Oppenheimer Initiates Coverage On Antero Resources

Oppenheimer initiated coverage on Antero Resources Corp AR Tuesday with an Outperform rating and $52 price target.

Analyst Robert Du Boff believed “a premium is warranted given strong production growth, reserve life, and midstream access. We would expect the stock to exhibit seasonal strength over the next few months, but caution that shares could be in for a bumpy ride this summer with local price discounts expected to widen again. However, we see a light at the end of the tunnel heading into
2016 as pipeline capacity to premium markets provides a nice boost to realizations.”

Du Boff also modeled “growth of ~50 percent in both 2015 and 2016. AR has significant infrastructure in place or under construction (fresh water, gas gathering and processing) to execute. We also expect that over 19 percent of production will be higher-value liquids (ex. ethane) by 2016, up from 7 percent in 2013.”

The analyst noted concluded, “We see a major inflection in 2016 due to narrowing differentials, as more gas moves to better markets. Although valuation appears rich on '15E numbers, AR is trading at a slight P/E discount on '16E consensus.”

Antero Resources Corp recently traded at $41.03, up 3.74 percent.