ANTERO RESOURCES Corp

Previous wording

During the three months ended, June 30, 2024, we achieved an investment grade credit rating from S&P Global Inc. As a result of this investment grade credit rating, on July 30, 2024, we entered into an amendment and restatement of our senior revolving credit facility with lender commitments of $1.65 billion that matures on July 30, 2029, subject to certain extension terms and conditions. The New Credit Facility is unsecured and is not guaranteed by any of our subsidiaries. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.

Current wording

During the second quarter of 2024, we achieved an investment grade credit rating from S&P Global Inc. As a result of this investment grade credit rating, on July 30, 2024, we entered into an amended and restated senior revolving credit facility with lender commitments of $1.65 billion that matures on July 30, 2029, subject to certain extension terms and conditions. Borrowings under the amended and restated facility are unsecured and are not guaranteed by any of our subsidiaries. See Note 7—Long-Term Debt to the unaudited condensed consolidated financial statements for more information.

Previous wording

Prices for natural gas, NGLs and oil that we produce significantly impact our revenues and cash flows. Natural gas benchmark prices decreased significantly while NGLs and oil benchmark prices increased during the three and six months ended June 30, 2024 as compared to the same period of 2023. As a result of the lower benchmark natural gas prices, we experienced a decrease in price realizations for natural gas and ethane products during the three and six months ended June 30, 2024. We monitor the economic factors that impact natural gas, NGLs and oil prices, including domestic and foreign supply and demand indicators, domestic and foreign commodity inventories, the actions of Organization of Petroleum Exporting Countries and other large producing nations and the current conflicts in Ukraine and in the Middle East, among others. In the current economic environment, we expect that commodity prices for some or all of the commodities we produce could remain volatile. This volatility is beyond our control and may adversely impact our business, financial condition, results of operations and future cash flows.

Current wording

Prices for natural gas, NGLs and oil that we produce significantly impact our revenues and cash flows. Benchmark prices for natural gas decreased significantly, while benchmark prices for oil remained consistent and benchmark prices for NGLs increased during the nine months ended September 30, 2024 as compared to the same period of 2023. As a result of the lower benchmark natural gas prices and higher benchmark NGLs prices in 2024, we experienced a decrease in price realizations for natural gas and ethane products and an increase in price realization for NGLs products during the three and nine months ended September 30, 2024. We monitor the economic factors that impact natural gas, NGLs and oil prices, including domestic and foreign supply and demand indicators, domestic and foreign commodity inventories, the actions of Organization of Petroleum Exporting Countries and other large producing nations and the current conflicts in Ukraine and in the Middle East, among others. In the current economic environment, we expect that commodity prices for some or all of the commodities we produce could remain volatile. This volatility is beyond our control and may adversely impact our business, financial condition, results of operations and future cash flows.

Previous wording

The following table details the average benchmark natural gas and oil prices:

Current wording

The following table details the average benchmark natural gas, NGLs and oil prices:

Previous wording

We are exposed to certain commodity price risks relating to our ongoing business operations, and we use derivative instruments when circumstances warrant to manage such risks. In addition, we periodically enter into contracts that contain embedded features that are required to be bifurcated and accounted for separately as derivatives. Due to our improved liquidity and leverage position as compared to historical levels, the percentage of our expected production that we hedge has decreased. For the three and six months ended June 30, 2023 and 2024, substantially all of our production was unhedged. The tables and narrative below exclude derivative instruments attributable to Martica, our consolidated VIE, since all gains or losses from such contracts are fully attributable to the noncontrolling interests in Martica.

Current wording

We are exposed to certain commodity price risks relating to our ongoing business operations, and we use derivative instruments when circumstances warrant to manage such risks. In addition, we periodically enter into contracts that contain embedded features that are required to be bifurcated and accounted for separately as derivatives. Due to our improved liquidity and leverage position as compared to historical levels, the percentage of our expected production that we hedge has decreased. For the three and nine months ended September 30, 2023 and 2024, substantially all of our production was unhedged. The tables and narrative below exclude derivative instruments attributable to Martica, our consolidated VIE, since all gains or losses from such contracts are fully attributable to the noncontrolling interests in Martica.

Previous wording

As of June 30, 2024, the estimated fair value of our commodity derivative contracts, excluding Martica, was a net liability of $37 million. See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for more information.

Current wording

As of September 30, 2024, the estimated fair value of our commodity derivative contracts, excluding Martica, was a net liability of $24 million. See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for more information.

Previous wording

As of June 30, 2024, the estimated fair value of Martica’s commodity derivative contracts was a net liability of $4 million. See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for more information.

Current wording

As of September 30, 2024, the estimated fair value of Martica’s commodity derivative contracts was a net liability of $3 million. See Note 11—Derivative Instruments to the unaudited condensed consolidated financial statements for more information.

Previous wording

The economy experienced elevated inflation levels as a result of global supply and demand imbalances, where global demand outpaced supplies beginning in 2021 and continuing through the second quarter of 2024. For example, the Consumer Price Index (“CPI”) for all urban consumers increased 3% from June 2022 to June 2023 and an additional 3% from June 2023 to June 2024 as compared to the Federal Reserve’s stated goal of 2%. In order to manage the inflation risk present in the United States’ economy, the Federal Reserve utilized monetary policy in the form of interest rate increases beginning in March 2022 in an effort to bring the inflation rate in line with its stated goal of 2% on a long-term basis. Between March 2022 and June 2024, the Federal Reserve increased the federal funds interest rate by 5.25%. While inflationary pressures in the United States’ economy have begun to subside, we continue to be impacted by the increased federal funds interest rate. See “— Results of Operations” for more information.

Current wording

The economy experienced elevated inflation levels as a result of global supply and demand imbalances, where global demand outpaced supplies beginning in 2021 and continuing through the third quarter of 2024. For example, the Consumer Price Index (“CPI”) for all urban consumers increased 3.7% from September 2022 to September 2023 and an additional 2.4% from September 2023 to September 2024 as compared to the Federal Reserve’s stated goal of 2%. In order to manage the inflation risk present in the United States’ economy, the Federal Reserve utilized monetary policy in the form of interest rate increases beginning in March 2022 in an effort to bring the inflation rate in line with its stated goal of 2% on a long-term basis. Between March 2022 and July 2023, the Federal Reserve increased the federal funds interest rate by 5.25%. During the three months ended September 30, 2024, inflation rates began to approach the Federal Reserve’s stated goal of 2%, and the Federal Reserve decreased the federal funds rate by 0.5% in September 2024. While inflationary pressures in the United States’ economy have begun to subside, we continue to be impacted by the increased federal funds interest rate. See “— Results of Operations” for more information.

Previous wording

Natural gas sales. Revenues from sales of natural gas decreased from $437 million for the three months ended June 30, 2023 to $375 million for the three months ended June 30, 2024, a decrease of $62 million, or 14%. Lower commodity prices (excluding the effects of derivative settlements) during the three months ended June 30, 2024 accounted for an approximate $43 million decrease in year-over-year natural gas sales revenue (calculated as the change in the year-to-year average price times current year production volumes). Lower natural gas production volumes accounted for an approximate $19 million decrease in year-over-year natural gas sales revenue (calculated as the change in year-to-year volumes times the prior year average price).

Current wording

Natural gas sales. Revenues from sales of natural gas decreased from $516 million for the three months ended September 30, 2023 to $426 million for the three months ended September 30, 2024, a decrease of $90 million, or 18%. Lower commodity prices (excluding the effects of derivative settlements) during the three months ended September 30, 2024 accounted for an approximate $69 million decrease in year-over-year natural gas sales revenue (calculated as the change in the year-to-year average price times current year production volumes). Lower natural gas production volumes accounted for an approximate $21 million decrease in year-over-year natural gas sales revenue (calculated as the change in year-to-year volumes times the prior year average price).

Previous wording

NGLs sales. Revenues from sales of NGLs increased from $398 million for the three months ended June 30, 2023 to $489 million for the three months ended June 30, 2024, an increase of $91 million, or 23%. Higher commodity prices (excluding the effects of derivative settlements) during the three months ended June 30, 2024 accounted for an approximate $69 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes). Higher NGLs production volumes accounted for an approximate $22 million increase in year-over-year NGLs revenues (calculated as the change in year-to-year volumes times the prior year average price).

Current wording

NGLs sales. Revenues from sales of NGLs increased from $483 million for the three months ended September 30, 2023 to $504 million for the three months ended September 30, 2024, an increase of $21 million, or 4%. Higher commodity prices (excluding the effects of derivative settlements) during the three months ended September 30, 2024 accounted for an approximate $21 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes).

Previous wording

Oil sales. Revenues from sales of oil increased from $58 million for the three months ended June 30, 2023 to $63 million for the three months ended June 30, 2024, an increase of $5 million, or 9%. Higher commodity prices (excluding the effects of derivative settlements) during the three months ended June 30, 2024 accounted for an approximate $6 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes). Lower oil production volumes during the three months ended June 30, 2024 accounted for an approximate $1 million decrease in year-over-year oil revenues (calculated as the change in year-to-year volumes times the prior year average price).

Current wording

Oil sales. Revenues from sales of oil decreased from $63 million for the three months ended September 30, 2023 to $53 million for the three months ended September 30, 2024, a decrease of $10 million, or 16%. Lower commodity prices (excluding the effects of derivative settlements) during the three months ended September 30, 2024 accounted for an approximate $6 million decrease in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes). Lower oil production volumes during the three months ended September 30, 2024 accounted for an approximate $4 million decrease in year-over-year oil revenues (calculated as the change in year-to-year volumes times the prior year average price).

Previous wording

Commodity derivative fair value gains (losses). Our commodity derivatives included fixed price swap contracts, basis swap contracts, call options and embedded put options. Because we do not designate these derivatives as accounting hedges, they do not receive hedge accounting treatment. Consequently, all mark-to-market gains or losses, as well as cash receipts or payments on settled derivative instruments, are recognized in our statements of operations and comprehensive income. For the three months ended June 30, 2023 and 2024, our commodity hedges resulted in derivative fair value gains of $8 million and fair value losses of $6 million, respectively. For the three months ended June 30, 2023 and 2024, commodity derivative fair value gains (losses) included $3 million and $6 million, respectively, of net cash proceeds on settled commodity derivative gains.

Current wording

Commodity derivative fair value gains. Our commodity derivatives included fixed price swap contracts, basis swap contracts, call options and embedded put options. Because we do not designate these derivatives as accounting hedges, they do not receive hedge accounting treatment. Consequently, all mark-to-market gains or losses, as well as cash receipts or payments on settled derivative instruments, are recognized in our statements of operations and comprehensive income. For the three months ended September 30, 2023 and 2024, our commodity hedges resulted in derivative fair value gains of $3 million and $18 million, respectively. For the three months ended September 30, 2023, commodity derivative fair value gains included $6 million of cash payments on settled commodity derivative losses. For the three months ended September 30, 2024, commodity derivative fair value gains included $4 million of net cash proceeds on settled commodity derivatives gains.

Previous wording

Lease operating expense. Lease operating expense remained relatively consistent for the three months ended June 30, 2023 and 2024 at $29 million and $30 million, respectively. On a per-unit basis, lease operating expense increased from $0.09 per Mcfe for the three months ended June 30, 2023 to $0.10 per Mcfe for the three months ended June 30, 2024 primarily due to increased oilfield services costs between periods.

Current wording

Lease operating expense. Lease operating expense decreased from $33 million, or $0.10 per Mcfe, for the three months ended September 30, 2023 to $30 million, or $0.09 per Mcfe, for the three months ended September 30, 2024, a decrease of $3 million primarily due to lower water disposal costs and workover expense between periods.

Previous wording

Gathering, compression, processing and transportation expense. Gathering, compression, processing and transportation expense remained relatively consistent at $664 million and $663 million for the three months ended June 30, 2023 and 2024, respectively. This was primarily a result of the following:

Current wording

Gathering, compression, processing and transportation expense. Gathering, compression, processing and transportation expense increased from $672 million for the three months ended September 30, 2023 to $685 million for the three months ended September 30, 2024, an increase of $13 million, or 2%. This was primarily a result of the following:

Previous wording

Production and ad valorem tax expense. Production and ad valorem taxes increased from $36 million for the three months ended June 30, 2023 to $42 million for the three months ended June 30, 2024, an increase of $6 million, or 16%, primarily due to higher ad valorem taxes and production volumes between periods, partially offset by lower natural gas prices during the three months ended June 30, 2024. Production and ad valorem taxes as a percentage of natural gas revenues increased from 8% for the three months ended June 30, 2023 to 11% for the three months ended June 30, 2024, primarily as a result of higher ad valorem taxes, which 2024 ad valorem taxes are based on commodity prices during 2022.

Current wording

Production and ad valorem tax expense. Production and ad valorem taxes increased from $32 million for the three months ended September 30, 2023 to $47 million for the three months ended September 30, 2024, an increase of $15 million, or 47%, primarily due to higher ad valorem taxes, partially offset by lower natural gas prices during the three months ended September 30, 2024. Production and ad valorem taxes as a percentage of natural gas revenues increased from 6% for the three months ended September 30, 2023 to 11% for the three months ended September 30, 2024, primarily as a result of higher ad valorem taxes, which 2024 ad valorem taxes are based on commodity prices during 2022.

Previous wording

General and administrative expense. General and administrative expense (excluding equity-based compensation expense) increased from $40 million for the three months ended June 30, 2023 to $42 million for the three months ended June 30, 2024, an increase of $2 million, or 5%, primarily due to higher professional service fees between periods. General and administrative expense on a per unit basis (excluding equity-based compensation) increased from $0.13 per Mcfe for the three months ended June 30, 2023 to $0.14 per Mcfe for the three months ended June 30, 2024 as a result of higher overall costs between periods.

Current wording

General and administrative expense. General and administrative expense (excluding equity-based compensation expense) decreased slightly from $40 million, or $0.13 per Mcfe, for the three months ended September 30, 2023 to $39 million, or $0.12 per Mcfe for the three months ended September 30, 2024 primarily as a result of lower pipeline bond and leased vehicle costs between periods.

Previous wording

Equity-based compensation expense. Noncash equity-based compensation expense increased from $14 million for the three months ended June 30, 2023 to $17 million for the three months ended June 30, 2024, an increase of $3 million, or 27%. This increase was primarily due to annual equity-based awards granted during the first quarter of 2024. See Note 9—Equity-Based Compensation to the unaudited condensed consolidated financial statements for more information.

Current wording

Equity-based compensation expense. Non-cash equity-based compensation expense decreased from $18 million for the three months ended September 30, 2023 to $16 million for the three months ended September 30, 2024, a decrease of $2 million, or 13%. This decrease was primarily due to lower PSU award expense between periods, partially offset by increased RSU award expense attributable to awards granted in the first quarter of 2024. See Note 9—Equity-Based Compensation to the unaudited condensed consolidated financial statements for more information.

Previous wording

Depletion, depreciation and amortization expense. DD&A expense increased from $339 million for the six months ended June 30, 2023 to $344 million for the six months ended June 30, 2024, an increase of $5 million, or 1%, primarily due to higher production volumes between periods. On a per unit basis, DD&A expense remained relatively consistent at $0.56 and $0.55 per Mcfe for the six months ended June 30, 2023 and 2024, respectively.

Current wording

Depletion, depreciation, and amortization expense (“DD&A expense”). DD&A expense decreased from $176 million, or $0.55 per Mcfe, for the three months ended September 30, 2023 to $170 million, or $0.55 per Mcfe, for the three months ended September 30 2024, a decrease of $6 million, or 3%. The decrease in total DD&A expense is primarily due to lower production volumes between periods.

Previous wording

Impairment of property and equipment. Impairment of oil and gas properties of $16 million for the three months ended June 30, 2023 primarily related to expiring leases we no longer plan to utilize.

Current wording

Impairment of property and equipment. Impairment of oil and gas properties remained consistent at $13 million for the three months ended September 30, 2023 and 2024. During both periods, we recognized impairments primarily related to expiring leases as well as design and initial costs related to pads we no longer plan to place into service.

Previous wording

Net marketing expense for the three months ended June 30, 2023 and 2024 remained relatively consistent at $22 million and $21 million, respectively, or $0.07 per Mcfe.

Current wording

Net marketing expense for the three months ended September 30, 2023 and 2024 remained relatively consistent at $17 million and $15 million, respectively, or $0.05 per Mcfe.

Previous wording

Marketing revenue. Marketing revenue increased from $44 million for the three months ended June 30, 2023 to $49 million for the three months ended June 30, 2024, an increase of $5 million, or 13%. This fluctuation primarily resulted from the following:

Current wording

Marketing revenue. Marketing revenue decreased from $53 million for the three months ended September 30, 2023 to $47 million for the three months ended September 30, 2024, a decrease of $6 million, or 11%. This fluctuation primarily resulted from the following:

Previous wording

Marketing expense. Marketing expense increased from $66 million for the three months ended June 30, 2023 to $71 million for the three months ended June 30, 2024, an increase of $5 million, or 7%. Marketing expense includes the cost of third-party purchased natural gas, NGLs and oil as well as firm transportation costs, including costs related to current excess firm capacity. The cost of third-party natural gas, oil and NGLs purchases increased $5 million between periods, primarily due to higher oil marketing volumes and prices between periods, partially offset by lower natural gas marketing volumes and prices between periods. Firm transportation costs remained consistent at $27 million for the three months ended June 30, 2023 and 2024.

Current wording

Marketing expense. Marketing expense decreased from $70 million for the three months ended September 30, 2023 to $62 million for the three months ended September 30, 2024, a decrease of $8 million, or 11%. Marketing expense includes the cost of third-party purchased natural gas, NGLs and oil as well as firm transportation costs, including costs related to current excess firm capacity. The cost of third-party natural gas, oil and NGLs purchases remained consistent at $43 million for the three months ended September 30, 2023 and 2024. Firm transportation costs were $26 million for the three months ended September 30, 2023 and $18 million for the three months ended September 30, 2024, a decrease of $8 million due to the reduction in firm transportation commitments and higher third-party marketing volumes between periods.

Previous wording

Antero Midstream revenue. Revenue from the Antero Midstream segment increased from $258 million for the three months ended June 30, 2023 to $270 million for the three months ended June 30, 2024, an increase of $12 million. This increase is primarily due to higher gathering and processing revenues of $18 million, partially offset by lower water handling revenues of $6 million. The increased gathering and processing revenues between periods is primarily a result of the expiration of the growth incentive fee rebate program on December 31, 2023, annual CPI-based gathering and compression rate adjustments and increased high pressure gathering throughput between periods. The decreased water handling revenues between periods was primarily due to lower fresh water delivery volumes, partially offset by higher other fluid handing

Current wording

Antero Midstream revenue. Revenue from the Antero Midstream segment increased from $264 million for the three months ended September 30, 2023 to $270 million for the three months ended September 30, 2024, an increase of $6 million. This increase is primarily due to higher gathering and processing revenues of $20 million, partially offset by lower water handling revenues of $14 million. The increased gathering and processing revenues between periods is primarily a result of the expiration of the growth incentive fee rebate program on December 31, 2023, annual CPI-based gathering and compression rate adjustments and increased high pressure gathering throughput between periods. The decreased water handling revenues between periods was primarily due to lower fresh water delivery and other fluid handling volumes, partially offset by an increased fresh water delivery rate due to an annual CPI-based adjustment during the first quarter of 2024.

Previous wording

Antero Midstream operating expense. Total operating expense related to the Antero Midstream segment increased from $113 million for the three months ended June 30, 2023 to $117 million for the three months ended June 30, 2024, an increase of $4 million. This increase is primarily due to higher direct operating expenses, equity-based compensation expenses and depreciation expense between periods, partially offset by lower interest expense. Direct operating expenses increased by $3 million between periods primarily due to higher compression expense for the addition of two compressor stations that were acquired during the second quarter of 2024 and increased high pressure gathering volumes, partially offset by increased pipeline maintenance, repair and monitoring activities for the three months ended June 30, 2024.

Current wording

Antero Midstream operating expense. Total operating expense related to the Antero Midstream segment increased from $102 million for the three months ended September 30, 2023 to $107 million for the three months ended September 30, 2024, an increase of $5 million. This increase is primarily due to higher general and administrative expense, including equity-based compensation expense, and depreciation expense between periods.

Previous wording

Interest expense. Interest expense increased from $54 million for the six months ended June 30, 2023 to $63 million for the six months ended June 30, 2024, an increase of $9 million or 17%, primarily due to higher average Prior Credit Facility borrowings between periods and higher benchmark interest rates during the six months ended June 30, 2024.

Current wording

Interest expense. Interest expense decreased from $32 million for the three months ended September 30, 2023 to $28 million for the three months ended September 30, 2024, a decrease of $4 million, or 11%, primarily due to the conversion of $26 million aggregate principal amount of our 2026 Convertible Notes during the first quarter of 2024 and lower benchmark interest rates during the three months ended September 30, 2024, partially offset by higher average Credit Facility borrowings between periods.

Previous wording

Income tax benefit. For the three months ended June 30, 2023, we had an income tax benefit of $30 million, with an effective tax rate of 31%, due to a loss before income taxes of $98 million. For the three months ended June 30, 2024, we had an income tax benefit of $13 million, with an effective tax rate of 18%, due to a loss before income taxes of $74 million. The decrease in income tax benefit between periods of $17 million is primarily due to lower loss before income taxes between periods. The decrease in the effective tax rate between periods was primarily due to the effects of noncontrolling interests and our loss before income taxes.

Current wording

Income tax expense. For the three months ended September 30, 2023, we had an income tax expense of $14 million, with an effective tax rate of 30%, due to income before income taxes of $46 million. For the three months ended September 30, 2024, we had an income tax expense of $1 million from a loss before income taxes of $9 million primarily due to the net loss before income taxes during the third quarter of 2024, which when taken together with the net loss before taxes during the six months ended June 30, 2024, resulted in a 9% effective tax rate for the nine months ended September 30, 2024.

Previous wording

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2024

Current wording

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2024

Previous wording

Natural gas sales. Revenues from sales of natural gas decreased from $1.1 billion for the six months ended June 30, 2023 to $849 million for the six months ended June 30, 2024, a decrease of $257 million, or 23%. Lower commodity prices (excluding the effects of derivative settlements) during the six months ended June 30, 2024 accounted for an approximate $255 million decrease in year-over-year natural gas sales revenue (calculated as the change in the year-to-year average price times current year production volumes). Higher natural gas production volumes accounted for an approximate $2 million increase in year-over-year natural gas sales revenue (calculated as the change in year-to-year volumes times the prior year average price).

Current wording

Natural gas sales. Revenues from sales of natural gas decreased from $1.6 billion for the nine months ended September 30, 2023 to $1.3 billion for the nine months ended September 30, 2024, a decrease of $0.3 billion, or 21%. Lower commodity prices (excluding the effects of derivative settlements) during the nine months ended September 30, 2024 accounted for an approximate $323 million decrease in year-over-year natural gas sales revenue (calculated as the change in the year-to-year average price times current year production volumes). Lower natural gas production volumes accounted for an approximate $24 million decrease in year-over-year natural gas sales revenue (calculated as the change in year-to-year volumes times the prior year average price).

Previous wording

NGLs sales. Revenues from sales of NGLs increased from $893 million for the six months ended June 30, 2023 to $1.0 billion for the six months ended June 30, 2024, an increase of $114 million, or 13%. Higher commodity prices (excluding the effects of derivative settlements) during the six months ended June 30, 2024 accounted for an approximate $54 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes). Higher NGLs production volumes accounted for an approximate $60 million increase in year-over-year NGLs revenues (calculated as the change in year-to-year volumes times the prior year average price).

Current wording

NGLs sales. Revenues from sales of NGLs increased from $1.4 billion for the nine months ended September 30, 2023 to $1.5 billion for the nine months ended September 30, 2024, an increase of $0.1 billion, or 10%. Higher commodity prices (excluding the effects of derivative settlements) during the nine months ended September 30, 2024 accounted for an approximate $76 million increase in year-over-year revenues (calculated as the change in the year-to-year average price times current year production volumes). Higher NGLs production volumes accounted for an approximate $60 million increase in year-over-year NGLs revenues (calculated as the change in year-to-year volumes times the prior year average price).

Previous wording

Oil sales. Revenues from sales of oil increased from $110 million for the six months ended June 30, 2023 to $128 million for the six months ended June 30, 2024, an increase of $18 million, or 17%. Higher oil prices, excluding the effects of derivative settlements, accounted for an approximate $7 million increase in year-over-year oil revenues (calculated as the change in the year-to-year average price times current year production volumes). Higher oil production volumes during the six months ended June 30, 2024 accounted for an approximate $11 million increase in year-over-year oil revenues (calculated as the change in year-to-year volumes times the prior year average price).

Current wording

Oil sales. Revenues from sales of oil increased from $172 million for the nine months ended September 30, 2023 to $181 million for the nine months ended September 30, 2024, an increase of $9 million, or 5%. Higher oil prices, excluding the effects of derivative settlements, accounted for an approximate $1 million increase in year-over-year oil revenues (calculated as the change in the year-to-year average price times current year production volumes). Higher oil production volumes during the nine months ended September 30, 2024 accounted for an approximate $8 million increase in year-over-year oil revenues (calculated as the change in year-to-year volumes times the prior year average price).

Previous wording

Commodity derivative fair value gains. Our commodity derivatives included variable price swap contracts, swaptions, basis swap contracts, call options and embedded put options. Because we do not designate these derivatives as accounting hedges, they do not receive hedge accounting treatment. Consequently, all mark-to-market gains or losses, as well as cash receipts or payments on settled derivative instruments, are recognized in our statements of operations. For the six months ended June 30, 2023 and 2024, our commodity hedges resulted in derivative fair value gains of $134 million and $4 million, respectively. For the six months ended June 30, 2023, commodity derivative fair value gains included $11 million of cash payments on settled commodity derivative losses and a $202 million cash payment for the early settlement of our swaption. For the six months ended June 30, 2024, commodity derivative fair value gains included $7 million of net cash proceeds for settled derivative gains.

Current wording

Commodity derivative fair value gains. Our commodity derivatives included variable price swap contracts, swaptions, basis swap contracts, call options and embedded put options. Because we do not designate these derivatives as accounting hedges, they do not receive hedge accounting treatment. Consequently, all mark-to-market gains or losses, as well as cash receipts or payments on settled derivative instruments, are recognized in our statements of operations. For the nine months ended September 30, 2023 and 2024, our commodity hedges resulted in derivative fair value gains of $138 million and $22 million, respectively. For the nine months ended September 30, 2023, commodity derivative fair value gains included $17 million of cash payments on settled commodity derivative losses and a $202 million cash payment for the early settlement of our swaption. For the nine months ended September 30, 2024, commodity derivative fair value gains included $12 million of net cash proceeds for settled derivative gains.

Previous wording

Amortization of deferred revenue, VPP. Amortization of deferred revenues associated with the VPP decreased from $15 million for the six months ended June 30, 2023 to $13 million for the six months ended June 30, 2024, a decrease of $2 million or 11%, primarily due to lower production volumes attributable to the VPP properties between periods. Amortization of the deferred revenues associated with the VPP are recognized as the production volumes are delivered at $1.61 per MMBtu over the contractual term.

Current wording

Amortization of deferred revenue, VPP. Amortization of deferred revenues associated with the VPP decreased from $23 million for the nine months ended September 30, 2023 to $20 million for the nine months ended September 30, 2024, a decrease of $3 million or 11%, primarily due to lower production volumes attributable to the VPP properties between periods. Amortization of the deferred revenues associated with the VPP are recognized as the production volumes are delivered at $1.61 per MMBtu over the contractual term.

Previous wording

Lease operating expense. Lease operating expense increased from $58 million for the six months ended June 30, 2023 to $59 million for the six months ended June 30, 2024, primarily due to higher oilfield service costs. On a per-unit basis, lease operating expenses decreased from $0.10 per Mcfe for the six months ended June 30, 2023 to $0.09 per Mcfe for the six months ended June 30, 2024, primarily due to higher production volumes between periods, partially offset by higher overall costs during the six months ended June 30, 2024.

Current wording

Lease operating expense. Lease operating expense decreased from $92 million, or $0.10 per Mcfe, for the nine months ended September 30, 2023 to $88 million, or $0.09 per Mcfe, for the nine months ended September 30, 2024, primarily due to lower water disposal costs and workover expense during the nine months ended September 30, 2024, partially offset by higher oilfield service costs between periods.

Previous wording

Gathering, compression, processing and transportation expense. Gathering, compression, processing and transportation expense remained consistent at $1.3 billion for the six months ended June 30, 2023 and 2024. This was primarily a result of the following:

Current wording

Gathering, compression, processing and transportation expense. Gathering, compression, processing and transportation expense remained consistent at $2.0 billion for the nine months ended September 30, 2023 and 2024. This was primarily a result of the following:

Previous wording

Production and ad valorem tax expense. Production and ad valorem taxes increased from $85 million for the six months ended June 30, 2023 to $100 million for the six months ended June 30, 2024, an increase of $15 million, or 17%, primarily due to higher ad valorem taxes and production volumes between periods, partially offset by lower natural gas prices during the six months ended June 30, 2024. Production and ad valorem taxes as a percentage of natural gas revenues increased

Current wording

Production and ad valorem tax expense. Production and ad valorem taxes increased from $118 million for the nine months ended September 30, 2023 to $148 million for the nine months ended September 30, 2024, an increase of $30 million, or 25%, primarily due to higher ad valorem taxes and production volumes between periods, partially offset by lower natural gas prices during the nine months ended September 30, 2024. Production and ad valorem taxes as a percentage of natural gas revenues increased from 7% for the nine months ended September 30, 2023 to 12% for the nine months ended September 30,

Previous wording

from 8% for the six months ended June 30, 2023 to 12% for the six months ended June 30, 2024, primarily as a result of higher ad valorem taxes, which 2024 West Virginia ad valorem taxes are based on commodity prices during 2022.

Current wording

2024, primarily as a result of higher ad valorem taxes, which 2024 West Virginia ad valorem taxes are based on commodity prices during 2022.

Previous wording

General and administrative expense. General and administrative expense (excluding equity-based compensation expense) decreased from $85 million for the six months ended June 30, 2023 to $82 million for six months ended June 30, 2024, a decrease of $3 million, or 3%, primarily due to lower professional service fees between periods. General and administrative expense on a per unit basis (excluding equity-based compensation) decreased from $0.14 per Mcfe for the six months ended June 30, 2023 to $0.13 per Mcfe for the six months ended June 30, 2024 as a result of lower overall costs and increased production volumes between periods.

Current wording

General and administrative expense. General and administrative expense (excluding equity-based compensation expense) decreased from $125 million for the nine months ended September 30, 2023 to $121 million for nine months ended September 30, 2024, a decrease of $4 million, or 3%, primarily due to lower professional service fees between periods. General and administrative expense on a per unit basis (excluding equity-based compensation) remained consistent at$0.13 per Mcfe for the nine months ended September 30, 2023 and 2024.

Previous wording

Equity-based compensation expense. Noncash equity-based compensation expense increased from $27 million for the six months ended June 30, 2023 to $33 million for the six months ended June 30, 2024, an increase of $6 million, or 25%. This increase was primarily due to annual equity-based awards granted in the first quarters of 2023 and 2024, partially offset by equity-based awards granted in prior years that were fully vested between periods. See Note 9—Equity-Based Compensation to the unaudited condensed consolidated financial statements for more information.

Current wording

Equity-based compensation expense. Non-cash equity-based compensation expense increased from $45 million for the nine months ended September 30, 2023 to $49 million for the nine months ended September 30, 2024, an increase of $4 million, or 10%. This increase was primarily due to RSU award expense attributable to awards granted in the fourth quarter of 2023 and first quarter of 2024, partially offset by lower PSU award expense between periods and equity-based awards granted in prior years that were fully vested between periods. See Note 9—Equity-Based Compensation to the unaudited condensed consolidated financial statements for more information.

Previous wording

Depletion, depreciation, and amortization expense (“DD&A expense”). DD&A expense remained relatively consistent at $171 million, or $0.56 per Mcfe, and $171 million, or $0.55 per Mcfe, for the three months ended June 30, 2023 and 2024, respectively.

Current wording

Depletion, depreciation and amortization expense. DD&A expense remained relatively consistent at $515 million, or $0.56 per Mcfe, and $514 million, or $0.55 per Mcfe, for the nine months ended September 30, 2023 and 2024, respectively.

Previous wording

Impairment of property and equipment. Impairment of oil and gas properties decreased from $31 million for the six months ended June 30, 2023 to $6 million for the six months ended June 30, 2024, a decrease of $25 million, primarily due to lower impairments of expiring leases between periods. During both periods, we recognized impairments primarily related to expiring leases as well as design and initial costs related to pads we no longer plan to place into service.

Current wording

Impairment of property and equipment. Impairment of oil and gas properties decreased from $45 million for the nine months ended September 30, 2023 to $19 million for the nine months ended September 30, 2024, a decrease of $26 million, primarily due to lower impairments of expiring leases between periods. During both periods, we recognized impairments primarily related to expiring leases as well as design and initial costs related to pads we no longer plan to place into service.

Previous wording

Contract termination, loss contingency and other operating expenses. Contract termination, loss contingency and other operating expenses attributable to our exploration and production segment decreased from $10 million for the six months ended June 30, 2023 to $5 million for the six months ended June 30, 2024. This decrease was primarily due to lower expense associated with the early termination of certain completion contracts between periods.

Current wording

Contract termination, loss contingency, settlements and other operating expenses. Contract termination, loss contingency, settlements and other operating expenses attributable to our exploration and production segment decreased from $24 million for the nine months ended September 30, 2023 to $4 million for the nine months ended September 30, 2024. This decrease was primarily due to a loss contingency recorded in the third quarter of 2023 and lower expense associated with the early termination of certain completion contracts between periods, partially offset by our receipt of 0.1 million shares of Antero Midstream common stock during the third quarter of 2024 as part of a judgment in a legal proceeding with an unaffiliated third-party.