Good day, and welcome to the Antero Resources Fourth Quarter and Full-Year 2017 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Michael Kennedy, Senior Vice President of Finance and Head of Investor Relations. Please go ahead, sir.

Thank you for joining us for Antero's fourth quarter 2017 investor conference call. We'll spend a few minutes going through the financial and operational 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.anteroresources.com, where we have provided a separate earnings call presentation that will be reviewed during today's call. Before we start our comments, I would like to first remind you that, during this call, Antero management will make forward-looking statements. Such statements are based on our current judgments, regarding factors that will impact the future performance of Antero and are subject to a number of risks and uncertainties, many of which are beyond Antero's control. Actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Today's call may also contain certain non-GAAP financial measures. Please refer to our earnings press release for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures. Before I turn it over to Paul, I also quickly want to address the recently published shareholder letter and our response press release. As stated in our press release, we are currently working with our Board to evaluate various potential measures. There is no definitive timetable for completion of this evaluation, and there can be no assurances that any initiatives will be announced or completed in the future. During today's call, we will not address any additional questions related to this matter. Joining me on the call today are Paul Rady, Chairman and CEO, and Glen Warren, President and CFO. I will now turn the call over to Paul.

Thanks, Mike, and thank you to everyone for listening to the call today. In my comments, I'm going to review our 2017 development activity, including the cost efficiencies and targets we have achieved, discuss our unique acreage position and how it will drive stable cash flows through our liquids exposure and our long lateral drilling, and finish with an operational update with respect to Antero's recently announced five-year plan. Glen will then highlight our fourth quarter and full-year financial results including price realizations, provide a brief update on recent marketing activities with our firm transportation portfolio, and discuss further our recently announced five-year operational and financial targets. First, I wanted to quickly touch on our recent Analyst Day that we hosted in New York in mid-January, which many of you have attended. Our decision to put on this event was a reflection of where Antero is today in its lifecycle. Following years of substantial production growth from virtually no production back in 2008 to now the seventh largest gas producer today, we are now moving into the next phase with the focus on disciplined investment and the delivery of free cash flow. We've been able to reduce our five-year capital plan by $2.9 billion due to the benefits of continued efficiency gains and the shift to longer laterals. These cost savings, combined with our large liquids-rich drilling inventory in the Appalachian Basin lead to $1.6 billion of targeted free cash flow through 2022 with upside to $2.8 billion under a $60 per barrel steady oil price environment. This updated five-year outlook positions Antero in a very small group of Elite E&Ps that have the size and scale, the double-digit growth, lower leverage and positive free cash flow. Now let's discuss some of our 2017 development highlights. For the second straight…

Thank you, Paul. In my comments today, I will highlight our fourth quarter and full-year financial results, including price realization that benefited from our increased liquids volumes and improved NGL prices during the year, provide an update on some recent marketing gains we have achieved, highlight recent favorable credit rating actions from the rating agencies, and finish up with brief comments on our recently announced long-term outlook including our priorities for free cash flow use. Let me begin with some of the key highlights from the quarter and the year. Production averaged a record 2.35 Bcfe a day for the quarter, an 18% year-over-year increase including over 170,000 barrels a day of liquids. Liquids production included 6,200 barrels a day of oil and just over 101,000 barrels of NGLs. This production outperformance continues to be driven by operational improvements particularly associated with the advanced completions and longer laterals that were more widely incorporated across the development program during 2017. Now to briefly touch on some financial highlights from the quarter, we generated $437 million in consolidated EBITDAX. This represents a 30% sequential increase up over $100 million resulting in a consolidated margin of $2.02 per Mcfe. The sequential increase in EBITDAX was driven primarily by improved liquids pricing, which I will touch on in just a minute. Adjusted operating cash flow was 360 million, sorry $368 million or $1.17 per share. Moving on to realized pricing during the fourth quarter, we realized $2.80 per Mcf before hedges on our natural gas production during the quarter, a $0.13 per Mcf differential to NYMEX Henry Hub and above guidance of $0.15 to $0.20 differential per Mcf. Excluding the negative impact from natural gas contract disputes of $0.20 per Mcf, the average price before hedging would have been $3 per Mcf or a…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Holly Stewart with Scotia Howard Weil. Please go ahead.

Good morning, gentlemen.

Good morning, Holly.

Maybe, the first one, just around your marketing accomplishments during the first quarter, I don't think we've actually think you have a marketing gain since you've been public. So, any specific here you can highlight, and maybe more importantly, can you replicate this again?

Well, it certainly was a strong beginning to the year, and of course, it reflects the cold that hit the Northeast, and so we were able to move not only our gas, but by a lot of distressed third-party gas that couldn't get out of the area. And so we were able to deliver gas to good high markets. So we're talking about Chicago and Michigan, even the Gulf because of self-storage draw-down had good prices through January, and then along the Eastern seaboard too. So, it was really good situation. As we fill more and more of our capacity, we will be able to take advantage of good prices. Will we be able to duplicate that at the beginning of the year, time will tell, but as our production grows, it certainly still is a good strategic advantage for us.

Okay, great. And then maybe just if you have any sort of color on what's on liquids pricing right now, looks like both propane and the butanes have been a little weak as of late. So just curious as to maybe - from a maybe higher macro level what you guys are seeing out there?

Well, we're seeing part of what was driving propane prices higher in the international market where Asian buyers that came back into the market and drove the price of propane up to nearly $0.85 a gallon on the front or at least remainder of Cal 18, I should say balance 2018. And they've quite had some, so you've seen demand has drifted down a little bit as some of the buyers have gone away. So the front, as you're probably aware now our balance 2018 is on order of $0.70 or so. We have about half of our Cal-18 production or propane production hedged right now at pretty good prices, and we're just watching and have some expectations that will move up a little bit again.

Okay, that's great. And then maybe a housekeeping item for Glen, if I could. Just Glen, kind of given Rovers and service in the first quarter, how should we think about the GPNT expense kind of flowing through the year, obviously, 1Q would be up, but just kind of thinking about the trend over the course of the quarters?

Yeah, Holly, I'll take that one. This is Mike. We expect the transport portion from Rover ticks up to about $0.55 per Mcfe for the full year. And that's up from the high 40s, and that's directly related to the Rover impact.

Okay. That's great. Thanks, Mike.

Yeah.

The next question comes from Arun Jayaram with JPMorgan. Please go ahead.

Yeah, good morning. I was wondering if you could help us a little bit with how the completion timing will occur now in 2018, given some of the weather related impacts. I think at Analyst Day, you highlighted something between a 140 and 150 completions, I wondered if you give us maybe a little bit of guidance around how that could trend by quarter in 2018.

The 145 that we referenced in the Analyst Day, it's actually pretty evenly split out through the quarters. It just so happens in the first quarter, the majority of that activities occurring in March. So you'll get a full impact from the first quarter completion starting in the second quarter, and that was as scheduled, a bit delay because of the weather, but as scheduled.

Great. A follow-up just on the amendment to the WGL agreement, can you just talk about how that will affect your gas price realizations in the early part and then beyond 2019 what happens?

Yeah. Well, we did restructure part of our contracts with WGL part of the difficulties that they ran into was their ability to receive our gas to buy it at a certain constricted pointer or restricted on the TECO system. And so that was a problem and we had to instead move the gas to inferior markets, lower realizations and realizing some damages. What we've done is to neutralize that contract, so that instead beginning at the end of the year, as WB is completed all the way over to Loudoun, Virginia, we will just be delivering that gas over in the Cove Point area. And so they don't have the restrictions over there to receive the gas. So that's how we worked it out, was reducing and shifting receipt points. And so we don't see that big differential going forward, and I think that that issue will be minimized.

Great. Thanks for that. And just final question is just kind of going back to the Analyst Day. You guys highlighted about $1.3 billion per annum in D&C spending on a consolidated basis between 2018 through 2020. One of the questions we've gotten is just can you help us maybe reconcile that because your lateral lengths are kind of increasing kind of 8% to 10% between 2018 and 2020, or in a bit of an inflationary environment, and you do have a higher completed well count. So maybe just give us a bit of comfort level on the $1.3 billion of D&C spending between 2018 and 2020?

Yeah, and we have put out a new slide yesterday, and it's in the, I think the presentations label CS summit and it's page 48. So it's in the appendix, but there's a slide there that takes you through each year. And you can see part of the difference is it's really driven by the wells that you're working on during the year, not so much the wells that are completed because you may complete a well in January, but the cost really happened in the previous year, and so on and so forth. So this slide kind of takes you through that and normalizes for the wells that are actually being worked on in a given year. And then it also points out that we are assuming some pick up in stages per day going from 4.5 this year to 5.5 over that three years kind of ratably, and then also we do have some concurrent operations baked in there. So you can see those numbers and then it nets you down to that average of $1.3 billion a year, but check out that slide on the CS Energy summit presentation yesterday page 48.

Thanks a lot. Appreciate that.

Thank you.

[Operator Instructions] The next question comes from Jeoffrey Lambujon with Tudor, Pickering, Holt & Company. Please go ahead.

Good morning. Thanks for taking my question. As you get to the free cash flow you highlight, how do you prioritize your options when it comes to using what you generate? You talked about leverage targets, but how do you balance drilling versus inventory adds versus shareholder returns?

Yeah, we like our drilling plan. So no plans to change that relative to what we said at the Analyst Day. And what we said at Analyst Day was we are prioritizing deleveraging at the current time, but we're also very focused on shareholder return. So, it will be a balance of those and we'll see how things play out. There is some sensitivity to that cash flow, could be quite a bit higher with higher liquids prices, could be a bit lower if liquids prices get lower. So this is something we'll just have to determine quarter-by-quarter, year-by-year, but the good news is there is - there's a nice bucket there, nice sized bucket capital to allocate.

Thanks.

This concludes our question-and-answer session. I would like to turn the conference back over to Michael Kennedy for any closing remarks.

Thanks everyone for joining us on our conference call today. If you have any further questions, please feel free to reach out to us. Thanks again.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.