Stock Strategist: Antero Gears Up for NGL Growth

[Morningstar Logo]( [Company Site]( [Company News]( [Membership]( [Portfolio]( [Stocks]( [Options]( [Funds]( [ETFs]( [Markets]( [Tools]( [Personal Finance]( [Discuss]( Stock Strategist Antero Gears Up for NGL Growth Its liquids-rich drilling inventory will enable it to outperform peers if NGL prices continue to strengthen. [tab_bar] by Dave Meats, CFA | 3/27/2017 5:30:00 PM [Antero Resources]( [AR]( produces natural gas from the Marcellus Shale in West Virginia and the Utica Shale in eastern Ohio. Henry Hub prices are close to our midcycle estimate of $3 per thousand cubic feet, which is well above the company’s cost of production. Though basis differentials in Appalachia remain far wider than historical norms, Antero is managing this with its extensive firm transport portfolio, enabling it to sidestep takeaway bottlenecks and sell into premium markets outside the basin. Consequently, we expect the company to earn a slight premium over Henry Hub until at least 2020. That’s much better than what most peers can achieve, even after adjusting for the incremental cost of $0.50-$0.60/mcf. Another advantage that separates Antero from other operators is leverage to liquids. Realized prices were disappointing in 2016, but the outlook is brighter as a result of increasing domestic demand, slower production growth, and more exports. We expect the natural gas liquids/crude price ratio to improve gradually over the next two to three years, and Antero, with 40% of the entire basin’s undeveloped liquids-rich acreage, is better positioned to capture this upside than its peers. Roughly 25% of its current production is NGLs and condensate, and half of its 3,500-plus future drilling opportunities will deliver significant liquids volumes (at least 20% of each well’s production). To read more, click [here](. Sponsored Links [Buy a Link Now]( New: ETF Managed Portfolios Center On [MorningstarAdvisor.com]( Tap into the industry's best source of information on ETF strategies for financial advisors. See key performance data, screen for specific strategy attributes, and learn more about this fast-growing area of the investment marketplace. [Click to get started](. Free Issue | Morningstar's Stock Newsletter >> Morningstar StockInvestor is celebrating more than 10 successful years of high-quality stock investing. Its two real-money portfolios have outperformed the S&P 500 since 2001. [Get new ideas for the core of your stock portfolio]( ). Search Most Recent Articles [This Senior-Loan ETF Isn’t the Panacea It May Seem]( [Buying Losers Might Work for Stocks, but Not for Funds]( [3 Struggling Foreign Large-Growth Funds That Should Bounce Back]( Latest Analyst Reports [Apartment Investment and Management Co.]( [Infineon Technologies]( [Capital One Financial]( [JPMorgan Chase]( [Lululemon Athletica]( ABOUT OUR EMAIL TO UNSUBSCRIBE this email address to the Stock Strategist newsletter, please click "reply" and then click "send." This will unsubscribe only this email address to this specific newsletter. All subscription changes will take effect within one business day. Replies are not read by individuals, so please do not use this for queries about Morningstar.com. If you have questions about Morningstar.com or your membership, send a note to [joe@morningstar.com](mailto:%20joe@morningstar.com). ABOUT OUR PRIVACY POLICY Please [click here]( to learn about Morningstar's privacy policy. (c) Copyright 2017. Morningstar, Inc. 22 West Washington Chicago, Illinois, 60602 All rights reserved.