Antero Raises $762 Million to Acquire Marcellus Acreage

Independent oil and gas producer Antero Resources Corp. (NYSE: AR) priced an underwritten secondary stock offering of 26.75 million shares to raise gross proceeds of approximately $762 million.

The underwriters have a 30-day option on an additional 4.01 million shares. Joint bookrunners for the offering are Credit Suisse and JPMorgan. The underwriters intend to offer the shares for sale from time to time “in one or more transactions on the New York Stock Exchange, in the over-the-counter market, through negotiated transactions, or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices.” The stock closed Thursday at $29.34.

Antero said it plans to use net proceeds from the offering to fund an acquisition of 55,000 net acres in the Marcellus shale play for $450 million and for general corporate purposes. The seller is Southwestern Energy Co. (NYSE: SWN) and the deal is expected to close in the third quarter.

According to a filing with the U.S. Securities and Exchange Commission (SEC), Antero is acquiring 14 million cubic feet of gas equivalent per day and has a so-called tag-along option on another 13,000 net acres (3 million cubic feet of gas equivalent per day). Under the terms of the tag-along option, the seller has a right to sell the additional assets to Antero at a price of approximately $110 million until July 9.

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Antero said that the 55,000-acre purchase adds 4.1 trillion cubic feet of gas equivalent to its unaudited proved, probable and possible (3P) Marcellus reserves. If the company acquires the additional 13,000 net acres, it will add an additional 1 trillion cubic feet equivalent to its unaudited Marcellus 3P reserves.

According to Southwestern, proved reserves on the 55,000 acres total 11 billion cubic feet equivalent and the company had no plans to drill the properties until 2023.

Antero’s stock traded down about 2.3% Friday morning, at $28.67 in a 52-week range of $18.50 to $37.07. The consensus price target on the stock is $31.80.

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