Baird Investment Banking Pitch Book
AR E&P STAND-ALONE:
WEIGHTED AVERAGE COST OF CAPITAL ANALYSIS
($ in millions)
Debt
Outstanding (7)
Cost of
Equity
(1)
(2)
(3)
(5)
(6)
(7)
(8)
(9)
Risk-free Interest Rate (¹)
(2)
Levered Beta
Market Premium
Size Premium
Cost of Equity
(5)
(3)
Source: AR and AM filings and Bloomberg
Represents estimated 20-year treasury rate as of March 29, 2018.
Two-year daily levered equity beta as of March 29, 2018.
Revolving Credit Facility
5.375% Senior Notes Due 2021
5.125% Senior Notes Due 2022
5.625% Senior Notes Due 2023
5.000% Senior Notes Due 2025
Cost of Debt
Amount
Outstanding
$185
1,000
1,100
750
600
$3,635
2.9%
1.0
6.9%
1.0%
10.9%
Interest
(6)
Rate
2.8%
4.0%
4.4%
4.8%
4.8%
4.4%
Large company stock total returns minus long-term government bond income returns as computed by Duff & Phelps LLC.
Source: Duff & Phelps LLC size premium.
Weighted Average Cost of Capital (8)
AR Market Equity / Implied Firm Value
AR Target Net Debt / Implied Firm Value
Weighted Contribution from Market Equity
Weighted Contribution from Debt
Weighted Average Cost of Capital
Capitalization
% of Debt
Cost of equity is calculated using CAPM (e.g. cost of equity risk-free interest rate + levered equity beta* market risk premium + size premium).
Interest rate for publicly-traded senior notes represents the yield-to-worst as of March 29, 2018.
Excludes current debt outstanding for Antero Midstream.
Excludes value of Antero Midstream common units held by Antero Resources, tax effected at 20%.
Net debt represents a target long-term 2.0x Net Debt/LTM EBITDA ratio,
Confidential
35.0%
30.0%
25.0%
8.3%
8.6%
8.9%
(9)
Cost of Equity
10.0% 10.5% 10.9% 11.5%
8.0%
8.3%
8.6%
BAIRD
68.0%
32.0%
7.4%
1.4%
8.8%
12.0%
8.6%
9.0%
9.3%
9.0%
9.3%
9.7%
9.3% 9.7% 10.1%
Debt capitalization as a percent of implied firm value is
sensitized between 25.0 % -35.0% and cost of equity is
sensitized 10.0% -12.0%
Baird will sensitize using WACC ranges from 8.0% to 10.1%
Project Bronco | Page 11View entire presentation