(17) Subsidiary Guarantors

Antero’s wholly-owned subsidiaries each have fully and unconditionally guaranteed Antero’s senior notes. Antero Midstream and its subsidiaries have been designated unrestricted subsidiaries under the Credit Facility and the indentures governing Antero’s senior notes, and do not guarantee any of Antero’s obligations (see note 7). 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 Antero or a restricted subsidiary of Antero, such subsidiary guarantor will be released from its obligations under its subsidiary guarantee if the sale or other disposition does not violate the covenants set forth in the indentures governing the notes.

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

The following Condensed Consolidating Balance Sheets at December 31, 2015 and 2016, and the related Condensed Consolidating Statements of Operations and Comprehensive Income and Condensed Consolidating Statements Cash Flows for the years ended December 31, 2014, 2015, and 2016, present financial information for Antero on a stand‑alone basis (carrying its investment in wholly-owned subsidiaries using 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. Antero’s wholly-owned subsidiaries are not restricted from making distributions to the Parent.

Condensed Consolidating Balance Sheet

December 31, 2015

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	16,590		—		6,883		—		23,473
Accounts receivable, net		76,697		—		2,707		—		79,404
Intercompany receivables		2,138		—		65,712		(67,850)		—
Accrued revenue		128,242		—		—		—		128,242
Derivative instruments		1,009,030		—		—		—		1,009,030
Other current assets		8,087		—		—		—		8,087
Total current assets		1,240,784		—		75,302		(67,850)		1,248,236
Property and equipment:
Natural gas properties, at cost (successful efforts method):
Unproved properties		1,996,081		—		—		—		1,996,081
Proved properties		8,243,901		—		—		(32,795)		8,211,106
Water handling and treatment systems		—		—		565,616		—		565,616
Gathering systems and facilities		16,561		—		1,485,835		—		1,502,396
Other property and equipment		46,415		—		—		—		46,415
		10,302,958		—		2,051,451		(32,795)		12,321,614
Less accumulated depletion, depreciation, and amortization		(1,431,747)		—		(157,625)		—		(1,589,372)
Property and equipment, net		8,871,211		—		1,893,826		(32,795)		10,732,242
Derivative instruments		2,108,450		—		—		—		2,108,450
Investments in subsidiaries		(302,336)		—		—		302,336		—
Contingent acquisition consideration		178,049		—		—		(178,049)		—
Other assets, net		15,661		—		10,904		—		26,565
Total assets	$	12,111,819		—		1,980,032		23,642		14,115,493

Liabilities and Equity
Current liabilities:
Accounts payable	$	58,970		—		10,941		—		69,911
Intercompany payable		65,712		—		2,138		(67,850)		—
Accrued liabilities		402,940		—		85,385		—		488,325
Revenue distributions payable		129,949		—		—		—		129,949
Other current liabilities		18,935		—		150		—		19,085
Total current liabilities		676,506		—		98,614		(67,850)		707,270
Long-term liabilities:
Long-term debt		4,048,782		—		620,000		—		4,668,782
Deferred income tax liability		1,370,686		—		—		—		1,370,686
Contingent acquisition consideration		—		—		178,049		(178,049)		—
Other liabilities		81,453		—		624		—		82,077
Total liabilities		6,177,427		—		897,287		(245,899)		6,828,815
Equity:
Stockholders' equity:
Partners' capital		—		—		1,082,745		(1,082,745)		—
Common stock		2,770		—		—		—		2,770
Additional paid-in capital		4,122,811		—		—		—		4,122,811
Accumulated earnings		1,808,811		—		—		—		1,808,811
Total stockholders' equity		5,934,392		—		1,082,745		(1,082,745)		5,934,392
Noncontrolling interest in consolidated subsidiary		—		—		—		1,352,286		1,352,286
Total equity		5,934,392		—		1,082,745		269,541		7,286,678
Total liabilities and equity	$	12,111,819		—		1,980,032		23,642		14,115,493

Condensed Consolidating Balance Sheet

December 31, 2016

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	17,568		—		14,042		—		31,610
Accounts receivable, net		28,442		—		1,240		—		29,682
Intercompany receivables		3,193		—		64,139		(67,332)		—
Accrued revenue		261,960		—		—		—		261,960
Derivative instruments		73,022		—		—		—		73,022
Other current assets		5,784		—		529		—		6,313
Total current assets		389,969		—		79,950		(67,332)		402,587
Property and equipment:
Natural gas properties, at cost (successful efforts method):
Unproved properties		2,331,173		—		—		—		2,331,173
Proved properties		9,726,957		—		—		(177,286)		9,549,671
Water handling and treatment systems		—		—		744,682		—		744,682
Gathering systems and facilities		17,929		—		1,705,839		—		1,723,768
Other property and equipment		41,231		—		—		—		41,231
		12,117,290		—		2,450,521		(177,286)		14,390,525
Less accumulated depletion, depreciation, and amortization		(2,109,136)		—		(254,642)		—		(2,363,778)
Property and equipment, net		10,008,154		—		2,195,879		(177,286)		12,026,747
Derivative instruments		1,731,063		—		—		—		1,731,063
Investments in subsidiaries		(420,429)		—		—		420,429		—
Contingent acquisition consideration		194,538		—		—		(194,538)		—
Other assets, net		21,087		—		74,066		—		95,153
Total assets	$	11,924,382		—		2,349,895		(18,727)		14,255,550

Liabilities and Equity
Current liabilities:
Accounts payable	$	21,648		—		16,979		—		38,627
Intercompany payable		64,139		—		3,193		(67,332)		—
Accrued liabilities		332,162		—		61,641		—		393,803
Revenue distributions payable		163,989		—		—		—		163,989
Derivative instruments		203,635		—		—		—		203,635
Other current liabilities		17,134		—		200		—		17,334
Total current liabilities		802,707		—		82,013		(67,332)		817,388
Long-term liabilities:
Long-term debt		3,854,059		—		849,914		—		4,703,973
Deferred income tax liability		950,217		—		—		—		950,217
Contingent acquisition consideration		—		—		194,538		(194,538)		—
Derivative instruments		234		—		—		—		234
Other liabilities		54,540		—		620		—		55,160
Total liabilities		5,661,757		—		1,127,085		(261,870)		6,526,972
Equity:
Stockholders' equity:
Partners' capital		—		—		1,222,810		(1,222,810)		—
Common stock		3,149		—		—		—		3,149
Additional paid-in capital		5,299,481		—		—		—		5,299,481
Accumulated earnings		959,995		—		—		—		959,995
Total stockholders' equity		6,262,625		—		1,222,810		(1,222,810)		6,262,625
Noncontrolling interest in consolidated subsidiary		—		—		—		1,465,953		1,465,953
Total equity		6,262,625		—		1,222,810		243,143		7,728,578
Total liabilities and equity	$	11,924,382		—		2,349,895		(18,727)		14,255,550

Condensed Consolidating Statement of Operations and Comprehensive Income

Year Ended December 31, 2014

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenue and other:
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 handling and treatment		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 assets		40,000		—		—		—		40,000
Other income		143		—		—		(143)		—
Total revenue and other		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 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 Operations and Comprehensive Income

Year Ended December 31, 2015

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenue and other:
Natural gas sales	$	1,039,892		—		—		—		1,039,892
Natural gas liquids sales		264,483		—		—		—		264,483
Oil sales		70,753		—		—		—		70,753
Gathering, compression, and water handling and treatment		6,651		—		299,787		(284,438)		22,000
Marketing		176,229		—		—		—		176,229
Commodity derivative fair value gains		2,381,501		—		—		—		2,381,501
Other income		4,594		—		—		(4,594)		—
Total revenue and other		3,944,103		—		299,787		(289,032)		3,954,858
Operating expenses:
Lease operating		36,132		—		33,283		(33,404)		36,011
Gathering, compression, processing, and transportation		852,573		—		25,305		(218,517)		659,361
Production and ad valorem taxes		77,074		—		1,251		—		78,325
Marketing		299,062		—		—		—		299,062
Exploration		3,846		—		—		—		3,846
Impairment of unproved properties		104,321		—		—		—		104,321
Depletion, depreciation, and amortization		641,860		—		67,903		—		709,763
Accretion of asset retirement obligations		1,655		—		—		—		1,655
General and administrative		190,712		—		43,968		(983)		233,697
Contract termination and rig stacking		38,531		—		—		—		38,531
Accretion of contingent acquisition consideration		—		—		3,333		(3,333)		—
Total operating expenses		2,245,766		—		175,043		(256,237)		2,164,572
Operating income		1,698,337		—		124,744		(32,795)		1,790,286
Other income (expenses):
Interest		(228,568)		—		(5,832)		—		(234,400)
Equity in net income of subsidiaries		47,485		—		—		(47,485)		—
Total other expenses		(181,083)		—		(5,832)		(47,485)		(234,400)
Income before income taxes		1,517,254		—		118,912		(80,280)		1,555,886
Provision for income tax expense		(575,890)		—		—		—		(575,890)
Net income and comprehensive income including noncontrolling interest		941,364		—		118,912		(80,280)		979,996
Net income and comprehensive income attributable to noncontrolling interest		—		—		—		38,632		38,632
Net income and comprehensive income attributable to Antero Resources Corporation	$	941,364		—		118,912		(118,912)		941,364

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Year Ended December 31, 2016

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Revenue and other:
Natural gas sales	$	1,260,750		—		—		—		1,260,750
Natural gas liquids sales		432,992		—		—		—		432,992
Oil sales		61,319		—		—		—		61,319
Gathering, compression, and water handling and treatment		—		—		586,352		(573,391)		12,961
Marketing		393,049		—		—		—		393,049
Commodity derivative fair value losses		(514,181)		—		—		—		(514,181)
Gain on sale of assets		93,776		—		3,859		—		97,635
Other income		18,324		—		—		(18,324)		—
Total revenue and other		1,746,029		—		590,211		(591,715)		1,744,525
Operating expenses:
Lease operating		50,651		—		136,387		(136,948)		50,090
Gathering, compression, processing, and transportation		1,146,221		—		28,097		(291,480)		882,838
Production and ad valorem taxes		69,485		—		(2,897)		—		66,588
Marketing		499,343		—		—		—		499,343
Exploration		6,862		—		—		—		6,862
Impairment of unproved properties		162,935		—		—		—		162,935
Depletion, depreciation, and amortization		710,012		—		99,861		—		809,873
Accretion of asset retirement obligations		2,473		—		—		—		2,473
General and administrative		186,672		—		54,163		(1,511)		239,324
Accretion of contingent acquisition consideration		—		—		16,489		(16,489)		—
Total operating expenses		2,834,654		—		332,100		(446,428)		2,720,326
Operating income (loss)		(1,088,625)		—		258,111		(145,287)		(975,801)
Other income (expenses):
Equity in earnings of unconsolidated affiliate		—		—		485		—		485
Interest		(232,455)		—		(21,893)		796		(253,552)
Loss on early extinguishment of debt		(16,956)		—		—		—		(16,956)
Equity in net income of subsidiaries		(7,156)		—		—		7,156		—
Total other expenses		(256,567)		—		(21,408)		7,952		(270,023)
Income (loss) before income taxes		(1,345,192)		—		236,703		(137,335)		(1,245,824)
Provision for income tax benefit		496,376		—		—		—		496,376
Net income (loss) and comprehensive income (loss) including noncontrolling interest		(848,816)		—		236,703		(137,335)		(749,448)
Net income and comprehensive income attributable to noncontrolling interest		—		—		—		99,368		99,368
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation	$	(848,816)		—		236,703		(236,703)		(848,816)

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2014

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by operating activities	$	992,930		—		5,333		—		998,263
Cash flows used in 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 water handling and treatment 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)
Change in other assets		(2,928)		—		(154)		—		(3,082)
Net distributions from guarantor subsidiary		115,000		—		—		(115,000)		—
Distributions from non-guarantor subsidiary		332,500		—		—		(332,500)		—
Net cash used in investing activities		(3,627,155)		—		(14,995)		(447,500)		(4,089,650)
Cash flows provided by (used in) financing activities:
Issuance of common units by 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)
Distributions		—		(115,000)		(332,500)		447,500		—
Employee tax withholding for settlement of equity compensation awards		(142)		—		—		—		(142)
Other		(2,777)		—		—		—		(2,777)
Net cash provided by (used in) financing activities		2,632,525		—		239,854		447,500		3,319,879
Net 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

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2015

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by operating activities	$	853,548		—		195,059		(32,795)		1,015,812
Cash flows used in investing activities:
Additions to unproved properties		(198,694)		—		—		—		(198,694)
Drilling and completion costs		(1,684,077)		—		—		32,795		(1,651,282)
Additions to water handling and treatment systems		(80,064)		—		(50,987)		—		(131,051)
Additions to gathering systems and facilities		(40,285)		—		(320,002)		—		(360,287)
Additions to other property and equipment		(6,595)		—		—		—		(6,595)
Change in other assets		2,570		—		7,180		—		9,750
Net distributions to guarantor subsidiary		(115,000)		—		—		115,000		—
Distributions from non-guarantor subsidiary		73,119		—		—		(73,119)		—
Proceeds from contribution of assets to non-guarantor subsidiary		801,116		—		—		(801,116)		—
Proceeds from asset sales		40,000		—		—		—		40,000
Net cash used in investing activities		(1,207,910)		—		(363,809)		(726,440)		(2,298,159)
Cash flows provided by (used in) financing activities:
Issuance of common stock		537,832		—		—		—		537,832
Issuance of common units by Antero Midstream Partners LP		—		—		240,703		—		240,703
Issuance of senior notes		750,000		—		—		—		750,000
Borrowings (repayments) on bank credit facility, net		(908,000)		(115,000)		620,000		—		(403,000)
Payments of deferred financing costs		(15,234)		—		(2,059)		—		(17,293)
Distributions		—		115,000		(908,364)		759,235		(34,129)
Employee tax withholding for settlement of equity compensation awards		(4,625)		—		(4,806)		—		(9,431)
Other		(4,808)		—		(33)		—		(4,841)
Net cash provided by (used in) financing activities		355,165		—		(54,559)		759,235		1,059,841
Net decrease in cash and cash equivalents		803		—		(223,309)		—		(222,506)
Cash and cash equivalents, beginning of period		15,787		—		230,192		—		245,979
Cash and cash equivalents, end of period	$	16,590		—		6,883		—		23,473

Condensed Consolidating Statement of Cash Flows

Year Ended December 31, 2016

(In thousands)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by operating activities	$	1,007,140		—		378,607		(144,491)		1,241,256
Cash flows used in investing activities:
Additions to proved properties		(134,113)		—		—		—		(134,113)
Additions to unproved properties		(611,631)		—		—		—		(611,631)
Drilling and completion costs		(1,472,250)		—		—		144,491		(1,327,759)
Additions to water handling and treatment systems		32		—		(188,220)		—		(188,188)
Additions to gathering systems and facilities		(2,944)		—		(228,100)		—		(231,044)
Additions to other property and equipment		(2,694)		—		—		—		(2,694)
Investments in unconsolidated affiliates		—		—		(75,516)		—		(75,516)
Change in other assets		304		—		3,673		—		3,977
Net distributions from subsidiaries		107,364		—		—		(107,364)		—
Proceeds from asset sales		161,830		—		10,000		—		171,830
Net cash used in investing activities		(1,954,102)		—		(478,163)		37,127		(2,395,138)
Cash flows provided by financing activities:
Issuance of common stock		1,012,431		—		—		—		1,012,431
Issuance of common units by Antero Midstream Partners LP		—		—		65,395		—		65,395
Sale of common units in Antero Midstream Partners LP by Antero Resources Corporation		178,000		—		—		—		178,000
Issuance of senior notes		600,000		—		650,000		—		1,250,000
Repayment of senior notes		(525,000)		—		—		—		(525,000)
Repayments on bank credit facility, net		(267,000)		—		(410,000)		—		(677,000)
Make-whole premium on debt extinguished		(15,750)		—		—		—		(15,750)
Payments of deferred financing costs		(8,324)		—		(10,435)		—		(18,759)
Distributions		—		—		(182,446)		107,364		(75,082)
Employee tax withholding for settlement of equity compensation awards		(21,260)		—		(5,635)		—		(26,895)
Other		(5,157)		—		(164)		—		(5,321)
Net cash provided by financing activities		947,940		—		106,715		107,364		1,162,019
Net increase (decrease) in cash and cash equivalents		978		—		7,159		—		8,137
Cash and cash equivalents, beginning of period		16,590		—		6,883		—		23,473
Cash and cash equivalents, end of period	$	17,568		—		14,042		—		31,610