Propane Prices are Fuelling Antero’s Fundamentals

Posted on January 1, 2021 by Florian Buschek

Propane is ripping higher as high demand causes hefty draws on inventory. Demand for NGLs in general comes from LNG exports as prices rise overseas for need of electricity generation and heating (there is export capacity for 80% of production in the US) and local demand for heating eg heating columns restaurants are using outside. This benefits Antero Resources AR (disclosure: long) as they are levered to NGLs and hedged on natural gas, which took a dive recently. The coming quarters will be extremely strong. Not only will the comps to 2020 look excellent, but AR will also outperform peers who are mostly not hedged on gas. Looking at propane alone we are a long way from historical prices. It is not clear that we get back to that at all, but propane is certainly not expensive historically.

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