Reportable Segments

9 Months Ended

Sep. 30, 2023

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 were attributable to customers located in the United States; however, some of the Company’s production revenues were 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 were 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 operating results and assets of the Company’s reportable segments were as follows (in thousands):

	Three Months Ended September 30, 2022
					Equity Method
	Exploration				Investment in		Elimination of
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliate		Total
Sales and revenues:
Third-party	$	1,904,302		159,985		1,651		(1,651)		2,064,287
Intersegment		337		—		229,383		(229,383)		337
Total revenue		1,904,639		159,985		231,034		(231,034)		2,064,624
Operating expenses:
Lease operating		27,453		—		—		—		27,453
Gathering, compression, processing, transportation and water handling		716,388		—		46,648		(46,648)		716,388
General and administrative		42,903		—		13,587		(13,587)		42,903
Depletion, depreciation and amortization		169,607		—		34,206		(34,206)		169,607
Impairment of property and equipment		33,924		—		—		—		33,924
Other		114,812		185,377		(1,177)		1,177		300,189
Total operating expenses		1,105,087		185,377		93,264		(93,264)		1,290,464
Operating income (loss)	$	799,552		(25,392)		137,770		(137,770)		774,160
Equity in earnings of unconsolidated affiliates	$	14,972		—		24,411		(24,411)		14,972
Capital expenditures for segment assets	$	244,680		—		74,120		(74,120)		244,680

	Three Months Ended September 30, 2023
					Equity Method
	Exploration				Investment in		Elimination of
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliate		Total
Sales and revenues:
Third-party	$	1,072,562		53,068		383		(383)		1,125,630
Intersegment		546		—		263,456		(263,456)		546
Total revenue		1,073,108		53,068		263,839		(263,839)		1,126,176
Operating expenses:
Lease operating		33,484		—		—		—		33,484
Gathering, compression, processing, transportation and water handling		671,886		—		51,914		(51,914)		671,886
General and administrative		58,425		—		17,633		(17,633)		58,425
Depletion, depreciation and amortization		176,259		—		30,745		(30,745)		176,259
Impairment of property and equipment		13,476		—		—		—		13,476
Other		47,372		69,542		1,234		(1,234)		116,914
Total operating expenses		1,000,902		69,542		101,526		(101,526)		1,070,444
Operating income (loss)	$	72,206		(16,474)		162,313		(162,313)		55,732
Equity in earnings of unconsolidated affiliates	$	22,207		—		27,397		(27,397)		22,207
Capital expenditures for segment assets	$	912,046		—		45,286		(45,286)		912,046

	Nine Months Ended September 30, 2022
					Equity Method
	Exploration				Investment in		Elimination of
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliate		Total
Sales and revenues:
Third-party	$	4,716,827		335,173		2,288		(2,288)		5,052,000
Intersegment		1,149		—		676,144		(676,144)		1,149
Total revenue		4,717,976		335,173		678,432		(678,432)		5,053,149
Operating expenses:
Lease operating		70,486		—		—		—		70,486
Gathering, compression, processing, transportation and water handling		1,962,878		—		131,959		(131,959)		1,962,878
General and administrative		123,033		—		47,597		(47,597)		123,033
Depletion, depreciation and amortization		511,390		—		98,181		(98,181)		511,390
Impairment of property and equipment		79,749		—		—		—		79,749
Other		258,963		415,571		5,375		(5,375)		674,534
Total operating expenses		3,006,499		415,571		283,112		(283,112)		3,422,070
Operating income (loss)	$	1,711,477		(80,398)		395,320		(395,320)		1,631,079
Equity in earnings of unconsolidated affiliates	$	54,863		—		70,467		(70,467)		54,863
Capital expenditures for segment assets	$	721,420		—		236,154		(236,154)		721,420

	Nine Months Ended September 30, 2023
					Equity Method
	Exploration				Investment in		Elimination of
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliate		Total
Sales and revenues:
Third-party	$	3,331,130		155,390		929		(929)		3,486,520
Intersegment		1,309		—		780,672		(780,672)		1,309
Total revenue		3,332,439		155,390		781,601		(781,601)		3,487,829
Operating expenses:
Lease operating		91,553		—		—		—		91,553
Gathering, compression, processing, transportation and water handling		1,981,033		—		162,382		(162,382)		1,981,033
General and administrative		169,587		—		53,142		(53,142)		169,587
Depletion, depreciation and amortization		515,247		—		101,174		(101,174)		515,247
Impairment of property and equipment		44,746		—		—		—		44,746
Other		146,536		240,841		8,722		(8,722)		387,377
Total operating expenses		2,948,702		240,841		325,420		(325,420)		3,189,543
Operating income (loss)	$	383,737		(85,451)		456,181		(456,181)		298,286
Equity in earnings of unconsolidated affiliates	$	58,986		—		77,825		(77,825)		58,986
Capital expenditures for segment assets	$	912,046		—		130,025		(130,025)		912,046

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

	As of December 31, 2022
					Equity Method
	Exploration				Investment in		Elimination of
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliate		Total
Investments in unconsolidated affiliates	$	220,429		—		652,767		(652,767)		220,429
Total assets		14,081,077		36,962		5,791,320		(5,791,320)		14,118,039

	(Unaudited)
	As of September 30, 2023
					Equity Method
	Exploration				Investment in		Elimination of
	and				Antero		Unconsolidated		Consolidated
	Production		Marketing		Midstream		Affiliate		Total
Investments in unconsolidated affiliates	$	220,110		—		635,954		(635,954)		220,110
Total assets		13,716,306		20,251		5,758,711		(5,758,711)		13,736,557