Antero Resources Corporation Price & Performance (AR)

I will now turn the call over to Paul.

Thank you, Brendan, and good morning, everyone. Let me start on Slide number three, And as I introduce this, let me point out that last year, 2024, was a remarkable year for us. The name of the slide is reduced maintenance capital. Chart on the left side shows our full drilling and completion capital that came in, in just $620,000,000 as illustrated by the dark green bar in the center of the display. This was $55,000,000 or 8% below our initial guidance and nearly $300,000,000 below our $9.00 9,000,000 Despite this lower spend, our production came in 2% above our initial guidance range averaging over 3.4 Bcf equivalent per day as shown on the right hand of the slide. Let's move on to Slide number four titled Drilling and Completion operating performance during 2024. We've highlighted some of these drilling and completion stats in prior calls. The results have continued to improve each subsequent quarter in 2024 and here we show the full year as compared to the prior two years.

On the drilling side shown in the top of the left side of the of the slide, we reduced the time it takes to drill a well to just ten days and 2024.

This is a nearly 30% improvement compared to the fourteen days that we averaged a couple of years ago, that is 2022. On the completion side shown on the top right hand side of the slide, we average 12.2 completion stages per day in 2024, while once again setting new quarterly records averaging 13.2 completion stages per day in the fourth quarter of twenty twenty The annual average represents a 53% increase compared to the completion stages back in 2022.

Moving to the chart on the bottom of the slide, these improvements in drilling and completion rates reduced our cycle times to just one hundred and twenty three days. Which is 25% below the 2022 level of one hundred and sixty three days This performance allows us to run a very lean program with just two rigs on average and just over one completion crew on average in order to hold 3.4 Bcf equivalent per day of production flat. Now to touch on the current liquids and NGL fundamental side, going to turn it over to our Senior Vice President of Liquids Marketing and Transportation, Dave Catalongo for his comments. Dave? Thanks, Paul. 2024 was a better year for Antero realizing record differentials to Mont Belvieu driven by high LPG export premiums and stronger domestic price differentials in our market area. As seen on the left hand side of Slide number five, in 2024, Antero realized a $1.41 per barrel premium over Mont Belvieu The fourth quarter of twenty twenty four was Antero's strongest quarter with our premium to Mont Belvieu averaging $3.09 per barrel. For 2025, we are still expecting high annual export premiums. Those premiums coupled with our domestic marketing efforts is allowing us to set our guidance for 2025 at levels even higher than twenty twenty four's record year resulting in a range for our C3 plus NGLs of $1.5 to $2.5 per barrel premium to mott Belvieu prices.

As we head into 2025, we are forecasting export dock premiums to be higher on a year over year basis. We expect more dock capacity to be placed in service at several terminals later in the year. However, we believe that as international demand continues to grow, and new terminal capacity comes online, more U. S. Barrels will be pulled into the export market resulting in stronger prices at Mont Belvieu Stronger Mont Belvieu prices directly benefit the realized pricing on Antero's domestic C3 plus sales as well. On the domestic marketing front, as seen on the right hand side of Slide number five, we have continued to enhance our marketing strategy by selling more of our products to distributors and end users. Driving stronger overall pricing In 2025, we have locked in almost all of our domestic propane sales a sizable portion of our export sales and attractive premium to Mont Belvieu. On butane, have a long term contract rolling off on April 1 that was historically priced at a steep discount to Mont Belvieu that we have now locked in at nearly Mont Belvieu flat pricing. The shift in pricing in one contract alone will result in approximately We believe this marketing strategy will drive premium pricing on our purity products and contribute to our attractive premiums to Mont Belvieu in 2025 and beyond.

As illustrated again by our guidance range. Of $1.5 per barrel to $2.5 per barrel premium, to Mount Bellevue and all of our C3 plus volumes. So far this year, we have observed [indiscernible] On the export side, The U. S. Continues to steadily grow with exports averaging 1,800,000 barrels per day year to date in 2025 as shown on Slide number six. This is 9% above the same period last year. On top of the growing exports, we have observed that during the winter months domestic prop Antero international markets ultimately lifting Mont Belvieu prices as well. Last month, the EIA reported a new weekly record for total overall demand, including both domestic and exports, of 3,800,000 barrels per day for the week ended January This eclipse the previous overall demand record by over 250,000 barrels per day and shows that domestic demand still plays an important role in The U. S. Propane market. A sustained strong demand this year as both propane inventories below the five year average in a matter of weeks as shown on the left hand side of Slide number six. U. S. Inventories entered the year 10% above the five year average with several weeks of strong demand and robust withdrawals decreased stocks to 1% below the five year average by the January.

Additionally, we saw the second largest weekly withdrawal on record per EIA data at 7,900,000 barrels for the week ended January 24. With that, I'll now turn it over to our Senior Vice President of Natural Gas Marketing, Justin Fowler to discuss the natural gas market. Versus the five year average, Since our third quarter conference call, we've seen a significant move lower in natural gas storage balance relative to the five year average.

At that time in late October, we were one hundred and Today, we sit at one hundred and eleven Bcf below the five year average and nearly 200 Bcf below this time last year. We believe today's low rig count combined with an upward step change [indiscernible] will support a continued tightening of inventories that is likely to fall meaningfully below the five year range in the second half of twenty twenty five. [indiscernible] expect these supportive fundamentals will lead to higher prices in 2025 and 2026. [indiscernible] charts on Slide number eight illustrate the record power burn and res comm demand we have observed. At the top of the slide, U. S. Natural gas demand from power burn have hit monthly records each month of the winter. At the bottom of the slide, you will see U. S. Natural gas demand from Rescom was also a January record at over 50 Bcf. Another positive update since our last quarterly call was the highly anticipated startup of the Venture Global Plaque and LNG facility. The first export cargo at Plaquemines was achieved on December 26, and the ramp up since that time has been faster than the market expectation. Today, the facility is exporting an average of approximately 1.5 Bcf per day.

We anticipate this increasing in the near term following this week's FERC commission approvals for liquefaction blocks number seven and number eight and with the request for block number nine filed with the FERC on Tuesday. [indiscernible] pricing impact following the startup of Placemann can be seen on the chart on Slide number nine titled TGP500L Basis Performance. Looking at the TGP500L basis, which is the basis hub with the most current exposure to Placamin, The quicker than anticipated ramp up of the facility has already lifted summer 2025 pricing by $0.1 per MMBtu compared to the strip pricing before the start up. As the facility ramps up further, you can see the TGP500L basis increases even further going from a $0.14 per MMBT premium in March 2025 to $0.5 premium in calendar year 2026.

This 2026 premium reflects a more than $0.2 increase as compared to strip pricing one year ago.

As a reminder, Antero holds 570,000 MMBtu per day of firm delivery to the 500L pool or 63% of the supply that feeds the Kinder Morgan TGP of Antero and Pass Phase one project capacity into Gator Express pipeline that feeds Plaquemines. This 570,000 per day represents nearly 25 and is a primary driver behind the increase in our realized natural gas price premium relative NYMEX in 2025. We expect our premium to NYMEX to be in the range of 10 to $0.2 up from $0.02 premium in 2024. Looking out to 2026, we expect this premium to increase further as the continued ramp up of Plaquemines as well as Corpus Christi Phase III and the startup of Golden Pass are expected to significantly increase the call on natural gas along the LNG core. With that, I will turn it over to Mike Kennedy, Antero's CFO Antero.

Now let's turn to Slide number 10 titled Lowest Free Cash Flow Breakeven. We've updated this slide for the full year 2024. The slide compares 2024 unhedged free cash flow breakeven levels across our peer group.

In past calls, we've highlighted our approximate $2.2 breakeven level which benefits from two things. First, the low maintenance capital requirements that Paul highlighted in his remarks and second, our high exposure to liquids and ability to capture premium pricing at both Dave and Justin touched on.

Result of these attributes are shown on the left hand side of the slide. Despite being unhedged at a $2.27 natural gas price, we generated positive free cash flow of $73,000,000 in 2024. Meanwhile, our gas peers with higher breakeven levels show significant outspent. The efficiency gains that we have achieved have a meaningful impact on our operating and financial outlooks, as you can see with our 2025 guidance.

We now expect production to be 50,000,000 a day higher than our prior targets while our capital budget is $25,000,000 lower than the maintenance capital program that we had previously communicated in past calls.

This low maintenance capital positions us to generate positive free cash flow and down cycles as we experienced in 2024 and to capture significant increases in free cash flow and higher price environments as we see from today's 2025 natural gas strip. Would also like to comment on the hedges that we added during the fourth quarter. After deferring two lean gas pads in 2024, we added natural gas hedges that tied to the volumes associated with those two twelve hundred Btu gas pads. Locking in prices above $3 per Mcf assured us that we would capture attractive rates of return from these wells.

In addition, this operational certainty provides continuity in our plan, resulting in the most efficient development program and optimizes our midstream infrastructure. We placed the sales the first DUC pad in late January and the second DUC pad is expected in the third quarter of twenty twenty five. For 2026 to sync with the expected volumes from our lean gas pads. I'll finish with comments on our compelling free cash flow outlook.

We expect 2025 to deliver Based on today's current strip, our guidance would suggest over $1,600,000,000 of free cash flow in 2025, represents a compelling 12% free cash flow yield. In 2025, we intend to use free cash flow to first pay down our credit facility in the remaining 2026 senior notes which as of 12/31/2024, totaled just under $500,000,000 Once this debt reduction has been achieved, Antero is incredibly well positioned as we enter 2025.

Our low absolute debt minimal hedges and firm transportation that delivers premium price realizations relative to NGL and natural gas benchmarks provides us with the greatest exposure to rising prices. We anticipate a significant call on natural gas over the next twelve months as new LNG facilities ramp up.

Ability for supply to respond to this increase in demand is likely to be challenged given the low industry activity levels we have today. With that, I will now turn the call over to the operator for questions.

Thank you. And at this time, we'll conduct our question and answer session. Our first question comes from Arun Jayaram with JPMorgan. Please state your question.

Yes, good morning.

Tim, I wanted to ask you a little bit about just the gas macro situation Given Justin's commentary around the ramp and demand from utility demand as well as the startup of some of the LNG facilities. It's really going to be a call on the market will call for higher natural gas volumes. I was wondering if you could talk about the ability of the Appalachia Basin as well as Antero to respond to call it a market call needing more gas volumes to meet the increase in demand?

Irene, this is Mike. Good question. For us at least, the maintenance capital where it's where we're comfortable at. All of our firm transport under this plan is filled. So and we're not really selling any local gas and that's been our strategy since date one. So for us, the ability to grow to meet that is not really even possible unless it's in the local basin or right next to our field.

Great. Clear answer there. And then just a follow-up, Mike, in the 10 ks, you guys highlighted inking a drilling partnership. With an unnamed operator, where it looks like they're going to be paying about 15% of your program are receiving a 15% working interest, but funding a greater than 15% portion of your capital development capital this year. Can you provide some details on that? And just the overall strategic benefits you see from an AR perspective Yes. We've had a drilling JV of some sort in place since 2021. The original one concluded in 2024. What we found with the drilling JV of benefit besides the the carry is also the ability to operate a two rig consistent program have one completion crew and a spot crew now and again for the maintenance capital. So it allows efficiencies around that to have that. And then from a water and handling perspective to be able to have optimal water handling within the field still be at maintenance capital. So we enjoyed that. And so when we came into the second half of twenty twenty four, We went out to see if there was appetite to continue that drilling JV and what's [indiscernible] The terms were better than what we found in 2021 to 2024.

So It's a disproportionate carry like the 10 ks says and just an upfront carry instead of a back ended one.

Any more kind of details on the magnitude of the of the carry No, 15% of our what is it $650,000,000 to $700,000,000 it's like $100,000,000 net to them and paying a little bit more than that obviously for their Antero.

Great. Thanks a lot.

Your next question comes from John Freeman with Raymond James. Please question.

Yes. Good morning, guys.

First question I had, you all have been pretty clear about you all were anticipating having about roughly 12 docks with the other two pads that you all deferred. And I'm just trying to reconcile with looks like you had 17 net wells that were in progress at year end. So just trying to get some color if it was still 12 dogs and just a handful of wells in various stages of drilling or if if the documents are Correct. We brought on 16 wells in January throughout the month. And then we still have one dug pad like you mentioned, seven wells that will be Q3 Got it. And then the other topic, we've obviously, you all are in in a terrific standpoint when it comes to takeaway relative to the the peers. We did see some peers this earnings season already that have been able to pick up some incremental Feet from some operators as maybe those operators didn't have the inventory or whatever to be able to renew those contracts. Obviously, you're in a great position, but is that something that you all are focused on in terms of kind of picking up some of those as they become available to kind of enhance your already strong position?

No, we've got a full Feet portfolio. We were first mover. It goes to all the various regions at very attractive rates and on the best pipe. So we're happy where we're at and just filling our current firm transport portfolio.

Got it. Thank you.

Your next question comes from Doug Leggate with Wolfe Research. Please state your question.

Hey, good morning, gentlemen. This is Carlos in for Doug.

First of all, congrats on the quarter. I guess what we'd like to address first is maybe take a moment to revisit your with a specific focus on your liquids runway.

So I wonder if you can parse at this point in time given where we are in the gas and macro how you see your midstream runway given that you have a midstream with the midstream you have a captive market to [indiscernible] liquid rich acreage contracts and leases. So wonder what your outlook there is Yes. Now we got a good inventory. That's what our organic lease program one with the benefits, not only does it increase near term working interest, but also the strategy behind it is to replace in the exact areas where we're drilling with with further acreage in the liquids window in the Marcellus, because of our dominant position owning the midstream, owning all the acreage in that area. We're really the only one that can develop in those areas. So the acreage finds its way to us. So able to replace what we've drilled every year. I think last year, it was around 59 locations and we put on sales like 45. Typical years around 60 is how we think about it. So every year we can replace the 60 locations we drove. Kind of the strategy around the organic leasing. So when you do that kind of look at our position, it's well over a decade of liquids drilling and then assuming we don't add any more acreage then you would transition to drilling well over a decade of our dry gas position.

So over twenty years plus from an inventory standpoint, long duration, long [indiscernible] So we're well positioned.

Thank you. I appreciate the answer. Now, I'd like to address real quick and reconciling your your completions for this year versus 2024 because in 2024 you completed net 41 wells at an average length of 15,700 feet and for 2025, your outlook suggests 62.5% at the midpoint with shorter laterals than that. So maybe first if you can address what you're seeing in terms of lateral footage per well and why [indiscernible] As it may be counterintuitive for what we expect an industry that is going to longer laterals And just to build on that, You mentioned 16 wells that have been drilled here in January. That there are some CapEx presumably pre spent in 2024 that doesn't hit in 2025 for obvious reasons. So I wonder if you can quantify that capital number?

Yes, all those 16 wells, the vast majority of that capital was in '24. Those were put on in January, turned to sales. So they'd already been drilled and completed. In 2024. A little bit of capital obviously for January, but the vast amounts were in $24,000,000 related to those 16 wells. So you kind of put that together with the low 40s to 42 wells we put on with 24 versus this year and then then there's obviously some carryout of 25 but that's why I referenced the 60 wells. It's generally 60 wells per year. You can see that in our proved reserve database. We have two eighty nine PUD locations over five years.

So when you do the math there, it's around six sixty wells. So we do about 60 wells a year. Antero on, we're already the longest I mean, it was over 15,000 feet for twenty four. May have been our longest year. Generally though, it's around 13,000 to 14,000 feet is our typical well. I think this year we're at 800 feet.

When you look into prudent reserve database, I think it's a similar number. So 13% to 14% is kind of where we're at every year is going to be a slight difference, but in and around that number is a great number for us and probably the longest laterals in the basin.

Thank you, guys.

Your next question comes from Bert Dounis with Truist Security. Please question.

Hey, good morning guys. Just Antero to brush on Slide 11. I know it's not necessarily a new slide, but just wondering if you've changed any assumptions there Maybe you could elaborate on if you're baking in some of this differential upside that you expect from maybe Plaquemines and other LNG facility area? That outlook for free cash flow over four years? Thanks.

What we really look to is on that left hand side of the page, when we think about it. So when you think about our C3 plus It's over 40,000,000 barrels a year. So you can do the math on that if versus the $40 kind of baseline that we put in there. And then when you do the natural gas For every $0.25 it was two twenty million But when you kind of bring that all together, what we really think about is every $0.1 of equivalents, dollars 100,000,000 of incremental free cash flow. So when you look at 2024 at $2.2 was kind of our breakeven. At $2.27 we had $73,000,000 of free cash flow. I think when we came in here today, it was $3.85 for 2025. So that $0.1 per 100,000,000, you get that $1,600,000,000 that I referenced over So those are kind of good rules of thumb. And kind of just illustrative on that chart showing the sensitivities, but the way we think about it, every $0.1 equivalent pricing is $100,000,000 plus of free cash flow.

That's helpful. Just want to clarify. I mean, I think you were saying 2026 differentials you expect to get better than 2025. I was just wondering if that was baked into that or are you holding 2025 assumptions? No, that was just trying to be a less on that trying to give you a sensitivity analysis But we do see higher because I think in 2026, it's plus $0.5 that $570,000,000 a day we send the Plaquemines versus $0.2 $0.3 this year. Perfect. That makes sense. And then just to address the hedging that you had going, I know it was strategically done for the DUC. Is Does that should we read through to more of a strategic thought from management? Are you guys looking at it, hey, maybe now they're any opportunistic moments we'll add for any periods where our production might be higher than our normal maintenance? Or is it was just a one time off and other than that you'll probably remain unhedged?

We have lean gas pads in the future. So we'll see what the price is there.

The great thing about '26 and beyond you can protect at that $3 level we talked about and do very wide collar. So you're really just getting a huge window of opportunity for natural gas prices and for cash flow generation, but not really locking in the price. So it is attractive when you got lean gas pads that generate very healthy returns at $3 plus gas can put a $3 floor and get very wide collars on it. So that's something that we'd look to for lean gas pads in the future.

Your next question comes from Neil Mehta with Goldman Sachs Asset Management. Please state your question.

Yes, it's Neil Betta here with the research side. We appreciate all the color here today. The first question is just about return of capital.

In the current environment, the business is throwing off a ton of cash.

Balance sheet has been restored to close to optimal levels. I'm just curious your perspective of the cadence of what you think it makes sense to start talking about incremental returns capital or how do you think about the optimal capital The optimal capital structure we think is have zero debt. Be able to run this business and have flexibility and be able to get exposure to the upside for natural gas prices. With that said, we have about $500,000,000 of repayable current debt either on our credit facility or calling our 26 notes, there's $97,000,000 outstanding there. Will get you down about $900,000,000 of debt Then you have some 29s, about three hundred million ish.

That also kind of high coupon that we could call and bring in this year as well. So that's something that we'd look to do. The first use is the 500,000,000 free cash flow. Then after that, it'll be fifty-fifty buying in 29s and then share buybacks. Then we have a piece of paper, the 2030s, which is I believe around hundred million dollars that's at 5.38 that's straight and below par, it's actually below where we could issue today. So we'll probably leave that out and then kind of shift to more share buybacks once all of the non 2,030 notes our extinguished Yes.

Okay.

Moving towards that Fortress balance sheet, appreciate that. And the all of it is just more of a theoretical question, which is it's a very dynamic gas environment globally. The U. S. Is starting to firm up from an inventory [indiscernible] play into it? Just your thoughts on if we get to closer to peace in Europe, [indiscernible] [indiscernible] gas potentially flows into the market.

How does that affect the way that you think about The U. S. Gas balance that the linkage between U. S. Pricing and European pricing just your framework for thinking around what is a very dynamic situation? Yes, I'll kick it over to Justin for his comments. But we tracked a formula on when it's economic for LNG to go offshore and we're well above that. I know it take a pretty drastic reduction in TTF, which wouldn't occur considering their storage levels to get there. But Justin, maybe you want to comment on that? Sure. Good morning. This is Justin. Mike's point, as we look out balance of 25 through 27, spreads are very healthy, Henry Hub versus less liquefaction costs, less shipping. So very supportive. Currently, the Europeans continue to set the FSRUs to bring additional gas volumes in. So just overall, we see it very supportive and time being I guess the question is just how does that evolve potentially as the curve does backwardate? For TPS and just your perspective on how do you think about that?

Yes. So I mean any backwardation just continues to support Henry in the front. So We'll continue to see that strength as the cargoes load For example, we're at 15.8 Bcf today the publications on LVNV feed gas. So [indiscernible] very healthy spread. If you see backwardation, on in the fronts, we see that very supportive and should continue to pull up Henry prices as well.

Yes. Right now, I mean, we're talking $10 an hour of cushion. So it'd have to be a significant decline correct, in PTS to levels that they haven't seen. So and a lot of it's contracted anyway. So we continue to see be supportive for the exports.

Perfect. Thanks, guys. Your next question comes from Kevin McCarthy with Pickering Energy Partners. Please state your question.

Hi, good morning team. My question is on well cost. I appreciate Paul's comments on the 2024 well cost.

How do your current well costs compare to your 2024 average average? And what is built into the 2025 guidance? For well costs and days per wells And do you have a view on whether you see further service cost deflation or efficiency gains?

Yes. Well costs are $24,000,000 we're on that $925,000,000 per foot range that we talked about In prior calls, with the efficiencies that we're seeing and we also have drilling contracts that came up and are in place for 2025 at lower rates. We're in the low 900s right now. So we're lower than we were in 2024. The 2025 plan does capture our efficiencies that we achieved in 2024. So we are assuming that 12 to 13 stages per day. And ten days for a well, it's around 5,000 feet per ten days, the way we think about it. So we are baking in those assumptions as we can And then we have the service costs like I mentioned are a bit down just because we had our drilling our legacy drilling contract roll off and new ones come into place for 25.

Appreciate that detail. Second question is on ethane production and pricing. If I remember correctly, you guys have talked about a small uplift to Belleview previously and your 2025 guidance has a pretty material uplift to Bellevue.

So curious what changed on that front and if the beat that we saw in the fourth quarter for ethane production is repeatable?

Yes. Kevin, this is Dave. Yes, fourth quarter we if you look at it on a gross basis, we were probably 997%, 98% utilized our de ethanolers. So very strong quarter as we looked back at 2024, there was some ramp up in volume is really related to some sales that will be at stronger pricing to Bellevue. So it's Those are now online and doing well. We would expect that to be a tailwind for 2025 differentials we also do have a contract that is expiring again here in about three months. Or sorry, end of the quarter that will also Expiration will improve our overall average premium for our ethane sales as well. So pretty good visibility on on that guide there and feel confident that we're going to be able to deliver Thank you.

Thank you. Our next question comes from Leo Mariani with ROTH MKM. Please state your question.

Good morning.

Wanted to see if you could provide just a little bit of color on perhaps the CapEx and production trends here in 2025 Just trying to get a sense if we should maybe continue to see a bit of a first half weighted CapEx budget this year and then just on your production trend, obviously, you got some winter weather and things like that to deal with in the first quarter? Do you expect production to to tick down a little bit maybe in 1Q versus 4Q and then kind of tick the rest of the year? Just any color on any of those kind of spending in production trends would be helpful.

Yes, not much variance.

First quarter probably in and around the the midpoint of the guidance, we did just bring on a lot of wells, but they're really just ramped [indiscernible] maybe a tad higher in the second quarter. We're talking maybe 1%. Very low variance and similar in capital, pretty even out over the quarter when we do that DUC pad and started in the late first quarter really second quarter, it will raise capital in the second quarter versus the first. So maybe up one completion crew in the second quarter versus the first for a bit. So maybe a bit higher in the second quarter, but like I said, it's pretty evened out. It's two rig program. One completion crew with one spot pad that's the whole program and that spot pads in the second quarter.

And then the production is very consistent. Just we did bring on 16 wells at the January kind of ramping into February.

Okay. That's helpful.

And I just wanted to shift a little bit back over to the JV for the year, guess I'm struggling a little bit with the numbers here, maybe you guys can clarify this.

I think you guys have been kind of saying for a while that maintenance CapEx is right around $700,000,000 You've got a partner that's coming in for, it looks like, a little bit more than 15% of the capital here in 2025. So I guess if I just did the The simple math on that and lopped off 15% of the maintenance capital that would put the budget for D and C maybe closer to $600,000,000 than what the current guidance is. So Can you me out all over the math there?

Yes, I don't think your math is correct. I think the way we think about it is we're running a two rig program and a one completion crew plus a spot. And that's generally that's probably around $8.25. But that amount would have you grow Antero when we looked at our our program, we wanted to continue those because it's a consistent I mentioned the continuity of the program and allows us to handle the water in the field efficiently But we also wanted to be really at maintenance capital and have our Our net production be flat and have the lowest capital possible. So when you put those two together, it really suggests that we should go out and get a JV partner And when they looked at our program and how consistent it is and how it's a manufacturing play and the results are so terrific, you're able to get opportunistic terms.

Okay, very helpful. Thank you.

Your next question comes from Kalia Camine with of America. Please state your question.

Hey, good morning guys. Thanks for getting me on.

My first question is a follow-up on the production guidance in Let's see, you called out a 50,000,000 cubic feet increase year over year.

Wondering if that's intended to stay in the space in or did you guys actually secure additional takeaway to move it out No, that's within the basin. We have we're approximately at 100% We do sell some locally to TECO and have some flexibility there. So that's still within outside the basin and not selling anything within.

Understood. This one is on free cash So when we look at it, you're going to end the year around net debt Antero.

What are your thoughts around implementing some kind of return to capital be it a dividend or a buyback?

Yes. Once we get the $500,000,000 paid back, we'll start buying back some shares and then it'll be fifty-fifty on buybacks versus taking in the 29s. And then once the 29s are in, it will be share buybacks.

Great.

Thanks.

Your next question comes from David Deckelbaum with TD Cowen. Please state your question.

Thanks for taking my questions guys. [indiscernible] Mike, maybe you could give a little bit of color of you made the earlier points, I think around lateral lengths and where your natural average lateral length is going to be in the program.

But you've obviously highlighted like a higher base level of production and there are some there's a lot of different variables that feed into that. But can you give some color on what sort of productivity variables you're baking into the guide this year? Are you locking in what you had achieved in 2024 in addition to kind of the accelerated cycle times that's helping you perhaps offset That degradation in lateral length? Yes, that's exactly right. That's correct. Have achieved those amounts those efficiencies in '24 so many times, like I said, on a day in, day out basis that we felt comfortable making them twenty five and although it's a slightly one thousand feet or 1,500 feet less lateral length, those efficiencies offset that. Appreciate that. And then just a follow-up on the guidance around premium to Henry Hub for natural gas. Obviously, you're benefiting from your away to TGP 500.

As you see sort of the impact of pac mains and some other LNG facilities coming online, Is there an internal thought around maybe changing some commercial agreements or signing direct offtakes with shippers Is that opportunity available to you all? Is that something that you have interested in? Or do you still find that the open basis markets are sort of your best course for managing risk and sort of maximizing your margins?

No, we evaluate all opportunities with our transport. Of course, we get offered those [indiscernible] we found the best just to retain the optionality for us don't enter in the firm sales, We're now getting I think three facilities in the Coast in 2025 coming on. They're going to have compete for that gas. We have the vast majority of the transport and the capacity We think the actual differential to premiums will be higher than what the market is. That guidance is just based on market. So we're going to retain that optionality for us and where the gas prices go. Thanks, Mike.

And your next question comes from Roger Read with Wealth Fargo. Please state your question.

Yes. Thank you. Good morning.

I'd just like to ask on the CapEx guidance, understand the service cost efficiency, but we do have now tariffs imported materials and raw materials. Just wondering if there's any risk for contingency built into the CapEx thinking just higher steel costs or anything like that?

Yes. The tariffs are within our $6.50 to 700 When you look at our program, a lot of it's pre bought. All the pipe and casings pre bought, same with the midstream. You already have a lot of that already in house. For the amount that's not and other items that would be subject to the tariffs.

You had a 25% increase, it would be about $5,000,000 to $10,000,000 total.

Increase in our capital. So it's well within that $50,000,000 threshold or ban we have for our capital guidance.

And then I know you don't give 20 guidance at this point, but not having things pre bought for 2026, there would be a little more pressure assuming 10% That's not bad, yes.

Yes, maybe it could be $15,000,000 $20,000,000 It's just not that impactful to us.

Okay, appreciate that. And then the other this question was sort of asked earlier, but I was just curious in basin opportunities as you look at them, in terms of demand specifically the idea adding capacity inside of PJM on the gas side?

Kick again over to Justin, but of course with our position in transport and being the low cost provider with the longest inventory, we're in all those discussions. But they're still kind of ongoing. Yes. Good morning, Roger.

We've said this on previous calls, but Antero owns the toggle between local Appalachia and using our Feet to the goal. So if the local spreads and pricing widened versus Gulf, then we do have that option to to take advantage of any markets that are more local in basin, as power needs, etcetera develop It would be fun to watch. Thank you, guys. Thank you.

Next question comes from Betty Jiang with Barclays. Please state your question.

Good morning. Want to ask about the propane outlook. It's the 2025 premium definitely giving better than expected. And we were under an assumption that, that premium is going to moderate sometime in the second half as the Gulf Coast exports ramp up. So we'd love to get your thoughts on just how you think about the longer term propane C3 plus premium given the increased focus on in house marketing efforts, do you see that premium ultimately improving even on a normalized basis?

Thanks.

Yes, this is Dave, Betty. A couple of things that were baked into that, that 2025 guide, as you talked about the export arms. So if you look back at '24 is kind of the opposite maybe of what we could see this year where it started low and then it kind of ramped as you got into the third and fourth quarter and you look at it on an annual average, it was somewhere around $0.15 per gallon or a little less. As we look at 2025, we think that you can certainly achieve those levels in the market today for 2025. As we talked about, we locked in a size portion of our export volumes already. So we've got good visibility into that. The other piece, if you look back at 2024 in the first quarter, of 2024, we did not have our marketing plan that we put in place really domestic contracting season is April 1 through March 31. So first quarter of twenty twenty four really didn't have those benefits. And we have those here in 2025. So that's another tailwind And then the butane contract that I talked about in my comments is kind of that third tailwind.

So that said, certainly 26%, we would think would look better than what we had in years prior to 'twenty three and maybe even 'twenty four. But the export market will still play a role in that and we'll see just how that evolves. Demand continues to be very strong, but we'll never complain about low ARBs and high Mont Belvieu prices either. So at the end of the day, the absolute price we're selling at the dock is really what drives our our economics Sure. That makes a lot of sense. My follow-up is on your liquids mix. It's I think 4Q, you guys are closer to 38% might be a record for the company. Sounds like there is a few more lean gas pads in the future as well. So how do you guys think about your long term mix liquids mix evolve over time?

It's similar to that. I think some of the liquids that you saw in the fourth quarter was what Dave mentioned on the ethane on the 98% running at that, but 38% is a good number for us.

Great.

Your next question comes from Paul Diamond with Citi. Please state your question. [indiscernible] I just Antero to touch around, I know you just added up, you increment pieces of the hedge book. You talked about being somewhat opportunistic in 'twenty six and beyond. Want to get a bit more clarity on that if you guys kind of have a target level for the ideal piece you want to be given expectations around lean gas production?

No, no target level. We just look at our plan With the lean gas around those 1,200 BTU wells, We've decided you really don't want to leave those to a $2 gas environment So when you can put in a $3 floor and lock it at it and get a wide collar up side that seems like a reasonable [indiscernible] Got it. And just one quick follow-up, more around the kind of the pricing curve around TGP500L. How much how do you guys look at the risks around the trend? I mean, obviously, the twenty five percent and twenty six numbers look pretty solid. But do you guys see any volatility coming down the pipe or is that pretty locked in in your view?

No, I mean, there's going to be a lot of demand in the Gulf Coast. So we think it's probably more to the upside than what we see right now in the market. So you've seen that over the past couple of years as these facilities continue to come on, the market moves higher and higher and those spreads move higher. So we feel good about it. We've had it for almost a decade before these and it was a good piece of pipe then and now with these facilities now, it's actually probably the premium pipe to be on. Understood. Thanks for your time, David.

Thank you. Your next question comes from Nitin Kumar with Mizuho Securities. Please state your question.

Good morning, everyone, and thanks for taking my question.

I just want to start on the cost environment particularly on service costs. I think earlier you mentioned that you're seeing service costs flat. Any early impact from the tariffs that present Trump has indicated, particularly on the steel side, No impact. Like I said on the earlier if it is implemented at 25%, it's about $5,000,000 to $10,000,000 for 2025.

Got it. And then I just wanted to also just follow-up on As I look at your capital plan for next production is flat at the aggregate level, but both gas and liquids are a little bit lower for what you did end up in 2024. Even though you have some ducks coming on earlier in the year, sorry for the in the weeds question, but is this an issue of timing or is it as we were talking about earlier, lateral ends? How do you kind of look at that trajectory especially as you think about '26?

Yes. I know gross is up. You can look at 2% or 3% gross volumes up. It's really around the ethane that Dave was mentioning. We have 10,000 barrel a day contract that expires at the end of this quarter that was well out of the money. Will now be in the gas stream getting NYMEX Henry Hub plus $0.2 So economically much better, but on the equivalent that 10,000 equates to about 60,000,000 a day. 10,000 barrels of ethane. And when you do it with the gas shrink, it's about 30,000,000 a day of lower production than [indiscernible] With that ethane contract in place.

Great. Thanks for the clarification.

Sure.

You. And there are no further questions at this time. I'll now hand it back to Brendan Kruger for closing remarks.

Yes. Thank you for joining us on today's call. Please reach out with any further questions. Thank you.

This concludes today's call. All parties may disconnect. Have a good day.