Q1 2025 Antero Resources Corp Earnings Call
Greetings and welcome to the inter Resources' first quarter 2025 earnings conference call.
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A brief question and answer session will follow the formal presentation.
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It is now my pleasure to introduce your host Brendon Cougar Vice President of finance. Thank you Sir you may begin.
Thank you and good morning, Thank you for joining us for Antero <unk> first quarter 2025, Investor Conference call, we'll spend a few minutes going through the financial and operating highlights and then we'll open it up for Q&A.
I would also like to direct you to the homepage of our website at Www Dot Antero resources Dot Com, where we have provided a separate earnings call presentation that will be reviewed during today's call.
Today's call may contain certain non-GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such measures.
Reconciliations to the most comparable GAAP financial measures.
Paul: Joining me on the call today are Paul ready, Chairman, CEO and President Michael Kennedy CFO, Dave can't along ago, Senior Vice President of liquids marketing and transportation and Justin Fowler Senior Vice President of natural gas marketing I will now turn the call over to Paul.
Speaker Change: Thanks, Brendan and good morning, everyone.
Paul: Well this year is off to an excellent start.
Paul: Let me begin with slide number three titled drilling and completion efficiencies, which details the drivers behind that are exceptional performance during the first quarter.
Paul: Starting with the chart on the left side of the slide we increased our completed feet per day to an average of 2400 52 feet.
Paul: This represents an increase of 15% from the 20 140 feet per day average in 2023.
Paul: On the right side of the slide we highlight our completion stages per day.
Paul: During the first quarter, we averaged 12.3 completion stages per day.
Paul: This continues the upward trend when comparing to our performance the past two years.
Paul: Notably we set a new company record in the first quarter, achieving 18 completion stages per day on one pad in March.
Paul: Lastly, shown in the left and the yellow bars at both charts. We included recent records announced by our natural gas peers to provide context on just how efficient our drilling and completion teams are today.
Paul: This performance allows us to run a very lean program with just two rigs on average and just over one completion crew on average in order to hold flat three four bcf equivalent per day of production.
Paul: Yeah.
Paul: Now, let's turn to slide number four to discuss our updated hedges.
Paul: During the quarter, we added new wide natural gas collars for 2026.
Paul: The volumes hedged tied to the expected volumes from our lean gas development, which is the.
Paul: Leaner Btu, so approximately 1200 btu or less.
Paul: That is planned through the end of 2026. These white collars lock in attractive rates of return with a floor price of $3 seven.
Paul: And a ceiling of $5 96.
Paul: Hedging these lean gas pads allows for continuity in our development planning, which is essential to maintaining our capital efficiencies.
Paul: With these two hedges in place we have hedged approximately 9% of our expected natural gas volumes through 2026.
Dave: Now to touch on the current liquids and NGL fundamentals I'm going to turn it over to our senior Vice President of liquids marketing and transportation, Dave can long ago for his comments.
Dave: Thanks, Paul.
Dave: Let's start on slide number five titled NGL pricing premium and.
Dave: Antero is fundamental NGL position on pricing outlook remains strong. This strength is highlighted by our previously stated guidance for a $1 50 to $2 50 per barrel premium to Mont Belvieu on our realized <unk> plus NGL prices.
Dave: As expected premium is an improvement to the $1 41 per barrel premium that we achieved in 2024.
Dave: Our outlook is supported by the strategic decision, we made to enter into firm sales agreements on 90% of our LPG volumes for 2025 at double digits cents per gallon premiums to Mont Belvieu.
Dave: In addition to selling our LPG at the Marcus Hook terminal along the East Coast has several competitive advantages first it is geographically advantaged to Europe and Atlantic Basin markets.
Dave: Second we sell our LPG at the dock to the highest bidder meeting the ultimate destination does not directly impact us and third Marcus hook export customers do not have cancellation rights. So the volumes that we've contracted to date are final.
Dave: The result of these attributes is that regardless of the extent of current tariff negotiations interros marketing position and strategy helps limit any meaningful impact from the tariffs.
Dave: Regarding our exposure to China, we did a look back at Antero as historical out LPG export cargoes and found that only two cargoes were directed by our customers to China during the entire year of 2024 or less than 4% of our overall <unk> plus NGL volumes.
This year no antero volumes have gone to China to date and not our contracted to do so for the remainder of the year as.
Dave: As I just mentioned, we sell our LPG or the doctor customers offering the highest price.
Dave: That very few cargos went to China going back to the beginning of 2024, even before the current trade policies went into effect shows that the Chinese market is rarely the best bid for Antero as barrels out of the east coast.
Dave: Next I'd like to discuss our outlook for the global LPG market first I'll note that there are recent reports, suggesting that China is likely to exclude ethane and LPG from their tariffs, which is what they have done over the last five years, we will watch for updated developments there.
Dave: Regardless, given how tight the global LPG supply demand balances, we anticipate that global trade patterns will adjust to absorb any displaced U S barrels.
Dave: A reshuffle of LPG trade flows could mean increased U S. LPG volumes heading to Europe, Southeast Asia, India, Japan, and South Korea. This would then require increased middle East, Russia, and Africa, and LPG supplies to be directed into China.
Dave: We'll ship tracking data is already demonstrating some of this reshuffle with increased flows from the U S and the Japan and South Korea, most market participants and consultants believe that U S. LPG barrels confined sufficient markets outside of China in the event that escalated tariffs continue.
Dave: And the broader LPG export market, we have not heard of any cancellations at the major U S. Gulf coast export terminals since the tariffs came into effect in demand and pricing for our remaining volumes. In 2025 has remained essentially unchanged from prior months slide.
Dave: Slide number six highlights U S. Propane exports as you can see exports year to date, including the most recent weeks in April are at record high levels and 7% above the year ago period, providing additional proof that we have not seen any impact to U S propane demand.
Dave: With that I'll now turn it over to our senior Vice President of natural gas marketing, Justin <unk> to discuss the natural gas market. Thanks.
Justin: Thanks, Dave.
Justin: I'll start on slide number seven which illustrates the positive impact on Gulf coast pricing that we've experienced due.
Justin: Due to the faster than expected ramp of venture Global's Plaquemines LNG facility.
Justin: The chart at the top of the slide illustrates the pace at which <unk> ramped up as compared to venture Global's loss LNG facility calculus, you pass.
Justin: The faster than anticipated startup led to higher demand along our PGP 500, L firm transport and therefore higher pricing.
Justin: Looking at the <unk> five on a dollar basis, which is the basis hub with the largest exposure to <unk> quicker than anticipated ramp of the facility has already lifted balance of the year 2025, and calendar 2026 pricing by <unk> 11 per btu compared to strip pricing before the <unk>.
Justin: <unk>.
Justin: Today the facility is exporting an average of over two one bcf per day.
Justin: Venture Global has indicated that they anticipate this increasing towards two seven Bcf per day in the coming months as the facility continues to commission additional blocks.
Speaker Change: As a reminder, antero has 570 Mcf per day of firm transportation or approximately 25% of our gas production on the TGT 500 L. Paul.
Speaker Change: Next I'd like to turn to slide number eight titled AAR position for data center natural gas demand surge.
Speaker Change: The Appalachia region, and <unk> have quickly become a focal point for natural gas fired power generation data centers and behind the meter projects.
Speaker Change: These projects will require a significant amount of natural gas supply for decades.
Speaker Change: The extensive resource base of the Marcellus and Utica shales provides certainty of long term natural gas supply.
Speaker Change: Ill supportive state regulations are leading the fast approvals and attractive incentives to build in the region.
Speaker Change: Recent announcements include the Homer city power plant outside of Pittsburgh, and the CTV shape, how our plant located within our development footprint in Doddridge County West Virginia.
Speaker Change: Combined these two natural gas power plants will deliver over six five gigawatts of power driving and nearly one two bcf increase and regional natural gas demand.
Speaker Change: Staying in West Virginia. This month, the legislature passed the micro grid, Bill and initiatives champion by West, Virginia Governor Patrick Morrissey.
Speaker Change: Bill aims to attract data centers into the state and incentivize them to do self sufficient onsite power generation.
Speaker Change: The Bill was signed into law by the Governor just yesterday.
Speaker Change: Through our extensive resource base integrated midstream assets and firm transportation commitments to the Gulf Coast LNG corridor, we are uniquely positioned to participate in both the LNG export growth along the Gulf coast and the expected growth in regional power demand through data center expansion.
Speaker Change: <unk>.
Antero: Haynesville producers can mentioned proximity to LNG, while northeast producers can mentioned power exposure, but antero is the only company that is positioned for both.
Antero: With that I will turn it over to Mike Kennedy CFO of Antero resources.
Mike Kennedy: Thanks, Justin.
Speaker Change: In the first quarter, we executed on our plan delivering production of three four Bcf per day at the midpoint of our guidance drilling.
Speaker Change: Drilling and completion capital is just $157 million or 23% of our full year guidance, we generated $337 million of free cash flow, which benefited from strong natural gas and NGL premiums relative to their benchmarks.
Speaker Change: We used this free cash flow to accelerate our share repurchase program repurchasing $92 million of stock or nearly 1% of our shares outstanding year to date in.
Speaker Change: In addition, we continue to focus on debt reduction reducing debt by over $200 million during the first quarter.
Speaker Change: We entered 2025 in the strongest position in company history, our low absolute debt and peer leading capital efficiency provide us with flexibility in our shareholder return strategy.
Speaker Change: With this flexibility, we can pivot between share buybacks or debt reduction depending on market conditions.
Speaker Change: This was highlighted by our activity year to date, when we saw an opportunity to between a share value and market fundamentals and thus we accelerated our buyback program ahead of the timeline we had previously targeted.
Speaker Change: Let's look at the attributes that put us in such a compelling position as we enter this new cycle, starting with slide number nine titled leading capital efficiency and free cash flow breakeven levels.
Speaker Change: The chart on the left hand side of the slide highlights our capital efficiency relative to our peers Antero has the lowest maintenance capital per Mcf of its peer group at just 54 per Mcf.
Speaker Change: This is 27% below the peer average of 74 per Mcf.
Speaker Change: The chart on the right shows unhedged free cash flow breakeven prices for Antero and our peer group and.
Speaker Change: Antero has the lowest breakeven at $2 29 per Mcf, driven by our low maintenance capital requirements and our ability to capture premium pricing that both Dave and Justin detailed earlier.
I'll close my comments on slide number 10, titled low debt balance provides flexibility.
Speaker Change: During the first quarter, we called the remaining $97 million of our 2026 senior notes pushing our nearest maturity out to 2029.
Speaker Change: At March 31, our total debt is just $1 3 billion.
Speaker Change: Which is the lowest debt level among our peers.
Speaker Change: Based on today's current strip our guidance suggests substantial free cash flow in 2025 and beyond.
Speaker Change: While we will target a 50 50 debt reduction and share buyback strategy, we intend to remain opportunistic pending market fluctuations.
Speaker Change: With that I will now turn the call over to the operator for questions.
Speaker Change: Thank you we will now be conducting a question and answer session.
Speaker Change: I would like to ask a question. Please press star one on your telephone keypad.
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Speaker Change: All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker Change: Thank you. Our first question comes from the line of Arun.
Joe: Joe <unk> with Jpmorgan. Please proceed with your question.
Arun: Yeah. Good morning, Dave I wanted to see if you could maybe clarify.
Arun: The marketing agreement for LPG is.
Arun: You mentioned, 90% of your.
Arun: LPG volumes are locked in with film firm sales at a double digit cents per gallon premium to Mont Belvieu.
Arun: So a couple of questions around that would be does this reflect your total volumes or is that just your exported volumes because as you know in your weekly as you continue to highlight and annual mix of 50% international versus domestic.
Arun: Yes, Arun so that 90% that I was speaking to is our export volumes, but when you look at our domestic sales as well.
Arun: Those are all locked in essentially a 90 plus percent level. In addition to that so really our entire ctrip plus barrel isn't that high over 90%.
Arun: Locked in premiums to Bellevue for the year, which is why we felt so confidence in the guidance range that we gave back in February.
Speaker Change: Is there a general cost to enter into these agreements or is it just youre, giving the surety of supply hence you get those premiums.
Arun: Yes on the domestic side.
Arun: Very common for those to be term deals that people locked in on an annual basis. Typically that's an April to March contract year, and then on the export side as we've talked about in prior years, sometimes we take a approach where we go and term up a lot of the volumes. Other times, we go into the spot market, we really try and be opportunistic with what we see as the fundamentals.
Arun: And try and make the right call. It is going to maximize the value and that you've kind of seen us do that three of the six years, we've been on Mariner 2019, 'twenty four and 'twenty five we've.
Arun: We've really kind of.
Arun: Called those those market dynamics correctly and been able to optimize our price realization. So we took advantage of some strength that was in the market early in 2025 to lock in some strong premiums and obviously had we not done that the spot market has been been much weaker.
Arun: Here in the mid single digit so just trying to make the right calls at the right times when the market provides those opportunities.
Speaker Change: Great and maybe my follow up.
Speaker Change: For you Paul.
Arun: Sure.
Arun: Recently been.
Arun: Some stepped up M&A as we think about some of the gas.
Arun: Levered producers and U S shale and we're hearing about.
Arun: Maybe some more deal potential as the year kind of plays on so I wanted to see if you could talk a little bit about how youre thinking about inorganic investment opportunities.
Arun: You know it within U S shale.
Arun: Yes, Ron this is Mike we have obviously have a very strong organic leasing program.
Arun: Adding locations at less than $1 million I think you saw in the first quarter was 850000.
Arun: Many of the leases acres in and amongst in exactly right next to our current development.
Arun: So as long as that's available to us that's what M&A would have to compete with.
Arun: And as I mentioned to our development program is so strong just because of our infrastructure our midstream RFT everything we've talked about on today's call.
Arun: And it really is just developing that next pad over and it's a contiguous acreage position. So any M&A would have to compete with that and Thats a very much a challenge to see in addition to that you look at our inventory it's over 20 years.
Arun: Half of it's liquid half of its dry gas next 10 years liquids after that dry gas. So we have substantial length in our in our inventory. So once again, there's no real need to do M&A, if it's ever opportunistic and very accretive to us. It makes sense for us of course, we would look at it but there's no need for M&A for Antero.
Speaker Change: Great. Thanks, a lot.
Arun: Okay.
John Freeman: Our next question comes from the line of John Freeman with Raymond James. Please proceed with your question.
John Freeman: Thanks, Good morning, guys.
Speaker Change: I first wanted to touch base on.
John Freeman: On the buybacks as you highlighted Mike Yao.
John Freeman: <unk> stepped into that earlier than sort of the original plan.
John Freeman: It's taken them a $500 million.
John Freeman: The debt and then go into that kind of 50, 50 debt reduction or buyback. So I just want to make sure that I understood. It right Mike does right now.
John Freeman: Plan now going forward that its going to be kind of at 50, 50 sort of debt reduction versus versus buybacks from this point forward as opposed to waiting until a full 500 million been taken down.
John Freeman: Yeah, John Yeah, we're opportunistic and we're trying to be countercyclical, we didn't think we'd get this opportunity to buy shares at these prices I mean, when you look at our fundamental outlook, it's as strong as ever.
John Freeman: The shares valued at where it is today is an opportunity for us.
John Freeman: So that's why we pivoted towards share buybacks.
John Freeman: We have a lot of visibility into our business and our cash flow generation and we don't really have any debt.
John Freeman: So.
John Freeman: Little debt no maturities till 'twenty nine so we've never really been in a position where we can see our cash flow generation not seem to be reflected in the market and so we're able to capitalize on that but.
John Freeman: The opportunity is more towards the debt side.
John Freeman: We could pivot towards that but at todays stock levels and share and value levels. We pivoted towards his 50 <unk> strategy basically in March.
John Freeman: That's great yeah that makes sense.
John Freeman: Follow up question just on <unk>.
John Freeman: On the hedging strategy and y'all did sort of indicate our move in this direction with maybe looking at some collars in 2026.
John Freeman: I understand that you know, they're pretty wide collars, so youre still getting to participate in upside, but just one idea is should we expect.
John Freeman: You all will continue to increase that that hedge percentages in 2026 or is this sort of more opportunistic or kind of one off or is there some sort of change in the hedging strategy that we should think about going forward yes.
John Freeman: Yes, no change still very bullish we have four pads.
John Freeman: That where that lean gas a Paul mentioned ones on right now one comes on in the third quarter and then too.
John Freeman: The early part of 'twenty six that we talked about earlier, leading really like $2 75, plus to really generate high returns for us.
John Freeman: Never in our careers have we seen.
John Freeman: Future strip price with a four handle on it and you get a two to a greater call SKU on that.
John Freeman: So to be able than lock in at $3 and I think today, it's three by $7 plus.
John Freeman: That's quite the dynamic to be able to lock in those returns on those pads not have to have docs like we did last year.
John Freeman: Continue to produce producers out at a high returns high cash flows and still have upside to $7 40. So we're still very bullish that's just quite a dynamic for us with the call SKU and the elevated pricing in 'twenty six.
John Freeman: Thanks I appreciate it.
John Freeman: Thank you.
Speaker Change: Our next question comes from the line of Doug Leggate with Wolfe Research. Please proceed with your question.
Speaker Change: Good morning. This is John Abbott on for Doug Leggate.
Speaker Change: We want to start off going back to the capital returns here I mean, you accelerated the buyback earlier.
Speaker Change: I mentioned on one of the previous questions and you want to be opportunistic.
Speaker Change: So I guess the question is you see the value in buying your shares now under the strategy is there a point, where you would probably not buy shares.
Speaker Change: In other words, you generate more cash and higher gas prices. So do you buy more shares reduced where do you concern you keep cash on the balance sheet. How do you think about that dynamic going forward for buybacks.
Speaker Change: Yes, no we always see value in buying back our shares and there is a tremendous company will always be interested in buying back shares but.
Speaker Change: It's common sense, what we found is when you have counter cyclical that's when you generate the highest returns and buying them back and then when your share price is at a high point or higher point buying down debt always accrues to the equity as well. So it's kind of just the balance sheet, just trying to be opportunistic buy buy low when.
Speaker Change: When you can.
Speaker Change: I appreciate it.
Speaker Change: I appreciated the discussion during the opening remarks on the NGL macro.
Speaker Change: Maybe a couple of questions with respect to Ngls, maybe with regards to your inventory.
Speaker Change: How do you would you sort of parse out the breakeven of your NGL inventory I mean, not all not all acreage is sort of the same.
Speaker Change: Is there a point, where you would reduce activity. If you saw NGL price is there a level of minimum level of activity that you would wish to maintain how do you think of those dynamics.
Speaker Change: Granted I know Youre still yeah, you gotta compared to natural gas prices. So yeah. A good example is last year, you averaged $2 27, natural gas Nymex, but because <unk> plus liquids where in the Forty's we.
Speaker Change: We generated on an unhedged basis over $70 million of free cash flow. So that's how our breakeven last year was at 220 <unk>.
Speaker Change: You mentioned today's comments $2 29 in the first quarter with a $40 three plus just.
Speaker Change: Just looking in the out years right now even with the backwardation of the oil.
Speaker Change: Being in the high Fifty's and that would could see three plus in the low thirties.
Speaker Change: At today's natural gas strip, Antero still generating $1 billion plus free cash flow every year. So.
Speaker Change: You've got a you've got to compare it to natural gas prices.
Speaker Change: Obviously, there's a dynamic there that if you have low oil prices and low C. III plus prices youre, probably going to have a lot of associated gas and thus high natural gas prices. That's why antero, so well positioned really has no constraints around infrastructure, we always talk about that transport midstream, but it's also the diversity of product being such a large.
Speaker Change: Natural gas producer and such a large liquids producer.
Speaker Change: Puts us in good shape with low debt obviously.
Speaker Change: I appreciate it thank you very much for taking our questions.
Doug Leggate: Thanks, Doug.
Speaker Change: Our next question comes from the line of Kevin Mccarthy with Pickering Energy Partners. Please proceed with your question.
Kevin Mccarthy: Hey, Good morning. My first question is more strategic some of your gas peers have announced well receipt plans to grow volumes I know that you've seen a lot of potential in just running a maintenance program, but as you look out over the next five to 10 years, what are the market dynamics that would incentivize you to grow volumes and are and is there.
Speaker Change: Any operational constraint in doing so.
Speaker Change: The market would be around what we talked about the local gas demand those power plants suggest and highlighted.
Speaker Change: Data centers anything locally that were you.
Speaker Change: <unk> our gas I mean, we have over 1000 dry gas locations that are well above two bcf per thousand over in the eastern portion of our field. So we have ample inventory to grow we have the local midstream capacity with Antero midstream, it's really just if there's that local demand.
Speaker Change: We're not going to grow into basis.
Speaker Change: Local basis without the demand meeting the need for the supply. So that's why it would be required if you have to make future commitments on F T or processing or whatnot. That's.
Speaker Change: That's not something we're interested in are our ft and processing are almost full right now they actually are full or above nameplate on the processing. So that's why we pursue maintenance capital, but if you did get local demand that demand at our gas.
Speaker Change: We could fill that they're easily.
Speaker Change: Great. Thank you for that detail.
Speaker Change: And as a follow up on another question on the LPG sales.
Speaker Change: You had the foresight to lock in the premiums for 2025 before the arbs closed, but as you look into 2026, if theres no pricing advantage to sell to either one of the international either one or both of the international markets.
Speaker Change: What is your flexibility to sell volumes between the U S markets and international Thanks.
Speaker Change: Yes, so I wouldn't say they are close it just come down a bit.
Speaker Change: I think what Dave mentioned is what we saw was pretty.
Speaker Change: Premium pricing for 'twenty, five that more than matched our premium pricing in 'twenty four and we saw it in January so our liquids departments very adapt very agile and so they were able to capture those premiums when you can capture a 15% premium versus what your average maybe 11 in 'twenty four and lock that in and that was very attractive.
Speaker Change: <unk> to us and they really look at the export capacity of the U S. A new dock capacity is coming on if the local production is going to meet that there's a lot of dynamics there.
Speaker Change: They do a great job in a really detailed and thorough analysis is probably the best in the business.
Speaker Change: In doing that and so well do that same analysis and we do it on a daily basis, but we will continue to do that analysis throughout the year and in 2006, and Dave mentioned it really goes till the end of March.
Speaker Change: March 31 of 2026, so through the next year will continue to analyze and will make the proper decision.
The beginning of next year.
Speaker Change: Thank you.
Speaker Change: Hmm.
Speaker Change: Our next question comes from the line of Leo Mariani with Roth Capital Partners. Please proceed with your question.
Speaker Change: Yeah.
Speaker Change: Follow up a little bit on the commentary around the split between debt Paydown and buyback stock.
Speaker Change: Very clear on that but.
In the first quarter, if I just look at the pure numbers it just over $200 million of debt pay down.
Speaker Change: In the first quarter I think it was only a $10 million buyback. Obviously you did some subsequently here in April to get to the next Tuesday on the 50 50 are you guys going to be looking at that kind of on a full year basis on the 50 bed equals you, obviously skewed much harder to get pay down in the first quarter. So just trying to get a sense, if there's more room for share buyback.
Speaker Change: Potentially this year and obviously on the debt side, you've got just over 300 billion on your revolver lap, so maybe not quite as much to pay down here in the near term yes.
Speaker Change: Yeah, I think he saw the the opportunistic I mean, we looked at just pulled it off the screen we looked at the <unk>, so far year to date and tear of shares and we bought back at a 10% lower level than the average of our shares.
We went about back earlier, but there was no disconnect in the January and February price all of a sudden in March I think you saw it across all markets, but uncertainty became apparent in so thanks became on sales. So we decided to capture that and then we put an attendant five one plan to continue to buy throughout this and so that's what we're really going forward just being opportunistic.
Speaker Change: There's no hard and fast rule 50, 50, we could go more share buybacks. If this continues we could go less.
Speaker Change: And pay down the debt a little bit more but as you mentioned, we don't have much debt left so ultimately the share buybacks is going to be a greater and greater percentage of our free cash flow use.
Speaker Change: Okay makes it makes a lot of sense for sure.
Speaker Change: Basically in your macro discussion.
Speaker Change: You talked about potential for in basin demand rattled off a couple projects that have been announced can you maybe provide a little bit more color on where antero is in kind of the discussions to try to maybe capture some of this in basin demand or some of these processes like a Homer city fairly competitive is there kind of a quote unquote auction.
Speaker Change: For some of that type of supply maybe just can provide some more color on where <unk> is on these projects.
Speaker Change: Ontario is obviously in the mix being one of the largest producers and definitely in West Virginia that CTV power plants right in the middle of our field. So I will have competitive advantages there.
Speaker Change: We're not interested in selling our gas really at local basis. So because right now, we obviously get Henry hub, and that's where our gas goes.
Speaker Change: So we do have a floor kind of on the pricing at least on our maintenance capital program future growth maybe in the coming years, maybe thats something that we would look at.
Speaker Change: But we're really focused on our firm transport and get in the LPG right now, but we are having discussions with the local local players of course, because we are such a large producer.
Speaker Change: Okay. Thank you.
Speaker Change: Our next question comes from the line of Roger read with Wells Fargo. Please proceed with your question.
Roger Read: Yeah. Thanks, good morning.
Speaker Change: Roger.
I was just sort of curious.
Speaker Change: Sounds like demand picked up a little quicker on the LNG side, no real change to your full year guidance.
Speaker Change: What would make you maybe a little more optimistic on the production side and then also as a follow up there to Leo's question, just kind of thinking in basin demand.
Speaker Change: Where are you in terms of visibility on some of the improvements there.
Speaker Change: Well, we got a lot of visibility where the gas the liquids producer in Appalachia, So a lot of a lot of visibility but.
Speaker Change: We're pursuing the maintenance capital plan, because that fills our firm transport fills our processing.
Speaker Change: And allows us to produce at the highest returns with the premium pricing from the Ngls and the <unk>.
Speaker Change: And the natural gas so no change to that like we mentioned I would have to be substantial local demand.
Speaker Change: And we would our supply would meet the timing of that demand.
Speaker Change: And thats not in this year and we don't see much for next year, either so we'll be a maintenance capital during that timeframe, but anything post that when we mentioned these projects.
Speaker Change: We could be a participant in that.
Speaker Change: Okay. That's it for me I'll turn it back thanks, alright. Thanks. Thank you.
Speaker Change: Our next question comes from the line of Paul Diamond with Citi. Please proceed with your question.
Speaker Change: Our California openings, taking the time just a quick one for me sticking off of in basin debate and dialogue I know, we'd all be FTE.
Speaker Change: Or would all your up to you on the books.
Speaker Change: Capital pretty much filling that I guess kind of drill down a little bit on what type of pricing like in base and like what collapsed at the basis.
Speaker Change: In Appalachia would you need to see to actually like sign on to that is that you know you're breakeven plus X or is that more of like a solid number how do you guys do that.
Speaker Change: No we really viewed through a Nymex Henry hub aligns I mean, that's how we've been talking about it.
Speaker Change: Whether it's ethane other projects or natural gas because that's what you can hedge for years and years and years.
Speaker Change: The basis could be strong at any particular moment, but and in the shoulder months summer months, you could see weakness and so that's why when you look out you see pretty wide basis locally even though there was a.
Speaker Change: Very strong pricing in the first quarter. So it's kind of more of a long term look can you lock in and can you hedge it can you count on it can't spend billions of dollars of capital to support it.
Speaker Change: That's why we looked at and that's why everything we've got really prices off Nymex Henry hub.
Speaker Change: Got it so does the I guess.
Speaker Change: Little expectation that there would be any sort of discount to the hub over the long term in order to get you guys to actually book, Yes, you could have a contract that's Henry hub minus something but it would have to be kind of floating on that Henry hub, having a floating on a local basis you can have such disconnects at certain times that.
Speaker Change: It's hard to put a lot of capital behind that.
It makes perfect sense. Thanks for your time.
Paul Diamond: It's Paul.
Paul Diamond: Our next question comes from the line of Neil Mehta with Goldman Sachs. Please proceed with your question.
Speaker Change: Hey, Tim.
Paul Diamond: Good morning.
Speaker Change: Just want to stay on the gas macro the dry gas macro and get your perspective with lower.
Speaker Change: Oil prices and we'll see what happens here over the next couple of days, how youre thinking about associated supply in the United States, particularly out of the Permian and does that represent.
Speaker Change: A tailwind that can make natural gas despite the risk potentially around industrial demand.
Speaker Change: We're protected from economic volatility.
Yeah, definitely we've never really seen a better setup.
Speaker Change: Natural gas demand growth over the coming.
Speaker Change: Quarters years versus supply I mean, you're coming into this already with a low rig count.
Speaker Change: Very low in the Haynesville in Appalachia, and other natural gas space and so if you put on top of that Permian rigs coming off and no real associated gas growth from there or muted.
Speaker Change: That just sets up for an explosive kind of natural gas environment going forward with the LPT I mean, what's the LNG demand.
Speaker Change: Kind of electrification of America.
Speaker Change: Putting the demand side of things, so very very exciting.
Speaker Change: Definitely would be a tailwind for natural gas.
Speaker Change: So.
Speaker Change: Two long term questions as it relates to gas I mean.
Speaker Change: The both side is we have to price to the Haynesville I know you guys don't have exposure there I'm sure you've done a lot of work to try to benchmark. What do you think the marginal haynesville cost would be if that's the price setting mechanism do you have a strong view on that and then the offset for those who are more bearish as the global gas market does flip.
Speaker Change: It seems like into decent oversupply.
Speaker Change: Does that provide a governor on how high we can ultimately go and so is that even though relevant marker or do we have to price that DTF minus so just thoughts around that.
Speaker Change: And we.
Speaker Change: We think haynesville is probably $4 plus and that's <unk>.
Speaker Change: Probably the inventory right now and that runs out pretty quick so I mean, no one really talks about inventory fatigue, but you'll definitely see it across the basin. So all this gas supply is going to have to come from not your Appalachian low cost producers, it's going to come from ever increasing second tier acreage in second tier basins. So that price will continue to grow.
Speaker Change: Sure.
Speaker Change: And global gas, how do you think about that headwind on the other side.
Speaker Change: Oh, Yeah, I'm thinking of a headwind if it's pricing of TTS. So we got Justin here, what's the kind of the tolling in the shipping.
Speaker Change: Our cause to TTM visit Tcf less $3 50, Tcf less four or something like that so yes. Good morning newest Justin when we look on the longer David a balance of 25 through Cal 28 call. It spreads still look very healthy.
Speaker Change: To the European and Asian markets. So we feel like that those net backs will support continued buying in growth.
Speaker Change: You continue to see Fsrus being set globally.
Speaker Change: Multiple locations various countries that are going to continue to consume natural gas because it is the <unk>.
Speaker Change: Fuel of the future here so.
Speaker Change: Continuing to see that demand getting built out.
Speaker Change: Okay. Thanks, Jess and thank you Kim.
Speaker Change: Mhm. Thank you.
Speaker Change: Our next question comes from the line of Betty Jang with Barclays. Please proceed with your question.
Betty Jang: Hello. Good morning, Thank you for taking my question.
Speaker Change: I have a question back to the <unk> three plus.
Speaker Change: Premium guidance. So if you guys are getting 15 cents per gallon.
Speaker Change: Allen premium on.
Speaker Change: 90% of your export volumes, so that re quake to roughly $6 premium.
Speaker Change: I'm, just trying to square that to your full year guidance of $2.
Speaker Change: Are you just assuming a bigger discount on the domestic volumes, that's just something that could be yes.
Speaker Change: Conservative.
Speaker Change: That's just on the export.
Speaker Change: So I and on propane and LPG has got a lot more in and obviously butane and natural gasoline all of that so that's just on the propane portion that is exported.
Speaker Change: And so when you.
Speaker Change: Sell locally it's more like more like come out Belvieu price, so from the propane and butane and natural gasoline is not what that premium is it's not near that 15.
Speaker Change: Got it. Thank you so on the propane piece Oh got it on the export.
Speaker Change: Propane yes.
Speaker Change: Got it.
Speaker Change: And then separately on the G. P M P.
Speaker Change: Could you maybe talk about some of the disruptions are dynamic for one Q and also.
Speaker Change: And follow up on the comment earlier about processing plants running full and running above name plate, how does that translate to your liquids mix over time do you see you see three plus mix much above 20%.
Speaker Change: Longer term.
Speaker Change: So if you read the AAM Antero midstream only see saw that are processing was more than full I think it was like 104% or something like that.
Speaker Change: On Sherwood and Smithburg processing facility. So you can see there that there wouldn't be any change to our current mix of of liquids.
Speaker Change: Then on your GP and T. Remember there is a variable component on natural gas prices as they go higher we do have to transport expense.
Speaker Change: Fuel expense on the transport and taxes. So our general rule of thumb is for every dollar of natural gas price higher you get 10 cents higher variable pricing and on the <unk>. So that's why you saw it a little bit higher than our guidance range. It comes back down throughout the year is here you have a little bit lower pricing in the second and third quarter.
Speaker Change: [laughter].
Speaker Change: Got it that's helpful. Thank you.
Speaker Change: Sure. Thank you.
Speaker Change: We have reached the end of the question and answer session I would now like to turn the floor back over to management for closing comments.
Speaker Change: Yes. Thank you for joining us on today's call. Please reach out with any further questions. Thank you.
Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.
Speaker Change: [music].
Yeah.
Speaker Change: Hum.
Speaker Change: Okay.
Speaker Change: [music].