Posted on December 8, 2020 by Florian Buschek
Antero Resources AR (disclosure: long) has been held down by low natural gas prices recently. People don’t get that that AR is fully hedged on gas and low prices now combined with high prices later are the dream scenario for AR. That way they don’t take losses on their hedges and can establish new hedges later at higher prices. Further, AR is levered to liquids and as I have pointed out previously, that alone will give us a cash flow bonanza considering the outlooks for NGLs.
Today however the stock was driven up by an upgrade from J.P. Morgan with price target $6 “largely driven by our constructive macro call on NGLs, specifically C3+ liquids pricing.” Aha, the word is getting out that NGLs are ripping and AR stands to benefit. The attention from J.P. Morgan is important because so far AR has only bullish coverage from smaller shops, so today’s upgrade should bring some new eyes on the story. As the word gets out and institutions do the homework to recognize how well AR is positioned for the upcoming natural gas and liquids price appreciation we should witness the stock doing very well.