaries that guarantee~~will depend on a variety of factors, including the ~~Credit Facility and certain~~market price of our ~~future restricted subsidiaries. See Note 7—Long-Term Debt to~~common stock, general market and economic conditions and applicable legal requirements. During the ~~unaudited condensed consolidated financial statements for more information.~~

~~Convertible Notes Equitizations~~

~~On January 12, 2021,~~three months ended March 31, 2022, we ~~completed a registered direct offering (the “January Share Offering”) of an aggregate of 31.4~~repurchased 3.7 million shares of our common stock at a ~~price~~total cost of $6.35 per share to certain holders of our 4.25% convertible senior notes due 2026 (the “2026 Convertible Notes”). We used the proceeds from the January Share Offering and approximately $63 million of borrowings under the Credit Facility to repurchase from such holders $150 million aggregate principal amount of the 2026 Convertible Notes in privately negotiated transactions (the “January Convertible Note Repurchase,” and, collectively with the January Share Offering, the “January Equitization Transactions”).$100 million.

On May 13, 2021, we completed a registered direct offering (the “May Share Offering”) of an aggregate of 11.6 million shares of our common stock at a price of $11.01 per share to certain holders of our 2026 Convertible Notes. We used the proceeds from the May Share Offering and approximately $26 million of borrowings under the Credit Facility to repurchase from such holders $56 million aggregate principal amount of the 2026 Convertible Notes in privately negotiated transactions (the “May Convertible Note Repurchase,” and, collectively with the May Share Offering, the “May Equitization Transactions”). See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.

~~Drilling Partnership~~

On February 17, 2021, we announced the formation of a drilling partnership with QL Capital Partners (“QL”), an affiliate of Quantum Energy Partners, for our 2021 through 2024 drilling program. Under the terms of the arrangement, each year in which QL participates represents an annual tranche, and QL will be conveyed a working interest in any wells spud by us during such tranche year. For 2021, together with QL, we agreed to a capital budget for such annual tranche, and for each subsequent year through 2024, we will propose a capital budget and estimated internal rate of return (“IRR”) for all wells to be spud during such year and, subject to the mutual agreement of the parties that the estimated IRR for the year exceeds a specified return, QL will be obligated to participate in such tranche. We develop and manage the drilling program associated with each tranche, including the selection of wells. Additionally, for each annual tranche in which QL participates, together with QL, we will enter into an assignment, bill of sale and conveyance pursuant to which QL will be conveyed a proportionate working interest percentage in each well spud in that year, which conveyance will not be subject to any reversion.

Under the terms of the arrangement, QL will fund 20% of development capital for wells spud in 2021 and is expected to fund between 15% and 20% of development capital for wells spud from 2022 through 2024, which funding amounts represent QL’s proportionate working interest in such wells. Additionally, we may receive a carry in the form of a one-time payment from QL for each annual tranche if the IRR for such tranche exceeds certain specified returns, which will be determined no earlier than December 31 following the end of each tranche year. Capital costs in excess of, and cost savings below, a specified percentage of budgeted amounts for each annual tranche will be for our account. Subject to the preceding sentence, for any wells included in a tranche, QL is obligated and responsible for its working interest share of costs and liabilities, and is entitled to its working interest share of revenues, associated with such wells for the life of such wells. If we present a capital budget for an annual tranche with an estimated IRR equal to or exceeding a specified return that QL in good faith believes is less than such specified return and QL elects not to participate, we will not be obligated to offer QL the opportunity to participate in subsequent annual tranches. ~~See Note 3—Transactions to the unaudited condensed consolidated financial statements for more information.~~

~~Overriding Royalty Interest Additional Contributions~~

On June 15, 2020, we announced the consummation of a transaction with an affiliate of Sixth Street Partners, LLC (“Sixth Street”) relating to certain overriding royalty interests across our existing asset base (the “ORRIs”). In connection with the transaction, we contributed the ORRIs to a newly formed subsidiary, Martica Holdings LLC (“Martica”). At the initial closing, Sixth Street contributed $300 million in cash (subject to customary adjustments) and agreed to contribute up to an additional $102 million in cash if certain production thresholds attributable to the ORRIs were achieved in the third quarter of 2020 and first quarter of 2021. All cash contributed by Sixth Street was distributed to us. We met the applicable production thresholds related to the third quarter of 2020 and first quarter of 2021 as of September 31, 2020 and March 31, 2021, respectively. We received a $51 million cash distribution during each of the fourth quarter of 2020 and the second quarter of 2021. ~~See Note 3—Transactions to the unaudited condensed consolidated financial statements for more information.~~

~~Table of Contents~~

Hedge Position (Excluding Martica)

We are exposed to certain risks relating to our ongoing business operations, and we use derivative instruments to manage our commodity price risk. In addition, we periodically enter into contracts that contain embedded features that are required to be bifurcated and accounted for separately as derivatives. The table below excludes derivative instruments attributable to Martica, our consolidated variable interest entity (“VIE”), since all gains or losses from such contracts are fully attributable to the noncontrolling interests in Martica. As of ~~June 30, 2021,~~March 31, 2022, our fixed price natural gas, oil and NGL swap positions excluding Martica ~~our consolidated VIE,~~ were as follows:

Weighted

Average

Commodity / Settlement Period

Index

Contracted Volume

Price

Natural Gas

July-December 2021

Henry Hub

397
Bcf

$
2.77
/MMBtu

January-December 2022

Henry Hub

422
Bcf

2.50
/MMBtu

January-December 2023

Henry Hub

16
Bcf

2.37
/MMBtu

835
Bcf

2.62
/MMBtu

Propane

July-October 2021

Mont Belvieu Propane-OPIS TET

4,200
MBbl

$
31.30
/Bbl

Butane

July-December 2021

Mont Belvieu Butane-OPIS Non-TET

1,072
MBbl

$
34.07
/Bbl

July-December 2021

Mont Belvieu Butane-OPIS TET

534
MBbl

$
31.68
/Bbl

Natural Gasoline

July-December 2021

Mont Belvieu Natural Gasoline-OPIS Non-TET

1,633
MBbl

$
50.36
/Bbl

Isobutane

July-December 2021

Mont Belvieu Isobutane-OPIS Non-TET

948
MBbl

$
35.25
/Bbl

Oil

July-December 2021

West Texas Intermediate

552
MBbl

$
55.16
/Bbl


				Weighted
				Average
Commodity / Settlement Period	Index	Contracted Volume		Price
Natural Gas
April-December 2022	Henry Hub	313	Bcf	$	2.49	/MMBtu
January-December 2023	Henry Hub	16	Bcf		2.37	/MMBtu
		329	Bcf		2.49	/MMBtu

In addition, we have a ~~call option~~swaption agreement, which entitles the ~~holder, if exercised,~~counterparty the right, but not the obligation, to enter into a fixed price swap agreement for approximately 156 Bcf at a price of $2.77 per MMBtu infor the year ending December 31, 2024.

As of ~~June 30, 2021,~~March 31, 2022, our 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

Commodity / Settlement Period

Index to Basis Differential

Contracted Volume

Hedged Differential

Natural Gas

July-December 2021

NYMEX to TCO

8
Bcf

$
0.414
/MMBtu

January-December 2022

NYMEX to TCO

22
Bcf

0.515
/MMBtu

January-December 2023

NYMEX to TCO

18
Bcf

0.525
/MMBtu

January-December 2024

NYMEX to TCO

18
Bcf

0.530
/MMBtu

66
Bcf

0.511
/MMBtu


				Weighted Average
Commodity / Settlement Period	Index to Basis Differential	Contracted Volume		Hedged Differential
Natural Gas
April-December 2022	NYMEX to TCO	17	Bcf	$	0.515	/MMBtu
January-December 2023	NYMEX to TCO	18	Bcf		0.525	/MMBtu
January-December 2024	NYMEX to TCO	18	Bcf		0.530	/MMBtu
		53	Bcf		0.524	/MMBtu

As of ~~June 30, 2021, we had natural gas and NGL contracts that fix the Mont Belvieu index price for natural gasoline to percentages of WTI as follows:~~

Weighted Average

Commodity / Settlement Period

Index to Basis Differential

Contracted Volume

Payout Ratio

Gas Liquids

July-December 2021

Mont Belvieu Natural Gasoline to WTI

1,716
MBbl

78
%

~~Table of Contents~~

~~As of June 30, 2021,~~March 31, 2022, we also had an embedded put option tied to NYMEX pricing for the production volumes associated with our retained interest in the VPP (as defined below) properties of ~~100~~83 Bcf remaining through December 31, 2026 at a weighted average strike price of ~~$2.58~~$2.54 per MMBtu.

We ~~believe~~maintain a hedging program designed to mitigate volatility in commodity prices and to protect certain of our ~~hedge position provides some certainty to~~expected future cash flows ~~supporting~~for our future operations and capital spending plans. As of ~~June 30, 2021,~~March 31, 2022, the estimated fair value of our commodity derivative contracts, excluding Martica, was a net liability of approximately ~~$918 million. Please see~~$1.4 billion. See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for more information.

Table of Contents

Results of Operations

We have three operating segments: (i) the exploration, development and production of natural gas, NGLs and oil; (ii) marketing and utilization of excess firm transportation capacity; and (iii) midstream services through our equity method investment in Antero ~~Midstream Corporation.~~Midstream. Revenues from Antero ~~Midstream Corporation’s~~Midstream’s operations were primarily derived from intersegment transactions for services provided to our exploration and production operations by Antero Midstream~~Partners.~~. All intersegment transactions were eliminated upon consolidation, including revenues from water handling and treatment services provided by Antero Midstream~~Partners LP (“Antero Midstream Partners”)~~, which we capitalized as proved property development costs. Marketing revenues are primarily derived from activities to purchase and sell third-party natural gas and NGLs and to market and utilize excess firm transportation capacity. See Note 16—Reportable Segments to the unaudited condensed consolidated financial statements.

~~Table of Contents~~

Three Months Ended ~~June 30, 2020~~March 31, 2021 Compared to ~~Three Months Ended June 30, 2021~~March 31, 2022

The operating results of our reportable segments were as follows ~~for the three months ended June 30, 2021 and 2021~~ (in thousands):

Three Months Ended June 30, 2020

Equity Method

Elimination of

Investment in

Intersegment

Exploration

Antero

Transactions and

and

Midstream

Unconsolidated

Consolidated


Production

Marketing

Corporation

Affiliates

Total

Revenue and other:

Natural gas sales

$
367,415

—

—

—

367,415

Natural gas liquids sales

212,197

—

—

—

212,197

Oil sales

8,322

—

—

—

8,322

Commodity derivative fair value losses

(168,015)

—

—

—

(168,015)

Gathering, compression, water handling and treatment

—

—

237,342

(237,342)

—

Marketing

—

64,285

—

—

64,285

Other income (loss)

707

—

(17,606)

17,606

707

Total

$
420,626

64,285

219,736

(219,736)

484,911

Operating expenses:

Lease operating

$
24,742

—

—

—

24,742

Gathering and compression

202,773

—

42,067

(42,067)

202,773

Processing

242,592

—

—

—

242,592

Transportation

186,480

—

—

—

186,480

Production and ad valorem taxes

19,992

—

—

—

19,992

Marketing

—

113,053

—

—

113,053

Exploration

231

—

—

—

231

Impairment of oil and gas properties

37,350

—

—

—

37,350

Depletion, depreciation, and amortization

214,035

—

27,745

(27,745)

214,035

Accretion of asset retirement obligations

1,111

—

61

(61)

1,111

General and administrative (excluding equity-based compensation)

30,430

—

9,725

(9,725)

30,430

Equity-based compensation

7,973

—

2,697

(2,697)

7,973

Contract termination and rig stacking and other expenses

11,071

—

2,715

(2,715)

11,071

Total

978,780

113,053

85,010

(85,010)

1,091,833

Operating income (loss)

$
(558,154)

(48,768)

134,726

(134,726)

(606,922)

Equity in earnings of unconsolidated affiliates

$
20,228

—

20,947

(20,947)

20,228


	Three Months Ended March 31, 2021
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Revenue and other:
Natural gas sales	$	720,369		—		—		—		720,369
Natural gas liquids sales		440,319		—		—		—		440,319
Oil sales		44,686		—		—		—		44,686
Commodity derivative fair value losses		(177,756)		—		—		—		(177,756)
Gathering, compression, water handling and treatment		—		—		241,789		(241,789)		—
Marketing		—		164,790		—		—		164,790
Amortization of deferred revenue, VPP		11,150		—		—		—		11,150
Other income (loss)		640		—		(17,668)		17,668		640
Total revenue	$	1,039,408		164,790		224,121		(224,121)		1,204,198

Operating expenses:
Lease operating	$	24,547		—		—		—		24,547
Gathering and compression		220,288		—		39,314		(39,314)		220,288
Processing		184,320		—		—		—		184,320
Transportation		200,469		—		—		—		200,469
Production and ad valorem taxes		44,697		—		—		—		44,697
Marketing		—		162,077		—		—		162,077
Exploration		219		—		—		—		219
General and administrative (excluding equity-based compensation)		38,432		—		13,918		(13,918)		38,432
Equity-based compensation		5,642		—		4,012		(4,012)		5,642
Depletion, depreciation, and amortization		194,026		—		26,850		(26,850)		194,026
Impairment of oil and gas properties		34,062		—		—		—		34,062
Impairment of midstream assets		—		—		1,379		(1,379)		—
Accretion of asset retirement obligations		788		—		119		(119)		788
Contract termination and other expenses		91		—		4,942		(4,942)		91
Total operating expenses		947,581		162,077		90,534		(90,534)		1,109,658
Operating income	$	91,827		2,713		133,587		(133,587)		94,540

Equity in earnings of unconsolidated affiliates	$	18,694		—		20,744		(20,744)		18,694

4338

Table of Contents

Three Months Ended June 30, 2021

Equity Method

Elimination of

Investment in

Intersegment

Exploration

Antero

Transactions and

and

Midstream

Unconsolidated

Consolidated

Production

Marketing

Corporation

Affiliates

Total

Revenue and other:

Natural gas sales

$
626,520

—

—

—

626,520

Natural gas liquids sales

464,381

—

—

—

464,381

Oil sales

51,906

—

—

—

51,906

Commodity derivative fair value losses

(831,840)

—

—

—

(831,840)

Gathering, compression, water handling and treatment

—

—

250,455

(250,455)

—

Marketing

—

165,453

—

—

165,453

Amortization of deferred revenue, VPP

11,279

—

—

—

11,279

Gain on sale of assets

2,288

—

—

2,288

Other income (loss)

(619)

—

(17,668)

17,668

(619)

Total

$
323,915

165,453

232,787

(232,787)

489,368

Operating expenses:

Lease operating

$
21,645

—

—

—

21,645

Gathering and compression

224,073

—

39,555

(39,555)

224,073

Processing

209,627

—

—

—

209,627

Transportation

207,662

—

—

—

207,662

Production and ad valorem taxes

33,694

—

—

—

33,694

Marketing

—

198,994

—

—

198,994

Exploration

5,638

—

—

—

5,638

Impairment of oil and gas properties

9,303

—

—

—

9,303

Depletion, depreciation, and amortization

187,330

—

26,619

(26,619)

187,330

Accretion of asset retirement obligations

1,331

—

114

(114)

1,331

General and administrative (excluding equity-based compensation)

27,928

—

11,192

(11,192)

27,928

Equity-based compensation

4,249

—

3,059

(3,059)

4,249

Contract termination and rig stacking and other expenses

844

—

849

(849)

844

Total

933,324

198,994

81,388

(81,388)

1,132,318

Operating income (loss)

$
(609,409)

(33,541)

151,399

(151,399)

(642,950)

Equity in earnings of unconsolidated affiliates

$
17,477

—

21,515

(21,515)

17,477


	Three Months Ended March 31, 2022
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Revenue and other:
Natural gas sales	$	995,792		—		—		—		995,792
Natural gas liquids sales		660,305		—		—		—		660,305
Oil sales		63,294		—		—		—		63,294
Commodity derivative fair value losses		(1,011,380)		—		—		—		(1,011,380)
Gathering, compression, water handling and treatment		—		—		236,159		(236,159)		—
Marketing		—		69,038		—		—		69,038
Amortization of deferred revenue, VPP		9,272		—		—		—		9,272
Other income (loss)		519		—		(17,668)		17,668		519
Total revenue	$	717,802		69,038		218,491		(218,491)		786,840

Operating expenses:
Lease operating	$	17,780		—		—		—		17,780
Gathering and compression		201,462		—		42,012		(42,012)		201,462
Processing		190,601		—		—		—		190,601
Transportation		198,215		—		—		—		198,215
Production and ad valorem taxes		52,808		—		—		—		52,808
Marketing		—		98,896		—		—		98,896
Exploration		898		—		—		—		898
General and administrative (excluding equity-based compensation)		31,042		—		15,099		(15,099)		31,042
Equity-based compensation		4,649		—		2,832		(2,832)		4,649
Depletion, depreciation, and amortization		168,388		—		28,300		(28,300)		168,388
Impairment of oil and gas properties		22,462		—		—		—		22,462
Accretion of asset retirement obligations		2,444		—		64		(64)		2,444
Contract termination and other expenses		8		—		1,148		(1,148)		8
Loss (gain) on sale of assets		1,786		—		(118)		118		1,786
Total operating expenses		892,543		98,896		89,337		(89,337)		991,439
Operating income (loss)	$	(174,741)		(29,858)		129,154		(129,154)		(204,599)

Equity in earnings of unconsolidated affiliates	$	25,178		—		23,232		(23,232)		25,178

4439

Table of Contents

Exploration and Production Segment

The following table sets forth selected operating data of the exploration and production ~~segment for the three months ended June 30, 2020 compared to the three months ended June 30, 2021:~~segment:

Three Months Ended

Amount of

June 30,

Increase

Percent

2020

2021

(Decrease)

Change

Production data ⁽¹⁾:

Natural gas (Bcf)

215

208

(7)

(3)
%
C2 Ethane (MBbl)

4,622

4,356

(266)

(6)
%
C3+ NGLs (MBbl)

11,935

10,440

(1,495)

(13)
%
Oil (MBbl)

1,004

940

(64)

(6)
%
Combined (Bcfe)

320

303

(17)

(5)
%
Daily combined production (MMcfe/d)

3,521

3,324

(197)

(6)
%
Average prices before effects of derivative settlements ⁽²⁾:

Natural gas (per Mcf)

$
1.71

3.01

1.30

76
%
C2 Ethane (per Bbl)

$
5.76

9.97

4.21

73
%
C3+ NGLs (per Bbl)

$
15.55

40.32

24.77

159
%
Oil (per Bbl)

$
8.29

55.22

46.93

566
%
Weighted Average Combined (per Mcfe)

$
1.83

3.78

1.95

107
%
Average realized prices after effects of derivative settlements⁽²⁾:

Natural gas (per Mcf)

$
2.79

2.91

0.12

4
%
C2 Ethane (per Bbl)

$
5.66

9.97

4.31

76
%
C3+ NGLs (per Bbl)

$
20.23

35.95

15.72

78
%
Oil (per Bbl)

$
33.47

52.05

18.58

56
%
Weighted Average Combined (per Mcfe)

$
2.81

3.55

0.74

26
%
Average costs (per Mcfe):

Lease operating

$
0.08

0.07

(0.01)

(13)
%
Gathering and compression

$
0.63

0.74

0.11

17
%
Processing

$
0.76

0.69

(0.07)

(9)
%
Transportation

$
0.58

0.69

0.11

19
%
Production taxes

$
0.06

0.11

0.05

83
%
Marketing, net

$
0.15

0.11

(0.04)

(27)
%
Depletion, depreciation, amortization and accretion

$
0.67

0.62

(0.05)

(7)
%
General and administrative (excluding equity-based compensation)

$
0.09

0.09

—

—
%


	Three Months Ended				Amount of
	March 31,				Increase		Percent
	2021		2022		(Decrease)		Change
Production data ^{(1) (2)}:
Natural gas (Bcf)		207		199		(8)	(4)	%
C2 Ethane (MBbl)		4,405		4,005		(400)	(9)	%
C3+ NGLs (MBbl)		9,926		9,638		(288)	(3)	%
Oil (MBbl)		960		724		(236)	(25)	%
Combined (Bcfe)		299		285		(14)	(5)	%
Daily combined production (MMcfe/d)		3,322		3,165		(157)	(5)	%
Average prices before effects of derivative settlements ⁽³⁾:
Natural gas (per Mcf) ⁽⁴⁾	$	3.48		5.01		1.53	44	%
C2 Ethane (per Bbl)	$	8.20		16.74		8.54	104	%
C3+ NGLs (per Bbl)	$	40.72		61.55		20.83	51	%
Oil (per Bbl)	$	46.55		87.45		40.90	88	%
Weighted Average Combined (per Mcfe)	$	4.03		6.04		2.01	50	%
Average realized prices after effects of derivative settlements⁽³⁾:
Natural gas (per Mcf)	$	3.56		3.60		0.04	1	%
C2 Ethane (per Bbl)	$	7.53		16.63		9.10	121	%
C3+ NGLs (per Bbl)	$	39.79		61.14		21.35	54	%
Oil (per Bbl)	$	45.80		86.76		40.96	89	%
Weighted Average Combined (per Mcfe)	$	4.05		5.03		0.98	24	%
Average costs (per Mcfe):
Lease operating	$	0.08		0.06		(0.02)	(25)	%
Gathering and compression	$	0.74		0.71		(0.03)	(4)	%
Processing	$	0.62		0.67		0.05	8	%
Transportation	$	0.67		0.70		0.03	4	%
Production and ad valorem taxes	$	0.15		0.19		0.04	27	%
Marketing (revenue) expense, net	$	(0.01)		0.10		0.11	*
Depletion, depreciation, amortization, and accretion	$	0.65		0.60		(0.05)	(8)	%
General and administrative (excluding equity-based compensation)	$	0.13		0.11		(0.02)	(15)	%

*	Not meaningful.

(1)	Production data excludes volumes related to the volumetric production payment transaction (the “VPP”). ~~Please see Note 3— Transactions to the unaudited condensed consolidated financial statements for more information.~~

(2)	Oil and NGLs production was converted at 6 Mcf per Bbl to calculate total Bcfe production and per Mcfe amounts. This ratio is an estimate of the equivalent energy content of the products and may not reflect their relative economic value.

(3)

Average ~~sales~~ prices ~~shown in the table~~ reflect ~~both~~ the before and after effects of our settled commodity derivatives. Our calculation of such after effects includes gains 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. ~~Oil and NGLs production was converted at 6 Mcf per Bbl~~

(4)

The average realized price for the three months ended March 31, 2021 includes $85 million of net litigation proceeds related to ~~calculate total Bcfe production and per Mcfe amounts. This ratio is an estimate~~a favorable litigation judgment. See Note 14—Contingencies to the unaudited condensed consolidated financial statements for further discussion on the litigation proceeds. Excluding the effect of the ~~equivalent energy content of~~litigation proceeds received, the ~~products and does not necessarily reflect their relative economic value.~~average realized price for natural gas would have been $3.07 per Mcf for the three months ended March 31, 2021.

Natural gas sales. Revenues from sales of natural gas increased from ~~$367~~$720 million, which included net litigation proceeds of $85 million, for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$627~~$996 million for the ~~three months ended June 30, 2021,~~March 31, 2022, an increase of ~~$260~~$276 million, or ~~71%~~38%. ~~Lower natural gas production volumes during~~See Note 14—Contingencies to the ~~three months ended June 30, 2021 accounted~~unaudited condensed consolidated financial statements for ~~an approximate $11 million decrease in year-over-year natural gas sales revenue (calculated as~~more information on the ~~change in year-to-year volumes times the prior year average price), and increases in~~litigation proceeds.

Excluding net litigation proceeds, higher commodity prices (excluding the effects of derivative settlements) during the three months ended March 31, 2022 accounted for an approximate ~~$271~~$391 million increase in year-over-year gas sales revenue (calculated as the change in the year-to-year average price excluding the net proceeds from the litigation times current year production volumes). Lower natural gas production volumes accounted for an approximate $30 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 excluding the net proceeds from the litigation). See Note 14—Contingencies to the unaudited condensed consolidated financial statements for further discussion on the litigation proceeds.

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NGLs sales. Revenues from sales of NGLs increased from ~~$212~~$440 million for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$464~~$660 million for the three months ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$252~~$220 million, or ~~119%~~50%. Higher commodity prices (excluding the effects of derivative settlements) during the three months ended March 31, 2022 accounted for an approximate $235 million increase in year-over-year revenues (calculated as the change in ~~year-over-year volumes times~~ the ~~change in~~ year-to-year average ~~price)~~price times current year production volumes). Lower NGLs production volumes accounted for an approximate ~~$25~~$15 million decrease in year-over-year NGL revenues (calculated as the change in year-to-year volumes times the prior year average price)~~, and increases in commodity~~.

Oil sales. Revenues from sales of oil increased from $45 million for the three months ended March 31, 2021 to $63 million for the three months ended March 31, 2022, an increase of $18 million, or 42%. Higher oil prices, excluding the effects of derivative settlements, accounted for an approximate ~~$277~~$29 million increase in year-over-year oil revenues (calculated as the change in the year-to-year average price times current year production volumes).

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~~Oil sales~~~~. Revenues from sales of~~ Lower oil ~~increased from $8 million for~~production volumes during the three months ended June 30, 2020 to $52 million for the three months ended June 30, 2021, an increase of $44 million, or 524% (calculated as the change in year-over-year volumes times the change in year-to-year average price). Lower oil production volumesMarch 31, 2022 accounted for ~~less than $1~~an approximate $11 million decrease in year-over-year oil revenues (calculated as the change in year-to-year volumes times the prior year average price), and increases in commodity prices, excluding the effects of derivative settlements, accounted for an approximate $44 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes).

Commodity derivative fair value ~~gains (losses).~~losses. To achieve more predictable cash flows, and to reduce our exposure to price fluctuations, we enter into fixed for variable price swap contracts, swaptions, basis swap contracts and collar contracts when management believes that favorable future sales prices for our production can be secured. Because we do not designate these derivatives as accounting hedges, they do not receive hedge accounting treatment. 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 three months ended ~~June 30, 2020~~March 31, 2021 and ~~2021,~~2022, our commodity hedges resulted in derivative fair value losses of ~~$168~~$178 million and ~~$832 million,~~$1.0 billion, respectively. For the three months ended ~~June 30, 2020,~~March 31, 2021, commodity derivative fair value losses included ~~$314~~$5 million of cash proceeds for gains on settled derivatives. For the three months ended ~~June 30, 2021,~~March 31, 2022, commodity derivative fair value losses included ~~$70~~$285 million of cash payments on commodity settled derivatives ~~losses as well as $5 million for payments on derivative monetizations.~~losses.

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. Derivative asset or liability positions at the end of any accounting period may reverse to the extent future commodity prices increase or decrease from their levels at the end of the accounting period, or as gains or losses are realized through settlement. We expect continued volatility in commodity prices and the related fair value of our derivative instruments in the future.

Amortization of deferred revenue, VPP. ~~The three months ended June 30, 2021 includes amortization of $11 million~~Amortization of deferred revenues associated with the VPP ~~that closed during~~decreased from $11 million for the ~~third quarter~~three months ended March 31, 2021 to $9 million for the three months ended March 31, 2022, a decrease of ~~2020, which relate~~$2 million or 17%, primarily due to ~~the~~a decrease in production ~~volumes delivered under~~volumes. Under the terms of the agreement, ~~during such period~~the production volumes are delivered at approximately $1.61 per ~~MMBtu. See Note 3—Transactions to~~MMBtu over the ~~unaudited condensed consolidated financial statements for more information on this transaction.~~contractual term.

Lease operating expense. Lease operating expense decreased from $25 million for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$22~~$18 million for the three months ended ~~June 30, 2021,~~March 31, 2022, a decrease of $3$7 million or ~~13%.~~28%, primarily due to lower production volumes. On a per unit basis, lease operating expenses ~~were~~decreased from $0.08 per Mcfe for the three months ended ~~June 30, 2020 decreased~~March 31, 2021 to ~~$0.07~~$0.06 per Mcfe for ~~each of~~ the three months ended ~~June 30, 2021~~March 31, 2022, primarily due to ~~cost savings initiatives.~~lower water disposal costs, partially offset by decreased production and higher workover expense.

Gathering, compression, processing, and transportation expense. Gathering, compression, processing, and transportation expense ~~increased~~decreased from ~~$632~~$605 million for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$641~~$590 million for the three months ended ~~June 30, 2021, an increase~~March 31, 2022, a decrease of $9$15 million or 2%~~. This increase is~~, primarily a result of ~~higher~~lower production and decreased gathering and compression ~~and transportation~~ costs, partially offset by ~~lower~~higher processing costs between periods. Gathering and compression costs ~~increased~~decreased from ~~$0.63 per Mcfe for the three months ended June 30, 2020 to~~ $0.74 per Mcfe for the three months ended ~~June 30,~~March 31, 2021 ~~primarily due~~ to higher fuel costs as a result of increased natural gas prices and $12 million in incentive fee rebates from Antero Midstream Corporation received during the three months ended June 30, 2020 that were not received during the three months ended June 30, 2021. Processing costs decreased from $0.76$0.71 per Mcfe for the three months ended ~~June 30, 2020~~March 31, 2022, primarily due to ~~$0.69~~$12 million in incentive fee rebates earned from Antero Midstream during the three months ended March 31, 2022 that were not earned during the three months ended March 31, 2021. Processing costs increased from $0.62 per Mcfe for the three months ended ~~June 30,~~March 31, 2021 ~~due~~ to ~~lower terminal fees between periods. Transportation costs increased from $0.58~~$0.67 per Mcfe for the three months ended ~~2020~~March 31, 2022, primarily due to ~~$0.69~~increased costs for ethane transportation as well as increased processing fees as a result of an annual CPI-based adjustment during the first quarter of 2022. Transportation costs increased from $0.67 per Mcfe for the three months ended ~~June 30,~~March 31, 2021 to $0.70 per Mcfe for the three months ended March 31, 2022, primarily due to ~~increased usage on the Rockies Express Pipeline.~~higher fuel costs between periods.

Production and ad valorem tax expense. ~~Production~~Total production and ad valorem taxes increased from ~~$20~~$45 million for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$34~~$53 million for the three months ended ~~June~~March ~~30, 2021,~~31, 2022, an increase of ~~$14~~$8 million, or ~~69%~~18% primarily due to higher commodity prices between periods. On a per Mcfe basis, production and ad valorem taxes increased from $0.15 per Mcfe for the three months ended March 31, 2021 to $0.19 per Mcfe for the three months ended March 31, 2022. Production and ad

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valorem taxes as a percentage of natural gas revenues ~~was~~remained relatively consistent at 6% and 5% ~~in each of~~for the three months ended ~~June 30,~~March 31, 2021 and 2022, respectively.

General and administrative expense. General and administrative expense (excluding equity-based compensation expense) decreased from $38 million for the three months ended March 31, 2021 to $31 million for the three months ended March 31, 2022, a decrease of $7 million, or 19%, primarily due to lower salary and wage expense between periods and lower professional service fees. On a per-unit basis, general and administrative expense excluding equity-based compensation decreased from $0.13 per Mcfe for the three months ended March 31, 2021 to $0.11 per Mcfe for the three months ended March 31, 2022, primarily due to lower overall general and administrative expense between periods.

Equity-based compensation expense. Noncash equity-based compensation expense decreased from $6 million for the three months ended March 31, 2021 to $5 million for the three months ended March 31, 2022, a decrease of $1 million or 18%, primarily due to lower restricted share unit awards granted during 2020 (which vest over a four year service period) and ~~2021.~~equity award forfeitures, partially offset by new awards granted to employees. When an equity award is forfeited, expense previously recognized for the award is reversed. See Note 9—Equity Based Compensation and Cash Awards to the unaudited condensed consolidated financial statements for more information.

Depletion, depreciation, and amortization expense. Depletion, depreciation and amortization (“DD&A”) expense decreased from $194 million for the three months ended March 31, 2021 to $168 million for the three months ended March 31, 2022, a decrease of $26 million, or 13%, primarily as a result of increased proved reserve volumes due to higher commodity prices as well as lower production volumes between periods. DD&A expense decreased from $0.65 per Mcfe for the three months ended March 31, 2021 to $0.60 per Mcfe March 31, 2022, primarily as a result of increased proved reserve volumes between periods.

Impairment of oil and gas properties. Impairment of oil and gas properties decreased from ~~$37~~$34 million for the three months ended ~~June 30, 2020~~March 31, 2021 to $9$22 million for the three months ended ~~June~~ ~~30, 2021,~~March 31, 2022, a decrease of ~~$28~~$12 million, or ~~75%~~34%, primarily related to lower impairments of expiring leases between periods. During both periods, we recognized impairments primarily related to expiring leases and initial costs related to pads we no longer plan to place into service.

~~Depletion, depreciation, and amortization expense~~. DD&A expense decreased from $214 million for the three months ended June 30, 2020 to $187 million for the three months ended June 30, 2021, a decrease of $27 million, or 12%, primarily as a result of increased proved reserve volumes due to higher commodity prices as well as lower production volumes between periods. DD&A

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expense decreased from $0.67 per Mcfe for the three months ended June 30, 2020 to $0.62 per Mcfe for the three months ended June 30, 2021, primarily as a result of increased proved reserve volumes between periods.

~~General and administrative expense~~. General and administrative expense (excluding equity-based compensation expense) decreased from $30 million for the three months ended June 30, 2020 to $28 million for the three months ended June 30, 2021, a decrease of $2 million, or 8%. The decrease was primarily due to lower employee headcount during 2021. We had 524 and 504 employees as of June 30, 2020 and 2021, respectively. On a per-unit basis, general and administrative expense excluding equity-based compensation was $0.09 per Mcfe for both the three months ended June 30, 2020 and 2021, respectively.

~~Equity-based compensation expense~~. Noncash equity-based compensation expense decreased from $8 million for the three months ended June 30, 2020 to $4 million for the three months ended June 30, 2021, primarily due to equity award forfeitures partially offset by new awards granted to employees. When an equity award is forfeited, expense previously recognized for the award is reversed. Please see Note 9—Equity Based Compensation and Cash Awards to the unaudited condensed consolidated financial statements for more information on equity-based compensation awards.

Marketing Segment

~~Marketing.~~Where feasible, we purchase and sell third-party natural gas and NGLs and market our excess firm transportation capacity, or engage third parties to conduct these activities on our behalf, in order to optimize the revenues from these transportation agreements. 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~~The net effect of our marketing ~~expenses decreased~~segment changes from ~~$49~~net marketing income of $3 million, or ~~$0.15~~$0.01 per Mcfe, for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$34~~net marketing expenses of $30 million, or ~~$0.11~~$0.10 per Mcfe, for the three months ended ~~June 30, 2021. The decrease in net marketing expense was driven by higher marketing~~March 31, 2022, primarily due to lower volumes and lower gas marketing margins ~~that mitigated some of our excess firm transportation expense.~~between periods.

Marketing ~~revenues increased~~revenue. Marketing revenue decreased from ~~$64 million for the three months ended June 30, 2020 to~~ $165 million for the three months ended ~~June 30,~~March 31, 2021 ~~an increase of $101 million.~~

~~Marketing expenses increased from $113~~to $69 million for the three months ended ~~June 30, 2020~~March 31, 2022, a decrease of $96 million, or 58%, primarily due to ~~$199~~lower marketing volumes between periods, partially offset by increased commodity prices between periods. Lower natural gas marketing volumes accounted for a $115 million decrease in year-over-year marketing revenues (calculated as the change in year-to-year volumes times the prior year average price), and changes in our natural gas prices accounted for an approximate $15 million increase in year-over-year marketing revenues (calculated as the change in the year-to-year average price times current year marketing volumes). Higher oil marketing volumes accounted for a $4 million increase in year-over-year marketing revenues (calculated as the change in year-to-year volumes times the prior year average price), and changes in our oil prices accounted for an approximate $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). Lower ethane marketing volumes accounted for a $3 million decrease in year-over-year marketing revenues (calculated as the change in year-to-year volumes times the prior year average price), and changes in our ethane prices accounted for an approximate $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). Lower NGL marketing volumes between periods also contributed to decreased marketing revenues during the three months ended March 31, 2022.

Marketing expense. Marketing expense decreased from $162 million for the three months ended ~~June~~ ~~30,~~March 31, 2021 ~~an increase~~to $99 million for the three months ended March 31, 2022, a decrease of ~~$86~~$63 million, or ~~76%~~39%. Marketing ~~expenses include~~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 as well as the~~capacity. The cost of third-party ~~purchased~~natural gas ~~and NGLs.~~decreased approximately $54 million, which was partially offset by increased oil purchases of

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approximately $8 million between periods. The total costs decreased primarily due to decreased marketing volumes between periods, partially offset by increased commodity prices. Firm transportation costs ~~included in the expenses above~~ were ~~$41 million and $19~~$56 million for the three months ended ~~June 30, 2020~~March 31, 2021 and ~~2021, respectively.~~

~~Equity Method Investment in Antero Midstream Corporation~~

~~Antero Midstream Corporation.~~ ~~Revenue from the Antero Midstream Corporation segment increased from $220~~$38 million for the three months ended ~~June 30, 2020~~March 31, 2022, a decrease of $18 million due to ~~$233~~the reduction in firm transportation commitments and third-party marketed volumes between periods.

Antero Midstream Segment

Antero Midstream revenue. Revenue from the Antero Midstream segment decreased from $224 million for the three months ended ~~June~~ ~~30,~~March 31, 2021 ~~an increase~~to $218 million for the three months ended March 31, 2022, a decrease of ~~$13~~$6 million, ~~or 6%,~~ primarily due to a decrease in low pressure revenues due to higher ~~gathering~~fee rebates earned by us and ~~compression revenues as a result of increased throughput between periods, partially offset by~~ lower water handling revenue as a result of ~~operational efficiencies.~~decreased well completions period-over-period, partially offset by higher compression and high pressure gathering revenues due to increased throughput between periods as well as higher low pressure, compression and high pressure fees as a result of an annual CPI-based adjustment.

Antero Midstream operating expense. Total operating ~~expenses~~expense related to the segment decreased from ~~$85~~$91 million for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$81~~$89 million for the three months ended ~~June 30, 2021,~~March 31, 2022 primarily due to ~~lower water handling~~increased direct operating ~~expenses~~costs as a result of ~~operational efficiencies, partially offset by increased gathering~~resuming fresh water deliveries to us in the Utica Shale and ~~compression expenses due~~a loss on the sale of excess pipe inventory during the three months ended March 31, 2021 compared to ~~higher throughput volumes.~~a gain on asset sale of miscellaneous equipment and pipe inventory during the three months ended March 31, 2022.

Discussion of Items Not Allocated to Segments

Interest expense. ~~Our interest~~Interest expense decreased from ~~$52~~$43 million for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$50~~$38 million for the three months ended ~~June 30, 2021,~~March 31, 2022, a decrease of $2$5 million or 4%12%, primarily due to the reduction in debt as a result of the repurchase of certain of our unsecured senior notes between periods. Interest expense includes approximately $5 million and ~~increased interest income between periods, partially offset by interest that accrued on~~$1 million of amortization of debt issuance costs and debt discounts and premiums for the ~~2026 Convertible Notes, 2026 Notes, 2029 Notes~~three months ended March 31, 2021 and ~~2030 Notes, each of which was issued after June 30, 2020.~~2022, respectively.

~~Gain (loss)~~Loss on early extinguishment of debt. ~~During the three months ended June 30, 2020,~~On January 12, 2021, we ~~recognized~~completed a ~~gain on early extinguishment~~registered direct offering (the “January Share Offering”) of ~~debt~~an aggregate of ~~$39~~31.4 million ~~related to $236 million principal amount~~shares of ~~debt that we repurchased~~our common stock at a ~~weighted average discount~~price of ~~17%~~$6.35 per share to certain holders of our 4.25% convertible senior notes due 2026 (the “2026 Convertible Notes”). ~~During~~We used the ~~three months ended June 30,~~proceeds from the January Share Offering and approximately $63 million of borrowings under the senior secured revolving credit facility prior to October 26, 2021 ~~we equitized $56~~to repurchase from such holders $150 million aggregate principal amount of ~~our~~the 2026 Convertible Notes in privately negotiated transactions (the “January Convertible Note Repurchase,” and, collectively with the ~~May~~January Share Offering, the “January Equitization Transactions and as a result, we recognized a loss of $21 million which represents the difference between the fair value of the liability component of the 2026 Convertible Notes and the carrying value of such notes.Transactions”). Additionally, during the three months ended ~~June 30,~~March 31, 2021, we redeemed ~~the remaining balance of $574~~$661 million of our ~~2023 Notes~~5.125% senior notes due December 1, 2022 (the “2022 Notes”) at

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par, plus accrued and unpaid interest and recognized a $2 million loss on early extinguishment of debt. As result, the 2022 Notes were fully retired as of February 10, 2021. During the three months ended March 31, 2022, we redeemed the remaining $585 million aggregate principal amount of our 2025 Notes at a redemption price of 101.25% of par, plus accrued and unpaid interest, which resulted in a loss on early debt extinguishment of $11 million. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements.

Loss on convertible note equitization. During the three months ended March 31, 2021, we recognized a loss of $39 million for the January Equitization Transactions, which represents the consideration paid in excess of the original terms of the 2026 Convertible Notes. There were no equitization transactions during the three months ended March 31, 2022. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.

~~Loss on convertible note equitization.~~ During the three months ended June 30, 2021, we recognized a loss of $12 million for the May Equitization Transactions, which represents the consideration paid in excess of the original terms of the 2026 Convertible Notes. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.

~~Transaction expense.~~ We incurred transaction expense of $6 million for the three months ended June 30, 2020, which expenses included legal and transaction fees associated with the sale of our overriding royalty interest and the creation of Martica. See Note 3—Transactions to the unaudited condensed consolidated financial statements for more information on this transaction.

Income tax benefit. Income tax benefit increased from ~~$142~~$3 million, with an effective tax rate of ~~24%~~21%, for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$176~~$53 million, with an effective tax rate of ~~25%~~23%, for the three months ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$34~~$50 million. The increase in tax benefit was primarily due to a higher loss before income taxes between periods.

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~~Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2021~~

~~The operating results of our reportable segments were as follows for the six months ended June 30, 2020 and 2021 (in thousands):~~

Six Months Ended June 30, 2020

Equity Method

Elimination of

Investment in

Intersegment

Exploration

Antero

Transactions and

and

Midstream

Unconsolidated

Consolidated

Production

Marketing

Corporation

Affiliates

Total

Revenue and other:

Natural gas sales

$
778,497

—

—

—

778,497

Natural gas liquids sales

469,870

—

—

—

469,870

Oil sales

43,968

—

—

—

43,968

Commodity derivative fair value gains

397,818

—

—

—

397,818

Gathering, compression, water handling and treatment

—

—

498,655

(498,655)

—

Marketing

—

110,358

—

—

110,358

Other income (loss)

1,505

—

(35,211)

35,211

1,505

Total

$
1,691,658

110,358

463,444

(463,444)

1,802,016

Operating expenses:

Lease operating

50,386

—

—

—

50,386

Gathering and compression

395,781

—

90,795

(90,795)

395,781

Processing

452,828

—

—

—

452,828

Transportation

371,860

—

—

—

371,860

Production and ad valorem taxes

45,691

—

—

—

45,691

Marketing

—

206,326

—

—

206,326

Exploration

441

—

—

—

441

Impairment of oil and gas properties

126,570

—

—

—

126,570

Impairment of midstream assets

—

—

664,544

(664,544)

—

Depletion, depreciation, and amortization

413,712

—

55,088

(55,088)

413,712

Accretion of asset retirement obligations

2,215

—

103

(103)

2,215

General and administrative (excluding equity-based compensation)

58,322

—

19,924

(19,924)

58,322

Equity-based compensation

11,302

—

6,035

(6,035)

11,302

Contract termination and rig stacking and other expenses

11,071

—

11,393

(11,393)

11,071

Total

1,940,179

206,326

847,882

(847,882)

2,146,505

Operating loss

$
(248,521)

(95,968)

(384,438)

384,438

(344,489)

Equity in earnings (loss) of unconsolidated affiliates

$
(107,827)

—

40,024

(40,024)

(107,827)

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Six Months Ended June 30, 2021

Equity Method

Elimination of

Investment in

Intersegment

Exploration

Antero

Transactions and

and

Midstream

Unconsolidated

Consolidated

Production

Marketing

Corporation

Affiliates

Total

Revenue and other:

Natural gas sales

$
1,346,889

—

—

—

1,346,889

Natural gas liquids sales

904,700

—

—

—

904,700

Oil sales

96,592

—

—

—

96,592

Commodity derivative fair value gains

(1,009,596)

—

—

—

(1,009,596)

Gathering, compression, water handling and treatment

—

—

492,244

(492,244)

—

Marketing

—

330,243

—

—

330,243

Amortization of deferred revenue, VPP

22,429

—

—

—

22,429

Gain on sale of assets

2,288

—

—

2,288

Other income

21

—

(35,336)

35,336

21

Total

$
1,363,323

330,243

456,908

(456,908)

1,693,566

Operating expenses:

Lease operating

$
46,192

—

—

—

46,192

Gathering and compression

444,361

—

78,869

(78,869)

444,361

Processing

393,947

—

—

—

393,947

Transportation

408,131

—

—

—

408,131

Production and ad valorem taxes

78,391

—

—

—

78,391

Marketing

—

361,071

—

—

361,071

Exploration

5,857

—

—

—

5,857

Impairment of oil and gas properties

43,365

—

—

—

43,365

Impairment of midstream assets

—

—

1,379

(1,379)

—

Depletion, depreciation, and amortization

381,356

—

53,469

(53,469)

381,356

Accretion of asset retirement obligations

2,119

—

233

(233)

2,119

General and administrative (excluding equity-based compensation)

66,360

—

25,110

(25,110)

66,360

Equity-based compensation

9,891

—

7,071

(7,071)

9,891

Contract termination and rig stacking and other expenses

935

—

5,791

(5,791)

935

Total

1,880,905

361,071

171,922

(171,922)

2,241,976

Operating income (loss)

$
(517,582)

(30,828)

284,986

(284,986)

(548,410)

Equity in earnings of unconsolidated affiliates

$
36,171

—

42,259

(42,259)

36,171

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~~Exploration and Production Segment~~

~~The following table sets forth selected operating data of the exploration and production segment for the six months ended June 30, 2020 compared to the six months ended June 30, 2021:~~

Amount of

Six Months Ended June 30,

Increase

Percent


2020

2021

(Decrease)

Change

Production data ^{(1) (2)}:

Natural gas (Bcf)

423

415

(8)

(2)
%

C2 Ethane (MBbl)

9,227

8,761

(466)

(5)
%

C3+ NGLs (MBbl)

22,767

20,366

(2,401)

(11)
%

Oil (MBbl)

1,941

1,900

(41)

(2)
%

Combined (Bcfe)

627

601

(26)

(4)
%

Daily combined production (MMcfe/d)

3,444

3,323

(121)

(4)
%

Average prices before effects of derivative settlements⁽³⁾:

Natural gas (per Mcf)

$
1.84

3.24

1.40

76
%

C2 Ethane (per Bbl)

$
5.79

9.08

3.29

57
%

C3+ NGLs (per Bbl)

$
18.29

40.52

22.23

122
%

Oil (per Bbl)

$
22.65

50.84

28.19

124
%

Weighted Average Combined (per Mcfe)

$
2.06

3.90

1.84

89
%

Average realized prices after effects of derivative settlements⁽³⁾:

Natural gas (per Mcf)

$
2.84

3.23

0.39

14
%

C2 Ethane (per Bbl)

$
5.74

8.74

3.00

52
%

C3+ NGLs (per Bbl)

$
21.34

37.82

16.48

77
%

Oil (per Bbl)

$
40.15

48.90

8.75

22
%

Weighted Average Combined (per Mcfe)

$
2.90

3.80

0.90

31
%

Average costs (per Mcfe):

Lease operating

$
0.08

0.08

—

—
%

Gathering and compression

$
0.63

0.74

0.11

17
%

Processing

$
0.72

0.65

(0.07)

(10)
%

Transportation

$
0.59

0.68

0.09

15
%

Production and ad valorem taxes

$
0.07

0.13

0.06

86
%

Marketing expense, net

$
0.15

0.05

(0.10)

(67)
%

Depletion, depreciation, amortization, and accretion

$
0.66

0.64

(0.02)

(3)
%

General and administrative (excluding equity-based compensation)

$
0.09

0.11

0.02

22
%

~~(1)~~

Production data excludes volumes related to the volumetric production payment transaction (the “VPP”). Please see Note 3— Transactions to the unaudited condensed consolidated financial statements for more information.

~~(2)~~

Average sales prices shown in the table reflect both the before and after effects of our settled commodity derivatives. Our calculation of such after effects includes gains 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. Oil and NGLs production was converted at 6 Mcf per Bbl to calculate total Bcfe production and per Mcfe amounts. This ratio is an estimate of the equivalent energy content of the products and does not necessarily reflect their relative economic value.

~~(3)~~

The average realized price for the six months ended June 30, 2021 includes $85 million of net litigation proceeds related to a favorable litigation judgment. See Note 14—Contingencies to the unaudited condensed consolidated financial statements for further discussion on the litigation proceeds. Excluding the effect of the litigation proceeds received, the average realized price would have been $3.04 per Mcf.

~~Natural gas sales~~. Revenues from sales of natural gas increased from $778 million for the six months ended June 30, 2020 to $1.3 billion, which included litigation proceeds of $85 million, for the six months ended June 30, 2021, an increase of $568 million, or 73%. Please see Note 14— Contingencies to the unaudited condensed consolidated financial statements for more information on the litigation proceeds.

Excluding net litigation proceeds, lower natural gas production volumes during the six months ended June 30, 2021 accounted for an approximate $14 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 excluding the net proceeds from the litigation), and increases in commodity prices (excluding the effects of derivative settlements) accounted for an approximate $497 million increase in year-over-year gas sales revenue (calculated as the change in the year-to-year average price excluding the net proceeds from the litigation times current year production volumes).

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~~NGLs sales~~. Revenues from sales of NGLs increased from $470 million for the six months ended June 30, 2020 to $905 million for the six months ended June 30, 2021, an increase of $435 million, or 93% (calculated as the change in year-over-year volumes times the change in year-to-year average price). Lower NGLs production volumes accounted for an approximate $47 million decrease in year-over-year NGL revenues (calculated as the change in year-to-year volumes times the prior year average price), and increases in commodity prices, excluding the effects of derivative settlements, accounted for an approximate $482 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes).

~~Oil sales~~. Revenues from sales of oil increased from $44 million for the six months ended June 30, 2020 to $97 million for the six months ended June 30, 2021, an increase of $53 million, or 120% (calculated as the change in year-over-year volumes times the change in year-to-year average price). Lower oil production volumes accounted for a $1 million decrease in year-over-year oil revenues (calculated as the change in year-to-year volumes times the prior year average price), and increases in commodity prices, excluding the effects of derivative settlements, 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).

~~Commodity derivative fair value gains (losses).~~ To achieve more predictable cash flows, and to reduce our exposure to price fluctuations, we enter into fixed for variable price swap contracts, basis swap contracts and collar contracts when management believes that favorable future sales prices for our production can be secured. Because we do not designate these derivatives as accounting hedges, they do not receive hedge accounting treatment. 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, 2020, our commodity hedges resulted in derivative fair value gains of $398 million. For the six months ended June 30, 2021, our commodity hedges resulted in derivative fair value loss of $1.0 billion. Commodity derivative fair value losses included $525 million of cash proceeds for gains on settled derivatives for the six months ended June 30, 2020. For the six months ended June 30, 2021, commodity derivative fair value losses included $65 million of cash payments on commodity derivative losses as well as $5 million for payments on derivative monetizations.

~~Amortization of deferred revenue, VPP.~~ The six months ended June 30, 2021 includes amortization of $22 million of deferred revenues associated with the VPP that closed during the third quarter of 2020, which relate to the production volumes delivered under the terms of the agreement during such period at approximately $1.61 per MMBtu. See Note 3—Transactions to the unaudited condensed consolidated financial statements for more information on this transaction.

~~Lease operating expense~~. Lease operating expense decreased from $50 million for the six months ended June 30, 2020 to $46 million for the six months ended June 30, 2021, a decrease of $4 million or 8% primarily due to cost savings initiatives. On a per unit basis, lease operating expenses were $0.08 per Mcfe for each of the six months ended June 30, 2020 and 2021.

~~Gathering, compression, processing, and transportation expense.~~ Gathering, compression, processing, and transportation expense remained relatively flat at $1.2 billion for both the six months ended June 30, 2020 and 2021. Gathering and compression costs increased from $0.63 per Mcfe for the six months ended June 30, 2020 to $0.74 per Mcfe for the six months ended June 30, 2021, primarily due to higher fuel costs as a result of increased natural gas prices and $24 million in incentive fee rebates from Antero Midstream Corporation received during the six months ended June 30, 2020 that were not received during the six months ended June 30, 2021. Processing costs decreased from $0.72 per Mcfe for the six months ended June 30, 2020 to $0.65 per Mcfe for the six months ended June 30, 2021, due to lower terminal fees between periods. Transportation costs increased from $0.59 per Mcfe for the six months ended June 30, 2020 to $0.68 per Mcfe for the six months ended June 30, 2021 primarily due to increased usage on the Rockies Express Pipeline.

~~Production and ad valorem tax expense.~~ ~~Production and ad valorem taxes increased from $46 million for the six months ended June 30, 2020 to $78 million for the six months ended June~~ 30, 2021, an increase of $32 million, or 72% primarily due to higher commodity prices between periods and $5 million for the litigation judgment. Production and ad valorem taxes as a percentage of natural gas revenues was relatively consistent at 6% in each of the six months ended June 30, 2020 and 2021.

~~Impairment of oil and gas properties~~. Impairment of oil and gas properties decreased from $127 million for the six months ended June 30, 2020 to $43 million for the six months ended June 30, 2021, a decrease of $84 million, or 66%, primarily related to

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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.

~~Depletion, depreciation, and amortization expense~~. DD&A expense decreased from $414 million for the six months ended June 30, 2020 to $381 million for the six months ended June 30, 2021, a decrease of $33 million, or 8%, primarily as a result of increased proved reserve volumes between periods due to higher commodity prices as well as lower production volumes between periods. DD&A per Mcfe remained relatively consistent at $0.66 per Mcfe and $0.64 per Mcfe during the six months ended June 30, 2020 and 2021, respectively.

~~General and administrative expense~~. General and administrative expense (excluding equity-based compensation expense) increased from $58 million for the six months ended June 30, 2020 to $66 million for the six months ended June 30, 2021, an increase of $8 million, or 14%. The increase was primarily due to higher salary and wage expense between periods, which includes our annual incentive program that was significantly reduced during 2020. We had 524 and 504 employees as of June 30, 2020 and 2021, respectively. On a per-unit basis, general and administrative expense excluding equity-based compensation increased by $0.02 per Mcfe, from $0.09 per Mcfe during the six months ended June 30, 2020 to $0.11 per Mcfe during the six months ended June 30, 2021 as a result of lower production volumes and higher overall costs between periods.

~~Equity-based compensation expense~~. Noncash equity-based compensation expense decreased from $11 million for the six months ended June 30, 2020 to $10 million for the six months ended June 30, 2021, primarily due to equity award forfeitures partially offset by new awards granted to employees. When an equity award is forfeited, expense previously recognized for the award is reversed. Please see Note 9—Equity Based Compensation and Cash Awards to the unaudited condensed consolidated financial statements for more information on equity-based compensation awards.

~~Marketing Segment~~

~~Marketing.~~ Where feasible, we purchase and sell third-party natural gas and NGLs and market our excess firm transportation capacity, or engage third parties to conduct these activities on our behalf, to optimize the revenues from these transportation agreements. We have entered into long-term firm transportation agreements for a significant portion of our current and expected future production to secure guaranteed capacity to favorable markets.

~~Net marketing expenses decreased from $96 million, or $0.15 per Mcfe, for the six months ended June 30, 2020 to $31 million, or $0.05 per Mcfe, for the six months ended June~~ ~~30, 2021. The decrease was driven by higher marketing volumes and margins that mitigated some of our excess firm transportation expense.~~

~~Marketing revenues increased from $110 million for the six months ended June 30, 2020 to $330 million for the six months ended June 30, 2021, an increase of $220 million.~~

~~Marketing expenses increased from $206 million for the six months ended June 30, 2020 to $361 million for the six months ended June~~ 30, 2021, an increase of $155 million, or 75%. Marketing expenses include firm transportation costs related to current excess firm capacity as well as the cost of third-party purchased gas and NGLs. Firm transportation costs included in the expenses above were $88 million and $53 million for the six months ended June 30, 2020 and 2021, respectively.

~~Equity Method Investment in Antero Midstream Corporation~~

~~Antero Midstream Corporation.~~ ~~Revenue from the Antero Midstream Corporation segment decreased from $463 million for the six months ended June 30, 2020 to $457 million for the six months ended June~~ 30, 2021, a decrease of $6 million, or 1%, primarily due to lower fresh water delivery revenue as a result of decreased well completions period-over-period, partially offset by higher gathering and compression revenues as a result of increased throughput between periods. Total operating expenses related to the segment decreased from $848 million for the six months ended June 30, 2020 to $172 million for the six months ended June 30, 2021, was primarily due to impairments by Antero Midstream Corporation during the six months ended June 30, 2020 of $89 million on its freshwater pipelines and equipment and impairment of goodwill of $575 million. Antero Midstream Corporation’s impairment expense was $1 million for the six months ended June 30, 2021 due to a lower of cost of market adjustment for pipe inventory.

~~Items Not Allocated to Segments~~

~~Interest expense.~~ Our interest expense decreased from $105 million for the six months ended June 30, 2020 to $93 million for the six months ended June 30, 2021 primarily due to the reduction in debt as a result of our debt repurchases of our unsecured

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senior notes and increased interest income between periods, partially offset by interest that accrued on the 2026 Convertible Notes, 2026 Notes, 2029 Notes and 2030 Notes, each of which was issued after June 30, 2020.

~~Impairment of equity investment~~. As of March 31, 2020, we determined that events and circumstances indicated that the carrying value of our equity method investment in Antero Midstream Corporation had experienced an other-than-temporary decline and we recorded an impairment of $611 million. The fair value of the equity method investment in Antero Midstream Corporation was based on the quoted market share price of Antero Midstream Corporation as of March 31, 2020. There was no such impairment for the six months ended June 30, 2021.

~~Gain (loss) on early extinguishment of debt.~~ During the six months ended June 30, 2020, we recognized a gain on early extinguishment of debt of $120 million related to $619 million principal amount of debt that we repurchased at a weighted average discount of 19%. During the six months ended June 30, 2021, we equitized $206 million aggregate principal amount of our 2026 Convertible Notes in privately negotiated exchange transactions and as a result, we recognized a loss of $61 million which represents the difference between the fair value of the liability component of the 2026 Convertible Notes and the carrying value of such notes. Additionally, during the six months ended June 30, 2021, we redeemed the remaining balance of $661 million of our 2022 Notes at par, plus accrued and unpaid interest and the remaining balance of $574 million of our 2023 Notes at par, plus accrued and unpaid interest and recognized a $5 million loss on early extinguishment of debt. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.

~~Loss on convertible note equitization.~~ During the six months ended June 30, 2021, we recognized a loss of $51 million for the January Equitization Transactions and the May Equitization Transactions, which represents the consideration paid in excess of the original terms of the 2026 Convertible Notes. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.

~~Transaction expense.~~ Transaction expense decreased from $6 million for the six months ended June 30, 2020 to $2 million for the six months ended June 30, 2021, a decreased of $4 million or 66%. Transaction expenses for the six months ended June 30, 2020 included legal and transaction fees associated with the sale of our overriding royalty interest and the creation of Martica. For the six months ended June 30, 2021, transaction expense included legal and transaction fees associated with the drilling partnership. See Note 3—Transactions to the unaudited condensed consolidated financial statements for more information on this transaction.

~~Income tax benefit~~. Income tax benefit decreased from $252 million, with an effective tax rate of 24%, for the six months ended June 30, 2020 to $179 million, with an effective tax rate of 25%, for the six months ended June 30, 2021, a decrease of $73 million. The decrease was primarily due to lower loss before income taxes between periods.

Capital Resources and Liquidity

Sources and Uses of Cash

Our primary sources of liquidity have been through net cash provided by operating activities, ~~including proceeds from derivatives, as well as~~ borrowings under ~~the Credit Facility,~~our senior secured revolving credit facility (the “Credit Facility”), issuances of debt and equity securities and additional contributions from our asset sales program, including our drilling partnership. Our primary use of cash has been for the exploration, development and acquisition of oil and natural gas properties. As we develop our reserves, we continually monitor what capital resources, including

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equity and debt financings, are available to meet our future financial obligations, planned capital expenditure activities and liquidity requirements. Our future success in growing our proved reserves and production will be highly dependent on net cash provided by operating activities and the capital resources available to us. For information about the impacts of COVID-19 on our capital resources and liquidity, see “—COVID-19 Pandemic.”

Based on strip prices as of ~~June 30, 2021,~~March 31, 2022, we believe that net cash provided by operating activities, distributions from our unconsolidated affiliate and available borrowings under the Credit Facility ~~capital market transactions and the effects of the drilling partnership~~ 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.

~~2021 Capital Budget and Capital Spending~~

~~On February 17, 2021, we announced our net capital budget for 2021 is $635 million, which includes: $590 million for drilling and completion and $45~~ million for leasehold expenditures. We do not include acquisitions in our capital budget. We periodically review our capital expenditures and adjust our budget and its allocation based on commodity prices, takeaway constraints, operating cash flow and liquidity, and on July 28, 2021, ~~we announced a $22.5 million increase for our leasehold expenditures to $65~~

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million for 2021 to reflect accelerated leasing activity focused on organically expanding our core liquids rich inventory. As a result, our total net capital budget for 2021 was revised to $657.5 million.

~~For the six months ended June 30, 2021,~~ our total consolidated capital expenditures, which excludes QL’s working interest share of such costs, were approximately $341 million, including drilling and completion costs of $307 million, leasehold acquisitions of $31 million, and other capital expenditures of $3 million.

Cash Flows

The following table summarizes our cash flows ~~for the six months ended June 30, 2020 and 2021:~~(in thousands):

Six Months Ended June 30,


2020

2021

Net cash provided by operating activities

$
316,640

872,272

Net cash used in investing activities

(449,608)

(302,878)

Net cash provided by (used in) financing activities

132,968

(564,853)

Net increase in cash and cash equivalents

$
—

4,541


	Three Months Ended March 31,
	2021		2022
Net cash provided by operating activities	$	563,731		565,673
Net cash used in investing activities		(122,975)		(215,117)
Net cash used in financing activities		(440,756)		(350,556)
Net increase in cash and cash equivalents	$	—		—

Operating Activities. Net cash provided by operating activities was ~~$317~~$564 million and ~~$872~~$566 million for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 and ~~2021,~~2022, respectively. Net cash provided by operating activities increased primarily due to increases in commodity prices both before and after the effects of settled commodity derivatives, ~~decreased net marketing expense as well as decreased~~partially offset by increased cash utilized for working capital, ~~partially offset by increases in gathering, compression~~decreased production, increased net marketing expense and ~~transportation costs and~~increased production and ad valorem taxes between periods.

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. Prices for natural gas, NGLs and oil are primarily determined by prevailing market conditions. Regional and worldwide economic activity, weather, infrastructure capacity to reach markets, storage capacity and other variables influence the market conditions for these products. For example, the impact of the COVID-19 outbreak ~~has~~ reduced ~~domestic and international~~global demand for natural gas, NGLs and oil. These factors are beyond our control and are difficult to predict.

Investing Activities. ~~Cash flows~~Net cash used in investing activities ~~decreased~~increased from ~~$450~~$123 million for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 to ~~$303~~$215 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, primarily due to ~~a decrease~~an increase in capital expenditures of ~~$269~~$93 million during the six months ended June 30, 2020 as compared to the same period in 2021, which was partially offset by $125 million in settlement of the water earnout impacting the six months ended June 30, 2020.between periods.

Financing Activities. Net cash flows ~~provided by (used in) financing activities changed from $133 million net cash flows provided by financing activities for the six months ended June 30, 2020 to $565 million net cash~~ used in financing activities decreased from $441 million for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2021 to $351 million for the three months ended March 31, 2022. During the ~~six~~three months ended ~~June 30,~~March 31, 2021, we issued $500 million aggregate principal amount of 8.375% senior notes due July 15, 2026 ~~Notes,~~and $700 million aggregate principal amount of 7.625% senior notes due February 1, 2029 ~~Notes and $600 million aggregate principal amount of 2030 Notes~~ (net of ~~$22~~$15 million of aggregate debt issuance costs), of which proceeds were used to (i) redeem $661 million aggregate principal amount of our 2022 Notes, which were fully retired, (ii) ~~redeem $574 million of our 2023 Notes, which were fully retired~~ and ~~(iii)~~ partially repay borrowings on our ~~Credit Facility.~~senior secured revolving credit facility. Also, during the ~~six~~three months ended ~~June 30,~~March 31, 2021, we completed the January Share Offering and ~~the May Share Offering and~~ used the proceeds and approximately ~~$89~~$63 million of borrowings under the ~~Credit Facility~~senior secured revolving credit facility to repurchase ~~$206~~$150 million aggregate principal amount of the 2026 Convertible Notes in privately negotiated transactions. Additionally, during the ~~six~~three months ended ~~June 30,~~March 31, 2021, we ~~received a $51 million payment from Martica and~~ distributed ~~$46~~$25 million to the noncontrolling interest in Martica. ~~Further, we repaid the remaining outstanding balance on our Credit Facility with net cash provided by operating activities.~~ During the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2022, we ~~repurchased~~ (i) ~~$619~~redeemed $585 million aggregate principal amount of ~~debt at a weighted average discount of 19% for $497~~our 2025 Notes (ii) repurchased 3.7 million ~~of cash and (ii) $43 million~~shares of our common stock at ~~weighted average price~~a total cost of ~~$1.54 per share.~~

~~Debt Agreements~~

~~Senior Secured Revolving Credit Facility~~

~~Our~~approximately $100 million and (iii) distributed $36 million to the noncontrolling interest in Martica. Additionally, we borrowed $388 million, net, on our Credit Facility during the three months ended March 31, 2022.

2022 Capital Budget and Capital Spending

On February 16, 2022, we announced our net capital budget for 2022 is ~~with~~$740 million to $775 million. Our budget includes: a ~~consortium~~range of ~~bank lenders. Borrowings under~~$675 million to $700 million for drilling and completion and a range of $65 million to $75 million for leasehold expenditures. We do not budget for acquisitions. During 2022, we plan to complete 60 to 65 net horizontal wells in the ~~Credit Facility are subject to borrowing base limitations based on the collateral value of our assets and are subject to regular redeterminations. The borrowing base was re-affirmed~~Appalachian Basin. We

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

~~at $2.85 billion in~~

For the ~~semi-annual redetermination in April 2021. The next redetermination~~three months ended March 31, 2022, our total consolidated capital expenditures were approximately $206 million, including drilling and completion costs of ~~the borrowing base is scheduled to occur in October 2021. The Credit Facility is scheduled to mature on October 26, 2022.~~$175 million, leasehold acquisitions of $24 million, and other capital expenditures of $7 million.

Debt Agreements

~~As of June 30, 2021, we had no borrowings and had $742 million of letters of credit outstanding under the Credit Facility.~~

~~We were in compliance with the applicable covenants and ratios as of December 31, 2020 and June~~ ~~30, 2021. As of June 30, 2021, our current ratio was 3.0 to 1.0 and our interest coverage ratio was 13.8 to 1.0.~~

~~For more information on the terms, conditions, and restrictions under the Credit Facility, please refer to the 2020 Form 10-K.~~

~~Senior Notes and Convertible Senior Notes~~

~~Please refer to~~See Note 7—Long Term Debt to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the ~~2020~~2021 Form 10-K for information on our senior notes.

~~Non-GAAP Financial Measures~~

Adjusted EBITDAX is a non-GAAP financial measure that we define as net income (loss), including noncontrolling interests, before interest expense, interest income, gains or losses from commodity derivatives, amortization of deferred revenue, gain on sale of assets but including net cash receipts or payments on derivative instruments included in derivative gains or losses other than payments from derivative monetizations, income taxes, impairments, depletion, depreciation, amortization, and accretion, exploration expense, equity-based compensation, gain (loss) on early extinguishment of debt, contract termination and rig stacking costs, equity in earnings (loss) of unconsolidated affiliate, transaction fees and loss on convertible note equitization.

Adjusted EBITDAX as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income or loss, net income or loss, cash flows provided by operating, investing, and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDAX provides no information regarding our capital structure, borrowings, interest costs, capital expenditures, working capital movement, or tax position. Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, exploration expenses, and other commitments and obligations. However, our management team believes Adjusted EBITDAX is useful to an investor in evaluating our financial performance because this measure:

●

is widely used by investors in the oil and natural gas industry to measure operating performance without regard to items excluded from the calculation of such term, which may vary substantially from company to company depending upon accounting methods and the book value of assets, capital structure and the method by which assets were acquired, among other factors;

●

~~helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital and legal structure from our operating structure;~~

●

is used by our management team for various purposes, including as a measure of our operating performance, in presentations to our Board of Directors, and as a basis for strategic planning and forecasting; and

●

~~is used by our Board of Directors as a performance measure in determining executive compensation.~~

There are significant limitations to using Adjusted EBITDAX as a measure of performance, including the inability to analyze the effects of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies, and the different methods of calculating Adjusted EBITDAX reported by different companies.

The following table represents a reconciliation of our net income (loss), including noncontrolling interest, to Adjusted EBITDAX and a reconciliation of our Adjusted EBITDAX to net cash provided by operating activities per our unaudited condensed consolidated statements of cash flows, in each case, for the three and six months ended June ~~30, 2020 and 2021 (in thousands). Adjusted EBITDAX also excludes the noncontrolling interests in Martica and these adjustments are disclosed in the table below as Martica related adjustments.~~

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Three Months Ended June 30,

Six Months Ended June 30,

2020

2021

2020

2021

Reconciliation of net loss to Adjusted EBITDAX:

Net loss and comprehensive loss attributable to Antero Resources Corporation

$
(463,304)

(523,467)

(802,114)

(538,966)

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

236

(10,984)

236

(6,589)

Unrealized commodity derivative losses

481,927

756,998

127,020

940,076

Payments for derivative monetizations

—

4,569

—

4,569

Amortization of deferred revenue, VPP

—

(11,279)

—

(22,429)

Gain on sale of assets

—

(2,288)

(31)

(2,288)

Interest expense, net

51,811

49,963

104,913

92,706

Loss (gain) on early extinguishment of debt

(39,171)

23,065

(119,732)

66,269

Loss on convertible note equitizations

—

11,731

—

50,777

Provision for income tax benefit

(142,404)

(175,966)

(252,389)

(178,912)

Depletion, depreciation, amortization, and accretion

215,146

188,661

415,927

383,475

Impairment of oil and gas properties

37,350

9,303

126,570

43,365

Impairment of equity method investment

—

—

610,632

—

Exploration expense

231

5,638

441

5,857

Equity-based compensation expense

7,973

4,249

11,302

9,891

Equity in (earnings) loss of unconsolidated affiliate

(20,228)

(17,477)

107,827

(36,171)

Dividends from unconsolidated affiliate

42,755

31,284

85,511

74,040

Contract termination and rig stacking

11,071

844

11,071

935

Transaction expense

6,138

185

6,138

2,476

189,531

345,029

433,322

889,081

Martica related adjustments⁽¹⁾

(3,100)

(25,677)

(3,100)

(50,239)

Adjusted EBITDAX
��
$
186,431

319,352

430,222

838,842

Reconciliation of our Adjusted EBITDAX to net cash provided by operating activities:

Adjusted EBITDAX

$
186,431

319,352

430,222

838,842

Martica related adjustments⁽¹⁾

3,100

25,677

3,100

50,239

Interest expense, net

(51,811)

(49,963)

(104,913)

(92,706)

Exploration expense

(231)

(5,638)

(441)

(5,857)

Changes in current assets and liabilities

(6,310)

21,370

1,417

81,857

Transaction expense

(6,138)

(185)

(6,138)

(2,476)

Payments for derivative monetizations

—

(4,569)

—

(4,569)

Other items

(9,078)

2,497

(6,607)

6,942

Net cash provided by operating activities

$
115,963

308,541

316,640

872,272

~~(1)~~

~~Adjustments reflect noncontrolling interests in Martica not otherwise adjusted in amounts above.~~

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. 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 and expenses, and related disclosure of contingent assets and liabilities. Certain accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. We evaluate our estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions used in preparation of our unaudited condensed consolidated financial statements. Our more significant accounting policies and estimates include the successful efforts method of accounting for our production activities, estimates of natural gas, NGLs and oil reserve quantities and standardized ~~measures~~measure of future cash flows and impairment of proved properties. We provide an expanded discussion of our more significant accounting policies,

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estimates and judgments in the ~~2020~~2021 Form 10-K. We believe these accounting policies reflect our more significant estimates and assumptions used in the preparation of our unaudited condensed consolidated financial statements. Also, see Note 2—Summary of Significant Accounting Policies to the consolidated financial statements, included in the ~~2020~~2021 Form 10-K, for a discussion of additional accounting policies and estimates made by management.

We evaluate the carrying amount of our proved natural gas, NGLs and oil properties for impairment for the Utica and Marcellus Shale properties, by property, when events or changes in circumstances indicate that a property’s carrying amount may not be recoverable. Under GAAP for successful efforts accounting, if the carrying amount exceeds the estimated undiscounted future net cash flows (measured using future prices), we estimate the fair value of our proved properties and record an impairment charge for any excess of the carrying amount of the properties over the estimated fair value of the properties.

Based on future prices as of ~~June~~March ~~30, 2021,~~31, 2022, 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, 2020~~March 31, 2021 and ~~2021.~~2022.

Estimated undiscounted future net cash flows are ~~very~~ sensitive to commodity price swings ~~at current commodity price levels~~ and a ~~relatively small~~ decline in prices could result in the carrying amount exceeding the estimated undiscounted future net cash flows at the end of a future reporting period, which would require us to further evaluate if an impairment charge would be necessary. If future prices decline from ~~June 30, 2021,~~March 31, 2022, the fair value of our properties may be below their carrying amounts and an impairment charge may be necessary. We are unable, however, to predict future commodity prices with any reasonable certainty.

New Accounting Pronouncements

~~Please refer to~~See Note 2—Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements for information on new accounting pronouncements.

Off-Balance Sheet Arrangements

~~As of June~~ 30, 2021, we did not have any off balance sheet arrangements other than contractual commitments for firm transportation, gas processing and fractionation, gathering, and compression services and land payment obligations. Please refer toSee Note 13—Commitments to the unaudited condensed consolidated financial statements for further information on off balance sheet arrangements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risk. The term “market risk” refers to the risk of loss arising from adverse changes in natural gas, NGLs and oil prices, as well as interest rates. These disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures.

Commodity Hedging Activities

Our primary market risk exposure is in the price we receive for our natural gas, NGLs and oil production. Pricing is primarily driven by spot regional market prices applicable to our U.S. natural gas production and the prevailing worldwide price for oil. Pricing for natural gas, NGLs and oil has, historically, been volatile and unpredictable, and we expect this volatility to continue in the future. The prices we receive for our production depend on many factors outside of our control, including volatility in the differences between commodity prices at sales points and the applicable index price.

To mitigate some of the potential negative impact on our cash flows caused by changes in commodity prices, we enter into financial derivative instruments for a portion of our natural gas, NGLs and oil production when management believes that favorable future prices can be secured.

Our financial hedging activities are intended to support natural gas, NGLs and oil prices at targeted levels and to manage our exposure to natural gas, NGLs and oil price fluctuations. These contracts may include commodity price swaps whereby we will receive a fixed price and pay a variable market price to the contract counterparty, collars that set a floor and ceiling price for the hedged production, basis differential swaps or embedded options. These contracts are financial instruments and do not require or

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allow for physical delivery of the hedged commodity. As of ~~June 30, 2021,~~March 31, 2022, our commodity derivatives included fixed price swaps and basis differential swaps at index-based pricing.

As of ~~June~~March ~~30, 2021,~~31, 2022, we had in place natural gas swaps covering portions of our projected production through 2023. Our commodity hedge position as of ~~June 30, 2021~~March 31, 2022 is summarized in Note 11—Derivative Instruments to our unaudited condensed consolidated financial ~~statements included elsewhere in this Quarterly Report on Form 10-Q.~~statements. Under the Credit Facility, we are permitted to hedge up to 75% of our projected production for the next 60 months. We may enter into hedge contracts with a term greater than 60 months, and for no longer than 72 months, for up to 65% of our estimated production. Based on our production and our fixed price swap contracts and embedded put option that settled during the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, our revenues would have decreased by approximately ~~$15~~$23 million for each $0.10 decrease per MMBtu in natural gas prices and $1.00 decrease per Bbl in oil and NGLs prices, excluding the effects of changes in the fair value of our derivative positions which remain open as of ~~June 30, 2021.~~March 31, 2022.

All derivative instruments, other than those that meet the normal purchase and normal sale scope exception or other derivative scope exceptions, are recorded at fair market value in accordance with GAAP and are included in our consolidated balance sheets as assets or liabilities. The fair values of our derivative instruments are adjusted for non-performance risk. Because we do not designate these derivatives as accounting hedges, they do not receive hedge accounting treatment; therefore, 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. We present total gains or losses on commodity derivatives (for both settled derivatives and derivative positions which remain open) within operating revenues as “Commodity derivative fair value gains (losses).”

Mark-to-market adjustments of derivative instruments cause earnings volatility but have no cash flow impact relative to changes in market prices until the derivative contracts are settled or monetized prior to settlement. We expect continued volatility in the fair value of our derivative instruments. Our cash flows are ~~only~~ impacted when the associated derivative contracts are settled or monetized by making or receiving payments to or from the counterparty. As of ~~June 30,~~March 31, 2022, the estimated fair value of our commodity derivative instruments was a net liability of $1.5 billion comprised of current and noncurrent assets and liabilities. As of December 31, 2021, the estimated fair value of our commodity derivative instruments was a net liability of ~~$918 million comprised of current and noncurrent assets and liabilities. As of December 31, 2020, the estimated fair value of our commodity derivative instruments was a net asset of $22~~$727 million comprised of current and noncurrent assets and liabilities.

By removing price volatility from a portion of our expected production through December ~~2023,~~2024, we have mitigated, but not eliminated, the potential negative effects of changing prices on our operating cash flows for those periods. While mitigating the negative effects of falling commodity prices, these derivative contracts also limit the benefits we would receive from increases in commodity prices above the fixed hedge prices.

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Counterparty and Customer Credit Risk

Our principal exposures to credit risk are through receivables resulting from the following: commodity derivative contracts ($2011 million as of ~~June 30, 2021)~~March 31, 2022); and the sale of our natural gas, NGLs and oil production ($~~434~~638 million as of ~~June 30, 2021)~~March 31, 2022), which we market to energy companies, end users and refineries.

By using derivative instruments that are not traded on an exchange to hedge exposures to changes in commodity prices, we expose ourselves to the credit risk of our counterparties. Credit risk is the potential failure of a counterparty to perform under the terms of a derivative contract. When the fair value of a derivative contract is positive, the counterparty is expected to owe us, which creates credit risk. To minimize the credit risk in derivative instruments, it is our policy to enter into derivative contracts only with counterparties that are creditworthy financial institutions that management deems to be competent and competitive market makers. The creditworthiness of our counterparties is subject to periodic review. We have commodity hedges in place with 1711 different counterparties, 138 of which are lenders under our Credit Facility. As of ~~June 30, 2021,~~March 31, 2022, we did not have any derivative ~~asset~~assets by bank counterparties under our Credit Facility. The estimated fair value of our commodity derivative assets has been risk-adjusted using a discount rate based upon the counterparties’ respective published credit default swap rates (if available, or if not available, a discount rate based on the applicable Reuters bond rating) as of ~~June 30, 2021~~March 31, 2022 for each of the European and American banks. We believe that all of these institutions, currently, are acceptable credit risks. Other than as provided by the Credit Facility, we are not required to provide credit support or collateral to any of our counterparties under our derivative contracts, nor are they required to provide credit support to us. As of ~~June 30, 2021,~~March 31, 2022, we did not have any past-due receivables from, or payables to, any of the counterparties to our derivative contracts.

We are also subject to credit risk due to the concentration of our receivables from several significant customers for sales of natural gas, NGLs and oil. We generally do not require our customers to post collateral. The inability or failure of our significant customers to meet their obligations to us, or their insolvency or liquidation, may adversely affect our financial results.

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Interest Rate Risks

Our primary exposure to interest rate risk results from outstanding borrowings under the Credit Facility, which has a floating interest rate. The average annualized interest rate incurred on the Credit Facility for borrowings during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 was approximately ~~3.69%~~3.19%. We estimate that a 1.0% increase in the applicable average interest rates for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 would have resulted in an estimated ~~$1.2~~$0.4 million increase in interest expense.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of ~~June 30, 2021~~March 31, 2022 at a level of reasonable assurance.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended ~~June 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

The information required by this item is included in Note 14—Contingencies to our unaudited condensed consolidated financial statements and is incorporated herein.

Item 1A. Risk Factors

We are subject to certain risks and hazards due to the nature of the business activities we conduct. For a discussion of these risks, see “Item 1A. Risk Factors” in the ~~2020~~2021 Form 10-K. There have been no material changes to the risks described in such report. We may experience additional risks and uncertainties not currently known to us. Furthermore, as a result of developments occurring in the future, conditions that we currently deem to be immaterial may also materially and adversely affect us.

Item 2. Unregistered Sales of Equity Securities

Issuer Purchases of Equity Securities

The following table sets forth our share purchase activity for each period presented:

Total Number

of Shares

Approximate

Repurchased

Dollar Value

as Part of

of Shares

Total Number

Publicly

that May

of Shares

Average Price

Announced

Yet be Purchased

Period

Purchased

Paid Per Share

Plans

Under the Plan

April 1, 2021 - April 30, 2021 ⁽¹⁾

437,546

$
9.49

—

$
—

May 1, 2021 - May 31, 2021

—

—

—

—

June 1, 2021 - June 30, 2021

—

—

—

—

Total

437,546

$
9.49

—

$
—


				Total Number	Approximate
				of Shares	Dollar Value
				Repurchased	of Shares
				as Part of	that May
	Total Number			Publicly	Yet be Purchased
	of Shares	Average Price		Announced	Under the Plan
Period	Purchased	Paid Per Share		Plans	($ in thousands) ⁽²⁾
January 1, 2022 - January 31, 2022 ⁽¹⁾	592,250	$	17.52	—		N/A
February 1, 2022 - February 28, 2022	210,832		21.57	208,807	$	995,498
March 1, 2022 - March 31, 2022	3,481,214		27.45	3,481,214		899,955
Total	4,284,296	$	25.78	3,690,021

(1)	The total number of shares purchased ~~represent~~includes shares of our common stock transferred to us in order to satisfy tax withholding obligations incurred upon the vesting of restricted stock and RSUs held by our employees.

(2)	On February 15, 2022, our Board of Directors authorized a share repurchase program that allows the Company to repurchase up to $1.0 billion of outstanding common stock.

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Item 6. Exhibits


Exhibit Number		Description of Exhibit
3.1		Amended and Restated Certificate of Incorporation of Antero Resources Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-36120) filed on October 17, 2013).
3.2		Amended and Restated Bylaws of Antero Resources Corporation (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-36120) filed on October 17, 2013).
~~4.1~~		Indenture, dated as of June 1, 2021, by and among Antero Resources Corporation, the guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (Commission File No. 001-36120) filed on June 1, 2021).
~~4.2~~		~~Form of 5.375% Senior Note due 2030 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Commission File No. 001-36120) filed on June 1, 2021).~~
10.1*		~~Form of Performance Share Unit Grant Notice and Performance Share Unit Agreement under the Antero Resources Corporation 2020 Long-Term Incentive Plan.~~
~~22.1~~		~~List of Guarantor Subsidiaries (incorporated by reference to Exhibit 22.1 to the Company’s Annual Report on Form 10-K (Commission File No. 001-36120) filed on February 17, 2021)~~.
31.1*		Certification of the Company’s Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 7241).
31.2*		Certification of the Company’s Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 7241).
32.1*		Certification of the Company’s Chief Executive Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 1350).
32.2*		Certification of the Company’s Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (18 U.S.C. Section 1350).
101*		The following financial information from this Quarterly Report on Form 10-Q of Antero Resources Corporation for the quarter ended ~~June 30, 2021~~March 31, 2022 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Loss, (iii) Condensed Consolidated Statements of Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

The exhibits marked with the asterisk symbol (*) are filed or furnished with this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


ANTERO RESOURCES CORPORATION

By:	/s/ MICHAEL N. KENNEDY
	Michael N. Kennedy
	Chief Financial Officer and Senior Vice President–Finance

Date:	~~July 28, 2021~~April 27, 2022

6350


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		2
PART I—FINANCIAL INFORMATION		4
Item 1.	Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3835
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5846
Item 4.	Controls and Procedures	6047

PART II—OTHER INFORMATION		6148
Item 1.	Legal Proceedings	6148
Item 1A.	Risk Factors	6148
Item 2.	Unregistered Sales of Equity Securities	6148
Item 6.	Exhibits	6249
SIGNATURES		6350


Balance as of December 31, 2020 ⁽¹⁾	$	255,082
Equity in earnings of unconsolidated affiliate		36,171
Dividends from unconsolidated affiliate		(74,040)
Elimination of intercompany profit		20,455
Balance as of June 30, 2021 ⁽¹⁾	$	237,668


Asset retirement obligations—December 31, 2020	$	54,452
Obligations incurred		637
Accretion expense		2,119
Revisions to prior estimates		(589)
Asset retirement obligations—June 30, 2021	$	56,619


Dividend yield		—	%
Volatility		85	%
Risk-free interest rate		0.32	%
Weighted average fair value of awards granted—Absolute TSR	$	11.99


	Six Months Ended June 30, 2020
					Equity Method		Elimination of
					Investment in		Intersegment
	Exploration				Antero		Transactions and
	and				Midstream		Unconsolidated		Consolidated
	Production		Marketing		Corporation		Affiliates		Total
Sales and revenues:
Third-party	$	1,690,153		110,358		—		—		1,800,511
Intersegment		1,505		—		463,444		(463,444)		1,505
Total	$	1,691,658		110,358		463,444		(463,444)		1,802,016

Operating expenses:
Lease operating	$	50,386		—		—		—		50,386
Gathering, compression, processing, and transportation		1,220,469		—		90,795		(90,795)		1,220,469
Impairment of oil and gas properties		126,570		—		—		—		126,570
Impairment of midstream assets		—		—		664,544		(664,544)		—
Depletion, depreciation, and amortization		413,712		—		55,088		(55,088)		413,712
General and administrative		69,624		—		25,959		(25,959)		69,624
Other		59,418		206,326		11,496		(11,496)		265,744
Total		1,940,179		206,326		847,882		(847,882)		2,146,505
Operating income (loss)	$	(248,521)		(95,968)		(384,438)		384,438		(344,489)
Equity in earnings (loss) of unconsolidated affiliates	$	(107,827)		—		40,024		(40,024)		(107,827)
Investments in unconsolidated affiliates	$	279,805		—		729,823		(729,823)		279,805
Segment assets	$	13,711,749		32,241		5,715,055		(5,715,055)		13,743,990
Capital expenditures for segment assets	$	575,133		—		123,414		(123,414)		575,133


	Six Months Ended June 30, 2021
					Equity Method		Elimination of
					Investment in		Intersegment
	Exploration				Antero		Transactions and
	and				Midstream		Unconsolidated		Consolidated
	Production		Marketing		Corporation		Affiliates		Total
Sales and revenues:
Third-party	$	1,363,302		330,243		—		—		1,693,545
Intersegment		21		—		456,908		(456,908)		21
Total	$	1,363,323		330,243		456,908		(456,908)		1,693,566

Operating expenses:
Lease operating	$	46,192		—		—		—		46,192
Gathering, compression, processing, and transportation		1,246,439		—		78,869		(78,869)		1,246,439
Impairment of oil and gas properties		43,365		—		—		—		43,365
Impairment of midstream assets		—		—		1,379		(1,379)		—
Depletion, depreciation, and amortization		381,356		—		53,469		(53,469)		381,356
General and administrative		76,251		—		32,181		(32,181)		76,251
Other		87,302		361,071		6,024		(6,024)		448,373
Total		1,880,905		361,071		171,922		(171,922)		2,241,976
Operating income (loss)	$	(517,582)		(30,828)		284,986		(284,986)		(548,410)
Equity in earnings of unconsolidated affiliates	$	36,171		—		42,259		(42,259)		36,171
Investments in unconsolidated affiliates	$	237,668		—		707,518		(707,518)		237,668
Segment assets	$	12,788,108		60,225		5,540,742		(5,540,742)		12,848,333
Capital expenditures for segment assets	$	305,749		—		74,365		(74,365)		305,749