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Antero Resources (NYSE: AR) is sitting on a potential gold mine of liquids-rich natural gas in the Marcellus and Utica shale region. The company's resource-filled position has already fueled its ascension up the leaderboard to become the nation's fifth-largest gas producer and the leader in natural gas liquids (NGLs). Unfortunately, the driller hasn't been able to fully cash in on that production because it's lacked the infrastructure needed to take its output to premium-priced markets.
Those infrastructure bottlenecks, however, are beginning to go away. That's because midstream giant Energy Transfer (NYSE: ET) recently completed some critical projects. As a result, Antero Resources now has the access it needs to maximize the value of its production.
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Cashing in on its market access for NGLs
Antero Resources recently reported strong underlying first-quarter numbers. CEO Paul Rady discussed the factors fueling the company's success on the accompanying conference call. He pointed out that "we began shipping volumes for the first time in February through our commitment on the Mariner East 2 pipeline," which is operated by Energy Transfer and moves NGLs from processing facilities in the Marcellus region to Philadelphia, where Energy Transfer's Marcus Hook Terminal can export them to the global markets. According to Rady, "We have 50,000 barrels a day of propane and butane capacity contracted on the pipeline, which equates to about one-third of the available capacity on ME2 today. As the largest shipper on ME2 and with approximately 50% of our NGL production being sold into premium international markets today, we are well positioned to deliver peer-leading NGL price realizations going forward."
Rady further noted that the company is already experiencing the benefits of this pipeline. He stated on the call that it "boosted cash flow by approximately $20 million during the first quarter." That number should improve as the company ramps up its exports. Antero only exported 29% of its volumes during the quarter but expected that number to reach 50% once it hits full stride.
Locked in on natural gas
In addition to securing space on Energy Transfer's Mariner pipeline systems for its NGL volumes, Antero locked up capacity on several other pipelines for its natural gas volumes. The company, for example, is a major shipper on Energy Transfer's recently completed Rover Pipeline system, which moves gas to premium markets across the U.S. as well as in Canada.