Subsidiary Guarantors (Tables)

3 Months Ended

Mar. 31, 2018

Subsidiary Guarantors

Schedule of condensed consolidated balance sheets

Condensed Consolidating Balance Sheet

December 31, 2017

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	20,078		—		8,363		—		28,441
Accounts receivable, net		33,726		—		1,170		—		34,896
Intercompany receivables		6,459		—		110,182		(116,641)		—
Accrued revenue		300,122		—		—		—		300,122
Derivative instruments		460,685		—		—		—		460,685
Other current assets		8,273		—		670		—		8,943
Total current assets		829,343		—		120,385		(116,641)		833,087
Property and equipment:
Natural gas properties, at cost (successful efforts method):
Unproved properties		2,266,673		—		—		—		2,266,673
Proved properties		11,460,615		—		—		(364,153)		11,096,462
Water handling and treatment systems		—		—		942,361		4,309		946,670
Gathering systems and facilities		17,929		—		2,032,561		—		2,050,490
Other property and equipment		57,429		—		—		—		57,429
		13,802,646		—		2,974,922		(359,844)		16,417,724
Less accumulated depletion, depreciation, and amortization		(2,812,851)		—		(369,320)		—		(3,182,171)
Property and equipment, net		10,989,795		—		2,605,602		(359,844)		13,235,553
Derivative instruments		841,257		—		—		—		841,257
Investments in subsidiaries		(573,926)		—		—		573,926		—
Contingent acquisition consideration		208,014		—		—		(208,014)		—
Investments in unconsolidated affiliates		—		—		303,302		—		303,302
Other assets		35,371		—		12,920		—		48,291
Total assets	$	12,329,854		—		3,042,209		(110,573)		15,261,490
Liabilities and Equity
Current liabilities:
Accounts payable	$	54,340		—		8,642		—		62,982
Intercompany payable		110,182		—		6,459		(116,641)		—
Accrued liabilities		338,819		—		106,006		(1,600)		443,225
Revenue distributions payable		209,617		—		—		—		209,617
Derivative instruments		28,476		—		—		—		28,476
Other current liabilities		17,587		—		209		—		17,796
Total current liabilities		759,021		—		121,316		(118,241)		762,096
Long-term liabilities:
Long-term debt		3,604,090		—		1,196,000		—		4,800,090
Deferred income tax liability		779,645		—		—		—		779,645
Contingent acquisition consideration		—		—		208,014		(208,014)		—
Derivative instruments		207		—		—		—		207
Other liabilities		42,906		—		410		—		43,316
Total liabilities		5,185,869		—		1,525,740		(326,255)		6,385,354
Equity:
Stockholders' equity:
Partners' capital		—		—		1,516,469		(1,516,469)		—
Common stock		3,164		—		—		—		3,164
Additional paid-in capital		5,565,756		—		—		1,005,196		6,570,952
Accumulated earnings		1,575,065		—		—		—		1,575,065
Total stockholders' equity		7,143,985		—		1,516,469		(511,273)		8,149,181
Noncontrolling interests in consolidated subsidiary		—		—		—		726,955		726,955
Total equity		7,143,985		—		1,516,469		215,682		8,876,136
Total liabilities and equity	$	12,329,854		—		3,042,209		(110,573)		15,261,490

Condensed Consolidating Balance Sheet

March 31, 2018

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	14,439		—		8,714		—		23,153
Accounts receivable, net		25,447		—		1,245		—		26,692
Intercompany receivables		2,765		—		111,001		(113,766)		—
Accrued revenue		279,923		—		—		—		279,923
Derivative instruments		459,892		—		—		—		459,892
Other current assets		9,217		—		1,157		—		10,374
Total current assets		791,683		—		122,117		(113,766)		800,034
Property and equipment:
Natural gas properties, at cost (successful efforts method):
Unproved properties		2,265,727		—		—		—		2,265,727
Proved properties		11,902,297		—		—		(430,869)		11,471,428
Water handling and treatment systems		—		—		965,499		8,890		974,389
Gathering systems and facilities		17,825		—		2,114,978		—		2,132,803
Other property and equipment		59,499		—		—		—		59,499
		14,245,348		—		3,080,477		(421,979)		16,903,846
Less accumulated depletion, depreciation, and amortization		(3,008,346)		—		(401,752)		—		(3,410,098)
Property and equipment, net		11,237,002		—		2,678,725		(421,979)		13,493,748
Derivative instruments		760,562		—		—		—		760,562
Investments in subsidiaries		(629,293)		—		—		629,293		—
Contingent acquisition consideration		211,888		—		—		(211,888)		—
Investments in unconsolidated affiliates		—		—		321,468		—		321,468
Other assets		33,245		—		13,792		—		47,037
Total assets	$	12,405,087		—		3,136,102		(118,340)		15,422,849
Liabilities and Equity
Current liabilities:
Accounts payable	$	65,845		—		7,376		—		73,221
Intercompany payable		111,001		—		2,765		(113,766)		—
Accrued liabilities		350,769		—		70,369		1,479		422,617
Revenue distributions payable		237,907		—		—		—		237,907
Derivative instruments		41,907		—		—		—		41,907
Other current liabilities		13,973		—		228		—		14,201
Total current liabilities		821,402		—		80,738		(112,287)		789,853
Long-term liabilities:
Long-term debt		3,575,426		—		1,301,280		—		4,876,706
Deferred income tax liability		788,765		—		—		—		788,765
Contingent acquisition consideration		—		—		211,888		(211,888)		—
Other liabilities		42,990		—		3,437		—		46,427
Total liabilities		5,228,583		—		1,597,343		(324,175)		6,501,751
Equity:
Stockholders' equity:
Partners' capital		—		—		1,538,759		(1,538,759)		—
Common stock		3,165		—		—		—		3,165
Additional paid-in capital		5,583,441		—		—		1,004,641		6,588,082
Accumulated earnings		1,589,898		—		—		—		1,589,898
Total stockholders' equity		7,176,504		—		1,538,759		(534,118)		8,181,145
Noncontrolling interests in consolidated subsidiary		—		—		—		739,953		739,953
Total equity		7,176,504		—		1,538,759		205,835		8,921,098
Total liabilities and equity	$	12,405,087		—		3,136,102		(118,340)		15,422,849

Schedule of condensed consolidated statement of operations and comprehensive income (loss)

Condensed Consolidating Statement of Operations and Comprehensive Income

Three Months Ended March 31, 2017

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Revenue and other:
Natural gas sales	$	466,664		—		—		—		466,664
Natural gas liquids sales		194,652		—		—		—		194,652
Oil sales		26,960		—		—		—		26,960
Commodity derivative gains		438,775		—		—		—		438,775
Gathering, compression, water handling and treatment		—		—		174,769		(172,165)		2,604
Marketing		65,924		—		—		—		65,924
Other income		4,440		—		—		(4,440)		—
Total revenue and other		1,197,415		—		174,769		(176,605)		1,195,579
Operating expenses:
Lease operating		15,742		—		38,622		(38,813)		15,551
Gathering, compression, processing, and transportation		347,768		—		8,114		(89,053)		266,829
Production and ad valorem taxes		23,975		—		818		—		24,793
Marketing		89,993		—		—		—		89,993
Exploration		2,107		—		—		—		2,107
Impairment of unproved properties		26,899		—		—		—		26,899
Depletion, depreciation, and amortization		175,193		—		27,536		—		202,729
Accretion of asset retirement obligations		637		—		—		—		637
General and administrative		51,056		—		14,457		(815)		64,698
Accretion of contingent acquisition consideration		—		—		3,526		(3,526)		—
Total operating expenses		733,370		—		93,073		(132,207)		694,236
Operating income		464,045		—		81,696		(44,398)		501,343
Other income (expenses):
Equity in earnings of unconsolidated affiliates		—		—		2,231		—		2,231
Interest		(58,003)		—		(8,836)		169		(66,670)
Equity in earnings (loss) of consolidated subsidiaries		(6,300)		—		—		6,300		—
Total other expenses		(64,303)		—		(6,605)		6,469		(64,439)
Income before income taxes		399,742		—		75,091		(37,929)		436,904
Provision for income tax expense		(131,346)		—		—		—		(131,346)
Net income and comprehensive income including noncontrolling interests		268,396		—		75,091		(37,929)		305,558
Net income and comprehensive income attributable to noncontrolling interests		—		—		—		37,162		37,162
Net income and comprehensive income attributable to Antero Resources Corporation	$	268,396		—		75,091		(75,091)		268,396

Condensed Consolidating Statement of Operations and Comprehensive Income

Three Months Ended March 31, 2018

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Revenue and other:
Natural gas sales	$	497,663		—		—		—		497,663
Natural gas liquids sales		234,170		—		—		—		234,170
Oil sales		30,273		—		—		—		30,273
Commodity derivative gains		22,437		—		—		—		22,437
Gathering, compression, water handling and treatment		—		—		229,591		(224,656)		4,935
Marketing		144,389		—		—		—		144,389
Marketing derivative gains		94,234		—		—		—		94,234
Other income		5,875		—		—		(5,875)		—
Total revenue and other		1,029,041		—		229,591		(230,531)		1,028,101
Operating expenses:
Lease operating		31,262		—		54,872		(59,412)		26,722
Gathering, compression, processing, and transportation		384,345		—		11,368		(103,775)		291,938
Production and ad valorem taxes		24,807		—		1,016		—		25,823
Marketing		195,739		—		—		—		195,739
Exploration		1,885		—		—		—		1,885
Impairment of unproved properties		50,536		—		—		—		50,536
Depletion, depreciation, and amortization		195,812		—		32,432		—		228,244
Accretion of asset retirement obligations		656		—		34		—		690
General and administrative		46,420		—		14,455		(845)		60,030
Accretion of contingent acquisition consideration		—		—		3,874		(3,874)		—
Total operating expenses		931,462		—		118,051		(167,906)		881,607
Operating income		97,579		—		111,540		(62,625)		146,494
Other income (expenses):
Equity in earnings of unconsolidated affiliates		—		—		7,862		—		7,862
Interest		(53,498)		—		(11,297)		369		(64,426)
Equity in earnings (loss) of consolidated subsidiaries		(20,128)		—		—		20,128		—
Total other expenses		(73,626)		—		(3,435)		20,497		(56,564)
Income before income taxes		23,953		—		108,105		(42,128)		89,930
Provision for income tax expense		(9,120)		—		—		—		(9,120)
Net income and comprehensive income including noncontrolling interests		14,833		—		108,105		(42,128)		80,810
Net income and comprehensive income attributable to noncontrolling interests		—		—		—		65,977		65,977
Net income and comprehensive income attributable to Antero Resources Corporation	$	14,833		—		108,105		(108,105)		14,833

Schedule of condensed consolidated statement of cash flows

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2017

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Cash flows provided by (used in) operating activities:
Net income including noncontrolling interests	$	268,396		—		75,091		(37,929)		305,558
Adjustment to reconcile net income to net cash provided by operating activities:
Depletion, depreciation, amortization, and accretion		175,830		—		27,536		—		203,366
Accretion of contingent acquisition consideration		(3,526)		—		3,526		—		—
Impairment of unproved properties		26,899		—		—		—		26,899
Commodity derivative gains		(438,775)		—		—		—		(438,775)
Gains on settled commodity derivatives		44,849		—		—		—		44,849
Deferred income tax expense		131,346		—		—		—		131,346
Equity-based compensation expense		19,217		—		6,286		—		25,503
Equity in earnings of unconsolidated affiliates		—		—		(2,231)		—		(2,231)
Equity in (earnings) loss of consolidated subsidiaries		6,300		—		—		(6,300)		—
Distributions of earnings from unconsolidated affiliates		—		—		—		—		—
Distributions from Antero Midstream		30,484		—		—		(30,484)		—
Other		(544)		—		631		—		87
Changes in current assets and liabilities		109,217		—		(11,091)		(789)		97,337
Net cash provided by operating activities		369,693		—		99,748		(75,502)		393,939
Cash flows used in investing activities:
Additions to proved properties		(49,664)		—		—		—		(49,664)
Additions to unproved properties		(55,542)		—		—		—		(55,542)
Drilling and completion costs		(351,943)		—		—		45,018		(306,925)
Additions to water handling and treatment systems		—		—		(36,954)		—		(36,954)
Additions to gathering systems and facilities		—		—		(66,559)		—		(66,559)
Additions to other property and equipment		(590)		—		—		—		(590)
Investments in unconsolidated affiliates		—		—		(159,889)		—		(159,889)
Change in other assets		(6,476)		—		(5,874)		—		(12,350)
Net cash used in investing activities		(464,215)		—		(269,276)		45,018		(688,473)
Cash flows provided by (used in) financing activities:
Issuance of common units by Antero Midstream		—		—		223,119		—		223,119
Borrowings (repayments) on bank credit facility, net		80,000		—		(10,000)		—		70,000
Distributions		—		—		(57,633)		30,484		(27,149)
Employee tax withholding for settlement of equity compensation awards		(1,657)		—		—		—		(1,657)
Other		(1,389)		—		—		—		(1,389)
Net cash provided by financing activities		76,954		—		155,486		30,484		262,924
Net decrease in cash and cash equivalents		(17,568)		—		(14,042)		—		(31,610)
Cash and cash equivalents, beginning of period		17,568		—		14,042		—		31,610
Cash and cash equivalents, end of period	$	—		—		—		—		—

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2018

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Cash flows provided by (used in) operating activities:
Net income including noncontrolling interests	$	14,833		—		108,105		(42,128)		80,810
Adjustment to reconcile net income to net cash provided by operating activities:
Depletion, depreciation, amortization, and accretion		196,468		—		32,466		—		228,934
Accretion of contingent acquisition consideration		(3,874)		—		3,874		—		—
Impairment of unproved properties		50,536		—		—		—		50,536
Commodity derivative gains		(22,437)		—		—		—		(22,437)
Gains on settled commodity derivatives		101,341		—		—		—		101,341
Marketing derivative gains		(94,234)		—		—		—		(94,234)
Gains on settled marketing derivatives		110,042		—		—		—		110,042
Deferred income tax expense		9,120		—		—		—		9,120
Equity-based compensation expense		14,945		—		6,211		—		21,156
Equity in (earnings) loss of consolidated subsidiaries		20,128		—		—		(20,128)		—
Equity in earnings of unconsolidated affiliates		—		—		(7,862)		—		(7,862)
Distributions of earnings from unconsolidated affiliates		—		—		7,085		—		7,085
Distributions from Antero Midstream		36,088		—		—		(36,088)		—
Other		279		—		690		—		969
Changes in current assets and liabilities		65,023		—		(16,519)		7,585		56,089
Net cash provided by operating activities		498,258		—		134,050		(90,759)		541,549
Cash flows used in investing activities:
Additions to unproved properties		(49,569)		—		—		—		(49,569)
Drilling and completion costs		(420,627)		—		—		60,759		(359,868)
Additions to water handling and treatment systems		—		—		(34,197)		(6,088)		(40,285)
Additions to gathering systems and facilities		104		—		(93,774)		—		(93,670)
Additions to other property and equipment		(2,571)		—		—		—		(2,571)
Investments in unconsolidated affiliates		—		—		(17,389)		—		(17,389)
Change in other assets		1,067		—		(1,284)		—		(217)
Net cash used in investing activities		(471,596)		—		(146,644)		54,671		(563,569)
Cash flows provided by (used in) financing activities:
Borrowings (repayments) on bank credit facility, net		(30,000)		—		105,000		—		75,000
Distributions		—		—		(92,003)		36,088		(55,915)
Employee tax withholding for settlement of equity compensation awards		(1,066)		—		(18)		—		(1,084)
Other		(1,235)		—		(34)		—		(1,269)
Net cash provided by (used in) financing activities		(32,301)		—		12,945		36,088		16,732
Net increase (decrease) in cash and cash equivalents		(5,639)		—		351		—		(5,288)
Cash and cash equivalents, beginning of period		20,078		—		8,363		—		28,441
Cash and cash equivalents, end of period	$	14,439		—		8,714		—		23,153