(14) Subsidiary Guarantors

Antero Resources Corporation (the Parent) and certain of its wholly owned subsidiaries each have fully and unconditionally guaranteed the Company’s senior notes. Antero Midstream and its subsidiary have been designated unrestricted subsidiaries under the Credit Facility and the indentures governing the Company’s senior notes, and do not guarantee any of Antero’s obligations (see note 3). In the event a subsidiary guarantor is sold or disposed of (whether by merger, consolidation, the sale of a sufficient amount of its capital stock so that it no longer qualifies as a “Subsidiary” of the Company (as defined in the indentures governing the notes) or the sale of all or substantially all of its assets (other than by lease)) and whether or not the subsidiary guarantor is the surviving entity in such transaction to a person which is not the Company or a restricted subsidiary of the Company, such subsidiary guarantor will be released from its obligations under its subsidiary guarantee if the sale or other disposition does not violate the covenants set forth in the indentures governing the notes.

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

The following Condensed Consolidating Balance Sheet at December 31, 2014, and the related statements of operations and comprehensive income (loss) and statements cash flows for the year ended December 31, 2014, present financial information for Antero Resources Corporation as the Parent on a stand‑alone basis (carrying its investment in wholly-owned subsidiaries on the equity method), financial information for the subsidiary guarantors, financial information for the non-guarantor subsidiaries, and the consolidation and elimination entries necessary to arrive at the information for the Company on a consolidated basis. The guarantor and non-guarantor subsidiaries had no revenues, expenses, or cash flows during the year ended December 31, 2013, or for any year prior to 2013 and immaterial assets and liabilities at December 31, 2013. Antero’s wholly-owned subsidiaries are not restricted from making distributions to the Parent.

Condensed Consolidating Balance Sheet

December 31, 2014

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	15,787		—		230,192		—		245,979
Accounts receivable, net		116,203		—		—		—		116,203
Intercompany receivables		1,380		—		17,646		(19,026)		—
Accrued revenue		191,558		—		—		—		191,558
Derivative instruments		692,554		—		—		—		692,554
Other		5,348		1		518		(1)		5,866
Total current assets		1,022,830		1		248,356		(19,027)		1,252,160
Property and equipment:
Natural gas properties, at cost (successful efforts method):
Unproved properties		2,060,936		—		—		—		2,060,936
Proved properties		6,515,221		—		—		—		6,515,221
Fresh water distribution systems		421,012		—		—		—		421,012
Gathering systems and facilities		16,532		—		1,180,707		—		1,197,239
Other property and equipment		37,687		—		—		—		37,687
		9,051,388		—		1,180,707		—		10,232,095
Less accumulated depletion, depreciation, and amortization		(828,533)		—		(51,110)		—		(879,643)
Property and equipment, net		8,222,855		—		1,129,597		—		9,352,452
Derivative instruments		899,997		—		—		—		899,997
Investments in subsidiaries		137,423		—		—		(137,423)		—
Other assets, net		51,718		—		17,168		—		68,886
Total assets	$	10,334,823		1		1,395,121		(156,450)		11,573,495

Liabilities and Equity
Current liabilities:
Accounts payable	$	485,628		—		45,936		—		531,564
Intercompany payable		17,646		—		1,380		(19,026)		—
Accrued liabilities		163,268		—		5,346		—		168,614
Revenue distributions payable		182,352		—		—		—		182,352
Deferred income tax liability		260,373		—		—		—		260,373
Other		12,203		—		—		(1)		12,202
Total current liabilities		1,121,470		—		52,662		(19,027)		1,155,105
Long-term liabilities:
Long-term debt		4,247,550		115,000		—		—		4,362,550
Deferred income tax liability		534,423		—		—		—		534,423
Other long-term liabilities		47,587		—		—		—		47,587
Total liabilities		5,951,030		115,000		52,662		(19,027)		6,099,665
Equity:
Stockholders' equity:
Parent net investment		—		(114,999)		—		114,999		—
Partners' capital		—		—		1,342,459		(1,342,459)		—
Common stock		2,621		—		—		—		2,621
Additional paid-in capital		3,513,725		—		—		—		3,513,725
Accumulated earnings		867,447		—		—		—		867,447
Total stockholders' equity		4,383,793		(114,999)		1,342,459		(1,227,460)		4,383,793
Noncontrolling interest in consolidated subsidiary		—		—		—		1,090,037		1,090,037
Total equity		4,383,793		(114,999)		1,342,459		(137,423)		5,473,830
Total liabilities and equity	$	10,334,823		1		1,395,121		(156,450)		11,573,495

Condensed Consolidating Statement of Operations and Comprehensive Income

Year ended December 31, 2014

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenue:
Natural gas sales	$	1,301,349		—		—		—		1,301,349
Natural gas liquids sales		328,323		—		—		—		328,323
Oil sales		107,080		—		—		—		107,080
Gathering, compression, and water distribution		20,284		—		25,178		(23,387)		22,075
Marketing		53,604		—		—		—		53,604
Commodity derivative fair value gains		868,201		—		—		—		868,201
Gain on sale of gathering system		40,000		—		—		—		40,000
Fee income		143		—		—		(143)		—
Total revenue		2,718,984		—		25,178		(23,530)		2,720,632
Operating expenses:
Lease operating		29,341		—		—		—		29,341
Gathering, compression, processing, and transportation		480,367		—		4,460		(23,414)		461,413
Production and ad valorem taxes		85,945		—		1,973		—		87,918
Marketing		103,435		—		—		—		103,435
Exploration		27,893		—		—		—		27,893
Impairment of unproved properties		15,198		—		—		—		15,198
Depletion, depreciation, and amortization		471,372		—		6,524		—		477,896
Accretion of asset retirement obligations		1,271		—		—		—		1,271
General and administrative		212,316		—		4,333		(116)		216,533
Total operating expenses		1,427,138		—		17,290		(23,530)		1,420,898
Operating income		1,291,846		—		7,888		—		1,299,734
Other income (expenses):
Interest		(159,585)		—		(466)		—		(160,051)
Loss on early extinguishment of debt		(20,386)		—		—		—		(20,386)
Equity in net income of subsidiaries		5,174		—		—		(5,174)		—
Total other expenses		(174,797)		—		(466)		(5,174)		(180,437)
Income from continuing operations before income taxes and discontinued operations		1,117,049		—		7,422		(5,174)		1,119,297
Provision for income tax expense		(445,672)		—		—		—		(445,672)
Income from continuing operations		671,377		—		7,422		(5,174)		673,625
Discontinued operations:
Income from sale of discontinued operations, net of income taxes		2,210		—		—		—		2,210
Net income and comprehensive income including noncontrolling interest		673,587		—		7,422		(5,174)		675,835
Net income and comprehensive income attributable to noncontrolling interest		—		—		—		2,248		2,248
Net income and comprehensive income attributable to Antero Resources Corporation	$	673,587		—		7,422		(7,422)		673,587

Condensed Consolidating Statement of Cash Flows

December 31, 2014

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by operating activities	$	992,788		—		5,333		—		998,121
Cash flows from investing activities:
Additions to proved properties		(64,066)		—		—		—		(64,066)
Additions to unproved properties		(777,422)		—		—		—		(777,422)
Drilling and completion costs		(2,477,150)		—		—		—		(2,477,150)
Additions to fresh water distribution systems		(196,675)		—		—		—		(196,675)
Additions to gathering systems and facilities		(543,196)		—		(14,841)		—		(558,037)
Additions to other property and equipment		(13,218)		—		—		—		(13,218)
Decrease in notes receivable		2,667		—		—		—		2,667
Change in other assets		(5,595)		—		(154)		—		(5,749)
Net distributions from subsidiaries		447,500		—		—		(447,500)		—
Net cash used in investing activities		(3,627,155)		—		(14,995)		(447,500)		(4,089,650)
Cash flows from financing activities:
Distributions to Antero		—		(115,000)		(332,500)		447,500		—
Issuance of common units in Antero Midstream Partners LP		—		—		1,087,224		—		1,087,224
Issuance of senior notes		1,102,500		—		—		—		1,102,500
Repayment of senior notes		(260,000)		—		—		—		(260,000)
Borrowings (repayments) on bank credit facility, net		1,837,000		115,000		(510,000)		—		1,442,000
Make-whole premium on debt extinguished		(17,383)		—		—		—		(17,383)
Payments of deferred financing costs		(26,673)		—		(4,870)		—		(31,543)
Other		(2,777)		—		—		—		(2,777)
Net cash provided by financing activities		2,632,667		—		239,854		447,500		3,320,021
Net increase (decrease) in cash and cash equivalents		(1,700)		—		230,192		—		228,492
Cash and cash equivalents, beginning of period		17,487		—		—		—		17,487
Cash and cash equivalents, end of period	$	15,787		—		230,192		—		245,979