Reportable Segments

6 Months Ended

Jun. 30, 2022

Reportable Segments

Reportable Segments

(16) Reportable Segments

(a) Summary of Reportable Segments

The Company’s operations, which are located in the United States, are organized into three reportable segments: (i) the exploration, development, and production of natural gas, NGLs and oil; (ii) marketing and utilization of excess firm transportation capacity and (iii) midstream services through the Company’s equity method investment in Antero Midstream. Substantially all of the Company’s production revenues are attributable to customers located in the United States; however, some of the Company’s production revenues are attributable to customers who then transport the Company’s production to foreign countries for resale or consumption. These segments are monitored separately by management for performance and are consistent with internal financial reporting. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. Management evaluates the performance of the Company’s business segments based on operating income (loss). 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—Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements.

Exploration and Production

The exploration and production segment is engaged in the development, production, exploration and acquisition of natural gas, NGLs and oil properties located in the Appalachian Basin. The Company targets large, repeatable resource plays where horizontal drilling and advanced fracture stimulation technologies provide the means to economically develop and produce natural gas, NGLs and oil from unconventional formations

Marketing

Where feasible, the Company purchases and sells third-party natural gas and NGLs and markets its excess firm transportation capacity, or engages third parties to conduct these activities on the Company’s behalf, in order to optimize the revenues from these transportation agreements. The Company has entered into long-term firm transportation agreements for a significant portion of its current and expected future production in order to secure guaranteed capacity to favorable markets.

Equity Method Investment in Antero Midstream

The Company receives midstream services through its equity method investment in Antero Midstream. Antero Midstream owns, operates and develops midstream energy infrastructure primarily to service the Company’s production and completion activity in the Appalachian Basin. Antero Midstream’s assets consist of gathering pipelines, compressor stations, interests in processing and fractionation plants and water handling assets. Antero Midstream provides midstream services to Antero Resources under long-term contracts.

(b) Reportable Segments Financial Information

The summarized operating results of the Company’s reportable segments are as follows (in thousands):

	Three Months Ended June 30, 2021
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Sales and revenues:
Third-party	$	322,246		165,453		70		(70)		487,699
Intersegment		(619)		—		232,717		(232,717)		(619)
Total revenue	$	321,627		165,453		232,787		(232,787)		487,080
Operating expenses:
Lease operating	$	21,645		—		—		—		21,645
Gathering, compression, processing and transportation		641,362		—		39,555		(39,555)		641,362
General and administrative		32,177		—		14,251		(14,251)		32,177
Depletion, depreciation and amortization		187,330		—		26,619		(26,619)		187,330
Impairment of oil and gas properties		9,303		—		—		—		9,303
Other		39,219		198,994		963		(963)		238,213
Total operating expenses		931,036		198,994		81,388		(81,388)		1,130,030
Operating income (loss)	$	(609,409)		(33,541)		151,399		(151,399)		(642,950)
Equity in earnings of unconsolidated affiliates	$	17,477		—		21,515		(21,515)		17,477
Capital expenditures for segment assets	$	182,591		—		45,976		(45,976)		182,591

	Three Months Ended June 30, 2022
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Sales and revenues:
Third-party	$	2,095,144		106,150		242		(242)		2,201,294
Intersegment		391		—		228,665		(228,665)		391
Total revenue	$	2,095,535		106,150		228,907		(228,907)		2,201,685
Operating expenses:
Lease operating	$	25,253		—		—		—		25,253
Gathering, compression, processing and transportation		656,212		—		43,299		(43,299)		656,212
General and administrative		44,439		—		16,079		(16,079)		44,439
Depletion, depreciation and amortization		173,395		—		35,675		(35,675)		173,395
Impairment of oil and gas properties		23,363		—		—		—		23,363
Other		86,207		131,298		5,458		(5,458)		217,505
Total operating expenses		1,008,869		131,298		100,511		(100,511)		1,140,167
Operating income (loss)	$	1,086,666		(25,148)		128,396		(128,396)		1,061,518
Equity in earnings of unconsolidated affiliates	$	14,713		—		22,824		(22,824)		14,713
Capital expenditures for segment assets	$	260,864		—		77,767		(77,767)		260,864

	Six Months Ended June 30, 2021
					Equity Method		Elimination of
					Investment in		Intersegment
	Exploration				Antero		Transactions and
	and				Midstream		Unconsolidated		Consolidated
	Production		Marketing		Corporation		Affiliates		Total
Sales and revenues:
Third-party	$	1,361,014		330,243		95		(95)		1,691,257
Intersegment		21		—		456,813		(456,813)		21
Total revenue		1,361,035		330,243		456,908		(456,908)		1,691,278
Operating expenses:
Lease operating		46,192		—		—		—		46,192
Gathering, compression, processing and transportation		1,246,439		—		78,869		(78,869)		1,246,439
General and administrative		76,251		—		32,181		(32,181)		76,251
Depletion, depreciation and amortization		381,356		—		53,469		(53,469)		381,356
Impairment of oil and gas properties		43,365		—		—		—		43,365
Impairment of midstream assets		—		—		1,379		(1,379)		—
Other		85,014		361,071		6,024		(6,024)		446,085
Total operating expenses		1,878,617		361,071		171,922		(171,922)		2,239,688
Operating income (loss)	$	(517,582)		(30,828)		284,986		(284,986)		(548,410)
Equity in earnings of unconsolidated affiliates	$	36,171		—		42,259		(42,259)		36,171
Capital expenditures for segment assets	$	305,749		—		74,365		(74,365)		305,749

	Six Months Ended June 30, 2022
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Sales and revenues:
Third-party	$	2,812,525		175,188		637		(637)		2,987,713
Intersegment		812		—		446,761		(446,761)		812
Total revenue		2,813,337		175,188		447,398		(447,398)		2,988,525
Operating expenses:
Lease operating		43,033		—		—		—		43,033
Gathering, compression, processing and transportation		1,246,490		—		85,311		(85,311)		1,246,490
General and administrative		80,130		—		34,010		(34,010)		80,130
Depletion, depreciation and amortization		341,783		—		63,975		(63,975)		341,783
Impairment of oil and gas properties		45,825		—		—		—		45,825
Other		144,151		230,194		6,552		(6,552)		374,345
Total operating expenses		1,901,412		230,194		189,848		(189,848)		2,131,606
Operating income (loss)	$	911,925		(55,006)		257,550		(257,550)		856,919
Equity in earnings of unconsolidated affiliates	$	39,891		—		46,056		(46,056)		39,891
Capital expenditures for segment assets	$	476,740		—		162,034		(162,034)		476,740

The summarized assets of the Company’s reportable segments are as follows (in thousands):

	As of December 31, 2021
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Investments in unconsolidated affiliates	$	232,399		—		696,009		(696,009)		232,399
Total assets	$	13,864,402		32,126		5,544,001		(5,544,001)		13,896,528

	(Unaudited)
	As of June 30, 2022
							Elimination of
					Equity Method		Intersegment
	Exploration				Investment in		Transactions and
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliates		Total
Investments in unconsolidated affiliates	$	229,095		—		681,560		(681,560)		229,095
Total assets	$	14,156,611		56,089		5,585,501		(5,585,501)		14,212,700