Subsidiary Guarantors (Tables)

6 Months Ended

Jun. 30, 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

June 30, 2018

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	31,083		—		19,525		—		50,608
Accounts receivable, net		23,454		—		12,222		—		35,676
Intercompany receivables		3,856		—		114,072		(117,928)		—
Accrued revenue		321,214		—		—		—		321,214
Derivative instruments		420,842		—		—		—		420,842
Other current assets		6,051		—		539		—		6,590
Total current assets		806,500		—		146,358		(117,928)		834,930
Property and equipment:
Natural gas properties, at cost (successful efforts method):
Unproved properties		2,108,109		—		—		—		2,108,109
Proved properties		12,423,199		—		—		(498,335)		11,924,864
Water handling and treatment systems		—		—		970,863		9,074		979,937
Gathering systems and facilities		17,825		—		2,237,560		—		2,255,385
Other property and equipment		60,693		—		73		—		60,766
		14,609,826		—		3,208,496		(489,261)		17,329,061
Less accumulated depletion, depreciation, and amortization		(3,209,725)		—		(438,185)		—		(3,647,910)
Property and equipment, net		11,400,101		—		2,770,311		(489,261)		13,681,151
Derivative instruments		763,592		—		—		—		763,592
Investments in subsidiaries		(695,059)		—		—		695,059		—
Contingent acquisition consideration		215,835		—		—		(215,835)		—
Investments in unconsolidated affiliates		—		—		358,830		—		358,830
Other assets		31,374		—		20,730		—		52,104
Total assets	$	12,522,343		—		3,296,229		(127,965)		15,690,607
Liabilities and Equity
Current liabilities:
Accounts payable	$	77,723		—		18,754		—		96,477
Intercompany payable		114,072		—		3,856		(117,928)		—
Accrued liabilities		349,647		—		89,182		—		438,829
Revenue distributions payable		211,234		—		—		—		211,234
Derivative instruments		30,661		—		—		—		30,661
Other current liabilities		9,840		—		213		1,479		11,532
Total current liabilities		793,177		—		112,005		(116,449)		788,733
Long-term liabilities:
Long-term debt		3,876,778		—		1,411,566		—		5,288,344
Deferred income tax liability		763,192		—		—		—		763,192
Contingent acquisition consideration		—		—		215,835		(215,835)		—
Other liabilities		41,737		—		5,690		—		47,427
Total liabilities		5,474,884		—		1,745,096		(332,284)		6,887,696
Equity:
Stockholders' equity:
Partners' capital		—		—		1,551,133		(1,551,133)		—
Common stock		3,171		—		—		—		3,171
Additional paid-in capital		5,590,775		—		—		1,006,762		6,597,537
Accumulated earnings		1,453,513		—		—		—		1,453,513
Total stockholders' equity		7,047,459		—		1,551,133		(544,371)		8,054,221
Noncontrolling interests in consolidated subsidiary		—		—		—		748,690		748,690
Total equity		7,047,459		—		1,551,133		204,319		8,802,911
Total liabilities and equity	$	12,522,343		—		3,296,229		(127,965)		15,690,607

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

Condensed Consolidating Statement of Operations and Comprehensive Income

Three Months Ended June 30, 2017

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Revenue and other:
Natural gas sales	$	454,257		—		—		—		454,257
Natural gas liquids sales		170,819		—		—		—		170,819
Oil sales		26,512		—		—		—		26,512
Commodity derivative fair value gains		85,641		—		—		—		85,641
Gathering, compression, water handling and treatment		—		—		193,767		(190,575)		3,192
Marketing		49,968		—		—		—		49,968
Other income		3,911		—		—		(3,911)		—
Total revenue		791,108		—		193,767		(194,486)		790,389
Operating expenses:
Lease operating		17,189		—		41,444		(41,641)		16,992
Gathering, compression, processing, and transportation		353,216		—		9,910		(96,379)		266,747
Production and ad valorem taxes		21,599		—		954		—		22,553
Marketing		77,421		—		—		—		77,421
Exploration		1,804		—		—		—		1,804
Impairment of unproved properties		15,199		—		—		—		15,199
Depletion, depreciation, and amortization		170,670		—		30,512		—		201,182
Accretion of asset retirement obligations		649		—		—		—		649
General and administrative		49,531		—		14,789		(221)		64,099
Accretion of contingent acquisition consideration		—		—		3,590		(3,590)		—
Total operating expenses		707,278		—		101,199		(141,831)		666,646
Operating income		83,830		—		92,568		(52,655)		123,743
Other income (expenses):
Equity in earnings of unconsolidated affiliates		—		—		3,623		—		3,623
Interest		(59,735)		—		(9,015)		168		(68,582)
Equity in earnings (loss) of consolidated subsidiaries		(10,408)		—		—		10,408		—
Total other expenses		(70,143)		—		(5,392)		10,576		(64,959)
Income before income taxes		13,687		—		87,176		(42,079)		58,784
Provision for income tax expense		(18,819)		—		—		—		(18,819)
Net income and comprehensive income including noncontrolling interests		(5,132)		—		87,176		(42,079)		39,965
Net income and comprehensive income attributable to noncontrolling interests		—		—		—		45,097		45,097
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation	$	(5,132)		—		87,176		(87,176)		(5,132)

Condensed Consolidating Statement of Operations and Comprehensive Income

Three Months Ended June 30, 2018

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Revenue and other:
Natural gas sales	$	473,540		—		—		—		473,540
Natural gas liquids sales		255,985		—		—		—		255,985
Oil sales		38,873		—		—		—		38,873
Commodity derivative fair value gains		55,336		—		—		—		55,336
Gathering, compression, water handling and treatment		—		—		250,392		(244,874)		5,518
Marketing		160,202		—		—		—		160,202
Marketing derivative fair value losses		(110)		—		—		—		(110)
Gain on sale of assets		—		—		583		(583)		—
Other income		5,179		—		—		(5,179)		—
Total revenue		989,005		—		250,975		(250,636)		989,344
Operating expenses:
Lease operating		32,312		—		62,218		(64,366)		30,164
Gathering, compression, processing, and transportation		409,708		—		12,400		(114,322)		307,786
Production and ad valorem taxes		24,886		—		1,005		—		25,891
Marketing		213,420		—		—		—		213,420
Exploration		1,471		—		—		—		1,471
Impairment of unproved properties		134,437		—		—		—		134,437
Impairment of gathering systems and facilities		4,470		—		4,614		(583)		8,501
Depletion, depreciation, and amortization		201,617		—		36,433		—		238,050
Accretion of asset retirement obligations		666		—		34		—		700
General and administrative		46,662		—		15,494		(469)		61,687
Accretion of contingent acquisition consideration		—		—		3,947		(3,947)		—
Total operating expenses		1,069,649		—		136,145		(183,687)		1,022,107
Operating income (loss)		(80,644)		—		114,830		(66,949)		(32,763)
Other income (expenses):
Equity in earnings of unconsolidated affiliates		—		—		9,264		—		9,264
Interest		(54,388)		—		(14,628)		(333)		(69,349)
Equity in earnings (loss) of consolidated subsidiaries		(26,926)		—		—		26,926		—
Total other expenses		(81,314)		—		(5,364)		26,593		(60,085)
Income (loss) before income taxes		(161,958)		—		109,466		(40,356)		(92,848)
Provision for income tax benefit		25,573		—		—		—		25,573
Net income (loss) and comprehensive income (loss) including noncontrolling interests		(136,385)		—		109,466		(40,356)		(67,275)
Net income and comprehensive income attributable to noncontrolling interests		—		—		—		69,110		69,110
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation	$	(136,385)		—		109,466		(109,466)		(136,385)

Condensed Consolidating Statement of Operations and Comprehensive Income

Six Months Ended June 30, 2017

(In thousands)

.	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Revenue and other:
Natural gas sales	$	920,921		—		—		—		920,921
Natural gas liquids sales		365,471		—		—		—		365,471
Oil sales		53,472		—		—		—		53,472
Commodity derivative fair value gains		524,416		—		—		—		524,416
Gathering, compression, water handling and treatment		—		—		368,536		(362,740)		5,796
Marketing		115,892		—		—		—		115,892
Other income		8,351		—		—		(8,351)		—
Total revenue and other		1,988,523		—		368,536		(371,091)		1,985,968
Operating expenses:
Lease operating		32,931		—		80,066		(80,454)		32,543
Gathering, compression, processing, and transportation		700,984		—		18,024		(185,432)		533,576
Production and ad valorem taxes		45,574		—		1,772		—		47,346
Marketing		167,414		—		—		—		167,414
Exploration		3,911		—		—		—		3,911
Impairment of unproved properties		42,098		—		—		—		42,098
Depletion, depreciation, and amortization		345,863		—		58,048		—		403,911
Accretion of asset retirement obligations		1,286		—		—		—		1,286
General and administrative		100,587		—		29,246		(1,036)		128,797
Accretion of contingent acquisition consideration		—		—		7,116		(7,116)		—
Total operating expenses		1,440,648		—		194,272		(274,038)		1,360,882
Operating income		547,875		—		174,264		(97,053)		625,086
Other income (expenses):
Equity in earnings of unconsolidated affiliates		—		—		5,854		—		5,854
Interest		(117,738)		—		(17,851)		337		(135,252)
Equity in earnings (loss) of consolidated subsidiaries		(16,708)		—		—		16,708		—
Total other expenses		(134,446)		—		(11,997)		17,045		(129,398)
Income before income taxes		413,429		—		162,267		(80,008)		495,688
Provision for income tax expense		(150,165)		—		—		—		(150,165)
Net income and comprehensive income including noncontrolling interests		263,264		—		162,267		(80,008)		345,523
Net income and comprehensive income attributable to noncontrolling interests		—		—		—		82,259		82,259
Net income and comprehensive income attributable to Antero Resources Corporation	$	263,264		—		162,267		(162,267)		263,264

Condensed Consolidating Statement of Operations and Comprehensive Income

Six Months Ended June 30, 2018

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Revenue and other:
Natural gas sales	$	971,203		—		—		—		971,203
Natural gas liquids sales		490,155		—		—		—		490,155
Oil sales		69,146		—		—		—		69,146
Commodity derivative fair value gains		77,773		—		—		—		77,773
Gathering, compression, water handling and treatment		—		—		479,983		(469,530)		10,453
Marketing		304,591		—		—		—		304,591
Marketing derivative fair value gains		94,124		—		—		—		94,124
Gain on sale of assets		—		—		583		(583)		—
Other income		11,054		—		—		(11,054)		—
Total revenue and other		2,018,046		—		480,566		(481,167)		2,017,445
Operating expenses:
Lease operating		63,574		—		117,090		(123,778)		56,886
Gathering, compression, processing, and transportation		794,053		—		23,768		(218,097)		599,724
Production and ad valorem taxes		49,693		—		2,021		—		51,714
Marketing		409,159		—		—		—		409,159
Exploration		3,356		—		—		—		3,356
Impairment of unproved properties		184,973		—		—		—		184,973
Impairment of gathering systems and facilities		4,470		—		4,614		(583)		8,501
Depletion, depreciation, and amortization		397,429		—		68,865		—		466,294
Accretion of asset retirement obligations		1,322		—		68		—		1,390
General and administrative		93,082		—		29,949		(1,314)		121,717
Accretion of contingent acquisition consideration		—		—		7,821		(7,821)		—
Total operating expenses		2,001,111		—		254,196		(351,593)		1,903,714
Operating income		16,935		—		226,370		(129,574)		113,731
Other income (expenses):
Equity in earnings of unconsolidated affiliates		—		—		17,126		—		17,126
Interest		(107,886)		—		(25,925)		36		(133,775)
Equity in earnings (loss) of consolidated subsidiaries		(47,054)		—		—		47,054		—
Total other expenses		(154,940)		—		(8,799)		47,090		(116,649)
Income before income taxes		(138,005)		—		217,571		(82,484)		(2,918)
Provision for income tax benefit		16,453		—		—		—		16,453
Net income (loss) and comprehensive income (loss) including noncontrolling interests		(121,552)		—		217,571		(82,484)		13,535
Net income and comprehensive income attributable to noncontrolling interests		—		—		—		135,087		135,087
Net income (loss) and comprehensive income (loss) attributable to Antero Resources Corporation	$	(121,552)		—		217,571		(217,571)		(121,552)

Schedule of condensed consolidated statement of cash flows

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 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	$	263,264		—		162,267		(80,008)		345,523
Adjustment to reconcile net income to net cash provided by operating activities:
Depletion, depreciation, amortization, and accretion		347,149		—		58,048		—		405,197
Accretion of contingent acquisition consideration		(7,116)		—		7,116		—		—
Impairment of unproved properties		42,098		—		—		—		42,098
Commodity derivative fair value gains		(524,416)		—		—		—		(524,416)
Gains on settled commodity derivatives		75,913		—		—		—		75,913
Deferred income tax expense		150,165		—		—		—		150,165
Equity-based compensation expense		39,241		—		13,237		—		52,478
Equity in earnings of unconsolidated affiliates		—		—		(5,854)		—		(5,854)
Equity in (earnings) loss of consolidated subsidiaries		16,708		—		—		(16,708)		—
Distributions of earnings from unconsolidated affiliates		—		—		5,820		—		5,820
Distributions from Antero Midstream		63,145		—		—		(63,145)		—
Other		(795)		—		1,267		—		472
Changes in current assets and liabilities		106,797		—		(6,963)		356		100,190
Net cash provided by operating activities		572,153		—		234,938		(159,505)		647,586
Cash flows used in investing activities:
Additions to proved properties		(179,318)		—		—		—		(179,318)
Additions to unproved properties		(129,876)		—		—		—		(129,876)
Drilling and completion costs		(725,668)		—		—		96,360		(629,308)
Additions to water handling and treatment systems		—		—		(95,451)		—		(95,451)
Additions to gathering systems and facilities		—		—		(155,365)		—		(155,365)
Additions to other property and equipment		(6,564)		—		—		—		(6,564)
Investments in unconsolidated affiliates		—		—		(191,364)		—		(191,364)
Change in other assets		(7,648)		—		(4,804)		—		(12,452)
Other		2,156		—		—		—		2,156
Net cash used in investing activities		(1,046,918)		—		(446,984)		96,360		(1,397,542)
Cash flows provided by (used in) financing activities:
Issuance of common units by Antero Midstream		—		—		246,585		—		246,585
Borrowings (repayments) on bank credit facility, net		490,000		—		95,000		—		585,000
Distributions		—		—		(125,014)		63,145		(61,869)
Employee tax withholding for settlement of equity compensation awards		(7,501)		—		(932)		—		(8,433)
Other		(2,645)		—		(102)		—		(2,747)
Net cash provided by financing activities		479,854		—		215,537		63,145		758,536
Net decrease in cash and cash equivalents		5,089		—		3,491		—		8,580
Cash and cash equivalents, beginning of period		17,568		—		14,042		—		31,610
Cash and cash equivalents, end of period	$	22,657		—		17,533		—		40,190

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2018

(In thousands)

	Parent (Antero)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries (Antero Midstream)		Eliminations		Consolidated
Cash flows provided by (used in) operating activities:
Net income (loss) including noncontrolling interests	$	(121,552)		—		217,571		(82,484)		13,535
Adjustment to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation, amortization, and accretion		398,751		—		68,933		—		467,684
Accretion of contingent acquisition consideration		(7,821)		—		7,821		—		—
Impairment of unproved properties		184,973		—		—		—		184,973
Impairment of gathering systems and facilities		4,470		—		4,614		(583)		8,501
Commodity derivative fair value gains		(77,773)		—		—		—		(77,773)
Gains on settled commodity derivatives		197,225		—		—		—		197,225
Marketing derivative fair value gains		(94,124)		—		—		—		(94,124)
Gains on settled marketing derivatives		94,158		—		—		—		94,158
Deferred income tax benefit		(16,453)		—		—		—		(16,453)
Gain on sale of assets		—		—		(583)		583		—
Equity-based compensation expense		28,149		—		12,078		—		40,227
Equity in (earnings) loss of consolidated subsidiaries		47,054		—		—		(47,054)		—
Equity in earnings of unconsolidated affiliates		—		—		(17,126)		—		(17,126)
Distributions of earnings from unconsolidated affiliates		—		—		17,895		—		17,895
Distributions from Antero Midstream		74,647		—		—		(74,647)		—
Other		547		—		1,385		—		1,932
Changes in current assets and liabilities		14,510		—		(157)		3,933		18,286
Net cash provided by operating activities		726,761		—		312,431		(200,252)		838,940
Cash flows used in investing activities:
Additions to unproved properties		(87,861)		—		—		—		(87,861)
Drilling and completion costs		(887,459)		—		—		134,678		(752,781)
Additions to water handling and treatment systems		—		—		(49,054)		(9,073)		(58,127)
Additions to gathering systems and facilities		—		—		(206,753)		—		(206,753)
Additions to other property and equipment		(3,502)		—		—		—		(3,502)
Investments in unconsolidated affiliates		—		—		(56,297)		—		(56,297)
Change in other assets		2,051		—		(9,077)		—		(7,026)
Net cash used in investing activities		(976,771)		—		(321,181)		125,605		(1,172,347)
Cash flows provided by (used in) financing activities:
Borrowings (repayments) on bank credit facility, net		270,000		—		215,000		—		485,000
Distributions		—		—		(193,670)		74,647		(119,023)
Employee tax withholding for settlement of equity compensation awards		(6,649)		—		(1,318)		—		(7,967)
Other		(2,336)		—		(100)		—		(2,436)
Net cash provided by (used in) financing activities		261,015		—		19,912		74,647		355,574
Net increase (decrease) in cash and cash equivalents		11,005		—		11,162		—		22,167
Cash and cash equivalents, beginning of period		20,078		—		8,363		—		28,441
Cash and cash equivalents, end of period	$	31,083		—		19,525		—		50,608