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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on September 30, 2013

Registration No. 333-189284

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 5
to

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



ANTERO RESOURCES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
  1311
(Primary Standard Industrial
Classification Code Number)
  80-0162034
(IRS Employer
Identification Number)

1625 17th Street
Denver, Colorado 80202
(303) 357-7310

(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

Glen C. Warren, Jr.
President, Chief Financial Officer and Secretary
1625 17th Street
Denver, Colorado 80202
(303) 357-7310

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)



Copies to:

W. Matthew Strock
Matthew R. Pacey
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2500
Houston, Texas 77002-6760
(713) 758-2222

 

Ryan J. Maierson
Latham & Watkins LLP
811 Main Street, Suite 3700
Houston, Texas 77002
(713) 546-5400

Approximate date of commencement of proposed sale of the securities to the public:
As soon as practicable after the effective date of this Registration Statement.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:    o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

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

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o

CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
to be Registered

  Amount to be
Registered(1)

  Proposed Maximum
Offering Price Per
Share(2)

  Proposed Maximum
Aggregate Offering
Price(1)(2)

  Amount of
Registration Fee(3)

 

Common Stock, par value $0.01 per share

  34,500,000   $42.00   $1,449,000,000   $197,643.60

 

(1)
Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes 4,500,000 additional shares of common stock that the underwriters have the option to purchase.

(2)
Estimated solely for the purpose of calculating the registration fee.

(3)
The Registrant previously paid $136,400 of the total registration fee in connection with the previous filing of this Registration Statement.

          The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated September 30, 2013

PROSPECTUS



30,000,000 Shares

LOGO

Antero Resources Corporation

Common Stock



        This is the initial public offering of the common stock of Antero Resources Corporation. We are offering 30,000,000 shares of our common stock. The selling stockholder has granted the underwriters the option to purchase up to an additional 3,750,000 shares of common stock on the same terms and conditions if the underwriters sell more than 30,000,000 shares of common stock in this offering. We have granted the underwriters the option to purchase up to an additional 750,000 shares of common stock on the same terms and conditions if the underwriters sell more than 33,750,000 shares of common stock in this offering. Any exercise by the underwriters of their options to purchase additional shares of common stock will be made initially with respect to the 3,750,000 additional shares of common stock to be sold by the selling stockholder and then with respect to the 750,000 additional shares of common stock to be sold by us. We will not receive any proceeds from the sale of shares held by the selling stockholder. No public market currently exists for our common stock.

        We have been approved to list our common stock on the New York Stock Exchange under the symbol "AR".

        We anticipate that the initial public offering price will be between $38.00 and $42.00 per share.

        Investing in our common stock involves risk. See "Risk Factors" beginning on page 26 of this prospectus.

 
  Per share   Total

Price to the public

  $                           $                        

Underwriting discounts and commissions payable by us

  $                           $                        

Proceeds to us (before expenses)

  $                           $                        



        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        The underwriters expect to deliver the shares of common stock to purchasers on or about                        , 2013.



Barclays   Citigroup   J.P. Morgan

Credit Suisse

 

Jefferies

 

Wells Fargo Securities



Morgan Stanley   TD Securities   Tudor, Pickering, Holt & Co.



Baird   BMO Capital Markets   Capital One Securities

Raymond James

 

Scotiabank / Howard Weil

 

Credit Agricole CIB

KeyBanc Capital Markets

 

Mitsubishi UFJ Securities

 

BB&T Capital Markets

 

 

Comerica Securities

 

 

   

Prospectus dated                        , 2013


Table of Contents

GRAPHIC


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TABLE OF CONTENTS

PROSPECTUS SUMMARY

    1  

RISK FACTORS

    26  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

    49  

USE OF PROCEEDS

    51  

DIVIDEND POLICY

    51  

CAPITALIZATION

    52  

DILUTION

    53  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

    54  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    58  

BUSINESS

    87  

MANAGEMENT

    124  

EXECUTIVE COMPENSATION

    131  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

    135  

CORPORATE REORGANIZATION

    142  

PRINCIPAL AND SELLING STOCKHOLDERS

    144  

DESCRIPTION OF CAPITAL STOCK

    147  

SHARES ELIGIBLE FOR FUTURE SALE

    151  

MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

    153  

UNDERWRITING (CONFLICTS OF INTEREST)

    157  

LEGAL MATTERS

    167  

EXPERTS

    167  

WHERE YOU CAN FIND MORE INFORMATION

    167  

INDEX TO FINANCIAL STATEMENTS

    F-1  

ANNEX A: GLOSSARY OF NATURAL GAS AND OIL TERMS

    A-1  



        You should rely only on the information contained in this prospectus and any free writing prospectus prepared by us or on behalf of us or to which we have referred you. Neither we nor the selling stockholder has authorized anyone to provide you with information different from that contained in this prospectus and any free writing prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the selling stockholder are offering to sell shares of common stock and seeking offers to buy shares of common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

        This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. See "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements."

Industry and Market Data

        The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications and other published independent sources. Some data is also based on our good faith estimates. Although we believe these third-party sources are reliable as of their respective dates, neither we nor the underwriters have independently verified the accuracy or completeness of this information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled "Risk Factors." These and other factors could cause results to differ materially from those expressed in these publications.

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PROSPECTUS SUMMARY

        This summary highlights some of the information contained in this prospectus and does not contain all of the information that may be important to you. You should read this entire prospectus and the documents to which we refer you before making an investment decision. You should carefully consider the information set forth under "Risk Factors," "Cautionary Statement Regarding Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical consolidated financial statements and the related notes to those financial statements included elsewhere in this prospectus. Where applicable, we have assumed an initial public offering price of $40.00 per share (the midpoint of the price range set forth on the cover page of this prospectus). Unless otherwise indicated, the information presented in this prospectus assumes that the underwriters' options to purchase additional shares of common stock are not exercised. Unless otherwise indicated, the estimated reserve volumes presented in this prospectus are based on SEC pricing at June 30, 2013 (assuming ethane rejection), as described in "—Our Properties—Reserves." Certain operational terms used in this prospectus are defined in the "Glossary of Natural Gas and Oil Terms."

        In this prospectus, references to "we," "us," "our" and the "Company" refer to Antero Resources LLC and its subsidiaries before the completion of our corporate reorganization and to Antero Resources Corporation and its subsidiaries as of and following the completion of our corporate reorganization. Please see "Corporate Reorganization." References to the "selling stockholder" refer to Antero Resources Investment LLC.

Our Company

        We are an independent oil and natural gas company engaged in the exploitation, development and acquisition of natural gas, NGLs and oil properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. We are focused on creating shareholder value through the development of our large portfolio of repeatable, low cost, liquids-rich drilling opportunities in two of the premier North American shale plays. We currently hold approximately 329,000 net acres in the southwestern core of the Marcellus Shale and approximately 102,000 net acres in the core of the Utica Shale. In addition, we estimate that approximately 170,000 net acres of our Marcellus Shale leasehold are prospective for the slightly shallower Upper Devonian Shale. Finally, we own the deep rights on a portion of our Marcellus Shale acreage in West Virginia that we believe is prospective for the dry gas Utica Shale. As of June 30, 2013, our estimated proved, probable and possible reserves were 6.3 Tcfe, 14.0 Tcfe and 7.4 Tcfe, respectively, and our proved reserves were 23% proved developed and 91% natural gas, assuming ethane rejection. As of June 30, 2013, our drilling inventory consisted of 4,576 identified potential horizontal well locations, approximately 64% of which are liquids-rich drilling opportunities.

        Our management team has a proven track record of implementing geologically driven growth strategies in some of the most prominent unconventional plays across the United States, including the Barnett, Woodford, Marcellus and Utica Shales. Paul Rady, our Chairman and Chief Executive Officer, and Glen Warren, our President and Chief Financial Officer, founded our business in 2002. The majority of our management team has worked together at various times for over 30 years at Amoco Production Company, Barrett Resources Corporation, Pennaco Energy Inc. and Antero Resources. Our management team has created significant shareholder value through various past ventures, including the sale of two unconventional resource-focused upstream companies and one midstream company in the last 15 years.

        We have been successful in targeting 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. We have been early adopters of innovative hydraulic fracturing and completion techniques, having drilled over 450 horizontal wells in the Barnett, Woodford, Marcellus and Utica Shales. As a result of our horizontal drilling and completion expertise, and the predictable geologic structure throughout our largely contiguous land position in the

 

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southwestern core of the Marcellus Shale, we have drilled approximately 1.3 million lateral feet without encountering any faulting in our target zone. We have drilled and completed 199 horizontal wells in the Marcellus Shale with a 100% success rate to date. We define the term 100% success rate to mean that all wells were completed and produce in commercially viable quantities. With 15 rigs running, we are currently the most active driller in the Marcellus Shale based on information from RigData. We have begun to apply the expertise and approach we employ in the Marcellus Shale to the Utica Shale, and we believe we will be able to achieve similar success. We have drilled and completed 11 horizontal wells in the Utica Shale with a 100% success rate without encountering any faulting.

        Our net daily production in the second quarter of 2013 averaged 458 MMcfe/d, including 4,160 Bbls/d of NGLs and oil. Further, our estimated average net daily production for the month of August 2013 was 594 MMcfe/d, including 8,630 Bbls/d of NGLs and oil. We grew proved reserves at a compounded annual growth rate of 96% from 2006 to 2012, despite the 2012 divestiture of our Arkoma and Piceance Basin properties. Additionally, from January 1, 2012 to June 30, 2013, we increased our Appalachian proved reserves by 47% to 6.3 Tcfe, assuming ethane rejection at each date.

        The charts below illustrate the growth in our average net daily production on an overall basis since 2006 and in the Appalachian Basin since 2010:

Antero Average Net Daily Production   Antero Appalachian Basin Average Net Daily Production


GRAPHIC

(1)
CAGR means compounded annual growth rate.

        Our 2013 capital budget is $2.45 billion, including $1.45 billion for drilling and completion, substantially all of which is allocated to our operated drilling in liquids-rich gas areas. As of June 30, 2013, we had spent approximately $1.2 billion of our 2013 capital budget.

Our Properties

Marcellus Shale

        We believe that the Marcellus Shale is a premier North American shale play due to its high well recoveries relative to drilling and completion costs, broad aerial extent, relatively homogeneous high-quality reservoir characteristics and significant hydrocarbon resources in place. Based on these attributes, as well as drilling results publicly released by other operators, we believe that the Marcellus Shale offers some of the most attractive single-well rates of return of all North American conventional and unconventional play types. We also believe that the Marcellus Shale has two core areas: the southwestern core in northern West Virginia and southwestern Pennsylvania and the northeastern core in northeastern Pennsylvania. According to RigData, as of September 2013, approximately 90% of the 91 drilling rigs operating in the Marcellus Shale were located in these two core areas.

 

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        All of our approximately 329,000 net acres in the Marcellus Shale are located within the southwestern core. We have experienced virtually no geologic complexity in our drilling activities to date, which has contributed to what we believe to be a narrow and predictable band of expected well recoveries per 1,000 feet of lateral length on our wells. Further, the lower thermal maturity of the Marcellus Shale in the western half of the southwestern core yields liquids-rich natural gas and condensate, which allows for NGL processing that can significantly improve well economics. As of June 30, 2013, we had approximately 2,941 identified gross undrilled horizontal well locations in the Marcellus Shale.

        For the three months ended June 30, 2013, we had average net daily production of 457 MMcfe/d in the Marcellus Shale. Further, our estimated average net daily production for the month of August 2013 in the Marcellus Shale was 549 MMcfe/d, including 6,528 Bbls/d of NGLs and oil. We currently have 15 rigs operating in the Marcellus Shale and expect to drill 135 wells in 2013, of which 74 had been drilled as of June 30, 2013. We believe our full cycle drilling, completion and operating costs on a per unit basis are among the lowest in the Marcellus Shale and the industry as a whole.

Utica Shale

        Based on initial drilling results and the first two months of production for our 11 Utica wells, we believe that the Utica Shale is a premier North American shale play. We believe that the core area is located in the southern portion of the play, which has been defined by significant drilling activity by several operators. We own approximately 102,000 net acres in the core of the Utica Shale and expect to add to our sizeable land position. The proximity of our Utica acreage position to our operations in the Marcellus Shale allows us to capitalize on operating and midstream synergies. We are currently operating four drilling rigs in the Utica Shale and have completed 11 horizontal wells with strong results. We have had a 100% success rate and believe over 90% of our acreage has liquids-rich gas processing potential. We expect to drill 26 wells in the Utica Shale in 2013, of which 11 had been drilled as of June 30, 2013. As of June 30, 2013, we had approximately 720 identified gross undrilled horizontal well locations in the Utica Shale. For the three months ended June 30, 2013, we had average net daily production of 1 MMcfe/d in the Utica Shale. Further, our estimated average net daily production for the month of August 2013 in the Utica Shale was 45 MMcfe/d, including 2,102 Bbls/d of NGLs and oil.

Reserves

        The following tables provide summaries of our estimated reserves as of June 30, 2013, assuming ethane "recovery" and ethane "rejection." Ethane rejection occurs when ethane is left in the wellhead gas stream when the gas is processed, rather than being separated out and sold as a liquid after fractionation. When ethane is left in the gas stream, the BTU content of the residue gas at the outlet of the processing plant is higher. Producers will elect to "reject" ethane when the price received for the higher BTU residue gas is greater than the price received for the ethane being sold as a liquid after fractionation. When ethane is recovered, the BTU content of the residue gas is lower, but a producer is then able to recover the value of the ethane sold as a separate NGL product. In addition, gas processing plants can produce the other NGL products (propane, normal butane, isobutane and natural gasoline) while rejecting ethane. The combination of infrastructure constraints in the Appalachian region and low ethane prices has resulted in many producers "rejecting" rather than "recovering" ethane. Although our reserve data as of December 31, 2012 assumed ethane recovery based on the reserve pricing methods required by the SEC, or SEC pricing, the current spot price environment has shifted to one that favors ethane rejection and therefore our reserve estimates as of June 30, 2013 assumed ethane rejection.

 

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SEC Pricing

 
  June 30, 2013  
 
  Estimated Net Reserves (Bcfe)(1)  
 
  Ethane Recovery   Ethane Rejection  

Proved Reserves(2):

             

Marcellus Shale

    6,689     5,959  

Upper Devonian Shale

    44     44  

Utica Shale

    341     279  
           

Total Proved Reserves

    7,074     6,282  
           

% Developed

    22 %   23 %

% Liquids

    23 %   9 %

Probable Reserves(2)(3):

             

Marcellus Shale

    14,135     11,796  

Upper Devonian Shale

    665     661  

Utica Shale

    1,958     1,582  
           

Total Probable Reserves

    16,758     14,039  
           

% Liquids

    38 %   19 %

Possible Reserves(2)(3):

             

Marcellus Shale

    989     959  

Upper Devonian Shale

    3,461     3,076  

Utica Shale

    3,843     3,393  
           

Total Possible Reserves

    8,293     7,428  
           

% Liquids

    23 %   10 %

PV-10 of Proved Reserves (in millions)(2)(4)

 
$

4,243
 
$

4,468
 

PV-10 of Probable Reserves (in millions)(2)(4)

  $ 8,223   $ 8,868  

PV-10 of Possible Reserves (in millions)(2)(4)

  $ 2,210   $ 2,413  

(1)
Volumes and values were determined under SEC pricing using index prices for natural gas and oil of $3.43 per MMBtu and $91.65 per Bbl. These prices were then adjusted for transportation, gathering, processing, compression and other costs. For the adjusted realized prices under SEC pricing, see "Business—Our Operations—Reserve Data—Adjusted Index Prices Used in Reserve Calculations."

(2)
Our estimated proved, probable and possible reserves and PV-10 as of June 30, 2013 using SEC pricing are based on evaluations prepared by our internal reserve engineers, which have been audited by our independent reserve engineers, DeGolyer and MacNaughton.

(3)
All of our estimated probable and possible reserves are classified as undeveloped.

(4)
PV-10 was prepared using SEC pricing discounted at 10% per annum, without giving effect to taxes or hedges. PV-10 is a non-GAAP financial measure. We believe that the presentation of PV-10 is relevant and useful to our investors as supplemental disclosure to the standardized measure of future net cash flows, or after tax amount, because it presents the discounted future net cash flows attributable to our reserves prior to taking into account future corporate income taxes and our current tax structure. While the standardized measure is dependent on the unique tax situation of each company, PV-10 is based on a pricing methodology and discount factors that are consistent for all companies. Moreover, GAAP does not provide a measure of estimated future net cash flows for reserves other than proved reserves or for proved, probable or possible reserves

 

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    calculated using prices other than SEC prices. PV-10 does not take into account the effect of future taxes, and PV-10 estimates for reserve categories other than proved or for pricing sensitivities uses the relevant reserve volumes and prices, as applicable, but PV-10 is otherwise calculated using the same assumptions as those for, and in a manner consistent with, the calculation of standardized measure. Because PV-10 estimates of probable and possible reserves are more uncertain than PV-10 and standardized measure of proved reserves, but have not been adjusted for risk due to that uncertainty, they may not be comparable with each other. Similarly, PV-10 estimates for price sensitivities are not adjusted for the likelihood that the relevant pricing scenario will occur, and thus they may be subject to the same issues with comparability. Nonetheless, we believe that PV-10 estimates for reserve categories other than proved or for pricing sensitivities present useful information for investors about the future net cash flows of our reserves in the absence of a comparable GAAP measure such as standardized measure. Because of this, PV-10 can be used within the industry and by creditors and securities analysts to evaluate estimated net cash flows from proved reserves on a more comparable basis. Investors should be cautioned that neither PV-10 nor standardized measure represents an estimate of the fair market value of our proved reserves. In addition, investors should be further cautioned that estimates of PV-10 of probable reserves, as well as the underlying volumetric estimates, are inherently more uncertain of being recovered and realized than comparable measures for proved reserves, and that the uncertainty for possible reserves is even more significant. Further, because estimates of probable and possible reserve volumes and PV-10 have not been adjusted for risk due to this uncertainty of recovery, they should not be summed arithmetically with each other or with comparable estimates for proved reserves. GAAP does not prescribe any corresponding measure for PV-10 of probable reserves and possible reserves or reserves based on other than SEC prices. As a result, it is not practicable for us to reconcile these additional PV-10 measures to GAAP standardized measure. For a reconciliation of PV-10 of proved reserves based on SEC pricing to standardized measure, see "—Summary Reserve, Production and Operating Data—Summary Reserve Data."

    Strip Pricing Sensitivity Case

 
  June 30, 2013  
 
  Estimated Net Reserves (Bcfe)(1)  
 
  Ethane Recovery   Ethane Rejection  

Sensitivity of Estimated Proved Reserves Based on Strip Pricing(2):

             

Total equivalent proved reserves

    7,087     6,295  

Total equivalent proved developed reserves

    1,594     1,448  

Percent proved developed

    22 %   23 %

PV-10 of proved reserves (in millions)(2)(3)

  $ 5,279   $ 5,644  

Sensitivity of Estimated Probable Reserves Based on Strip Pricing(2)(4):

             

Total equivalent probable reserves

    16,776     14,057  

PV-10 of probable reserves (in millions)(2)(3)

  $ 9,173   $ 10,210  

Sensitivity of Estimated Possible Reserves Based on Strip Pricing(2)(4):

             

Total equivalent possible reserves

    8,310     7,444  

PV-10 of possible reserves (in millions)(2)(3)

  $ 2,939   $ 3,245  

(1)
Volumes and values were determined under strip pricing using index prices for natural gas and oil of $3.86 per MMBtu and $87.04 per Bbl. These prices were then adjusted for transportation, gathering, processing, compression and other costs. For the adjusted realized prices under strip

 

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    pricing, see "Business—Our Operations—Reserve Data—Adjusted Index Prices Used in Reserve Calculations."

(2)
Our estimated proved, probable and possible reserves and PV-10 as of June 30, 2013 based on strip pricing as of June 30, 2013 have been prepared by our internal reserve engineers, which have been audited by our independent reserve engineers, DeGolyer and MacNaughton.

(3)
PV-10 was prepared using strip pricing, discounted at 10% per annum, without giving effect to taxes or hedges. PV-10 is a non-GAAP financial measure. We believe that the presentation of PV-10 is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our reserves prior to taking into account future corporate income taxes and our current tax structure. PV-10 is based on a pricing methodology and discount factors that are consistent for all companies. Moreover, GAAP does not provide a measure of estimated future net cash flows for reserves other than proved reserves or for proved, probable or possible reserves calculated using prices other than SEC prices. PV-10 does not take into account the effect of future taxes, and PV-10 estimates for reserve categories other than proved or for pricing sensitivities uses the relevant reserve volumes and prices, as applicable, but PV-10 is otherwise calculated using the same assumptions as those for, and in a manner consistent with, the calculation of standardized measure. Because PV-10 estimates of probable and possible reserves are more uncertain than PV-10 and standardized measure of proved reserves, but have not been adjusted for risk due to that uncertainty, they may not be comparable with each other. Similarly, PV-10 estimates for price sensitivities are not adjusted for the likelihood that the relevant pricing scenario will occur, and thus they may be subject to the same issues with comparability. Nonetheless, we believe that PV-10 estimates for reserve categories other than proved or for pricing sensitivities present useful information for investors about the future net cash flows of our reserves in the absence of a comparable GAAP measure such as standardized measure. Because of this, PV-10 can be used within the industry and by creditors and securities analysts to evaluate estimated net cash flows from proved reserves on a more comparable basis. Investors should be cautioned that PV-10 does not represent an estimate of the fair market value of our reserves. In addition, investors should be further cautioned that estimates of PV-10 of probable reserves, as well as the underlying volumetric estimates, are inherently more uncertain of being recovered and realized than comparable measures for proved reserves, and that the uncertainty for possible reserves is even more significant. Further, because estimates of proved and probable reserve volumes and PV-10 have not been adjusted for risk due to this uncertainty of recovery, they should not be summed arithmetically with each other or with comparable estimates for proved reserves. GAAP does not prescribe any corresponding measure for PV-10 of reserves based on other than SEC prices. As a result, it is not practicable for us to reconcile these additional PV-10 measures to GAAP standardized measure.

(4)
All of our estimated probable and possible reserves are classified as undeveloped.

For more information about our reserves, including the reserves attributable to individual natural gas product types and the prices used in calculating volumes and values under each pricing scenario, see "Business—Our Operations—Reserve Data."

 

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Operating Data

        The following table provides a summary of our net acreage and identified potential well locations as of June 30, 2013, our 2013 and 2014 projected drilling schedules based on gross wells, and our average net daily production for August 2013:

 
  As of June 30, 2013    
   
   
 
 
   
  Identified Potential Well Locations(2)   2013
Projected
Drilling
Schedule
(Gross Wells)
  Planned
2014
Drilling
Schedule
(Gross Wells)
   
 
 
   
  Average Net
Daily
Production
(MMcfe/d)
 
 
  Net
Acres(1)
  Total   Proved
Undeveloped
  Probable   Possible  

Marcellus Shale:

                                                 

Highly Rich/Condensate(3)

    48,000     505     18     454     33     4     21     16  

Highly Rich Gas(3)

    89,000     777     116     653     8     51     54     149  

Rich Gas(3)

    77,000     673     276     396     1     75     75     188  

Dry Gas(3)

    106,000     986     277     530     179     5         192  

Utica Shale

    100,000     720     17     175     528     26     47     45  

Upper Devonian Shale

    170,000     915     7     149     759             4  
                                     

Total

          4,576     711     2,357     1,508     161     197     594  
                                     

(1)
Net acres prospective for the Upper Devonian Shale are also included among the Marcellus Shale net acres. The Upper Devonian Shale and the Marcellus Shale are stacked formations within the same geographic footprint.

(2)
Our proved undeveloped, probable and possible identified potential well locations are based on specifically engineered locations to which the applicable category of reserves were attributable based on SEC pricing as of June 30, 2013. For a description of how we determine our identified potential well locations, see "Business—Our Operations—Reserve Data—Identification of Potential Well Locations."

(3)
Classifications are based on our and other operators' drilling results in the Marcellus Shale and are subject to confirmation through actual future drilling results. For definitions of "highly rich/condensate," "highly rich gas," "rich gas" and "dry gas," see the "Glossary of Natural Gas and Oil Terms" in Annex A to this prospectus.

Recent Operating Developments

        Our estimated current net daily production is 640 MMcfe/d, including 11,500 Bbls/d of NGLs and oil. Our estimated current net daily production in the Marcellus Shale is 555 MMcfe/d, including 7,400 Bbls/d of NGLs and oil, and our estimated current net daily production in the Utica Shale is 85 MMcfe/d, including 4,100 Bbls/d of NGLs and oil. Current net daily production represents the average net daily production for the period from September 1, 2013 through September 25, 2013.

Midstream Infrastructure

        We maintain a strong commitment to developing the necessary midstream infrastructure to support our drilling schedule and production growth. We accomplish this goal through a combination of internal asset developments and contractual relationships with third-party midstream service providers. As part of our internal developments, we have invested a significant amount of capital in building low- and high-pressure gathering lines, compression facilities and water pipeline systems. We currently own and operate 103 miles of gathering pipelines and have contracted access to an additional 94 miles of gathering pipelines in the Marcellus and Utica Shales. We also own and operate four compressor stations and have firm access to nine additional third-party compressor stations in the Appalachian

 

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Basin. We have additional gathering pipelines and compressor stations under construction to support our planned drilling activities in the Marcellus and Utica Shales. In the past we have monetized certain midstream infrastructure assets for a significant return on investment and redeployed the proceeds into our ongoing operations.

        Through third-party contractual relationships, we have obtained committed cryogenic processing capacity for our Marcellus and Utica Shale production. For example, we have contracted with MarkWest Energy Partners, L.P., or MarkWest, to provide processing capacity as follows:

 
  Plant
Processing
Capacity
(MMcf/d)
  Contracted Firm
Processing
Capacity
(MMcf/d)(1)
  Anticipated Date
of Completion

Marcellus Shale:

               

Sherwood I

    200     200   In service

Sherwood II

    200     200   In service

Sherwood III

    200     150   Fourth Quarter 2013

Sherwood IV

    200     200   Second Quarter 2014
             

Marcellus Shale Total

    800     750    
             

Utica Shale:

               

Cadiz(2)

    185       In service

Seneca I

    200     200   Fourth Quarter 2013

Seneca II(3)

    200       Fourth Quarter 2013

Seneca III(4)

    200     100   First Quarter 2014
             

Utica Shale Total

    785     300    
             

(1)
Contracted firm capacity at the Sherwood and Seneca facilities as of the start-up date of each identified unit.

(2)
Firm interim capacity of 80 MMcf/d at Cadiz will be fixed at 50 MMcf/d capacity upon start-up of the Seneca I processing complex and will terminate upon start-up of the Seneca II processing complex.

(3)
We have 50 MMcf/d of interim capacity at the Seneca II processing facility until July 1, 2014.

(4)
Remaining 100 MMcf/d of capacity at the Seneca III processing complex is available for commitment at our option.

        Our NGL processing capacity at the Sherwood facility has been curtailed since August 2013 due to a line break in a MarkWest NGL pipeline caused by a landslide due to abnormal rainfall. Repairs and remediation to the pipeline and rights of way in the landslide impacted areas are currently underway, and MarkWest is working to return the pipeline to service, which is expected to be in October 2013. While our NGLs from that facility are being transported by truck for fractionation and sale, we estimate that our net daily production since August 2013 has been reduced by 60 to 80 MMcfe/d as a result of this line break in order to match NGL production to trucking capacity. We do not expect the temporary NGL processing capacity constraints at the Sherwood facility to have a material impact on our results of operations.

        Our midstream infrastructure also includes two independent fresh water sourcing and delivery systems for well completion operations in our Marcellus and Utica Shale operating areas. These systems consist of permanent buried pipelines, temporary surface pipelines and fresh water storage facilitates, as well as pumping stations to transport the fresh water throughout the pipeline networks. Current cost estimates for both the Marcellus and Utica projects are anticipated to total $525 million through 2023. The capital expenditures are estimated to be $250 million in 2013. The water pipeline

 

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systems are expected to deliver a reliable year-round water supply, lessen water handling costs and significantly decrease water truck traffic and associated road damage on state, county and municipal roadways. It is estimated that these water pipeline systems will reduce our well completion costs by up to $600,000 per well, and we anticipate that over 30% of our 2013 completed wells and up to 90% of our 2014 completed wells will utilize these new infrastructures. Assuming a 7,000 foot horizontal well lateral, it is estimated that 1,850 water truckload trips per well completion will be eliminated from roadways.

        We also have contracted 1,300,000 MMBtu/d of long-haul firm transportation or firm sales capacity on various pipelines and 20,000 Bbl/d of committed ethane takeaway capacity to accommodate our growing production and manage basis differentials.

        We will continue to invest significantly in our midstream infrastructure, as it allows us to optimize our processing and takeaway capacity to support our expected rapid production growth, affords us more control over the direction and planning of our drilling schedule and has historically created significant value for our equity owners. In 2013, we estimate we will spend a total of approximately $600 million on midstream infrastructure.

        In addition, we believe that our midstream assets may be well suited for a master limited partnership ("MLP") or similar structure. Accordingly, following the closing of this offering, we intend to contribute our midstream assets to Antero Resources Midstream LLC, or Antero Midstream, a subsidiary formed to hold our midstream business, and enter into commercial arrangements for midstream services with them. We will initially own all of the membership interests in Antero Midstream other than a special membership interest, which will be indirectly owned by Antero Investment. The special membership interest in Antero Midstream will provide Antero Investment with certain rights, including the right to cause an initial public offering of Antero Midstream as a MLP or similar structure. Following any such initial public offering, the special membership interest will convert into a general partner interest and incentive distribution rights in the MLP, which will allow Antero Investment to manage Antero Midstream's business and affairs. We may also seek opportunities to finance our midstream business on a stand-alone basis. See "Certain Relationships and Related Party Transactions—Antero Midstream" and "Corporate Reorganization."

Business Strengths

        Our objective is to build shareholder value through growth in reserves, production and cash flows by developing and expanding our portfolio of low-risk, high-return drilling locations and ensuring timely development of processing and pipeline takeaway capacity. We believe that the following strengths will allow us to successfully execute our business strategies:

    Large, stable operated position in the core of the Marcellus and Utica Shales.  We own extensive and contiguous land positions in the core areas of two of the premier North American shale plays. We believe our approximately 329,000 net acres in the southwestern core of the Marcellus Shale and our 102,000 net acres in the Utica Shale are characterized by consistent and predictable geology. However, 92% of this acreage is currently undeveloped or does not include wells that have been drilled or completed to a point of producing commercially viable quantities. Approximately 52% of our Marcellus acreage and 20% of our Utica acreage was held by production at June 30, 2013, while an additional 27% and 78%, respectively, does not expire for five years or more. However, 48% and 80% of our natural gas leases related to our Marcellus and Utica acreage, respectively, require us to drill wells that are commercially productive by the end of the primary term, and if we are unsuccessful in drilling such wells, we could lose our rights under such leases. As of June 30, 2013, all of our total aggregate proved, probable and possible reserves were attributable to properties that we operate.

 

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    Multi-year, low-risk drilling inventory.  Our drilling inventory at June 30, 2013 consisted of 4,576 identified potential horizontal well locations on our existing leasehold acreage. We believe that we and other operators in the area have substantially delineated and de-risked our large contiguous acreage position in the southwestern core of the Marcellus Shale. We have drilled and completed 199 wells on our Marcellus Shale acreage with a success rate of 100%. We have drilled and completed 11 horizontal wells in the core of the Utica Shale with a 100% success rate.

    Exposure to large resource of liquids-rich gas and condensate.  Approximately 64% of our 4,576 identified potential horizontal well locations as of June 30, 2013 target the liquids-rich gas regions of the Marcellus and Utica Shales. The gas content of this liquids-rich gas allows for NGL processing that, coupled with the condensate, can significantly improve well economics. This exposure to a range of liquids contents allows us to optimize our drilling economics across a portfolio of liquids-rich gas locations in order to take advantage of the existing commodity price environment.

    Low-cost leader.  We are a low-cost leader in the U.S. Our ability to drill consistently long laterals, averaging over 7,000 lateral feet, helps us to reduce costs on a per-lateral-foot basis, which is a key competitive advantage. The contiguous nature of our leasehold and the lack of geologic complexity are critical to our ability to drill long laterals. Additionally, since June 2013, we have shortened our average frac stage lengths on many of our Marcellus Shale wells from 350 feet per stage historically to 150 to 250 feet per stage. Initial well results have shown increases in 24-hour initial production rates of 25% to 35% when compared to similar wells within the same geographic area. In addition, we estimate that the incremental costs attributable to the short stage lengths has averaged an estimated $1.5 million to $2.0 million per well. We have implemented operational efficiencies to continue lowering our costs, such as (i) pad drilling, (ii) development of an extensive water pipeline system, (iii) the use of less expensive, shallow vertical drilling rigs to drill to the kick-off point of the horizontal wellbore, (iv) the use of natural gas powered rigs and (v) our proactive approach to meeting our gathering, processing and compression infrastructure needs.

    Access to committed processing, compression and takeaway capacity in the Marcellus and Utica Shales. We have contracted a total of 750 MMcf/d of processing capacity in the Marcellus Shale, 400 MMcf/d of which is currently in service. Similarly, we have 300 MMcf/d of contracted processing capacity in the Utica Shale, with the option to access additional capacity. We also have secured 1,300,000 MMBtu/d of long-haul firm transportation capacity or firm sales and have committed to 20,000 Bbl/d of ethane takeaway capacity. We believe our commitment to midstream infrastructure allows us to commercialize our production more quickly at optimal prices, making us a logical consolidator of additional acreage in our core areas.

    Financial strength and flexibility.  As of June 30, 2013, after giving effect to this offering and the application of the net proceeds therefrom, we expect to have approximately $1.72 billion of available borrowing capacity under our credit facility (after deducting $32 million outstanding letters of credit). After the completion of this offering and the recent increase in lender commitments under our credit facility, together with our operating cash flow and hedging program, we believe we will have the financial flexibility to pursue our currently planned 2013 and 2014 development and delineation drilling activities.

    Proven and incentivized executive and technical teams.  We believe our management team's experience and expertise across multiple resource plays provides a distinct competitive advantage. Our officers have an average of over 30 years of industry experience in the Rocky Mountain, Midcontinent and Appalachian operating regions and have successfully built, grown and sold two unconventional resource-focused upstream companies and one midstream company in the past 15 years. Additionally, our technical team has drilled over 450 horizontal wells in the

 

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      Barnett, Woodford, Marcellus and Utica Shales over the past ten years. Our management team has a significant economic interest in us through their interest in our controlling stockholder, Antero Resources Investment LLC, or Antero Investment. Management's percentage interest in our stock held by Antero Investment may increase over time, without diluting public investors, if our stock price appreciates following this offering. We believe our management team's ability to increase their economic interest in us provides significant incentives to grow our stock price for the benefit of all stockholders.

Business Strategy

        Our strategy consists of the following principal elements:

    Create shareholder value through the development of our extensive drilling inventory.  Since initiating our drilling program with one rig in 2009, we have invested over $3.2 billion in land and drilling in the Appalachian Basin and currently intend to use an average of 17 rigs in 2013. With 15 rigs running in the Marcellus Shale, we are currently the most active driller in the area based on information from RigData. We intend to dedicate substantially all of our $1.45 billion drilling and completion budget in 2013 to develop our liquids-rich areas. Approximately 85% of the 2013 drilling and completion budget is allocated to the Marcellus Shale, and the remaining 15% is allocated to the Utica Shale.

    Enhance returns through a focus on optimizing full cycle economics.  We continually monitor and adjust our drilling program with the objective of achieving the highest total returns on our portfolio of drilling opportunities. We believe that we will achieve this objective by (i) minimizing the capital costs of drilling and completing horizontal wells, (ii) maximizing well production and recoveries by optimizing lateral length, the number of frac stages, perforation intervals and the type of fracture stimulation employed, (iii) targeting specific BTU windows within our leasehold position to optimize our hydrocarbon mix based on the existing commodity price environment, (iv) minimizing operating costs through efficient well management, and (v) pursuing infrastructure initiatives, such as the development of our extensive water pipeline system and gas gathering system.

    Maximize wellhead economics by ensuring timely development of processing and pipeline takeaway capacity and the marketing of our NGLs. We expect to continue to meaningfully increase our liquids production from the NGLs, oil and condensate associated with our growing natural gas production. We endeavor to ensure that we have sufficient processing capacity in place to recover NGLs when economically desirable. We have also secured long-term firm takeaway capacity and firm sales on major pipelines that are in existence or currently under construction in our core operating areas to accommodate our growing production and to manage basis differentials. Further, we plan to maximize the value of our NGLs through processing and marketing agreements with transporters and NGL end users.

    Continue growing our core acreage position through leasing and strategic acquisitions.  We intend to continue identifying and acquiring additional acreage and producing assets in our core areas in the Marcellus and Utica Shales. We believe that by managing a large team of dedicated landmen, we have a competitive advantage that enables us to continue to opportunistically add acreage to our core positions. This team of landmen has allowed us to build a large, contiguous acreage position in our Marcellus and Utica Shale plays, making us the logical acreage consolidator in our core areas. We initially targeted and acquired 114,000 net acres in the Marcellus Shale in 2008, based on specific geologic and technical analysis, and have selectively built our position to approximately 329,000 net acres. We started building our targeted Utica Shale acreage position in the fourth quarter of 2011 and currently have approximately 102,000 net acres of leasehold in the core of the liquids-rich window in Ohio.

 

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    Manage commodity price exposure through an active hedging program to protect our expected future cash flows. We expect to continue to maintain an active hedging program designed to mitigate volatility in commodity prices and regional basis differentials and to protect our expected future cash flows. As of June 30, 2013, we had entered into hedging contracts through December 31, 2018 covering a total of approximately 943 Bcfe of our projected natural gas and oil production at a weighted average price of $4.80 per Mcfe. These hedging contracts include hedges for the six-month period ending December 31, 2013 covering a total of approximately 84 Bcfe of our projected natural gas and oil production at a weighted average price of $4.68 per Mcfe. This hedging program has led to over $650 million in realized gains over the past five years.

Risk Factors

        An investment in our common stock involves a number of risks. You should carefully consider, in addition to the other information contained in this prospectus, the risks described in "Risk Factors" before investing in our common stock. These risks could materially affect our business, financial condition and results of operations, and cause the trading price of our common stock to decline. You could lose part or all of your investment. You should bear in mind, in reviewing this prospectus, that past experience is no indication of future performance. You should read the section titled "Cautionary Statement Regarding Forward-Looking Statements" for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this prospectus.

Corporate Reorganization

        Antero Resources LLC was formed in October 2009 by members of our management team and the Sponsors, as defined below. Antero Resources Appalachian Corporation, a wholly owned subsidiary of Antero Resources LLC, was formed in March 2008 and renamed Antero Resources Corporation in June 2013. Pursuant to the terms of a corporate reorganization, which will be completed immediately prior to or contemporaneously with the closing of this offering, (i) all of the outstanding interests of our existing owners in Antero Resources LLC will be exchanged for similar interests in Antero Resources Investment LLC, or Antero Investment, and (ii) Antero Resources LLC will be merged into Antero Resources Corporation.

        In addition, we intend to transfer our midstream business to Antero Resources Midstream LLC, or Antero Midstream, following the closing of this offering. We will initially own all of the membership interests in Antero Midstream other than a special membership interest, which will be indirectly owned by Antero Investment. The special membership interest in Antero Midstream will provide Antero Investment with certain rights, including the right to cause an initial public offering of Antero Midstream as a MLP or similar structure. Following any such initial public offering, the special membership interest will convert into a general partner interest in the MLP, which will allow Antero Investment to manage Antero Midstream's business and affairs. Following any such initial public offering, Antero Investment will also hold incentive distribution rights in the MLP, which will represent the right to receive an increasing percentage of the MLP's quarterly cash distributions in excess of specified target distribution levels. See "Certain Relationships and Related Party Transactions—Antero Midstream" and "Corporate Reorganization."

 

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        The following diagram indicates our ownership structure after giving effect to our corporate reorganization and assuming no exercise of the underwriters' options to purchase additional shares. See "Corporate Reorganization" for more information regarding our corporate reorganization.

GRAPHIC


(1)
Includes each of our Sponsors and certain members of our management team who have made investments in Antero Investment in exchange for investment units. For information on the entities and individuals who may be deemed to control the Sponsors and for a list of our management team (all of whom hold interests in Antero Investment), see "Principal and Selling Stockholders."

(2)
Holds profits interests in Antero Investment on behalf of members of our management team and other employees. All of the membership interests in Antero Resources Employee Holdings LLC are held by our employees. The compensation committee of Antero Investment has voting and control rights over the shares held by Antero Resources Employee Holdings LLC.

(3)
Represents an interest that provides Antero Investment with certain rights, including the right to cause an initial public offering of Antero Midstream as a MLP or similar structure. Following any such initial public offering, this special membership interest will convert into a general partner interest in the MLP, which will allow Antero Investment to manage Antero Midstream's business and affairs. Following any such initial public offering, Antero Investment will also hold incentive distribution rights in the MLP, which will represent the right to receive an increasing percentage of the MLP's quarterly cash distributions in excess of specified target distribution levels. See "Certain Relationships and Related Party Transactions—Antero Midstream."

 

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Our Principal Stockholders

        Following the completion of this offering and our corporate reorganization, Antero Investment will directly own 88.2% of our common stock, or 86.5% if the underwriters' options to purchase additional shares from us and Antero Investment are exercised in full. Antero Investment is primarily owned by investment funds affiliated with or managed by Warburg Pincus LLC, Yorktown Partners LLC and Trilantic Capital Partners, or collectively, the Sponsors, and certain members of our management. See "Principal and Selling Stockholders" and "Corporate Reorganization—Limited Liability Company Agreement of Antero Investment."

        Warburg Pincus LLC is a leading global private equity firm focused on growth investing. The firm has more than $40 billion in assets under management. Its active portfolio of more than 125 companies is highly diversified by stage, sector and geography. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value. Founded in 1966, Warburg Pincus has raised 13 private equity funds which have invested more than $45 billion in over 675 companies in more than 35 countries. Since the late 1980s, Warburg Pincus has invested more than $6 billion in energy and natural resources companies around the world. In addition to Antero Resources LLC, notable energy investments for which the firm was lead and/or founding investor include Bill Barrett Corporation (NYSE: BBG), Encore Acquisition Company (NYSE: EAC, since acquired by Denbury Resources), Kosmos Energy Ltd. (NYSE: KOS), Laredo Petroleum Holdings, Inc. (NYSE: LPI), MEG Energy (TSX: MEG), Newfield Exploration (NYSE: NFX), Spinnaker Exploration (NYSE: SKE, since acquired by Norsk Hydro/Statoil) and Targa Resources (NYSE: NGLS, TRGP). The firm is headquartered in New York with offices in Amsterdam, Beijing, Frankfurt, Hong Kong, London, Luxembourg, Mumbai, Port Louis, San Francisco, Sao Paulo and Shanghai.

        Yorktown Partners LLC is a private investment manager investing exclusively in the energy industry with an emphasis on North American oil and gas production, and midstream businesses. Yorktown has raised 10 private equity funds totaling over $6.5 billion. Yorktown's investors include university endowments, foundations, families, insurance companies, and other institutional investors. The firm is headquartered in New York.

        Trilantic Capital Partners is a global private equity firm focused on control and significant minority investments in North America and Europe with primary investment focus in the business services, consumer, energy and financial sectors. The firm currently manages four institutional private equity funds with aggregate capital commitments of $5.7 billion. Trilantic has offices in New York, London, Guernsey and Luxembourg.

Emerging Growth Company Status

        We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we are an emerging growth company, unlike other public companies, we will not be required to:

    provide an auditor's attestation report on management's assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002;

    comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;

    comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the Securities and Exchange Commission, or the SEC, determines otherwise;

 

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    provide certain disclosure regarding executive compensation required of larger public companies; or

    obtain shareholder approval of any golden parachute payments not previously approved.

        We will cease to be an "emerging growth company" upon the earliest of:

    the last day of the fiscal year in which we have $1.0 billion or more in annual revenues;

    the date on which we become a large accelerated filer;

    the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or

    the last day of the fiscal year following the fifth anniversary of our initial public offering.

        In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, but we intend to irrevocably opt out of the extended transition period.

Corporate Information

        Our principal executive offices are located at 1625 17th Street, Denver, Colorado 80202, and our telephone number at that address is (303) 357-7310. Our website is located at www.anteroresources.com. We expect to make our periodic reports and other information filed with or furnished to the SEC available free of charge through our website as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference herein and does not constitute a part of this prospectus.

 

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The Offering

Common stock offered by us

  30,000,000 shares.

Common stock to be outstanding after the offering

 

254,375,000 shares (or 255,125,000 shares if the underwriters exercise their options to purchase additional shares in full).

Option to purchase additional shares from the selling stockholder

 

The selling stockholder has granted the underwriters a 30-day option to purchase up to an aggregate of 3,750,000 additional shares of our common stock held by the selling stockholder to cover over-allotments.

Option to purchase additional shares from us

 

We have granted the underwriters a 30-day option to purchase up to an aggregate of 750,000 additional shares of our common stock from us if the underwriters sell more than an aggregate of 33,750,000 shares of common stock (including the shares purchased from the selling stockholder) to cover over-allotments.

 

Any exercise by the underwriters of their options to purchase additional shares of common stock will be made initially with respect to the 3,750,000 additional shares of common stock to be sold by the selling stockholder and then with respect to the 750,000 additional shares of common stock to be sold by us.

 

The share amounts in each of the options assume that the public offering price is equal to $40.00 per share (the mid-point of the price range set forth on the cover of this prospectus). The aggregate number of shares that may be purchased from the selling stockholder and us by the underwriters upon the exercise of their options is not subject to adjustment based on changes in the public offering price. However, if the actual public offering price is greater than $40.00 per share, the allocation of shares among the options will be adjusted such that the number of shares that may be purchased from the selling stockholder will not result in gross proceeds of more than $150 million. Similarly, if the actual public offering price is lower than $40.00 per share, the allocation of shares among the options will be adjusted such that the number of shares that may be purchased from the selling stockholder will not result in gross proceeds of less than $150 million. In either case, the balance of the shares subject to the options will be subject to purchase from us upon the exercise thereof by the underwriters in the manner described above.

Use of proceeds

 

We expect to receive approximately $1.14 billion of net proceeds from the sale of the common stock offered by us after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 

We intend to use the net proceeds from this offering, including any proceeds received pursuant to any exercise by the underwriters of their option to purchase additional shares of our common stock from us, to repay outstanding borrowings under our credit facility.

 

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We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholder pursuant to any exercise by the underwriters of their option to purchase additional shares of our common stock from the selling stockholder.

 

Affiliates of certain of the underwriters are lenders under our credit facility and, accordingly, will receive a portion of the proceeds of this offering. See "Underwriting (Conflicts of Interest)."

Conflicts of interest

 

Because affiliates of Barclays Capital Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, Credit Suisse Securities (USA) LLC, BMO Capital Markets Corp., Capital One Securities, Inc., Comerica Securities, Inc., Mitsubishi UFJ Securities (USA), Inc. and TD Securities (USA) LLC are lenders under our credit facility and will each receive more than 5% of the net proceeds of this offering due to the repayment of borrowings under the credit facility, such underwriters are deemed to have a conflict of interest within the meaning of Rule 5121 of the Financial Industry Regulatory Authority, or FINRA. Accordingly, this offering will be conducted in accordance with Rule 5121, which requires, among other things, that a "qualified independent underwriter" has participated in the preparation of, and has exercised the usual standards of "due diligence" with respect to, the registration statement and this prospectus. Jefferies LLC has agreed to act as qualified independent underwriter for this offering and to undertake the legal responsibilities and liabilities of an underwriter under the Securities Act, specifically including those inherent in Section 11 of the Securities Act. Jefferies LLC will not receive any additional fees for serving as qualified independent underwriter in connection with this offering. We have agreed to indemnify Jefferies LLC against liabilities incurred in connection with acting as a qualified independent underwriter, including liabilities under the Securities Act. See "Underwriting (Conflicts of Interest)."

Dividend policy

 

We do not anticipate paying any cash dividends on our common stock. In addition, our credit facility and the indentures governing our senior notes place certain restrictions on our ability to pay cash dividends.

Risk factors

 

You should carefully read and consider the information set forth under the heading "Risk Factors" and all other information set forth in this prospectus before deciding to invest in our common stock.

Listing and trading symbol

 

We have been approved to list our common stock on the New York Stock Exchange, or the NYSE, under the symbol "AR".

        The information above excludes 16,534,375 shares of common stock reserved for issuance under our 2013 Long-Term Incentive Plan, or the LTIP, that we intend to adopt in connection with the completion of this offering.

 

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Summary Historical Consolidated Financial Data

        The following table shows our summary historical consolidated financial data, for the periods and as of the dates indicated, for Antero Resources LLC and its subsidiaries.

        The summary statement of operations data for the years ended December 31, 2010, 2011 and 2012 and the balance sheet data as of December 31, 2011 and 2012 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The balance sheet data as of December 31, 2010 is derived from our audited consolidated financial statements not included in this prospectus. The summary statement of operations data for the three and six months ended June 30, 2012 and 2013 and the balance sheet data as of June 30, 2013 are derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The balance sheet data as of June 30, 2012 is derived from our unaudited consolidated financial statements not included in this prospectus.

        The statement of operations data for all periods presented has been recast to present the results of operations from our Piceance Basin and Arkoma Basin operations in discontinued operations. The losses on the sales of these properties are also included in discontinued operations in 2012. The results from continuing operations reflect our remaining operations in the Appalachian Basin. No part of our general and administrative expenses or interest expense was allocated to discontinued operations.

        The summary historical consolidated financial data has been prepared on a consistent basis with our audited consolidated financial statements. In the opinion of management, such summary historical consolidated financial data reflects all adjustments (consisting of normal and recurring accruals) considered necessary to present our financial position for the periods presented.

        The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year because of the impact of fluctuations in prices received from natural gas and oil, natural production declines, the uncertainty of exploration and development drilling results and other factors. The summary financial data presented below are qualified in their entirety by reference to, and should be read in conjunction with, "Capitalization," "Management's Discussion and

 

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Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere herein.

 
  Year Ended December 31,   Three Months Ended
June 30,
  Six Months Ended
June 30,
 
 
  2010   2011   2012   2012   2013   2012   2013  
 
  (in thousands)
 

Statement of operations data:

                                           

Operating revenues:

                                           

Natural gas, NGLs and oil production revenues

  $ 47,431   $ 195,289   $ 264,982   $ 44,965   $ 191,661   $ 90,147   $ 325,056  

Commodity derivative fair value gains (losses)

    77,599     496,064     179,546     (6,040 )   195,483     211,214     123,542  

Gain on sale of assets

            291,190             291,305      
                               

Total revenues

    125,030     691,353     735,718     38,925     387,144     592,666     448,598  
                               

Operating expenses:

                                           

Lease operating expenses

    1,158     4,608     6,243     1,866     1,454     2,559     2,525  

Gathering, compression, processing and transportation

    9,237     37,315     91,094     20,079     48,670     31,654     89,640  

Production taxes

    2,885     11,915     20,210     3,371     10,108     7,113     18,727  

Exploration expenses

    2,350     4,034     14,675     2,952     7,300     4,756     11,662  

Impairment of unproved properties

    6,076     4,664     12,070     1,295     4,803     1,581     6,359  

Depletion, depreciation and amortization

    18,522     55,716     102,026     22,321     52,589     38,431     92,953  

Accretion of asset retirement obligations

    11     76     101     24     267     46     531  

Expenses related to acquisition of business

    2,544                          

General and administrative

    21,952     33,342     45,284     10,473     13,567     19,646     26,284  

Loss on sale of compressor station

        8,700                      
                               

Total operating expenses

    64,735     160,370     291,703     62,381     138,758     105,786     248,681  
                               

Operating income (loss)

    60,295     530,983     444,015     (23,456 )   248,386     486,880     199,917  
                               

Other expense:

                                           

Interest expense

  $ (56,463 ) $ (74,404 ) $ (97,510 ) $ (24,223 ) $ (33,468 ) $ (48,593 ) $ (63,396 )

Interest rate derivative fair value losses

    (2,677 )   (94 )                    
                               

Total other expense

    (59,140 )   (74,498 )   (97,510 )   (24,223 )   (33,468 )   (48,593 )   (63,396 )
                               

Income (loss) before income taxes and discontinued operations            

    1,155     456,485     346,505     (47,679 )   214,918     438,287     136,521  

Income tax (expense) benefit

    (939 )   (185,297 )   (121,229 )   14,442     (83,725 )   (183,969 )   (53,325 )
                               

Income (loss) from continuing operations

    216     271,188     225,276     (33,237 )   131,193     254,318     83,196  

Discontinued operations:

                                           

Income (loss) from results of operations and sale of discontinued operations

    228,412     121,490     (510,345 )   (444,850 )       (404,674 )    
                               

Net income (loss) attributable to Antero equity owners

  $ 228,628   $ 392,678   $ (285,069 ) $ (478,087 ) $ 131,193   $ (150,356 ) $ 83,196  
                               

Balance sheet data (at period end):

                                           

Cash and cash equivalents

  $ 8,988   $ 3,343   $ 18,989   $ 5,575   $ 10,867   $ 5,575   $ 10,867  

Property and equipment, net

    2,159,762     2,880,414     2,937,473     2,678,800     4,074,634     2,678,800     4,074,634  

Total assets

    2,486,287     3,788,800     3,618,793     3,586,082     4,825,148     3,586,082     4,825,148  

Long-term indebtedness

    652,632     1,317,330     1,444,058     1,042,172     2,418,217     1,042,172     2,418,217  

Total equity

    1,594,987     1,958,806     1,673,737     1,808,450     1,756,933     1,808,450     1,756,933  

Other financial data:

                                           

EBITDAX from continuing operations(1)

  $ 27,824   $ 160,259   $ 284,710   $ 60,236   $ 132,608   $ 127,887   $ 251,357  

EBITDAX from discontinued operations(1)

    169,854     180,562     149,605     46,003         100,692      
                               

Total EBITDAX(1)

  $ 197,678   $ 340,821   $ 434,315   $ 106,239   $ 132,608   $ 228,579   $ 251,357  
                               

Net cash provided by operating activities

    127,791     266,307     332,255     60,493     82,190     160,984     192,397  

Net cash provided by (used in) investing activities

    (230,672 )   (901,249 )   (463,491 )   (8,372 )   (630,523 )   116,327     (1,178,408 )

Net cash provided by (used in) financing activities

    101,200     629,297     146,882     (53,039 )   554,394     (275,079 )   977,889  

Capital expenditures(2)

    423,002     929,887     1,755,430     466,570     597,938     726,262     1,236,434  

(1)
"EBITDAX" is a non-GAAP financial measure that we define as net income (loss) before interest expense or interest income, derivative fair value gains or losses, excluding net cash receipts or payments on derivative instruments, taxes, impairments, depletion, depreciation, amortization, exploration expense, franchise taxes, stock compensation, business acquisition and gain or loss on sale of assets. "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. EBITDAX should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows

 

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    provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. EBITDAX provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position. EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration expenses, and other commitments and obligations. However, our management team believes 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 a company's operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and 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 structure from our operating structure; and

    is used by our management team for various purposes, including as a measure of operating performance, in presentations to our board of directors, as a basis for strategic planning and forecasting and by our lenders pursuant to covenants under our credit facility and the indentures governing our senior notes.

    There are significant limitations to using EBITDAX as a measure of performance, including the inability to analyze the effect 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 EBITDAX reported by different companies. The following table represents a reconciliation of our net income (loss) from continuing operations to EBITDAX from continuing operations, a reconciliation of our net income (loss) from discontinued operations to

 

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      EBITDAX from discontinued operations, and a reconciliation of our total EBITDAX to net cash provided by operating activities per our consolidated statements of cash flows, in each case for the periods presented:

 
  Year Ended December 31,   Three Months Ended
June 30,
  Six Months Ended
June 30,
 
 
  2010   2011   2012   2012   2013   2012   2013  
 
  (in thousands)
 

Net income (loss) from continuing operations

  $ 216   $ 271,188   $ 225,276   $ (33,237 ) $ 131,193   $ 254,318   $ 83,196  

Commodity derivative fair value (gains) losses(3)

    (77,599 )   (496,064 )   (179,546 )   6,040     (195,483 )   (211,214 )   (123,542 )

Net cash receipts on settled derivative instruments(3)

    15,063     49,944     178,491     49,864     14,146     96,716     62,277  

(Gain) loss on sale of assets

        8,700     (291,190 )           (291,305 )    

Interest expense and other

    59,140     74,498     97,510     24,223     33,468     48,593     63,396  

Provision (benefit) for income taxes

    939     185,297     121,229     (14,442 )   83,725     183,969     53,325  

Depreciation, depletion, amortization, and accretion

    18,533     55,792     102,127     22,345     52,856     38,477     93,484  

Impairment of unproved properties

    6,076     4,664     12,070     1,295     4,803     1,581     6,359  

Exploration expense

    2,350     4,034     14,675     2,952     7,300     4,756     11,662  

Other

    3,106     2,206     4,068     1,196     600     1,996     1,200  
                               

EBITDAX from continuing operations

    27,824     160,259     284,710     60,236     132,608     127,887     251,357  
                               

Net income (loss) from discontinued operations

    228,412     121,490     (510,345 )   (444,850 )       (404,674 )    

Commodity derivative fair value (gains) losses(3)

    (166,685 )   (180,130 )   (46,358 )   550         (65,238 )    

Net cash receipts on settled derivative instruments(3)

    58,650     66,654     92,166     32,647         65,874      

(Gain) loss on sale of assets

    (147,559 )       795,945     427,232         427,232      

Provision (benefit) for income taxes)

    29,070     45,155     (272,553 )   (1,717 )       12,727      

Depreciation, depletion, amortization, and accretion

    115,739     115,164     89,124     31,698         63,366      

Impairment of unproved properties

    29,783     6,387     962     243         993      

Exploration expense

    22,444     5,842     664     200         412      
                               

EBITDAX from discontinued operations

    169,854     180,562     149,605     46,003         100,692      
                               

Total EBITDAX

  $ 197,678   $ 340,821   $ 434,315   $ 106,239   $ 132,608   $ 228,579   $ 251,357  

Interest expense and other

    (59,140 )   (74,498 )   (97,510 )   (24,223 )   (33,468 )   (48,593 )   (63,396 )

Exploration expense

    (24,794 )   (9,876 )   (15,339 )   (3,152 )   (7,300 )   (5,168 )   (11,662 )

Changes in current assets and current liabilities

    (698 )   8,309     9,887     (16,654 )   (10,238 )   4,040     14,723  

Other

    14,745     1,551     902     (1,717 )   588     (17,874 )   1,375  
                               

Net cash provided by operating activities

  $ 127,791   $ 266,307   $ 332,255   $ 60,493   $ 82,190   $ 160,984   $ 192,397  
                               
(2)
Capital expenditures as shown in this table differ from the amounts shown in the statement of cash flows in the consolidated financial statements because amounts in this table include changes in accounts payable for capital expenditures from the previous reporting period while the amounts in the statement of cash flows in the financial statements are presented on a cash basis.

(3)
The adjustments for the derivative fair value (gains) losses and net cash receipts on settled commodity derivative instruments have the effect of adjusting net income (loss) from continuing operations for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses on a cash basis during the period the derivatives settled.

 

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Summary Reserve, Production and Operating Data

Summary Reserve Data

        The following table summarizes our estimated proved reserves and related standardized measure and PV-10 at December 31, 2010, 2011 and 2012 and June 30, 2013 based on SEC pricing (and not giving effect to any pricing sensitivities). See "Business—Our Operations—Reserve Data" for an illustration of the sensitivity of our estimated reserves and related PV-10 to changes in product price levels.

        Our estimated proved reserves and PV-10 as of December 31, 2012 and June 30, 2013 are based on evaluations prepared by our internal reserve engineers, which have been audited by our independent reserve engineers, DeGolyer and MacNaughton, or D&M. Our estimated proved reserves as of December 31, 2011 were based on evaluations prepared by our internal reserve engineers, which were audited by D&M and Ryder Scott & Company, or Ryder Scott. Over 99% and 85% of our estimated proved, probable and possible reserves as of June 30, 2013 and December 31, 2012, respectively, were audited by D&M. Over 85% of our estimated proved reserves as of December 31, 2011 were audited by D&M or Ryder Scott. Over 99% of our estimated proved reserves as of December 31, 2010 were prepared by D&M or Ryder Scott. For each period presented, the specific percentage of our estimated reserves audited or prepared (as applicable) by D&M or Ryder Scott, which we collectively refer to as our independent reserve engineers, is disclosed in the summary report of D&M or Ryder Scott incorporated by reference into, or filed as an exhibit to, the registration statement of which this prospectus forms a part. See "Business—Our Operations—Reserve Data—Preparation of Reserve Estimates" for definitions of proved, probable and possible reserves and the technologies and economic data used in their estimation. See "—Our Properties—Reserves."

        Our estimated proved reserves at December 31, 2010 and 2011 included reserves attributable to our Arkoma Basin and Piceance Basin assets that were sold during 2012. The information in the following table does not give any effect to or reflect our commodity hedges. In addition, the estimated proved reserves below assume ethane recovery as of December 31, 2010, 2011 and 2012 and ethane rejection as of June 30, 2013 on our liquids-rich natural gas. See "Business—Our Operations—Reserve Data" for more information about our reserves and pricing sensitivities.

 
  At December 31,    
 
 
  At June 30,
2013
 
 
  2010   2011   2012  

Estimated proved reserves:

                         

Natural gas (Bcf)

    2,543     3,931     3,694     5,724  

NGLs (MMBbl)

    104     164     203     88  

Oil (MMBbl)

    10     17     3     5  

Total equivalent proved reserves (Bcfe)          

    3,231     5,017     4,929     6,282  

Total equivalent proved developed reserves (Bcfe)

    457     844     1,047     1,445  

Percent proved developed

    14 %   17 %   21 %   23 %

Total equivalent proved undeveloped reserves (Bcfe)

    2,774     4,173     3,882     4,837  

PV-10 of proved reserves (in millions)(1)

  $ 1,466   $ 3,445   $ 1,923   $ 4,468  

Standardized measure (in millions)(1)

  $ 1,097   $ 2,470   $ 1,601     *  

(1)
PV-10 was prepared using SEC pricing, discounted at 10% per annum, without giving effect to taxes or hedges. PV-10 is a non-GAAP financial measure. We believe that the presentation of PV-10 is relevant and useful to our investors as supplemental disclosure to the standardized measure of future net cash flows, or after tax amount, because it presents the discounted future net cash flows attributable to our reserves prior to taking into account future corporate income taxes and our current tax structure. While the standardized measure is dependent on the unique

 

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    tax situation of each company, PV-10 is based on a pricing methodology and discount factors that are consistent for all companies. Moreover, GAAP does not provide a measure of estimated future net cash flows for reserves other than proved reserves or for proved, probable or possible reserves calculated using prices other than SEC prices. PV-10 does not take into account the effect of future taxes, and PV-10 estimates for reserve categories other than proved or for pricing sensitivities uses the relevant reserve volumes and prices, as applicable, but PV-10 is otherwise calculated using the same assumptions as those for, and in a manner consistent with, the calculation of standardized measure. Because PV-10 estimates of probable and possible reserves are more uncertain than PV-10 and standardized measure of proved reserves, but have not been adjusted for risk due to that uncertainty, they may not be comparable with each other. Similarly, PV-10 estimates for price sensitivities are not adjusted for the likelihood that the relevant pricing scenario will occur, and thus they may be subject to the same issues with comparability. Nonetheless, we believe that PV-10 estimates for reserve categories other than proved or for pricing sensitivities present useful information for investors about the future net cash flows of our reserves in the absence of a comparable GAAP measure such as standardized measure. Because of this, PV-10 can be used within the industry and by creditors and securities analysts to evaluate estimated net cash flows from proved reserves on a more comparable basis. Investors should be cautioned that neither PV-10 nor standardized measure represents an estimate of the fair market value of our proved reserves. In addition, investors should be further cautioned that estimates of PV-10 of probable reserves, as well as the underlying volumetric estimates, are inherently more uncertain of being recovered and realized than comparable measures for proved reserves, and that the uncertainty for possible reserves is even more significant. Further, because estimates of probable and possible reserve volumes and PV-10 have not been adjusted for risk due to this uncertainty of recovery, they should not be summed arithmetically with each other or with comparable estimates for proved reserves.

    The following table sets forth the estimated future net cash flows from our proved reserves (without giving effect to our commodity hedges), the present value of those net cash flows before income tax (PV-10), the present value of those net cash flows after income tax (standardized measure) and the prices used in projecting future net cash flows at December 31, 2010, 2011 and 2012 and June 30, 2013:

 
  At December 31,    
 
 
  At June 30,
2013(d)
 
(In millions, except per Mcf data)
  2010(a)   2011(b)   2012(c)  
 
  (unaudited)
   
 

Future net cash flows

  $ 5,990   $ 11,470   $ 7,221   $ 14,411  

Present value of future net cash flows:

                         

Before income tax (PV-10)

  $ 1,466   $ 3,445   $ 1,923   $ 4,468  

Income taxes

    (369 )   (975 )   (322 )   *  

After income tax (standardized measure)

  $ 1,097   $ 2,470   $ 1,601     *  

(a)
12-month average prices used at December 31, 2010 were $4.18 per Mcf for the Arkoma Basin, $3.93 per Mcf for the Piceance Basin and $4.51 for the Appalachian Basin.

(b)
12-month average prices used at December 31, 2011 were $3.90 per Mcf for the Arkoma Basin, $3.84 per Mcf for the Piceance Basin and $4.16 per Mcf for the Appalachian Basin.

(c)
12-month average prices used at December 31, 2012 were $2.78 per Mcf for natural gas, $26.36 per Bbl for NGLs and $95.05 per Bbl for oil.

(d)
12-month average prices used at June 30, 2013 were $3.43 per Mcf for natural gas, $45.66 per Bbl for NGLs and $91.65 per Bbl for oil.

 

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*
With respect to PV-10 calculated as of an interim date, it is not practicable to calculate the taxes for the related interim period because GAAP does not provide for disclosure of standardized measure on an interim basis.

    Future net cash flows represent projected revenues from the sale of proved reserves net of production and development costs (including operating expenses and production taxes). Prices for 2010, 2011, 2012, and 2013 were based on 12-month unweighted average of the first-day-of-the-month pricing, without escalation. Costs are based on costs in effect for the applicable year without escalation. There can be no assurance that the proved reserves will be produced as estimated or that the prices and costs will remain constant. There are numerous uncertainties inherent in estimating reserves and related information and different reserve engineers often arrive at different estimates for the same properties.

Production, Revenues and Price History

        The following table sets forth information regarding our production, our revenues and realized prices, and production costs from continuing operations in the Appalachian Basin for the years ended December 31, 2010, 2011 and 2012 and for the three and six months ended June 30, 2012 and 2013. For additional information on price calculations, see information set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations."

    Continuing Operations Data—Appalachian Basin

 
  Year Ended December 31,   Three Months
Ended June 30,
  Six Months
Ended June 30,
 
 
  2010   2011   2012   2012   2013   2012   2013  

Production data:

                                           

Natural gas (Bcf)

    11     45     87     19     39     35     73  

NGLs (MBbl)

            71         354         559  

Oil (MBbl)

        2     19     4     25     4     35  

Total combined production (Bcfe)

    11     45     87     19     42     35     76  

Average daily combined production (MMcfe/d)

    30     124     239     213     458     195     421  

Average sales prices:

                                           

Natural gas (per Mcf)

  $ 4.39   $ 4.33   $ 2.99   $ 2.31   $ 4.37   $ 2.53   $ 4.05  

NGLs (per Bbl)

  $   $   $ 52.07   $   $ 48.70   $   $ 49.75  

Oil (per Bbl)

  $   $ 97.19   $ 80.34   $ 77.16   $ 85.07   $ 80.05   $ 85.36  

Combined average sales prices before effects of cash settled derivatives (per Mcfe)(1)

  $ 4.39   $ 4.33   $ 3.03   $ 2.32   $ 4.60   $ 2.54   $ 4.27  

Combined average sales prices after effects of cash settled derivatives (per Mcfe)(1)

  $ 5.78   $ 5.44   $ 5.08   $ 4.90   $ 4.94   $ 5.26   $ 5.09  

Average costs per Mcfe:

                                           

Lease operating costs

  $ 0.11   $ 0.10   $ 0.07   $ 0.10   $ 0.03   $ 0.07   $ 0.03  

Gathering, compression, processing and transportation

  $ 0.85   $ 0.83   $ 1.04   $ 1.04   $ 1.17   $ 0.89   $ 1.18  

Production taxes

  $ 0.27   $ 0.26   $ 0.23   $ 0.17   $ 0.24   $ 0.20   $ 0.25  

Depreciation, depletion, amortization and accretion

  $ 1.71   $ 1.24   $ 1.17   $ 1.15   $ 1.27   $ 1.08   $ 1.23  

General and administrative

  $ 2.03   $ 0.74   $ 0.52   $ 0.54   $ 0.33   $ 0.55   $ 0.35  

(1)
Average sales prices shown reflect both of the before and after effects of our cash settled derivatives. Our calculation of such effects includes realized gains or losses on cash settlements for

 

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    commodity derivatives, which do not qualify for hedge accounting because we do not designate them as hedges.

    Discontinued Operations Data—Arkoma and Piceance Basins

        The table above does not include the following production or revenue from discontinued operations from the Arkoma and Piceance Basin properties which were sold in 2012:

 
  Year Ended December 31,  
 
  2010   2011   2012  

Production (combined Bcfe)

    36     44     35  

Natural gas, NGL and oil production revenues (in millions)

  $ 159   $ 197   $ 125  

 

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RISK FACTORS

        Investing in our common stock involves risks. You should carefully consider the information in this prospectus, including the matters addressed under "Cautionary Statement Regarding Forward-Looking Statements," and the following risks before making an investment decision. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.

Risks Related to Our Business

Natural gas, NGL and oil prices are volatile. A substantial or extended decline in commodity prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.

        The prices we receive for our natural gas, NGL and oil production heavily influence our revenue, profitability, access to capital and future rate of growth. Natural gas, NGLs and oil are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the commodities market has been volatile. This market will likely continue to be volatile in the future. The prices we receive for our production, and the levels of our production, depend on numerous factors beyond our control. These factors include the following:

    worldwide and regional economic conditions impacting the global supply and demand for natural gas, NGLs and oil;

    the price and quantity of imports of foreign natural gas, including liquefied natural gas;

    political conditions in or affecting other producing countries, including conflicts in the Middle East, Africa, South America and Russia;

    the level of global exploration and production;

    the level of global inventories;

    prevailing prices on local price indexes in the areas in which we operate;

    localized and global supply and demand fundamentals and transportation availability;

    weather conditions;

    technological advances affecting energy consumption;

    the price and availability of alternative fuels; and

    domestic, local and foreign governmental regulation and taxes.

        Furthermore, the worldwide financial and credit crisis in recent years has reduced the availability of liquidity and credit to fund the continuation and expansion of industrial business operations worldwide resulting in a slowdown in economic activity and recession in parts of the world. This has reduced worldwide demand for energy and resulted in lower natural gas, NGL and oil prices.

        Lower commodity prices will reduce our cash flows and borrowing ability. We may be unable to obtain needed capital or financing on satisfactory terms, which could lead to a decline in our reserves as existing reserves are depleted. Lower commodity prices may also reduce the amount of natural gas, NGLs and oil that we can produce economically.

        If commodity prices further decrease, a significant portion of our exploitation, development and exploration projects could become uneconomic. This may result in our having to make significant downward adjustments to our estimated proved reserves. As a result, a substantial or extended decline in commodity prices may materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures.

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Our exploitation, development and exploration projects require substantial capital expenditures. We may be unable to obtain required capital or financing on satisfactory terms, which could lead to a decline in our natural gas reserves.

        The natural gas industry is capital intensive. We make and expect to continue to make substantial capital expenditures for the exploitation, development and acquisition of natural gas reserves. Our cash flow used in investing activities related to capital and exploration expenditures was approximately $1.68 billion in 2012. Our board of directors has approved a capital budget for 2013 of $2.45 billion, including $1.45 billion for drilling and completion, $400 million for leasehold acquisitions, and $600 million for the construction of water handling infrastructure and gas gathering pipelines and facilities. Our capital budget excludes acquisitions. As of June 30, 2013, we had spent approximately $1.2 billion of our 2013 capital budget. We expect to fund these capital expenditures with cash generated by operations, the proceeds of this offering, borrowings under our credit facility and possibly through additional sales of gathering assets or capital market transactions. The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things, commodity prices, actual drilling results, the availability of drilling rigs and other services and equipment, and regulatory, technological and competitive developments. A reduction in commodity prices from current levels may result in a decrease in our actual capital expenditures, which would negatively impact our ability to grow production. We intend to finance our future capital expenditures primarily through cash flow from operations and through borrowings under our credit facility; however, our financing needs may require us to alter or increase our capitalization substantially through the issuance of debt or equity securities or the sale of assets. The issuance of additional indebtedness would require that a portion of our cash flow from operations be used for the payment of interest and principal on our indebtedness, thereby reducing our ability to use cash flow from operations to fund working capital, capital expenditures and acquisitions.

        Our cash flow from operations and access to capital are subject to a number of variables, including:

    our proved reserves;

    the level of hydrocarbons we are able to produce from existing wells;

    the prices at which our production is sold;

    our ability to acquire, locate and produce new reserves; and

    our ability to borrow under our credit facility.

        If our revenues or the borrowing base under our credit facility decrease as a result of lower natural gas prices, operating difficulties, declines in reserves or for any other reason, we may have limited ability to obtain the capital necessary to sustain our operations at current levels. If additional capital is needed, we may not be able to obtain debt or equity financing on terms acceptable to us, if at all. If cash flow generated by our operations or available borrowings under our credit facility are not sufficient to meet our capital requirements, the failure to obtain additional financing could result in a curtailment of our operations relating to development of our properties, which in turn could lead to a decline in our reserves and production, and could adversely affect our business, financial condition and results of operations.

Drilling for and producing natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations.

        Our future financial condition and results of operations will depend on the success of our exploitation, development and acquisition activities, which are subject to numerous risks beyond our control, including the risk that drilling will not result in commercially viable natural gas production. Our decisions to purchase, explore, develop or otherwise exploit prospects or properties will depend in

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part on the evaluation of data obtained through geophysical and geological analyses, production data and engineering studies, the results of which are often inconclusive or subject to varying interpretations. For a discussion of the uncertainty involved in these processes, see "—Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in our reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves." In addition, our cost of drilling, completing and operating wells is often uncertain before drilling commences.

        Further, many factors may curtail, delay or cancel our scheduled drilling projects, including the following:

    delays imposed by or resulting from compliance with regulatory requirements;

    pressure or irregularities in geological formations;

    shortages of or delays in obtaining equipment and qualified personnel or in obtaining water for hydraulic fracturing activities;

    equipment failures or accidents;

    adverse weather conditions, such as blizzards, tornados, hurricanes and ice storms;

    issues related to compliance with environmental regulations;

    environmental hazards, such as natural gas leaks, oil spills, pipeline and tank ruptures, encountering naturally occurring radioactive materials, and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the surface and subsurface environment;

    declines in natural gas prices;

    limited availability of financing at acceptable terms;

    title problems; and

    limitations in the market for natural gas.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

        Our ability to make scheduled payments on or to refinance our indebtedness obligations, including our credit facility, our $525 million of 9.375% senior notes due 2017, our $400 million of 7.25% senior notes due 2019 and our $525 million of 6.00% senior notes due 2020, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, including the senior notes.

        If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness, including the senior notes. Our ability to restructure or refinance our indebtedness will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments, including the indentures governing our senior notes, may restrict us from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. In the absence of sufficient cash flows and capital resources, we could face substantial liquidity problems and

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might be required to dispose of material assets or operations to meet our debt service and other obligations. Our credit facility and the indentures governing our senior notes currently restrict our ability to dispose of assets and our use of the proceeds from such disposition. We may not be able to consummate those dispositions, and the proceeds of any such disposition may not be adequate to meet any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

        The borrowing base under our credit facility is currently $2.0 billion, and lender commitments under the credit facility are $1.75 billion. Our next scheduled borrowing base redetermination is expected to occur in April 2014. In the future, we may not be able to access adequate funding under our credit facility as a result of a decrease in our borrowing base due to the issuance of new indebtedness, the outcome of a subsequent semi-annual borrowing base redetermination or an unwillingness or inability on the part of our lending counterparties to meet their funding obligations and the inability of other lenders to provide additional funding to cover the defaulting lender's portion. Declines in commodity prices could result in a determination to lower the borrowing base in the future and, in such a case, we could be required to repay any indebtedness in excess of the redetermined borrowing base. As a result, we may be unable to implement our drilling and development plan, make acquisitions or otherwise carry out our business plan, which would have a material adverse effect on our financial condition and results of operations and impair our ability to service our indebtedness.

We are required to pay fees to our service providers based on minimum volumes regardless of actual volume throughput.

        We have various firm transportation and gas processing, gathering and compression service agreements in place, each with minimum volume delivery commitments. As of June 30, 2013, our long-term contractual obligation under these agreements was $3.0 billion. We are obligated to pay fees on minimum volumes to our service providers regardless of actual volume throughput, which could be significant and have a material adverse effect on our results of operations. If these fees on minimum volumes are substantial, we may not be able to generate sufficient cash to cover these obligations, which may require us to reduce or delay our planned investments and capital expenditures or seek alternative means of financing.

Restrictions in our existing and future debt agreements could limit our growth and our ability to engage in certain activities.

        Our credit facility contains a number of significant covenants (in addition to covenants restricting the incurrence of additional indebtedness), including restrictive covenants that may limit our ability to, among other things:

    sell assets;

    make loans to others;

    make investments;

    enter into mergers;

    make certain payments;

    hedge future production;

    incur liens; and

    engage in certain other transactions without the prior consent of the lenders.

        The indentures governing our senior notes contain similar restrictive covenants. In addition, our credit facility requires us to maintain certain financial ratios or to reduce our indebtedness if we are unable to comply with such ratios. These restrictions, together with those in the indentures governing

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our senior notes, may also limit our ability to obtain future financings to withstand a future downturn in our business or the economy in general, or to otherwise conduct necessary corporate activities. We may also be prevented from taking advantage of business opportunities that arise because of the limitations that the restrictive covenants under the indentures governing our senior notes and our credit facility impose on us.

        Our credit facility limits the amounts we can borrow up to a borrowing base amount, which the lenders, in their sole discretion, determine on a semi-annual basis based upon projected revenues from the natural gas properties securing our loan. The lenders can unilaterally adjust the borrowing base and the borrowings permitted to be outstanding under our credit facility. Any increase in the borrowing base requires the consent of the lenders holding 100% of the commitments. If the requisite number of lenders do not agree to an increase, then the borrowing base will be the lowest borrowing base acceptable to such lenders. Outstanding borrowings in excess of the borrowing base must be repaid, or we must pledge other natural gas properties as additional collateral after applicable grace periods. We do not currently have any substantial unpledged properties, and we may not have the financial resources in the future to make mandatory principal prepayments required under our credit facility. The borrowing base under our credit facility is currently $2.0 billion and lender commitments are $1.75 billion. Our next scheduled borrowing base redetermination is expected to occur in April 2014.

        A breach of any covenant in our credit facility would result in a default under that agreement after any applicable grace periods. A default, if not waived, could result in acceleration of the indebtedness outstanding under the facility and in a default with respect to, and an acceleration of, the indebtedness outstanding under other debt agreements. The accelerated indebtedness would become immediately due and payable. If that occurs, we may not be able to make all of the required payments or borrow sufficient funds to refinance such indebtedness. Even if new financing were available at that time, it may not be on terms that are acceptable to us.

Currently, we receive significant incremental cash flows as a result of our hedging activity. To the extent we are unable to obtain future hedges at effective prices consistent with those we have received to date and natural gas prices do not improve, our cash flows may be adversely impacted. Additionally, if development drilling costs increase significantly in the future, our hedged revenues may not be sufficient to cover our costs.

        To achieve more predictable cash flows and reduce our exposure to downward price fluctuations, as of June 30, 2013, we had entered into a number of hedge contracts for approximately 943 Bcfe of our projected natural gas and oil production through December 31, 2018. We are currently realizing a significant benefit from these hedge positions. For example, for the years ended December 31, 2011 and 2012, we received approximately $117 million and $271 million, respectively, in revenues pursuant to our hedges, which represented approximately 11% and 30%, respectively, of our total revenues (including revenues from discontinued operations) for such periods. Many of the hedge agreements that resulted in these realized gains for the years ended December 31, 2011 and 2012 were executed at times when spot and future prices were higher than prices that we are currently able to obtain in the futures market, and the price at which we have been able to hedge future production has decreased as a result. Therefore, we expect that this benefit will decline materially over the life of the hedges, which cover decreasing volumes at declining prices through December 2018. If we are unable to enter into new hedge contracts in the future at favorable pricing and for a sufficient amount of our production, our financial condition and results of operations could be materially adversely affected.

        Additionally, since we hedge a significant part of our estimated future production, we have fixed a significant part of our future revenue stream. For example, for the years ended December 31, 2011 and 2012, approximately 73% and 81%, respectively, of our estimated future production (including production from discontinued operations) was covered by our hedge contracts. If development drilling costs increase significantly because of inflation, increased demand for oilfield services, increased costs

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to comply with regulations governing our industry or other factors, future hedged revenues may not be sufficient to cover our costs.

In certain circumstances we may have to purchase commodities on the open market or make cash payments under our hedging arrangements and these payments could be significant.

        If our production is less than the volume commitments under our hedging arrangements, or if natural gas or oil prices exceed the price at which we have hedged our commodities, we may be obligated to make cash payments to our hedge counterparties or purchase the volume difference at market prices, which could, in certain circumstances, be significant. As of June 30, 2013, we had entered into hedging contracts through December 31, 2018 covering a total of approximately 943 Bcfe of our projected natural gas and oil production at a weighted average price of $4.80 per Mcfe. These hedging contracts include hedges for the six-month period ending December 31, 2013 covering a total of approximately 84 Bcfe of our projected natural gas and oil production at a weighted average price of $4.68 per Mcfe. If we have to purchase additional commodities on the open market or post cash collateral to meet our obligations under such arrangements, our cash otherwise available for use in our operations would be reduced.

Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in our reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.

        The process of estimating natural gas and oil reserves is complex. It requires interpretations of available technical data and many assumptions, including assumptions relating to current and future economic conditions and commodity prices. Any significant inaccuracies in these interpretations or assumptions could materially affect our estimated quantities and present value of our reserves.

        In order to prepare our estimates, we must project production rates and timing of development expenditures. We must also analyze available geological, geophysical, production and engineering data. The extent, quality and reliability of this data can vary.

        The process also requires economic assumptions about matters such as natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds.

        Actual future production, natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable natural gas reserves will vary from our estimates. Any significant variance could materially affect the estimated quantities and present value of our reserves. In addition, we may adjust our reserve estimates to reflect production history, results of exploration and development, existing commodity prices and other factors, many of which are beyond our control.

        You should not assume that the present value of future net revenues from our reserves is the current market value of our estimated natural gas reserves. We generally base the estimated discounted future net cash flows from our reserves on prices and costs on the date of the estimate. Actual future prices and costs may differ materially from those used in the present value estimate.

Our identified potential well locations are scheduled out over many years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. In addition, we may not be able to raise the substantial amount of capital that would be necessary to drill our potential well locations.

        Our management team has specifically identified and scheduled certain well locations as an estimation of our future multi-year drilling activities on our existing acreage. These well locations represent a significant part of our growth strategy. Our ability to drill and develop these locations depends on a number of uncertainties, including natural gas and oil prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, gathering system and pipeline transportation constraints, access to and availability of

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water sourcing and distribution systems, regulatory approvals and other factors. Because of these uncertain factors, we do not know if the numerous potential well locations we have identified will ever be drilled or if we will be able to produce natural gas or oil from these or any other potential well locations. In addition, unless production is established within the spacing units covering the undeveloped acres on which some of the potential locations are obtained, the leases for such acreage will expire. As such, our actual drilling activities may materially differ from those presently identified.

        As of June 30, 2013, we had 4,576 identified potential horizontal well locations. As a result of the limitations described above, we may be unable to drill many of our potential well locations. In addition, we will require significant additional capital over a prolonged period in order to pursue the development of these locations, and we may not be able to raise or generate the capital required to do so. Any drilling activities we are able to conduct on these potential locations may not be successful or result in our ability to add additional proved reserves to our overall proved reserves or may result in a downward revision of our estimated proved reserves, which could have a material adverse effect on our future business and results of operations. For more information on our identified potential well locations, see "Business—Our Operations—Identification of Potential Well Locations."

Approximately 92% of our net leasehold acreage is undeveloped, and that acreage may not ultimately be developed or become commercially productive, which could cause us to lose rights under our leases as well as have a material adverse effect on our oil and natural gas reserves and future production and, therefore, our future cash flow and income.

        Approximately 92% of our net leasehold acreage is undeveloped, or acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves. In addition, 48% and 80% of our natural gas leases related to our Marcellus and Utica acreage, respectively, require us to drill wells that are commercially productive, and if we are unsuccessful in drilling such wells, we could lose our rights under such leases. Our future oil and natural gas reserves and production and, therefore, our future cash flow and income are highly dependent on successfully developing our undeveloped leasehold acreage.

Our producing properties are concentrated in the Appalachian Basin, making us vulnerable to risks associated with operating in one major geographic area.

        Our producing properties are geographically concentrated in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. At June 30, 2013, all of our total estimated proved reserves were attributable to properties located in this area. As a result of this concentration, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints, market limitations, water shortages or other drought related conditions or interruption of the processing or transportation of oil, natural gas or NGLs.

Insufficient processing or takeaway capacity in the Appalachian Basin could cause significant fluctuations in our realized natural gas and NGL prices.

        The Appalachian Basin natural gas and NGL business environment has historically been characterized by periods during which production has surpassed local processing and takeaway capacity, resulting in substantial discounts in the price received. Although additional Appalachian Basin takeaway capacity has been added in 2012 and 2013, we do not believe the existing and expected capacity will be sufficient to keep pace with the increased production caused by accelerated drilling in the area. For example, we have experienced capacity constraints in the Marcellus Shale during the last several months due to delays in the completion of third-party gathering and compression infrastructure. In

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addition, production from almost all of our completed horizontal Utica Shale wells has been delayed for several months pending the completion of third-party high pressure gathering infrastructure.

        If we are unable to secure additional gathering, compression and processing capacity and long-term firm takeaway capacity on major pipelines that are in existence or currently under construction in our core operating area to accommodate our growing production and to manage basis differentials, it could have a material adverse effect on our financial condition and results of operations.

We may incur losses as a result of title defects in the properties in which we invest.

        It is our practice in acquiring oil and gas leases or interests not to incur the expense of retaining lawyers to examine the title to the mineral interest at the time of acquisition. Rather, we rely upon the judgment of oil and gas lease brokers or landmen who perform the fieldwork in examining records in the appropriate governmental office before attempting to acquire a lease in a specific mineral interest. Leases in the Appalachian Basin are particularly vulnerable to title deficiencies due the long history of land ownership in the area, resulting in extensive and complex chains of title. Additionally, there are claims against us alleging that certain acquired leases that are held by production are invalid due to production from the producing horizons being insufficient to hold title to the formation rights that we have purchased. The existence of a material title deficiency can render a lease worthless and can adversely affect our results of operations and financial condition. While we do typically obtain title opinions prior to commencing drilling operations on a lease or in a unit, the failure of title may not be discovered until after a well is drilled, in which case we may lose the lease and the right to produce all or a portion of the minerals under the property.

The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced.

        At June 30, 2013, 77% of our total estimated proved reserves were classified as proved undeveloped. Our approximately 4.8 Tcfe of estimated proved undeveloped reserves will require an estimated $4.6 billion of development capital over the next five years. Moreover, the development of probable and possible reserves will require additional capital expenditures and such reserves are less certain to be recovered than proved reserves. Development of these undeveloped reserves may take longer and require higher levels of capital expenditures than we currently anticipate. Delays in the development of our reserves, increases in costs to drill and develop such reserves, or decreases in commodity prices will reduce the PV-10 value of our estimated proved undeveloped reserves and future net revenues estimated for such reserves and may result in some projects becoming uneconomic. In addition, delays in the development of reserves could cause us to have to reclassify our proved undeveloped reserves as unproved reserves.

If commodity prices decrease to a level such that our future undiscounted cash flows from our properties are less than their carrying value for a significant period of time, we will be required to take write-downs of the carrying values of our properties.

        Accounting rules require that we periodically review the carrying value of our properties for possible impairment. Based on specific market factors and circumstances at the time of prospective impairment reviews, and the continuing evaluation of development plans, production data, economics and other factors, we may be required to write down the carrying value of our properties. A writedown constitutes a non-cash charge to earnings. We may incur impairment charges in the future, which could have a material adverse effect on our results of operations for the periods in which such charges are taken.

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Unless we replace our reserves with new reserves and develop those reserves, our reserves and production will decline, which would adversely affect our future cash flows and results of operations.

        Producing natural gas reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Unless we conduct successful ongoing exploitation, development and exploration activities or continually acquire properties containing proved reserves, our proved reserves will decline as those reserves are produced. Our future natural gas reserves and production, and therefore our future cash flow and results of operations, are highly dependent on our success in efficiently developing and exploiting our current reserves and economically finding or acquiring additional recoverable reserves. We may not be able to develop, exploit, find or acquire sufficient additional reserves to replace our current and future production. If we are unable to replace our current and future production, the value of our reserves will decrease, and our business, financial condition and results of operations would be adversely affected.

Conservation measures and technological advances could reduce demand for oil and natural gas.

        Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices could reduce demand for oil and natural gas. The impact of the changing demand for oil and gas services and products may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our derivative activities could result in financial losses or could reduce our earnings.

        To achieve more predictable cash flows and reduce our exposure to adverse fluctuations in the prices of natural gas, we enter into derivative instrument contracts for a significant portion of our natural gas production, including fixed-price swaps. As of June 30, 2013, we had entered into hedging contracts through December 31, 2018 covering a total of approximately 943 Bcfe of our projected natural gas and oil production at a weighted average price of $4.80 per Mcfe. These hedging contracts include hedges for the six-month period ending December 31, 2013 covering a total of approximately 84 Bcfe of our projected natural gas and oil production at a weighted average price of $4.68 per Mcfe. Accordingly, our earnings may fluctuate significantly as a result of changes in fair value of our derivative instruments.

        Derivative instruments also expose us to the risk of financial loss in some circumstances, including when:

    production is less than the volume covered by the derivative instruments;

    the counterparty to the derivative instrument defaults on its contractual obligations;

    there is an increase in the differential between the underlying price in the derivative instrument and actual prices received; or

    there are issues with regard to legal enforceability of such instruments.

        The use of derivatives may, in some cases, require the posting of cash collateral with counterparties. If we enter into derivative instruments that require cash collateral and commodity prices or interest rates change in a manner adverse to us, our cash otherwise available for use in our operations would be reduced which could limit our ability to make future capital expenditures and make payments on our indebtedness, and which could also limit the size of our borrowing base. Future collateral requirements will depend on arrangements with our counterparties, highly volatile oil and natural gas prices and interest rates.

        As of June 30, 2013, the estimated fair value of our commodity derivative contracts was approximately $593 million. Any default by the counterparties to these derivative contracts when they

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become due would have a material adverse effect on our financial condition and results of operations. The fair value of our commodity derivative contracts of approximately $593 million at June 30, 2013 includes the following values by bank counterparty: BNP Paribas—$150 million; Credit Suisse—$161 million; Wells Fargo—$99 million; JP Morgan—$102 million; Barclays—$65 million; Deutsche Bank—$11 million; Union Bank—$2 million; and Toronto Dominion Bank—$1 million. Additionally, contracts with Dominion Field Services account for $2 million of the fair value. The credit ratings of certain of these banks have been downgraded because of the sovereign debt crisis in Europe.

        In addition, derivative arrangements could limit the benefit we would receive from increases in the prices for natural gas, which could also have an adverse effect on our financial condition.

Our hedging transactions expose us to counterparty credit risk.

        Our hedging transactions expose us to risk of financial loss if a counterparty fails to perform under a derivative contract. Disruptions in the financial markets could lead to sudden decreases in a counterparty's liquidity, which could make them unable to perform under the terms of the derivative contract and we may not be able to realize the benefit of the derivative contract.

The inability of our significant customers to meet their obligations to us may adversely affect our financial results.

        In addition to credit risk related to receivables from commodity derivative contracts, our principal exposures to credit risk are through joint interest receivables ($6 million at December 31, 2012) and the sale of our natural gas production ($47 million in receivables at December 31, 2012), which we market to energy marketing companies, refineries and affiliates. Joint interest receivables arise from billing entities who own partial interest in the wells we operate. These entities participate in our wells primarily based on their ownership in leased properties on which we wish to drill. We can do very little to choose who participates in our wells. We are also subject to credit risk due to concentration of our natural gas receivables with several significant customers. The largest purchaser of our natural gas during the twelve months ended December 31, 2012 purchased approximately 23% of our operated production. We 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.

Our operations may be exposed to significant delays, costs and liabilities as a result of environmental and occupational health and safety requirements applicable to our business activities.

        We may incur significant delays, costs and liabilities as a result of environmental and occupational health and safety requirements applicable to our exploration, development and production activities. These delays, costs and liabilities could arise under a wide range of federal, regional, state and local laws and regulations relating to protection of the environment and worker health and safety, including regulations and enforcement policies that have tended to become increasingly strict over time resulting in longer waiting periods to receive permits and other regulatory approvals. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, imposition of cleanup and site restoration costs and liens, and, in some instances, issuance of orders or injunctions limiting or requiring discontinuation of certain operations.

        For example, in March 2011, we received orders for compliance from federal regulatory agencies, including the U. S. Environmental Protection Agency, or the EPA, relating to certain of our activities in West Virginia. The orders allege that certain of our operations at several well sites are in non-compliance with certain environmental regulations, such as unpermitted discharges of fill material into wetlands or waters of the United States that are potentially in violation of the Clean Water Act. We have responded to all pending orders and are actively cooperating with the relevant agencies. No fine or penalty relating to these matters has been proposed at this time, but we believe that these actions

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will result in monetary sanctions exceeding $100,000. In addition, we expect to incur additional costs to remediate these well locations in order to bring them into compliance with applicable environmental laws and regulations. We have not, however, been required to suspend our operations at these locations to date and our management team does not expect these matters to have a material adverse effect on our financial condition, results of operations or cash flows.

        Strict, joint and several liabilities may be imposed under certain environmental laws, which could cause us to become liable for the conduct of others or for consequences of our own actions that were in compliance with all applicable laws at the time those actions were taken. In addition, claims for damages to persons or property, including natural resources, may result from the environmental and worker health and safety impacts of our operations. We have been named from time to time as a defendant in litigation related to such matters. For example, we have been named as the defendant in separate lawsuits in Colorado, West Virginia and Pennsylvania in which the plaintiffs have alleged that our oil and natural gas activities exposed them to hazardous substances and damaged their properties. The plaintiffs have requested unspecified damages and other injunctive or equitable relief. We are not yet able to estimate what our aggregate exposure for monetary or other damages resulting from these or other similar claims might be. Also, new laws, regulations or enforcement policies could be more stringent and impose unforeseen liabilities or significantly increase compliance costs. If we were not able to recover the resulting costs through insurance or increased revenues, our business, financial condition or results of operations could be adversely affected.

We may incur substantial losses and be subject to substantial liability claims as a result of our operations. Additionally, we may not be insured for, or our insurance may be inadequate to protect us against, these risks.

        We are not insured against all risks. Losses and liabilities arising from uninsured and underinsured events could materially and adversely affect our business, financial condition or results of operations.

        Our natural gas exploration and production activities are subject to all of the operating risks associated with drilling for and producing natural gas, including the possibility of:

    environmental hazards, such as uncontrollable releases of oil, natural gas, brine, well fluids, toxic gas or other pollution into the environment, including groundwater, air and shoreline contamination;

    abnormally pressured formations;

    mechanical difficulties, such as stuck oilfield drilling and service tools and casing collapse;

    fires, explosions and ruptures of pipelines;

    personal injuries and death;

    natural disasters; and

    terrorist attacks targeting natural gas and oil related facilities and infrastructure.

        Any of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as a result of claims for:

    injury or loss of life;

    damage to and destruction of property, natural resources and equipment;

    pollution and other environmental damage;

    regulatory investigations and penalties;

    suspension of our operations; and

    repair and remediation costs.

        We may elect not to obtain insurance for any or all of these risks if we believe that the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. The occurrence of an event that is not fully covered by insurance could have a material adverse effect on our business, financial condition and results of operations.

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We may be limited in our ability to choose gathering operators and processing and fractionation services providers in our areas of operations pursuant to the agreements we will enter into with Antero Midstream.

        Pursuant to the gas gathering and compression agreement that we intend to enter into with Antero Midstream, we will dedicate the gathering and compression of all of our current and future natural gas production in West Virginia, Ohio and Pennsylvania to Antero Midstream, so long as such production is not otherwise subject to a pre-existing dedication. Further, pursuant to the right of first offer that we intend to enter into with Antero Midstream, Antero Midstream will have a right to bid to provide certain processing and fractionation services in respect of all of our current and future gas production (as long as it is not subject to a pre-existing dedication) and will be entitled to provide such services if its bid matches or is more favorable to us than terms proposed by other parties. As a result, we will be limited in our ability to use other gathering operators in West Virginia, Ohio and Pennsylvania, even if such operators are able to offer us more favorable pricing or more efficient service. We will also be limited in our ability to use other processing and fractionation services providers in any area to the extent Antero Midstream is able to offer a competitive bid.

Properties that we decide to drill may not yield natural gas or oil in commercially viable quantities.

        Properties that we decide to drill that do not yield natural gas or oil in commercially viable quantities will adversely affect our results of operations and financial condition. There is no way to predict in advance of drilling and testing whether any particular prospect will yield natural gas or oil in sufficient quantities to recover drilling or completion costs or to be economically viable. The use of micro-seismic data and other technologies and the study of producing fields in the same area will not enable us to know conclusively prior to drilling whether natural gas or oil will be present or, if present, whether natural gas or oil will be present in commercial quantities. We cannot assure you that the analogies we draw from available data from other wells, more fully explored prospects or producing fields will be applicable to our drilling prospects. Further, our drilling operations may be curtailed, delayed or cancelled as a result of numerous factors, including:

    unexpected drilling conditions;

    title problems;

    pressure or lost circulation in formations;

    equipment failure or accidents;

    adverse weather conditions;

    compliance with environmental and other governmental or contractual requirements; and

    increase in the cost of, shortages or delays in the availability of, electricity, supplies, materials, drilling or workover rigs, equipment and services.

We may be unable to make attractive acquisitions or successfully integrate acquired businesses, and any inability to do so may disrupt our business and hinder our ability to grow.

        In the future we may make acquisitions of businesses that complement or expand our current business. We may not be able to identify attractive acquisition opportunities. Even if we do identify attractive acquisition opportunities, we may not be able to complete the acquisition or do so on commercially acceptable terms.

        The success of any completed acquisition will depend on our ability to integrate effectively the acquired business into our existing operations. The process of integrating acquired businesses may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources. In addition, possible future acquisitions may be larger and for purchase prices

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significantly higher than those paid for earlier acquisitions. No assurance can be given that we will be able to identify additional suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire identified targets. Our failure to achieve consolidation savings, to integrate the acquired businesses and assets into our existing operations successfully or to minimize any unforeseen operational difficulties could have a material adverse effect on our financial condition and results of operations.

        In addition, our credit facility imposes and the indentures governing our senior notes impose certain limitations on our ability to enter into mergers or combination transactions. Our credit facility and the indentures governing our senior notes also limit our ability to incur certain indebtedness, which could indirectly limit our ability to engage in acquisitions of businesses.

Market conditions or operational impediments may hinder our access to natural gas and oil markets or delay our production.

        Market conditions or the unavailability of satisfactory natural gas and oil transportation arrangements may hinder our access to natural gas and oil markets or delay our production. The availability of a ready market for our natural gas and oil production depends on a number of factors, including the demand for and supply of natural gas and oil and the proximity of reserves to pipelines and terminal facilities. Our ability to market our production depends in substantial part on the availability and capacity of gathering systems, pipelines and processing facilities owned and operated by third parties. Our failure to obtain such services on acceptable terms could materially harm our business. We may be required to shut in wells due to lack of a market or inadequacy or unavailability of natural gas and oil pipeline or gathering system capacity. In addition, if natural gas or oil quality specifications for the third-party natural gas or oil pipelines with which we connect change so as to restrict our ability to transport natural gas or oil, our access to natural gas and oil markets could be impeded. If our production becomes shut in for any of these or other reasons, we would be unable to realize revenue from those wells until other arrangements were made to deliver the products to market.

We are subject to complex federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of conducting our operations or expose us to significant liabilities.

        Our natural gas exploration, production and transportation operations are subject to complex and stringent laws and regulations. In order to conduct our operations in compliance with these laws and regulations, we must obtain and maintain numerous permits, approvals and certificates from various federal, state and local governmental authorities. We may incur substantial costs in order to maintain compliance with these existing laws and regulations. In addition, our costs of compliance may increase if existing laws and regulations are revised or reinterpreted, or if new laws and regulations become applicable to our operations. Such costs could have a material adverse effect on our business, financial condition and results of operations.

        Our business is subject to federal, state and local laws and regulations as interpreted and enforced by governmental authorities possessing jurisdiction over various aspects of the exploration for, and the production and transportation of, natural gas. Failure to comply with such laws and regulations, including any evolving interpretation and enforcement by governmental authorities, could have a material adverse effect on our business, financial condition and results of operations.

        Changes to existing or new regulations may unfavorably impact us, could result in increased operating costs and have a material adverse effect on our financial condition and results of operations. Such potential regulations could increase our operating costs, reduce our liquidity, delay or halt our operations or otherwise alter the way we conduct our business, which could in turn have a material adverse effect on our financial condition, results of operations and cash flows.

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The unavailability or high cost of additional drilling rigs, equipment, supplies, personnel and oilfield services could adversely affect our ability to execute our exploration and development plans within our budget and on a timely basis.

        The demand for qualified and experienced field personnel to drill wells and conduct field operations, geologists, geophysicists, engineers and other professionals in the oil and natural gas industry can fluctuate significantly, often in correlation with natural gas and oil prices, causing periodic shortages. Historically, there have been shortages of drilling and workover rigs, pipe and other equipment as demand for rigs and equipment has increased along with the number of wells being drilled. We cannot predict whether these conditions will exist in the future and, if so, what their timing and duration will be. Such shortages could delay or cause us to incur significant expenditures that are not provided for in our capital budget, which could have a material adverse effect on our business, financial condition or results of operations.

A change in the jurisdictional characterization of some of our assets by federal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our assets, which may cause our revenues to decline and operating expenses to increase.

        Section 1(b) of the Natural Gas Act of 1938, or NGA, exempts natural gas gathering facilities from regulation by the Federal Energy Regulatory Commission, or FERC, as a natural gas company under the NGA. We believe that the natural gas pipelines in our gathering systems meet the traditional tests FERC has used to establish a pipeline's status as a gatherer not subject to regulation as a natural gas company. However, the distinction between FERC-regulated transmission services and federally unregulated gathering services is the subject of ongoing litigation, so the classification and regulation of our gathering facilities are subject to change based on future determinations by FERC, the courts or Congress.

Should we fail to comply with all applicable FERC administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines.

        Under the Domenici-Barton Energy Policy Act of 2005, FERC has civil penalty authority under the NGA to impose penalties for current violations of up to $1 million per day for each violation and disgorgement of profits associated with any violation. While our systems have not been regulated by FERC as a natural gas company under the NGA, FERC has adopted regulations that may subject certain of our otherwise non-FERC jurisdictional facilities to FERC annual reporting and daily scheduled flow and capacity posting requirements. Additional rules and legislation pertaining to those and other matters may be considered or adopted by FERC from time to time. Failure to comply with those regulations in the future could subject us to civil penalty liability.

Climate change laws and regulations restricting emissions of "greenhouse gases" could result in increased operating costs and reduced demand for the oil and natural gas that we produce while potential physical effects of climate change could disrupt our production and cause us to incur significant costs in preparing for or responding to those effects.

        In response to findings that emissions of carbon dioxide, methane and other greenhouse gases, or GHGs, present an endangerment to public health and the environment, the EPA has adopted regulations under existing provisions of the federal Clean Air Act that, among other things, establish Prevention of Significant Deterioration, or PSD, construction and Title V operating permit reviews for certain large stationary sources that are potential major sources of GHG emissions. Facilities required to obtain PSD permits for their GHG emissions also will be required to meet "best available control technology" standards that will be established by the states or, in some cases, by the EPA on a case-by-case basis. These EPA rulemakings could adversely affect our operations and restrict or delay our ability to obtain air permits for new or modified sources. In addition, the EPA has adopted rules

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requiring the monitoring and reporting of GHG emissions from specified onshore and offshore oil and gas production sources in the United States on an annual basis, which include certain of our operations. We are monitoring GHG emissions from our operations in accordance with the GHG emissions reporting rule and believe that our monitoring activities are in substantial compliance with applicable reporting obligations. While Congress has from time to time considered legislation to reduce emissions of GHGs, there has not been significant activity in the form of adopted legislation to reduce GHG emissions at the federal level in recent years. In the absence of such federal climate legislation, a number of state and regional efforts have emerged that are aimed at tracking and/or reducing GHG emissions by means of cap and trade programs that typically require major sources of GHG emissions, such as electric power plants, to acquire and surrender emission allowances in return for emitting those GHGs. If Congress undertakes comprehensive tax reform in the coming year, it is possible that such reform may include a carbon tax, which could impose additional direct costs on operations and reduce demand for refined products. Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address GHG emissions would impact our business, any such future laws and regulations imposing reporting obligations on, or limiting emissions of GHGs from, our equipment and operations could require us to incur costs to reduce emissions of GHGs associated with our operations. Substantial limitations on GHG emissions could adversely affect demand for the oil and natural gas we produce. Finally, it should be noted that some scientists have concluded that increasing concentrations of GHGs in the Earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, floods and other climatic events; if any such effects were to occur, they could have an adverse effect on our exploration and production operations.

Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays in the completion of oil and natural gas wells and adversely affect our production.

        Hydraulic fracturing is an important and common practice that is used to stimulate production of natural gas and/or oil from dense subsurface rock formations. The hydraulic fracturing process involves the injection of water, sand, and chemicals under pressure into targeted subsurface formations to fracture the surrounding rock and stimulate production. We regularly use hydraulic fracturing as part of our operations. Hydraulic fracturing typically is regulated by state oil and natural gas commissions, but the EPA has asserted federal regulatory authority pursuant to the federal Safe Drinking Water Act, or SDWA, over certain hydraulic fracturing activities involving the use of diesel fuels and published draft permitting guidance in May 2012 addressing the performance of such activities using diesel fuels. In November 2011, the EPA announced its intent to develop and issue regulations under the Toxic Substances Control Act to require companies to disclose information regarding the chemicals used in hydraulic fracturing and the agency currently plans to issue a Notice of Proposed Rulemaking that would seek public input on the design and scope of such disclosure regulations. In addition, Congress has from time to time considered legislation to provide for federal regulation of hydraulic fracturing under the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process. At the state level, several states have adopted or are considering legal requirements that could impose more stringent permitting, disclosure, and well construction requirements on hydraulic fracturing activities. Local government also may seek to adopt ordinances within their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular. We believe that we follow applicable standard industry practices and legal requirements for groundwater protection in our hydraulic fracturing activities. Nonetheless, if new or more stringent federal, state, or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where we operate, we could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development, or production activities, and perhaps even be precluded from drilling wells.

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        In addition, certain governmental reviews have been conducted or are underway that focus on environmental aspects of hydraulic fracturing practices. The White House Council on Environmental Quality is coordinating an administration-wide review of hydraulic fracturing practices. The EPA has commenced a study of the potential environmental effects of hydraulic fracturing on drinking water and groundwater, with a first progress report outlining work currently underway by the agency released on December 21, 2012 and a draft final report drawing conclusions about the potential impacts of hydraulic fracturing on drinking water resources expected to be available for public comment and peer review by 2014. Moreover, the EPA is developing effluent limitations for the treatment and discharge of wastewater resulting from hydraulic fracturing activities and plans to propose these standards by 2014. In addition, the U.S. Department of the Interior published a revised proposed rule on May 24, 2013 that would implement updated requirements for hydraulic fracturing activities on federal lands, including new requirements relating to public disclosure, well bore integrity and handling of flowback water. Other governmental agencies, including the U.S. Department of Energy, have evaluated or are evaluating various other aspects of hydraulic fracturing. These ongoing or proposed studies could spur initiatives to further regulate hydraulic fracturing under the SDWA or other regulatory mechanisms, and could ultimately make it more difficult or costly for us to perform fracturing and increase our costs of compliance and doing business.

Competition in the natural gas industry is intense, making it more difficult for us to acquire properties, market natural gas and secure trained personnel.

        Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment for acquiring properties, marketing natural gas and securing trained personnel. Also, there is substantial competition for capital available for investment in the oil and natural gas industry. Many of our competitors possess and employ financial, technical and personnel resources substantially greater than ours. Those companies may be able to pay more for productive natural gas properties and exploratory prospects and to evaluate, bid for and purchase a greater number of properties and prospects than our financial or personnel resources permit. In addition, other companies may be able to offer better compensation packages to attract and retain qualified personnel than we are able to offer. The cost to attract and retain qualified personnel has increased over the past three years due to competition and may increase substantially in the future. We may not be able to compete successfully in the future in acquiring prospective reserves, developing reserves, marketing hydrocarbons, attracting and retaining quality personnel and raising additional capital, which could have a material adverse effect on our business.

The loss of senior management or technical personnel could adversely affect operations.

        We depend on the services of our senior management and technical personnel. We do not maintain, nor do we plan to obtain, any insurance against the loss of any of these individuals. The loss of the services of our senior management or technical personnel, including Paul M. Rady, our Chairman and Chief Executive Officer, and Glen C. Warren, Jr., our President and Chief Financial Officer, could have a material adverse effect on our business, financial condition and results of operations.

Seasonal weather conditions and regulations adversely affect our ability to conduct drilling activities in some of the areas where we operate.

        Natural gas operations in our operating areas can be adversely affected by seasonal weather conditions and regulations designed to protect various wildlife. This limits our ability to operate in those areas and can intensify competition during those months for drilling rigs, oilfield equipment, services, supplies and qualified personnel, which may lead to periodic shortages. These constraints and

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the resulting shortages or high costs could delay our operations and materially increase our operating and capital costs.

We have been an early entrant into new or emerging plays. As a result, our drilling results in these areas are uncertain, and the value of our undeveloped acreage will decline if drilling results are unsuccessful.

        While our costs to acquire undeveloped acreage in new or emerging plays have generally been less than those of later entrants into a developing play, our drilling results in these areas are more uncertain than drilling results in areas that are developed and producing. Since new or emerging plays have limited or no production history, we are unable to use past drilling results in those areas to help predict our future drilling results. As a result, our cost of drilling, completing and operating wells in these areas may be higher than initially expected, and the value of our undeveloped acreage will decline if drilling results are unsuccessful.

Increases in interest rates could adversely affect our business.

        Our business and operating results can be harmed by factors such as the availability, terms of and cost of capital, increases in interest rates or a reduction in credit rating. These changes could cause our cost of doing business to increase, limit our ability to pursue acquisition opportunities, reduce cash flow used for drilling and place us at a competitive disadvantage. For example, as of June 30, 2013, outstanding borrowings and letters of credit under our credit facility were approximately $992 million, and the impact of a 1.0% increase in interest rates on this amount of indebtedness would result in increased interest expense for that period of approximately $2.1 million and a corresponding decrease in our net income before the effects of increased interest rates on the value of our interest rate swap contracts and income taxes. In addition, an increase in interest rates could negatively impact the valuation that our midstream business would receive in an initial public offering as a MLP. Recent and continuing disruptions and volatility in the global financial markets may lead to a contraction in credit availability impacting our ability to finance our operations. We require continued access to capital. A significant reduction in cash flows from operations or the availability of credit could materially and adversely affect our ability to achieve our planned growth and operating results.

We may be subject to risks in connection with acquisitions of properties.

        The successful acquisition of producing properties requires an assessment of several factors, including:

    recoverable reserves;

    future natural gas prices and their applicable differentials;

    operating costs; and

    potential environmental and other liabilities.

        The accuracy of these assessments is inherently uncertain. In connection with these assessments, we perform a review of the subject properties that we believe to be generally consistent with industry practices. Our review will not reveal all existing or potential problems nor will it permit us to become sufficiently familiar with the properties to fully assess their deficiencies and capabilities. Inspections may not always be performed on every well, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken. Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of the problems. We often are not entitled to contractual indemnification for environmental liabilities and acquire properties on an "as is" basis.

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Certain federal income tax deductions currently available with respect to natural gas and oil exploration and development may be eliminated, and additional state taxes on natural gas extraction may be imposed, as a result of future legislation.

        The Fiscal Year 2013 Budget proposed by the President recommends the elimination of certain key U.S. federal income tax incentives currently available to oil and gas exploration and production companies, and legislation has been introduced in Congress that would implement many of these proposals. Such changes include, but are not limited to, (i) the repeal of the percentage depletion allowance for oil and gas properties; (ii) the elimination of current deductions for intangible drilling and development costs; (iii) the elimination of the deduction for certain U.S. production activities for oil and gas production; and (iv) an extension of the amortization period for certain geological and geophysical expenditures. It is unclear, however, whether any such changes will be enacted or how soon such changes could be effective.

        The passage of this legislation or any other similar change in U.S. federal income tax law could eliminate or postpone certain tax deductions that are currently available with respect to natural gas and oil exploration and development, and any such change could negatively affect our financial condition and results of operations.

        In February 2013, the governor of the state of Ohio proposed a plan to enact new severance taxes in fiscal 2014 and 2015. However, the Ohio State Senate did not include a severance tax increase in the version of the budget bill that it passed on June 7, 2013. The possibility remains that the severance tax increase on horizontal wells will resurface during compromise talks on the budget.

Risks Related to the Offering and our Common Stock

The requirements of being a public company, including compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

        As a public company, we will need to comply with new laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC and the requirements of the NYSE, with which we are not required to comply as a private company. Complying with these statutes, regulations and requirements will occupy a significant amount of time of our board of directors and management and will significantly increase our costs and expenses. We will need to:

    institute a more comprehensive compliance function;

    comply with rules promulgated by the NYSE;

    continue to prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;

    establish new internal policies, such as those relating to insider trading; and

    involve and retain to a greater degree outside counsel and accountants in the above activities.

        Furthermore, while we generally must comply with Section 404 of the Sarbanes Oxley Act of 2002 for our fiscal year ended December 31, 2013, we are not required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until our first annual report subsequent to our ceasing to be an "emerging growth company" within the meaning of Section 2(a)(19) of the Securities Act. Accordingly, we may not be required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until as late as our annual report for the fiscal year ending December 31, 2018. Once it is required to do so, our independent registered

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public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, operated or reviewed. Compliance with these requirements may strain our resources, increase our costs and distract management; and we may be unable to comply with these requirements in a timely or cost-effective manner.

The initial public offering price of our common stock may not be indicative of the market price of our common stock after this offering. In addition, an active, liquid and orderly trading market for our common stock may not develop or be maintained, and our stock price may be volatile.

        Prior to this offering, our common stock was not traded on any market. An active, liquid and orderly trading market for our common stock may not develop or be maintained after this offering. Active, liquid and orderly trading markets usually result in less price volatility and more efficiency in carrying out investors' purchase and sale orders. The market price of our common stock could vary significantly as a result of a number of factors, some of which are beyond our control. In the event of a drop in the market price of our common stock, you could lose a substantial part or all of your investment in our common stock. The initial public offering price will be negotiated between us, the selling stockholder and representatives of the underwriters, based on numerous factors which we discuss in "Underwriting (Conflicts of Interest)," and may not be indicative of the market price of our common stock after this offering. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price paid by you in this offering.

        The following factors could affect our stock price:

    our operating and financial performance and drilling locations, including reserve estimates;

    quarterly variations in the rate of growth of our financial indicators, such as net income per share, net income and revenues;

    strategic actions by our competitors;

    changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;

    speculation in the press or investment community;

    sales of our common stock by us, the selling stockholder or other stockholders, or the perception that such sales may occur;

    changes in accounting principles;

    additions or departures of key management personnel;

    actions by our stockholders;

    general market conditions, including fluctuations in commodity prices; and

    domestic and international economic, legal and regulatory factors unrelated to our performance.

        The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company's securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management's attention and resources and harm our business, operating results and financial condition.

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Antero Investment will hold a majority of our outstanding common stock.

        Immediately following the completion of this offering, Antero Investment will hold approximately 88.2% of our common stock (or 86.5% if the underwriters fully exercise their options to purchase additional shares of common stock from us and Antero Investment). Accordingly, Antero Investment will have the ability to elect all of the members of our board of directors and thereby control our management and affairs. In addition, Antero Investment will be able to determine the outcome of all matters requiring stockholder approval, including mergers, amendments to our certificate of incorporation and other material transactions and will be able to cause or prevent a change in control of our company that could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company. The existence of significant stockholders may also have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of our company. So long as Antero Investment continues to own a significant amount of our common stock, even if such amount represents less than 50% of the aggregate voting power, it will continue to be able to strongly influence all matters requiring stockholder approval, regardless of whether or not other stockholders believe that a potential transaction is in their own best interests.

        In addition, the limited liability company agreement of Antero Investment will provide that Antero Investment and its members will agree to vote the shares of our common stock held by Antero Investment in favor of the election of the five directors of Antero Investment to our board. See "Corporate Reorganization—Limited Liability Company Agreement of Antero Investment."

Antero Investment will own a special membership interest in Antero Midstream that will provide Antero Investment with certain rights, including the right to cause an initial public offering of Antero Midstream and to prohibit our ability to sell, transfer or otherwise dispose of any portion of our midstream business or Antero Midstream without Antero Investment's consent.

        Following the completion of this offering, we intend to contribute our midstream business to Antero Midstream, a newly formed limited liability company. We will own 100% of the economic interests and initially control Antero Midstream, but Antero Investment, which includes members of our management and our Sponsors, will own a special membership interest in Antero Midstream that will provide Antero Investment with certain rights, including the right to cause an initial public offering of Antero Midstream and to prohibit our ability to sell, transfer or otherwise dispose of any portion of our midstream business or Antero Midstream without Antero Investment's consent. As a result, we may not be able to manage our midstream business in a manner that will maximize its value to our stockholders. For example, we may not be able to pursue strategic dispositions of our midstream assets or determine whether to pursue an initial public offering of our midstream business when we believe it to be in the best interest of our shareholders. Following the completion of an initial public offering of Antero Midstream, Antero Investment's interest in Antero Midstream will automatically convert into a general partner interest. As a result, Antero Investment will control our current and future midstream business and may operate this business in a manner that is inconsistent with the interests of our shareholders, because those decisions will be controlled by Antero Investment and not by us. In addition, following an initial public offering of Antero Midstream, Antero Investment will have the right to receive an increasing percentage of the MLP's quarterly cash distributions in excess of specified target distribution levels. As a result, we may not receive the full economic benefit of our midstream business after an initial public offering of Antero Midstream. See "Certain Relationships and Related Party Transactions—Antero Midstream—Special Membership Interest."

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Our amended and restated certificate of incorporation and amended and restated bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.

        Our amended and restated certificate of incorporation authorizes our board of directors to issue preferred stock without stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us. In addition, some provisions of our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders, including:

    a classified board of directors, so that only approximately one-third of our directors are elected each year;

    limitations on the removal of directors;

    limitations on the ability of our stockholders to call special meetings; and

    establishing advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders.

Investors in this offering will experience immediate and substantial dilution of $28.61 per share.

        Based on an assumed initial public offering price of $40.00 per share, purchasers of our common stock in this offering will experience an immediate and substantial dilution of $28.61 per share in the as adjusted net tangible book value per share of common stock from the initial public offering price, and our as adjusted net tangible book value as of June 30, 2013 after giving effect to this offering would be $11.39 per share. This dilution is due in large part to earlier investors having paid substantially less than the initial public offering price when they purchased their shares. See "Dilution."

We may invest or spend the proceeds of this offering in ways with which you may not agree or in ways which may not yield a return.

        A portion of the net proceeds from this offering are expected to be used for general corporate purposes, including working capital. Our management will have considerable discretion in the application of the net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not increase our operating results or market value. Until the net proceeds are used, they may be placed in investments that do not produce significant income or that may lose value.

We do not intend to pay dividends on our common stock, and our credit facility and the indentures governing our senior notes place certain restrictions on our ability to do so. Consequently, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.

        We do not plan to declare dividends on shares of our common stock in the foreseeable future. Additionally, our credit facility and the indentures governing our senior notes place certain restrictions on our ability to pay cash dividends. Consequently, your only opportunity to achieve a return on your investment in us will be if you sell your common stock at a price greater than you paid for it. There is no guarantee that the price of our common stock that will prevail in the market will ever exceed the price that you pay in this offering.

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Future sales of our common stock in the public market could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.

        We may sell additional shares of common stock in subsequent public offerings. We may also issue additional shares of common stock or convertible securities. After the completion of this offering, we will have 255,125,000 outstanding shares of common stock, assuming full exercise of the underwriters' options to purchase additional shares. This number includes 30,000,000 shares that we are selling in this offering, 3,750,000 shares that Antero Investment may sell in this offering if the underwriters' option to purchase additional shares from Antero Investment is fully exercised, and 750,000 shares that we may sell in this offering if the underwriters' option to purchase additional shares from us is fully exercised, which may be resold immediately in the public market. Following the completion of this offering, and assuming full exercise of the underwriters' options to purchase additional shares, Antero Investment will own 220,625,000 shares, or approximately 86.5% of our total outstanding shares, all of which are restricted from immediate resale under the federal securities laws and are subject to the lock-up agreements between the selling stockholder and the underwriters described in "Underwriting (Conflicts of Interest)," but may be sold into the market in the future.

        Prior to the completion of this offering, we intend to file a registration statement with the SEC on Form S-8 providing for the registration of 16,534,375 shares of our common stock issued or reserved for issuance under our stock incentive plan. Subject to the satisfaction of vesting conditions, Rule 144 restrictions applicable to our affiliates and the expiration of lock-up agreements, shares registered under the registration statement on Form S-8 will be available for resale immediately in the public market without restriction.

        We cannot predict the size of future issuances of our common stock or securities convertible into common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our common stock.

The underwriters of this offering may waive or release parties to the lock-up agreements entered into in connection with this offering, which could adversely affect the price of our common stock.

        Antero Investment and our directors and executive officers have entered into lock-up agreements with respect to their common stock, pursuant to which they are subject to certain resale restrictions for a period of 180 days following the effectiveness date of the registration statement of which this prospectus forms a part. Barclays Capital Inc., at any time and without notice, may release all or any portion of the common stock subject to the foregoing lock-up agreements. If the restrictions under the lock-up agreements are waived, then common stock will be available for sale into the public markets, which could cause the market price of our common stock to decline and impair our ability to raise capital.

We expect to be a "controlled company" within the meaning of the NYSE rules and, as a result, will qualify for and could rely on exemptions from certain corporate governance requirements.

        Upon completion of this offering, Antero Investment will control a majority of the combined voting power of all classes of our outstanding voting stock, and we expect to be a controlled company within the meaning of the NYSE corporate governance standards. Under the NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain NYSE corporate governance requirements, including the requirements that:

    a majority of the board of directors consist of independent directors;

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    the nominating and governance committee be composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities;

    the compensation committee be composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and

    there be an annual performance evaluation of the nominating and governance and compensation committees.

        These requirements will not apply to us as long as we remain a controlled company. Following this offering, we may utilize some or all of these exemptions. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE. See "Management."

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

        We are classified as an "emerging growth company" under the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things, (1) provide an auditor's attestation report on management's assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes Oxley Act of 2002, (2) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (3) comply with any new audit rules adopted by the PCAOB after April 5, 2012 unless the SEC determines otherwise, (4) provide certain disclosure regarding executive compensation required of larger public companies or (5) hold stockholder advisory votes on executive compensation.

We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.

        Our certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our common stock respecting dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock. For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the common stock.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        The information in this prospectus includes "forward-looking statements." All statements, other than statements of historical fact included in this prospectus, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this prospectus, the words "could," "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading "Risk Factors" included in this prospectus. These forward-looking statements are based on management's current belief, based on currently available information, as to the outcome and timing of future events.

        Forward-looking statements may include statements about our:

    business strategy;

    reserves;

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

    realized natural gas, NGLs and oil prices;

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

    hedging strategy and results;

    future drilling plans;

    competition and government regulations;

    pending legal or environmental matters;

    marketing of natural gas, NGLs and oil;

    leasehold or business acquisitions;

    costs of developing our properties and conducting our gathering and other midstream operations;

    general economic conditions;

    credit markets;

    uncertainty regarding our future operating results; and

    plans, objectives, expectations and intentions contained in this prospectus that are not historical.

        We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas, NGLs and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described under "Risk Factors" in this prospectus.

        Reserve engineering is a process of estimating underground accumulations of natural gas, NGLs, and oil that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the

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quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities 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 in this prospectus 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 prospectus 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, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this prospectus.

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USE OF PROCEEDS

        We expect to receive approximately $1.14 billion of net proceeds from the sale of the common stock offered by us after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        We intend to use the net proceeds from this offering, including any proceeds received pursuant to any exercise by the underwriters of their option to purchase additional shares of common stock from us, to repay outstanding borrowings under our credit facility. As of September 27, 2013, we had approximately $1.49 billion of outstanding borrowings and letters of credit under our credit facility, which matures in May 2016 and bears interest at a variable rate, which was approximately 2.1% as of June 30, 2013. The borrowings to be repaid were incurred primarily for our drilling and development program and for general corporate purposes. While we currently do not have plans to immediately borrow additional amounts under the credit facility, we may at any time reborrow amounts repaid under the credit facility.

        A $1.00 increase or decrease in the assumed initial public offering price of $40.00 per share would cause the net proceeds from this offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable to us, to increase or decrease, respectively, by approximately $28.65 million. If the proceeds increase due to a higher initial public offering price, we would use the additional net proceeds to fund a portion of our drilling and development program. If the proceeds decrease due to a lower initial public offering price, then we would reduce by a corresponding amount the net proceeds directed to repay outstanding borrowings under our credit facility.

        We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholder pursuant to any exercise by the underwriters of their option to purchase additional shares of our common stock from the selling stockholder. Any exercise by the underwriters of their options to purchase additional shares of common stock will be made initially with respect to the 3,750,000 additional shares of common stock to be sold by the selling stockholder and then with respect to the 750,000 additional shares of common stock to be sold by us. We will pay all expenses related to this offering, other than underwriting discounts and commissions related to the shares sold by the selling stockholder.

        Affiliates of certain of the underwriters are lenders under our credit facility and will receive a portion of the proceeds of this offering. Accordingly, this offering is being made in compliance with Rule 5121 of the FINRA. See "Underwriting (Conflicts of Interest)."


DIVIDEND POLICY

        We do not anticipate declaring or paying any cash dividends to holders of our common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the growth of our business. Our future dividend policy is within the discretion of our board of directors and will depend upon then-existing conditions, including our results of operations, financial condition, capital requirements, investment opportunities, statutory restrictions on our ability to pay dividends and other factors our board of directors may deem relevant. In addition, our credit facility and the indentures governing our senior notes place certain restrictions on our ability to pay cash dividends.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2013:

    on an actual basis; and

    as adjusted to give effect to the transactions described under "Corporate Reorganization" which will be completed immediately prior to or contemporaneously with the closing of this offering and the application of the net proceeds as set forth under "Use of Proceeds."

        This table should be read in conjunction with, and is qualified in its entirety by reference to, "Use of Proceeds" and our historical audited and unaudited consolidated financial statements and the accompanying notes appearing elsewhere in this prospectus.

 
  As of June 30, 2013  
 
  Actual   As Adjusted  
 
  (in thousands)
 

Cash and cash equivalents

  $ 10,867   $ 191,867  

Indebtedness:

             

Senior secured revolving credit facility(1)

    960,000      

9.375% senior notes due 2017

    525,000     525,000  

7.25% senior notes due 2019

    400,000     400,000  

6.00% senior notes due 2020

    525,000     525,000  

9.00% senior note due 2013

    25,000     25,000  

Net unamortized premium

    8,217     8,217  
           

Total indebtedness

    2,443,217     1,483,217  
           

Equity:

             

Members' equity

    1,460,947      

Common stock, $1.00 par value (actual); $0.01 par value (as adjusted); 1,000,000,000 shares authorized (as adjusted); 254,375,000 shares issued and outstanding (as adjusted)

        2,544  

Preferred stock, $0.01 par value; 50,000,000 shares authorized (as adjusted); no shares issued and outstanding (as adjusted)

         

Additional paid in capital(2)

        2,861,403  

Accumulated earnings

    295,986     33,986  
           

Total equity

    1,756,933     2,897,933  
           

Total capitalization

  $ 4,200,150   $ 4,381,150  
           

(1)
As of September 27, 2013, the outstanding balance under our credit facility was approximately $1.46 billion. In addition, as of September 27, 2013, we had outstanding letters of credit under our credit facility of approximately $32 million. As of September 27, 2013, after giving effect to the application of the net proceeds of this offering, we would have had approximately $1.4 billion of available borrowing capacity under our credit facility.

(2)
In connection with our corporate reorganization, we expect to recognize non-cash stock compensation expense of approximately $262.0 million at the time of the offering. In addition, approximately $147.5 million of stock compensation expense will be amortized over the remaining service period. The stock compensation expense recognized in the statement of operations will be offset by a capital contribution from Antero Investment; therefore, the stock compensation charge will have no effect on total equity. The estimated stock compensation charge that we will recognize at the time of the offering is reflected in the as adjusted amounts. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Corporate Reorganization."

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DILUTION

        Purchasers of the common stock in this offering will experience immediate and substantial dilution in the net tangible book value per share of the common stock for accounting purposes. Our net tangible book value as of June 30, 2013, after giving effect to the transactions described under "Corporate Reorganization," was $1.76 billion, or $7.83 per share. Pro forma net tangible book value per share is determined by dividing our pro forma tangible net worth (tangible assets less total liabilities) by the total number of outstanding shares of common stock that will be outstanding immediately prior to the closing of this offering including giving effect to our corporate reorganization. After giving effect to the sale of the shares in this offering and further assuming the receipt of the estimated net proceeds (after deducting estimated underwriting discounts and commissions and estimated offering expenses), our adjusted pro forma net tangible book value as of June 30, 2013 would have been approximately $2.90 billion, or $11.39 per share. This represents an immediate increase in the net tangible book value of $3.56 per share to our existing stockholders and an immediate dilution (i.e., the difference between the offering price and the adjusted pro forma net tangible book value after this offering) to new investors purchasing shares in this offering of $28.61 per share. The following table illustrates the per share dilution to new investors purchasing shares in this offering:

Assumed initial public offering price per share

        $ 40.00  

Pro forma net tangible book value per share as of June 30, 2013 (after giving effect to our corporate reorganization)

  $ 7.83        

Increase per share attributable to new investors in this offering

    3.56        
             

As adjusted pro forma net tangible book value per share after giving effect to our corporate reorganization and this offering

          11.39  
             

Dilution in pro forma net tangible book value per share to new investors in this offering

        $ 28.61  
             

        The following table summarizes, on an adjusted pro forma basis as of June 30, 2013, the total number of shares of common stock owned by existing stockholders and to be owned by new investors, the total consideration paid, and the average price per share paid by our existing stockholders and to be paid by new investors in this offering at $40.00, the midpoint of the range of the initial public offering price set forth on the cover page of this prospectus, calculated before deduction of estimated underwriting discounts and commissions:

 
  Shares Acquired   Total Consideration   Average Price
Per Share
 
 
  Number   Percent   Amount   Percent  
 
   
   
  (in thousands)
   
   
 

Existing stockholders(1)

    224,375,000     88.2 % $ 1,756,933     59.4 % $ 7.83  

New investors in this offering

    30,000,000     11.8     1,200,000     40.6        
                             

Total

    254,375,000     100.0 % $ 2,956,933     100.0 % $ 40.00  
                           

(1)
The number of shares disclosed for the existing stockholders includes 3,750,000 shares that may be sold by the selling stockholder in this offering pursuant to any exercise of the underwriters' option to purchase additional shares of common stock.

        A $1.00 increase or decrease in the assumed initial public offering price of $40.00 per share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase or decrease our as adjusted pro forma net tangible book value as of June 30, 2013 by approximately $28.65 million, the as adjusted pro forma net tangible book value per share after this offering by $0.11 per share and the dilution in pro forma as adjusted net tangible book value per share to new investors in this offering by $0.89 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

        The following table shows our selected historical consolidated financial data, for the periods and as of the dates indicated, for Antero Resources LLC and its subsidiaries.

        The selected statement of operations data for the years ended December 31, 2010, 2011 and 2012 and the balance sheet data as of December 31, 2011 and 2012 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected statement of operations data for the years ended December 31, 2008 and 2009 and the balance sheet data as of December 31, 2008, 2009, and 2010 are derived from our audited consolidated financial statements not included in this prospectus. The selected statement of operations data for the three and six months ended June 30, 2012 and 2013 and the balance sheet data as of June 30, 2013 are derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The balance sheet data as of June 30, 2012 is derived from our unaudited consolidated financial statements not included in this prospectus.

        The statement of operations data for all periods presented has been recast to present the results of operations from our Piceance Basin and Arkoma Basin operations in discontinued operations. The losses on the sales of these properties are also included in discontinued operations in 2012. The results from continuing operations reflect our remaining operations in the Appalachian Basin. No part of our general and administrative expenses or interest expense was allocated to discontinued operations.

        The selected historical consolidated financial data has been prepared on a consistent basis with our audited consolidated financial statements. In the opinion of management, such selected historical consolidated financial data reflects all adjustments (consisting of normal and recurring accruals) considered necessary to present our financial position for the periods presented.

        The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year because of the impact of fluctuations in prices received from natural gas and oil, natural production declines, the uncertainty of exploration and development drilling results and other factors. The selected financial data presented below are qualified in their entirety by reference to, and should be read in conjunction with, "Capitalization," "Management's Discussion and

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Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere herein.

 
  Year Ended December 31,   Three Months Ended
June 30,
  Six Months Ended
June 30,
 
(in thousands, except ratios)
  2008   2009   2010   2011   2012   2012   2013   2012   2013  

Statement of operations data:

                                                       

Operating revenues:

                                                       

Natural gas sales

  $   $ 2,252   $ 47,392   $ 195,116   $ 259,743   $ 44,688   $ 172,332   $ 89,822   $ 294,278  

NGL sales

                    3,719         17,244         27,816  

Oil sales

            39     173     1,520     277     2,085     325     2,962  

Commodity derivative fair value gains (losses)

        3,910     77,599     496,064     179,546     (6,040 )   195,483     211,214     123,542  

Gain on sale of assets

                    291,190             291,305      
                                       

Total revenues

        6,162     125,030     691,353     735,718     38,925     387,144     592,666     448,598  
                                       

Operating expenses:

                                                       

Lease operating expenses

        28     1,158     4,608     6,243     1,866     1,454     2,559     2,525  

Gathering, compression, processing and transportation

        421     9,237     37,315     91,094     20,079     48,670     31,654     89,640  

Production taxes

        128     2,885     11,915     20,210     3,371     10,108     7,113     18,727  

Exploration expenses

        2,095     2,350     4,034     14,675     2,952     7,300     4,756     11,662  

Impairment of unproved properties

        100     6,076     4,664     12,070     1,295     4,803     1,581     6,359  

Depletion, depreciation and amortization

    391     1,706     18,522     55,716     102,026     22,321     52,589     38,431     92,953  

Accretion of asset retirement obligations

            11     76     101     24     267     46     531  

Expenses related to acquisition of business

            2,544                          

General and administrative

    16,171     20,843     21,952     33,342     45,284     10,473     13,567     19,646     26,284  

Loss on sale of compressor station

                8,700                      
                                       

Total operating expenses

    16,562     25,321     64,735     160,370     291,703     62,381     138,758     105,786     248,681  
                                       

Operating income (loss)

    (16,562 )   (19,159 )   60,295     530,983     444,015     (23,456 )   248,386     486,880     199,917  
                                       

Other expense:

                                                       

Interest expense

  $ (37,594 ) $ (36,053 ) $ (56,463 ) $ (74,404 ) $ (97,510 ) $ (24,223 ) $ (33,468 ) $ (48,593 ) $ (63,396 )

Interest rate derivative fair value losses

    (15,245 )   (4,985 )   (2,677 )   (94 )                    
                                       

Total other expense

    (52,839 )   (41,038 )   (59,140 )   (74,498 )   (97,510 )   (24,223 )   (33,468 )   (48,593 )   (63,396 )
                                       

Income (loss) before income taxes and discontinued operations

    (69,401 )   (60,197 )   1,155     456,485     346,505     (47,679 )   214,918     438,287     136,521  

Income tax (expense) benefit

    26,520         (939 )   (185,297 )   (121,229 )   14,442     (83,725 )   (183,969 )   (53,325 )
                                       

Income (loss) from continuing operations

    (42,881 )   (60,197 )   216     271,188     225,276     (33,237 )   131,193     254,318     83,196  

Discontinued operations:

                                                       

Income (loss) from results of operations and sale of discontinued operations

    126,837     (45,972 )   228,412     121,490     (510,345 )   (444,850 )       (404,674 )    
                                       

Net income (loss) attributable to Antero equity owners

  $ (83,956 ) $ (106,169 ) $ 228,628   $ 392,678   $ (285,069 ) $ (478,087 ) $ 131,193   $ (150,356 ) $ 83,196  
                                       

Balance sheet data (at period end):

                                                       

Cash and cash equivalents

  $ 38,969   $ 10,669   $ 8,988   $ 3,343   $ 18,989   $ 5,575   $ 10,867   $ 5,575   $ 10,867  

Other current assets

    165,199     84,175     147,917     330,299     255,617     296,776     317,038     296,776     317,038  
                                       

Total current assets

    204,168     94,844     156,905     333,642     274,606     302,351     327,905     302,351     327,905  

Natural gas properties, at cost (successful efforts method):

                                                       

Unproved properties

    649,605     596,694     737,358     834,255     1,243,237     984,105     1,366,023     984,105     1,366,023  

Producing properties

    1,148,306     1,340,827     1,762,206     2,497,306     1,689,132     1,925,216     2,629,529     1,925,216     2,629,529  

Gathering systems and facilities

    179,836     185,688     85,404     142,241     168,930     113,270     334,096     113,270     334,096  

Other property and equipment

    3,113     3,302     5,975     8,314     9,517     9,615     11,282     9,615     11,282  
                                       

    1,980,860     2,126,511     2,590,943     3,482,116     3,110,816     3,032,206     4,340,930     3,032,206     4,340,930  

Less accumulated depletion, depreciation and amortization               

    (183,145 )   (322,992 )   (431,181 )   (601,702 )   (173,343 )   (353,406 )   (266,296 )   (353,406 )   (266,296 )
                                       

Property and equipment, net

    1,797,715     1,803,519     2,159,762     2,880,414     2,937,473     2,678,800     4,074,634     2,678,800     4,074,634  
                                       

Other assets

    27,084     38,203     169,620     574,744     406,714     604,931     422,609     604,931     422,609  
                                       

Total assets

  $ 2,028,967     1,936,566   $ 2,486,287   $ 3,788,800   $ 3,618,793   $ 3,586,082   $ 4,825,148   $ 3,586,082   $ 4,825,148  
                                       

Current liabilities

  $ 208,209   $ 112,493   $ 152,483   $ 255,058   $ 376,296   $ 311,766   $ 477,531   $ 311,766   $ 477,531  

Long-term indebtedness

    622,734     515,499     652,632     1,317,330     1,444,058     1,042,172     2,418,217     1,042,172     2,418,217  

Other long-term liabilities

    20,469     9,467     86,185     257,606     124,702     423,694     172,467     423,694     172,467  

Total equity

    1,177,555     1,299,107     1,594,987     1,958,806     1,673,737     1,808,450     1,756,933     1,808,450     1,756,933  
                                       

Total liabilities and equity

  $ 2,028,967   $ 1,936,566   $ 2,486,287   $ 3,788,800   $ 3,618,793   $ 3,586,082   $ 4,825,148   $ 3,586,082   $ 4,825,148  
                                       

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  Year Ended December 31,   Three Months Ended
June 30,
  Six Months Ended
June 30,
 
(in thousands, except ratios)
  2008   2009   2010   2011   2012   2012   2013   2012   2013  

Other financial data:

                                                       

EBITDAX from continuing operations(1)

  $ (15,288 ) $ (15,857 ) $ 27,824   $ 160,259   $ 284,710   $ 60,236   $ 132,608   $ 127,887   $ 251,357  

EBITDAX from discontinued operations(1)

    223,801     217,127     169,854     180,562     149,605     46,003         100,692      
                                       

Total EBITDAX(1)

  $ 208,513   $ 201,270   $ 197,678   $ 340,821   $ 434,315   $ 106,239   $ 132,608   $ 228,579   $ 251,357  
                                       

Net cash provided by operating activities

    157,515     149,307     127,791     266,307     332,255     60,493     82,190     160,984     192,397  

Net cash provided by (used in) investing activities

    (1,004,010 )   (281,899 )   (230,672 )   (901,249 )   (463,491 )   (8,372 )   (630,523 )   116,327     (1,178,408 )

Net cash provided by (used in) financing activities

    874,350     104,292     101,200     629,297     146,882     (53,039 )   554,394     (275,079 )   977,889  

Capital expenditures(2)

    1,041,748     203,454     423,002     929,887     1,755,430     466,570     597,938     726,262     1,236,434  

(1)
"EBITDAX" is a non-GAAP financial measure that we define as net income (loss) before interest expense or interest income, derivative fair value gains or losses, excluding net cash receipts or payments on derivative instruments, taxes, impairments, depletion, depreciation, amortization, exploration expense, franchise taxes, stock compensation, business acquisition and gain or loss on sale of assets. "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. EBITDAX should not be considered in isolation or as a substitute for operating income, 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. EBITDAX provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position. EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration expenses, and other commitments and obligations. However, our management team believes 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 a company's operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and 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 structure from our operating structure; and

is used by our management team for various purposes, including as a measure of operating performance, in presentations to our board of directors, as a basis for strategic planning and forecasting and by our lenders pursuant to covenants under our credit facility and the indentures governing our senior notes.

    There are significant limitations to using EBITDAX as a measure of performance, including the inability to analyze the effect 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 EBITDAX reported by different companies. The following table represents a reconciliation of our net income (loss) from continuing operations to EBITDAX from continuing operations, a reconciliation of our net income (loss) from discontinued operations to

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    EBITDAX from discontinued operations, and a reconciliation of our total EBITDAX to net cash provided by operating activities per our consolidated statements of cash flows, in each case for the periods presented:

 
  Year Ended December 31,   Three Months
Ended June 30,
  Six Months
Ended June 30,
 
(in thousands)
  2008   2009   2010   2011   2012   2012   2013   2012   2013  

Net income (loss) from continuing operations

  $ (42,881 ) $ (60,197 ) $ 216   $ 271,188   $ 225,276   $ (33,237 ) $ 131,193   $ 254,318   $ 83,196  

Commodity derivative fair value (gains) losses(3)

        (3,910 )   (77,599 )   (496,064 )   (179,546 )   6,040     (195,483 )   (211,214 )   (123,542 )

Net cash receipts on settled derivative instruments(3)

            15,063     49,944     178,491     49,864     14,146     96,716     62,277  

(Gain) loss on sale of assets

                8,700     (291,190 )           (291,305 )    

Interest expense and other

    52,839     41,038     59,140     74,498     97,510     24,223     33,468     48,593     63,396  

Provision (benefit) for income taxes

    (26,520 )       939     185,297     121,229     (14,442 )   83,725     183,969     53,325  

Depreciation, depletion, amortization, and accretion

    391     1,706     18,533     55,792     102,127     22,345     52,856     38,477     93,484  

Impairment of unproved properties

        100     6,076     4,664     12,070     1,295     4,803     1,581     6,359  

Exploration expense

        2,095     2,350     4,034     14,675     2,952     7,300     4,756     11,662  

Other

    883     3,311     3,106     2,206     4,068     1,196     600     1,996     1,200  
                                       

EBITDAX from continuing operations

    (15,288 )   (15,857 )   27,824     160,259     284,710     60,236     132,608     127,887     251,357  
                                       

Net income (loss) from discontinued operations

    126,837     (45,972 )   228,412     121,490     (510,345 )   (444,850 )       (404,674 )    

Commodity derivative fair value (gains) losses(3)

    (116,354 )   (51,455 )   (166,685 )   (180,130 )   (46,358 )   550         (65,238 )    

Net cash receipts on settled derivative instruments(3)

    26,053     116,550     58,650     66,654     92,166     32,647         65,874      

(Gain) loss on sale of assets

            (147,559 )       795,945     427,232         427,232      

Provision (benefit) for income taxes)

    29,549     (2,605 )   29,070     45,155     (272,553 )   (1,717 )       12,727      

Depreciation, depletion, amortization, and accretion

    124,606     138,372     115,739     115,164     89,124     31,698         63,366      

Impairment of unproved properties

    10,112     54,104     29,783     6,387     962     243         993      

Exploration expense

    22,998     8,133     22,444     5,842     664     200         412      
                                       

EBITDAX from discontinued operations

    223,801     217,127     169,854     180,562     149,605     46,003         100,692      
                                       

Total EBITDAX

  $ 208,513   $ 201,270   $ 197,678   $ 340,821   $ 434,315   $ 106,239   $ 132,608   $ 228,579   $ 251,357  

Interest expense and other

    (52,839 )   (41,038 )   (59,140 )   (74,498 )   (97,510 )   (24,223 )   (33,468 )   (48,593 )   (63,396 )

Exploration expense

    (22,998 )   (10,228 )   (24,794 )   (9,876 )   (15,339 )   (3,152 )   (7,300 )   (5,168 )   (11,662 )

Changes in current assets and current liabilities

    4,047     (2,648 )   (698 )   8,309     9,887     (16,654 )   (10,238 )   4,040     14,723  

Other

    20,792     1,951     14,745     1,551     902     (1,717 )   588     (17,874 )   1,375  
                                       

Net cash provided by operating activities

  $ 157,515   $ 149,307   $ 127,791   $ 266,307   $ 332,255   $ 60,493   $ 82,190   $ 160,984   $ 192,397  
                                       
(2)
Capital expenditures as shown in this table differ from the amounts shown in the statement of cash flows in the consolidated financial statements because amounts in this table include changes in accounts payable for capital expenditures from the previous reporting period while the amounts in the statement of cash flows in the financial statements are presented on a cash basis.

(3)
The adjustments for the derivative fair value (gains) losses and net cash receipts on settled commodity derivative instruments have the effect of adjusting net income (loss) from continuing operations for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses on a cash basis during the period the derivatives settled.

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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 consolidated financial statements and related notes included elsewhere in this prospectus. 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, NGL and oil prices, the timing of planned capital expenditures, availability of acquisitions, 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, 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 "Risk Factors" included elsewhere in this prospectus. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

Our Company

        We are an independent oil and natural gas company engaged in the exploitation, development and acquisition of natural gas, NGLs and oil properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania. We are focused on creating shareholder value through the development of our large portfolio of repeatable, low cost, liquids-rich drilling opportunities in two of the premier North American shale plays. We currently hold approximately 329,000 net acres in the southwestern core of the Marcellus Shale and approximately 102,000 net acres in the core of the Utica Shale. In addition, we estimate that approximately 170,000 net acres of our Marcellus Shale leasehold are prospective for the slightly shallower Upper Devonian Shale. Finally, we own the deep rights on a portion of our Marcellus Shale acreage in West Virginia that we believe is prospective for the dry gas Utica Shale. As of June 30, 2013, our estimated proved, probable and possible reserves were 6.3 Tcfe, 14.0 Tcfe and 7.4 Tcfe, respectively, and our proved reserves were 23% proved developed and 91% natural gas, assuming ethane rejection. As of June 30, 2013, our drilling inventory consisted of 4,576 identified potential horizontal well locations, approximately 64% of which are liquids-rich drilling opportunities.

        The statement of operations data for all periods presented in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" has been recast to present the results of operations from our Arkoma Basin and Piceance operations in discontinued operations.

Source of Our Revenues

        Our revenues are derived from the sale of natural gas and oil production, as well as the sale of NGLs that are extracted from our natural gas during processing. Our production revenues derive entirely from the continental United States. During 2012 our revenues from both continuing and discontinued operations were comprised of approximately 85% from the production and sale of natural gas and 15% from the production and sale of NGLs and oil. Natural gas, NGL, and oil prices are inherently volatile and are influenced by many factors outside of our control. Substantially all of our production is derived from natural gas wells which also produce NGLs and limited quantities of oil. To achieve more predictable cash flows and to reduce our exposure to downward price fluctuations, we use derivative instruments to hedge future sales prices on a significant portion of our natural gas production. We currently use fixed price natural gas swaps in which we receive a fixed price for future production in exchange for a payment of the variable market price received at the time future

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production is sold. At the end of each period we estimate the fair value of these swaps and, because we have not elected hedge accounting, we recognize the changes in the fair value of unsettled commodity derivative instruments in earnings at the end of each accounting period. We expect continued volatility in the fair value of these swaps.

Principal Components of Our Cost Structure

    Lease operating expenses.  These are the day to day operating costs incurred to maintain production of our natural gas, NGLs, and oil. Such costs include produced water recycling, pumping, maintenance, repairs, and workover expenses. Cost levels for these expenses can vary based on supply and demand for oilfield services.

    Gathering, compression, processing and transportation.  These are costs incurred to bring natural gas, NGLs, and oil to the market. Such costs include the costs to operate and maintain our low and high pressure gathering and compression systems as well as fees paid to third parties who operate low- and high-pressure gathering systems that transport our gas. They also include costs to process and extract NGLs from our produced gas and to transport our NGLs and oil to market. We often enter into fixed price long-term contracts that secure transportation and processing capacity that may include minimum volume commitments, the cost for which is included in these expenses.

    Production taxes.  Production taxes consist of severance and ad valorem taxes and are paid on produced natural gas, NGLs, and oil based on a percentage of market prices (not hedged prices) and at fixed per unit rates established by federal, state or local taxing authorities.

    Exploration expense.  These are geological and geophysical costs and include seismic costs, costs of unsuccessful exploratory dry holes and unsuccessful leasing efforts.

    Impairment of unproved and proved properties.  These costs include unproved property impairment and costs associated with lease expirations. We could record impairment charges for proved properties if the carrying value were to exceed estimated future cash flows. Through June 30, 2013, we have not recorded any impairment for proved properties.

    Depreciation, depletion and amortization.  Depreciation, depletion and amortization, or DD&A, includes the systematic expensing of the capitalized costs incurred to acquire, explore and develop natural gas, NGLs, and oil. As a "successful efforts" company, we capitalize all costs associated with our acquisition and development efforts and all successful exploration efforts, and allocate these costs to each unit of production using the units of production method.

    General and administrative expense.  These costs include overhead, including payroll and benefits for our corporate staff, costs of maintaining our headquarters, costs of managing our production and development operations, franchise taxes, audit and other professional fees and legal compliance expenses.

    Interest expense.  We finance a portion of our working capital requirements and acquisitions with borrowings under our credit facility. As a result, we incur substantial interest expense that is affected by both fluctuations in interest rates and our financing decisions. At June 30, 2013, we also had a fixed interest rate of 9.375% on senior notes having a principal balance of $525 million, a fixed interest rate of 7.25% on senior notes having a principal balance of $400 million, and a fixed interest rate of 6.00% on senior notes having a principal balance of $525 million. We expect to continue to incur significant interest expense as we continue to grow.

    Income tax expense.  Through December 31, 2011, each of our operating entities filed separate federal and state income tax returns; therefore, our provision for income taxes through that date consisted of the sum of our income tax provisions for each of the operating entities. In October

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      2012, we completed a reorganization of our legal structure by contributing all of the outstanding shares owned by Antero Resources LLC in each of the Antero Arkoma, Antero Piceance and Antero Pipeline corporations to Antero Appalachian. Antero Arkoma, Antero Piceance, and Antero Pipeline were first converted to limited liability companies and then liquidated as part of the reorganization. As a result, for income tax purposes, the operations subsequent to the reorganizations and tax attributes of Arkoma, Piceance and Pipeline are now combined with Antero Appalachian for tax reporting purposes. Our subsidiaries are subject to state and federal income taxes but are currently not in a tax paying position for regular federal income taxes, primarily due to the current deductibility of intangible drilling costs and the deferral of unrealized commodity hedge gains for tax purposes until they are realized. We do pay some state income or franchise taxes where state income or franchise taxes are determined on a basis other than income. We have generated net operating loss carryforwards that expire at various dates from 2024 through 2032. We have recognized the value of these net operating losses to the extent of our deferred tax liabilities. We recorded valuation allowances for deferred tax assets at December 31, 2012 of approximately $48 million primarily for capital loss and state loss carryforwards for which we do not believe we will realize a benefit. The amount of deferred tax assets considered realizable, however, could change in the near term as we generate taxable income or estimates of future taxable income are reduced.

    The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations. We give financial statement recognition to those tax positions that we believe are more likely than not to be sustained upon examination by the Internal Revenue Service or state revenue authorities. The financial statements included unrecognized benefits at December 31, 2012 and June 30, 2013 of $15 million that, if recognized, would result in a reduction of other long-term liabilities and an increase in noncurrent deferred tax liabilities. No impact to our 2012 effective tax rate would result from the recognition of the tax benefits. As of June 30, 2013, we have accrued $0.4 million of interest expense on unrecognized tax benefits.

Corporate Reorganization

        The limited liability company agreement of Antero Investment to be adopted in connection with the closing of this offering provides a mechanism by which the shares of our common stock to be allocated amongst the members of Antero Investment, including Antero Resources Employee Holdings LLC, or Employee Holdings, will be determined. As a result, the satisfaction of all performance, market, and service conditions relative to the membership interests awards held by Employee Holdings will be probable. Accordingly, we will recognize approximately $262.0 million in a non-cash charge for stock compensation expense for the estimated fair value of the prospective distributions to Employee Holdings at the closing of this offering and approximately an additional $147.5 million over the remaining service period. The charge will not have a dilutive effect on the pro forma as adjusted net tangible book value per share to new investors in this offering.

        We will retain an independent valuation firm to estimate the fair value of the shares to be distributed in satisfaction of the profits interests which will be charged to expense at the closing of this offering and over the remaining service period, respectively. Because consideration for the membership interests awards will be deemed given by Antero Investment, the charge to expense will be accounted for as a capital contribution by Antero Investment to us and credited to additional paid-in capital.

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Results of Operations

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2013

        The following table sets forth selected operating data (as recast for discontinued operations) for the three months ended June 30, 2012 compared to the three months ended June 30, 2013:

 
  Three Months Ended
June 30,
   
   
 
 
  Amount of
Increase
(Decrease)
  Percent Change  
 
  2012   2013  
 
  (in thousands, except per unit and production data)
 

Operating revenues:

                         

Natural gas sales

  $ 44,688   $ 172,332   $ 127,644     286 %

NGL sales

        17,244     17,244     *  

Oil sales

    277     2,085     1,808     653 %

Commodity derivative fair value gains (losses)

    (6,040 )   195,483     201,523     *  
                     

Total operating revenues

    38,925     387,144     348,219     895 %
                     

Operating expenses:

                         

Lease operating expense

    1,866     1,454     (412 )   (22 )%

Gathering, compression, processing and transportation

    20,079     48,670     28,591     142 %

Production taxes

    3,371     10,108     6,737     200 %

Exploration expenses

    2,952     7,300     4,348     147 %

Impairment of unproved properties

    1,295     4,803     3,508     271 %

Depletion, depreciation, and amortization

    22,321     52,589     30,268     136 %

Accretion of asset retirement obligations

    24     267     243     1,013 %

General and administrative

    10,473     13,567     3,094     30 %
                     

Total operating expenses

    62,381     138,758     76,377     122 %
                     

Operating income (loss)

    (23,456 )   248,386     271,842     *  

Interest expense

   
(24,223

)
 
(33,468

)
 
(9,245

)
 
38

%
                     

Income (loss) before income taxes and discontinued operations

    (47,679 )   214,918     262,597     *  

Income tax benefit (expense)

    14,442     (83,725 )   (98,167 )   *  
                     

Income (loss) from continuing operations

    (33,237 )   131,193     164,430     *  

Loss from discontinued operations

    (444,850 )       444,850     *  
                     

Net income (loss) attributable to Antero members

  $ (478,087 ) $ 131,193   $ 609,280     *  
                     

EBITDAX from continuing operations(1)

  $ 60,236   $ 132,608   $ 72,372     120 %

Total EBITDAX(1)

 
$

106,239
 
$

132,608
 
$

26,369
   
25

%

Production data:

                         

Natural gas (Bcf)

    19     39     20     104 %

NGLs (MBbl)

        354     354     *  

Oil (MBbl)

    4     25     21     585 %

Combined (Bcfe)

    19     42     23     115 %

Daily combined production (MMcfe/d)

    213     458     245     115 %

Average prices before effects of cash settled derivatives(2):

                         

Natural gas (per Mcf)

  $ 2.31   $ 4.37   $ 2.06     89 %

NGLs (per Bbl)

  $   $ 48.70   $ *     *  

Oil (per Bbl)

  $ 77.16   $ 85.07   $ 7.91     10 %

Combined (per Mcfe)

  $ 2.32   $ 4.60   $ 2.28     98 %

Average realized prices after effects of cash settled derivatives(2):

                         

Natural gas (per Mcf)

  $ 4.89   $ 4.74   $ (0.15 )   (3 )%

NGls (per Bbl)

  $   $ 48.70   $ 48.70     *  

Oil (per Bbl)

  $ 77.16   $ 80.70   $ 3.54     5 %

Combined (per Mcfe)

  $ 4.90   $ 4.94   $ 0.04     1 %

Average costs (per Mcfe):

                         

Lease operating costs

  $ 0.10   $ 0.03   $ (0.07 )   (70 )%

Gathering, compression, processing and transportation

  $ 1.04   $ 1.17   $ 0.13     13 %

Production taxes

  $ 0.17   $ 0.24   $ 0.07     41 %

Depletion, depreciation, amortization, and accretion

  $ 1.15   $ 1.27   $ 0.12     10 %

General and administrative

  $ 0.54   $ 0.33   $ (0.21 )   (39 )%

(1)
See "—Non-GAAP Financial Measure" for a definition of EBITDAX (a non-GAAP measure) and a reconciliation of EBITDAX from continuing and discontinued operations to net income (loss) from continuing and discontinued operations attributable to Antero members and to cash flow provided by operating activities.

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(2)
Average prices shown in the table reflect the sales prices we received before and after giving effect to our realized commodity hedging transactions. Our calculation of such after-effects includes realized gains or losses on cash settlements for commodity derivatives, which do not qualify for hedge accounting because we do not designate them as hedges for accounting purposes. Oil and NGL 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.

*
Not meaningful or applicable

        Natural gas, NGLs, and oil sales.    Revenues from production of natural gas, NGLs, and oil increased from $45 million from continuing operations for the three months ended June 30, 2012 to $192 million for the three months ended June 30, 2013, an increase of $147 million, or 326%. Our production increased by 115% over that same period, from 19 Bcfe from continuing operations for the three months ended June 30, 2012 to 42 Bcfe for the three months ended June 30, 2013. Net equivalent prices before the effects of realized hedge gains increased from $2.32 per Mcfe for the three months ended June 30, 2012 to $4.60 for the three months ended June 30, 2013, an increase of 98%. Increased production volumes accounted for an approximate $52 million increase in year-over-year revenues (calculated as the change in year-to-year volumes times the prior year average price), and commodity price increases accounted for an approximate $95 million increase in year-over-year revenues (calculated as the change in year-to-year average price times current year production volumes). Production increases resulted from additional producing wells as a result of the ongoing Appalachian Basin drilling program. Additionally, natural gas prices were significantly higher than the depressed price levels during the previous year's quarter, increasing from an average of $2.31 during the three months ended June 30, 2012 to $4.37 during the three months ended June 30, 2013.

        Commodity derivative fair value gains (losses).    To achieve more predictable cash flows and to reduce our exposure to downward price fluctuations, we enter into derivative contracts using fixed for variable swap contracts when management believes that favorable future sales prices for our natural gas production can be secured. Because we do not designate these derivatives as accounting hedges, they do not receive accounting hedge treatment and all mark-to-market gains or losses, as well as cash receipts or payments on settled derivative instruments, are recognized in our results of operations.

        For the three months ended June 30, 2012 and 2013, our hedges resulted in derivative fair value gains (losses) of $(6) million and $195 million, respectively. The derivative fair value gains included $50 million and $14 million of cash settlements received on derivatives for the three months ended June 30, 2012 and 2013, respectively.

        Lease operating expenses.    Lease operating expenses decreased by 22% from the three months ended June 30, 2012 to the three months ended June 30, 2013 from $1.9 million to $1.5 million due primarily to workover expenses of $1.1 million incurred in the previous year that did not recur in 2013. On a per unit basis, lease operating expenses decreased by 70%, from $0.10 per Mcfe for the three months ended June 30, 2012 to $0.03 for the three months ended June 30, 2013, primarily because of the decrease in workover expenses. Excluding the 2012 workover expenses, lease operating expenses per Mcfe increased from $0.02 in 2012 to $0.03 in 2013.

        Gathering, compression, processing and transportation expense.    Gathering, compression, processing, and transportation expense increased from $20 million for the three months ended June 30, 2012 to $49 million for the three months ended June 30, 2013, primarily due to an increase in production volumes, increased costs on firm transportation commitments and processing charges incurred in the 2013 period but not the 2012 period. On a per unit basis, gathering, compression, processing and transportation expense increased by $0.13 per Mcfe, or 13%, for the three months ended June 30, 2013 compared to the three months ended June 30, 2012. We began processing natural gas in order to extract NGLs in October 2012 and this resulted in an increase of $0.13 per Mcfe. Increased gathering and compression charges of $0.15 per Mcfe were offset by a reduction of per unit firm transportation fees of $0.15 per unit. Firm transportation charges increased by $3 million for the three months ended

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June 30, 2013 compared to the prior year period, but decreased on a per unit basis by $0.15 per Mcfe as total production increased from the prior year period. We enter into long-term firm transportation agreements for a significant part of our current and expected future production in order to secure guaranteed capacity on major pipelines.

        Production taxes.    Total production taxes increased by approximately $7 million for the three months ended June 30, 2013 compared to the three months ended June 30, 2012, primarily as a result of increased production. On a per unit basis, production taxes increased from $0.17 to $0.24 per Mcfe. Production taxes as a percentage of natural gas, NGL, and oil revenues were 7.5% and 5.3% for the three months ended June 30, 2012 and 2013, respectively. Production taxes declined as a percent of production revenues because of higher per unit sales prices during the three months ended June 30, 2013 compared to the three months ended June 30, 2012 and the impact of this on the West Virginia production tax liability.

        Exploration expense.    Exploration expense increased from $3 million for the three months ended June 30, 2012 to $7 million for the three months ended June 30, 2013 primarily due to an increase in the cost of unsuccessful lease acquisition efforts as we increased the number of third-party lease brokers contracted in the Appalachian Basin.

        Impairment of unproved properties.    Impairment of unproved properties was approximately $1 million for the three months ended June 30, 2012 compared to $5 million for the three months ended June 30, 2013. The increase in impairment charges was due to an increase in expiring acreage and ongoing evaluation of our undeveloped Marcellus acreage. We charge impairment expense for expired or soon-to-be-expired leases when we determine they are impaired through lack of drilling activities or based on other factors, such as remaining lease terms, reservoir performance, commodity price outlooks, expected well economics, or future plans to develop the acreage.

        DD&A.    DD&A increased from $22 million for the three months ended June 30, 2012 to $53 million for the three months ended June 30, 2013, primarily because of increased production. DD&A per Mcfe increased by 10% from $1.15 per Mcfe during the three months ended June 30, 2012 to $1.27 per Mcfe during the three months ended June 30, 2013 as a result of increased depreciation on gathering systems and facilities and increased proved property costs subject to depletion.

        We evaluate the impairment of our proved natural gas and oil properties on a field-by-field basis whenever events or changes in circumstances indicate that a property's carrying amount may not be recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, we reduce the carrying amount of the oil and gas properties to their estimated fair value. No impairment expenses were recorded for the three months ended June 30, 2012 or 2013 for proved properties.

        General and administrative expense.    General and administrative expense increased from $10 million for the three months ended June 30, 2012 to $14 million for the three months ended June 30, 2013, primarily as a result of increased staffing levels and related salary and benefits expenses and increases in legal and other general corporate expenses, all of which resulted from our growth in production levels and development activities. On a per unit basis, general and administrative expense decreased by 39%, from $0.54 per Mcfe during the three months ended June 30, 2012 to $0.33 per Mcfe during the three months ended June 30, 2013, primarily due to a 115% increase in production during that time. We had 132 employees as of June 30, 2012 and 184 employees as of June 30, 2013.

        Interest expense.    Interest expense increased from $24 million for the three months ended June 30, 2012 to $33 million for the three months ended June 30, 2013, primarily due to the issuance of a total of $525 million of 6.00% senior notes due 2020 during the fourth quarter of 2012 and the first quarter of 2013. Interest expense includes approximately $2 million of non-cash amortization of deferred financing costs for both the three months ended June 30, 2012 and 2013.

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        Income tax benefit (expense).    Income tax benefit (expense) changed from a deferred benefit of $14 million for the three months ended June 30, 2012 to a deferred expense of $84 million for the three months ended June 30, 2013. The deferred benefit in 2012 resulted primarily from unrealized commodity derivative losses. The deferred expense in 2013 resulted from pre-tax income of $215 million which included $181 million of unrealized commodity derivative gains.

        At December 31, 2012, we had approximately $1.0 billion of U.S. federal net operating loss carryforwards, or NOLs, and approximately $1.3 billion of state NOLs, which expire starting in 2024 through 2032. From time to time, there has been proposed legislation in the U.S. Congress to eliminate or limit future deductions for intangible drilling costs; such legislation could significantly affect our future taxable position if passed. The impact of any change will be recorded in the period that such legislation might be enacted.

        The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations. We give financial statement recognition to those tax positions that we believe are more likely than not to be sustained upon examination by the Internal Revenue Service or state revenue authorities. Our financial statements included unrecognized benefits at June 30, 2013 of $15 million that, if recognized, would result in a reduction of other long-term liabilities and an increase in noncurrent deferred tax liabilities. As of June 30, 2013, we had accrued approximately $0.4 million of interest on unrecognized tax benefits.

        Loss from discontinued operations.    The loss from discontinued operations for the three months ended June 30, 2012 resulted from the recasting of the revenues and direct expenses from the Piceance and Arkoma properties, which were sold during 2012, as discontinued operations. The loss from discontinued operations for the three months ended June 30, 2012 includes a $427 million loss on the sale of the Arkoma properties. We did not reclassify any general and administrative expenses or interest expense from continuing operations to discontinued operations.

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Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2013

        The following table sets forth selected operating data (as recast for discontinued operations) for the six months ended June 30, 2012 compared to the six months ended June 30, 2013:

 
  Six Months Ended
June 30,
   
   
 
 
  Amount of
Increase
(Decrease)
  Percent Change  
 
  2012   2013  
 
  (in thousands, except per unit and production data)
 

Operating revenues:

                         

Natural gas sales

  $ 89,822   $ 294,278   $ 204,456     228 %

NGL sales

        27,816     27,816     *  

Oil sales

    325     2,962     2,637     811 %

Commodity derivative fair value gains

    211,214     123,542     (87,672 )   (42 )%

Gain on sale of gathering system

    291,305         (291,305 )   *  
                     

Total operating revenues

    592,666     448,598     (144,068 )   (24 )%
                     

Operating expenses:

                         

Lease operating expense

    2,559     2,525     (34 )   (1 )%

Gathering, compression, processing, and transportation

    31,654     89,640     57,986     183 %

Production taxes

    7,113     18,727     11,614     163 %

Exploration expenses

    4,756     11,662     6,906     145 %

Impairment of unproved properties

    1,581     6,359     4,778     302 %

Depletion, depreciation, and amortization

    38,431     92,953     54,522     142 %

Accretion of asset retirement obligations

    46     531     485     1,054 %

General and administrative

    19,646     26,284     6,638     34 %
                     

Total operating expenses

    105,786     248,681     142,895     135 %
                     

Operating income (loss)

    486,880     199,917     (286,963 )   (59 )%

Interest expense

   
(48,593

)
 
(63,396

)
 
(14,803

)
 
30

%
                     

Income before income taxes and discontinued operations

    438,287     136,521     (301,766 )   (69 )%

Income tax expense

    (183,969 )   (53,325 )   130,644     (71 )%
                     

Income from continuing operations

    254,318     83,196     (171,122 )   (67 )%

Loss from discontinued operations

    (404,674 )       404,674     *  
                     

Net income (loss) attributable to Antero members

  $ (150,356 ) $ 83,196   $ 233,552     *  
                     

EBITDAX from continuing operations(1)

  $ 127,887   $ 251,357   $ 123,470     97 %

Total EBITDAX(1)

 
$

228,579
 
$

251,357
 
$

22,778
   
10

%

Production data:

                         

Natural gas (Bcf)

    35     73     38     105 %

NGLs (MBbl)

        559     559     *  

Oil (MBbl)

    4     35     31     764 %

Combined (Bcfe)

    35     76     41     116 %

Daily combined production (MMcfe/d)

    195     421     226     116 %

Average prices before effects of cash settled derivatives(2):

                         

Natural gas (per Mcf)

  $ 2.53   $ 4.05   $ 1.52     60 %

NGLs (per Bbl)

  $   $ 49.75   $ 49.75     *  

Oil (per Bbl)

  $ 80.05   $ 85.36   $ 5.31     7 %

Combined (per Mcfe)

  $ 2.54   $ 4.27   $ 1.73     68 %

Average realized prices after effects of cash settled derivatives(2):

                         

Natural gas (per Mcf)

  $ 5.26   $ 4.91   $ (0.35 )   (7 )%

NGls (per Bbl)

  $   $ 49.75   $ 49.75     *  

Oil (per Bbl)

  $ 80.05   $ 79.14   $ (0.91 )   (1 )%

Combined (per Mcfe)

  $ 5.26   $ 5.09   $ (0.17 )   (3 )%

Average costs (per Mcfe):

                         

Lease operating costs

  $ 0.07   $ 0.03   $ (0.04 )   (57 )%

Gathering, compression, and transportation

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