Antero Resources (NYSE:AR) reported record second-quarter production, higher year-over-year adjusted EBITDAX and $220 million of free cash flow, while outlining a multiyear plan to reduce cash costs and optimize its transportation portfolio as regional natural-gas demand expands.
Chief Executive Officer and President Michael Kennedy said the company’s structural changes have reduced earnings volatility. Although Henry Hub natural-gas prices were down 16% from a year earlier, Antero’s adjusted EBITDA increased 57%, supported by production growth, product diversity and lower cash operating expenses.
Cost-reduction plan targets $2 per Mcfe by 2028
Antero expects cash costs to decline by more than 25% from 2025 through year-end 2028, reaching $2 per Mcfe. Kennedy said the effort reflects a transition from an entirely liquids-focused development program and entirely out-of-basin sales model toward a more balanced mix of liquids and dry-gas development, as well as in-basin and out-of-basin sales.
The company expects approximately $300 million of annual margin improvement by 2028. That figure includes:
- $60 million of annualized cash-flow improvement beginning in the third quarter of 2026 after the return threshold for an overriding royalty interest transaction was met and the Martica entity was dissolved on June 30.
- $30 million of annualized cash-flow improvement when a volumetric production payment expires in July 2027.
- $105 million from optimizing liquids transportation commitments, including ethane and LPG transportation, expected by the end of 2028.
- $105 million primarily from optimizing natural-gas firm transportation and increasing dry-gas development.
Kennedy said the $0.70-per-Mcfe cost improvement is expected to be partly offset by approximately $0.35 per Mcfe of lower price realizations as more volumes are sold in basin. Still, the company expects the shift to improve overall natural-gas margins. Management said its $300 million estimate does not include potential premiums from demand-pull projects seeking access to Antero’s transportation routes.
In response to an analyst question, Kennedy said the margin-improvement opportunity could grow to roughly $600 million to $700 million when viewed over a five-year period rather than the three-year horizon through 2028.
Regional demand and transportation optionality
Management emphasized its ability to choose among local and long-haul markets as firm transportation agreements approach renewal. Kennedy said local power and data-center-related projects will need to compete with returns available in broader energy markets, including the LNG corridor.
Justin Fowler, senior vice president of natural-gas marketing, said announced data-center and power projects are forecast to add 19 Bcf per day of U.S. natural-gas demand by 2030, while LNG and Mexico export growth could contribute another 23 Bcf per day. In Appalachia, four publicly announced projects represent more than 9 Bcf per day of demand, with an additional 3 Bcf per day associated with projects the company has discussed but that have not been publicly announced. Fowler said 6 Bcf per day of the regional projects are either under construction or have reached final investment decision.
Antero expects its mix of natural-gas sales to move over time from approximately two-thirds along the LNG fairway and one-third elsewhere toward a more balanced 50/50 split. Krueger said that transition could take about five years.
Kennedy said Antero is evaluating opportunities based on price, timing, execution certainty and counterparty credit. He said a recently announced local project did not meet the company’s return hurdles because of uncertainty around pricing, timing and execution.
Liquids pricing and export outlook
Senior Vice President of Liquids Marketing and Transportation Dave Cannelongo said Antero realized a C3+ price of $44.26 per barrel in the second quarter, up $6.41 per barrel from a year earlier and its highest quarterly realized price since 2022.
Cannelongo said geopolitical uncertainty surrounding Middle East supply and transit routes has supported demand for U.S. LPG. U.S. propane exports averaged 2.03 million barrels per day during the quarter, up 170,000 barrels per day from the prior-year period. He also cited new weekly export highs above 2.6 million barrels per day in May and July, as well as a record monthly normal-butane export level of 815,000 barrels per day in April.
China’s U.S. LPG market share rose from 10% in June 2025 to an average of 51% in the second quarter, based on third-party shipping data, Cannelongo said. He added that Chinese propane dehydrogenation demand increased 40% from April to July and was forecast to rise further in August. The company expects additional LPG terminal expansions through 2027 to add 1 million barrels per day of export capacity.
Dry-gas results, acquisitions and capital plans
Antero reported results from its first dry-gas pad in more than 12 years. Krueger said the pad produced a more than 67% improvement in estimated ultimate recovery and a nearly 30% reduction in cost per foot. Lateral lengths nearly doubled, sand intensity increased to 2,000 pounds per foot from 800 pounds per foot, and cost per foot declined 28% to about $900. Estimated ultimate recovery exceeded 2 Bcf per thousand feet, compared with 1.2 Bcf per thousand feet previously.
The company also closed $315 million of acquisitions in its core West Virginia Marcellus area in July. The assets add about 125 million cubic feet equivalent per day of net production and 15 net drilling locations. Krueger said the transactions were acquired at a combined valuation of about four times EBITDAX and a free-cash-flow yield above 20%.
Antero expects to exit 2026 at roughly 4.5 Bcfe per day of net production, compared with 3.3 Bcfe per day at the beginning of 2025. Management said gross basin production has remained essentially flat at 35.5 Bcf per day during that period.
The company repurchased 1.1 million shares for $38 million during the quarter. Kennedy said the repurchases were accelerated after Antero viewed its share price as attractive relative to its production growth, lower costs, stronger liquids pricing and higher EBITDA.
For capital spending, Kennedy reiterated a $1 billion maintenance capital framework and said 2026 spending is currently expected to be above that level but below the company’s $1.2 billion growth-capital case. Whether Antero completes additional dry-gas pads in the fourth quarter will depend on natural-gas prices and hedging opportunities, he said.
About Antero Resources (NYSE:AR)
Antero Resources Corporation is an independent exploration and production company focused on the development of natural gas, natural gas liquids (NGLs) and oil properties in the Appalachian Basin of the United States. The company’s operations target the Marcellus and Utica shales, where it applies advanced drilling and completion techniques to optimize recovery from its large acreage position. Antero’s portfolio encompasses significant reserves of ethane, propane and other NGLs, alongside dry gas volumes that are positioned to serve both domestic and export markets.
Headquartered in Denver, Colorado, Antero Resources holds approximately 1.8 million net acres of leasehold interests across parts of West Virginia and Ohio.
