Segment Information

3 Months Ended

Mar. 31, 2020

(17) Segment Information

See Note 2(l) to the unaudited condensed consolidated financial statements for a description of the Company’s determination of its reportable segments. Revenues from gathering and processing and water handling and treatment operations were primarily derived from intersegment transactions for services provided to the Company’s exploration and production operations prior to the closing of the Transactions. Through March 12, 2019, the results of Antero Midstream Partners were included in the consolidated financial statements of Antero Resources. Effective March 13, 2019, the results of Antero Midstream Partners are no longer consolidated in Antero Resources’ results; however, the Company’s segment disclosures include the results of our unconsolidated affiliates due to their significance to the Company’s operations. See Note 3 to the unaudited condensed consolidated financial statements for further discussion on the Transactions. Marketing revenues are primarily derived from activities to purchase and sell third-party natural gas and NGLs and to market excess firm transportation capacity to third parties.

Operating segments are evaluated based on their contribution to consolidated results, which is primarily determined by the respective operating income (loss) of each segment. General and administrative expenses were allocated to the midstream segment based on the nature of the expenses and on a combination of the segments’ proportionate share of the Company’s consolidated property and equipment, capital expenditures, and labor costs, as applicable. General and administrative expenses related to the marketing segment are not allocated because they are immaterial. Other income, income taxes, and interest expense are primarily managed and evaluated on a consolidated basis. Intersegment sales were transacted at prices which approximate market. Accounting policies for each segment are the same as the Company’s accounting policies described in Note 2 to the unaudited condensed consolidated financial statements.

The operating results and assets of the Company’s reportable segments were as follows for the three months ended March 31, 2019 and 2020 (in thousands):


					Equity Method		Elimination of
					Investment in		intersegment
	Exploration				Antero		transactions and
	and				Midstream		unconsolidated		Consolidated
	production		Marketing		Corporation		affiliates		total
Three months ended March 31, 2019:
Sales and revenues:
Third-party	$	941,635		91,186		4		—		1,032,825
Intersegment		1,758		—		54,104		(51,280)		4,582
Total	$	943,393		91,186		54,108		(51,280)		1,037,407

Operating expenses:
Lease operating	$	42,969		—		11,815		(13,052)		41,732
Gathering, compression, processing, and transportation		535,015		—		2,935		(113,421)		424,529
Impairment of oil and gas properties		81,244		—		—		—		81,244
Impairment of midstream assets		—		—		6,982		—		6,982
Depletion, depreciation, and amortization		218,494		—		7,650		14,057		240,201
General and administrative		49,908		—		2,184		16,110		68,202
Other		44,137		163,084		1,291		(288)		208,224
Total		971,767		163,084		32,857		(96,594)		1,071,114
Operating income (loss)	$	(28,374)		(71,898)		21,251		45,314		(33,707)
Equity in earnings of unconsolidated affiliates	$	1,817		—		2,880		9,384		14,081
Investments in unconsolidated affiliates	$	1,989,612		—		1,153,943		(1,153,943)		1,989,612
Segment assets	$	17,263,369		25,361		6,660,325		(6,660,325)		17,288,730
Capital expenditures for segment assets	$	399,278		—		16,005		56,650		471,933


					Equity Method		Elimination of
					Investment in		intersegment
	Exploration				Antero		transactions and
	and				Midstream		unconsolidated		Consolidated
	production		Marketing		Corporation		affiliates		total
Three months ended March 31, 2020:
Sales and revenues:
Third-party	$	1,270,234		46,073		—		—		1,316,307
Intersegment		798		—		243,708		(243,708)		798
Total	$	1,271,032		46,073		243,708		(243,708)		1,317,105

Operating expenses:
Lease operating	$	25,644		—		—		—		25,644
Gathering, compression, processing, and transportation		588,624		—		55,908		(55,908)		588,624
Impairment of oil and gas properties		89,220		—		—		—		89,220
Impairment of midstream assets		—		—		664,544		(664,544)		—
Depletion, depreciation, and amortization		199,677		—		27,343		(27,343)		199,677
General and administrative		31,221		—		10,199		(10,199)		31,221
Other		27,013		93,273		4,878		(4,878)		120,286
Total		961,399		93,273		762,872		(762,872)		1,054,672
Operating income (loss)	$	309,633		(47,200)		(519,164)		519,164		262,433
Equity in earnings (loss) of unconsolidated affiliates	$	(128,055)		—		19,077		(19,077)		(128,055)
Investments in unconsolidated affiliates	$	291,989		—		716,778		(716,778)		291,989
Segment assets	$	14,516,150		9,639		5,781,359		(5,781,359)		14,525,789
Capital expenditures for segment assets	$	311,611		—		67,983		(67,983)		311,611