Credit Suisse Bullish On Antero Resources, Raises Price Target

Antero Resources Corp AR has recently completed a bolt-on acquisition in the Marcellus and added 55k net core acres and 14 MMcfe/d of production. Credit Suisse’s Mark Lear maintained an Outperform rating for the company, while raising the price target from $35 to $39.

Deal Aimed At Consolidation

The $450 million acquisition from Southwestern Energy Company SWN was funded via the sale of 26.75 million shares of equity at $28.50 per share. As part of the deal, Statoil ASA (ADR) STO has a 30-day tag along right to sell an additional 13k net acres for $100 million.

Related Link: Tudor Pickering Upgrades Antero Resources To Buy

Lear mentioned that the deal would consolidate Antero Resources’ position in the core southwestern Appalachia region. The acquisition also adds to Antero Resources’ high graded inventory in the dry and wet gas windows.

“The company now controls 237k net core acres in the Marcellus, which has more recently benefitted from reduced wells costs (now $8.5MM for a 9k’ lateral from $10.2MM in 2H15) and enhanced completions which is driving in excess of 20% improvement in EUR/1000’ of lateral in the wet gas window,” Lear wrote.

Antero Resources raised its 2017 production growth guidance from 20 percent to 20-25 percent. The analyst increased the EPS estimates for 2016, 2017 and 2018 from $0.45 to $0.46, from $0.34 to $0.38 and from $1.56 to $1.66, respectively.