Valens Equity Weekly Insights - 2024 04 16
Antero Resources (AR) has a low-cost, unhedged inventory of high quality natural gas. Uniform Accounting highlights what the company's returns could look like during a strong natural gas cycle, something that the market is not pricing in. That makes Antero a compelling buy.When natural gas prices have been above breakeven, Antero's Uniform ROA has historically gotten above 10%, as high as 22%. The company is set to get back to those levels in the current market, as it has the capacity to extract most of its reserves with limited incremental investment, and hedge very little of its portfolio, betting on a strong natural gas market.
Antero's management is aligned to focus on profitable growth and careful leverage management, which should help management take advantage of the natural gas cycle without overinvesting.
Earnings Call Forensics of the Q4 earnings call highlights management's confidence about asset efficiency and the benefit its scale gives it support ROA improvement.
Harmonic (HLIT) is being removed from the Conviction Long List. The company failed to find a buyer for its declining Video business and expects declining year-over-year revenue for its Broadband business, suggesting the strength of this business may be wavering.
Antero Resources is an oil and natural gas company engaged in the exploration, development and production of natural gas, natural gas liquids (NGLs), and oil properties. The company focuses on unconventional reservoirs, which can generally be characterized as fractured shale formations. The company's drilling operations are focused in the Marcellus Shale and Utica Shale of the Appalachian Basin. The company's industry segments are: the exploration, development, and production of natural gas, NGLs, and oil; marketing of excess firm transportation capacity; and the gathering and processing of natural gas. All of the company's operations are conducted in the United States.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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