Segment Information

6 Months Ended

Jun. 30, 2020

(18) Segment Information

See Note 2(l)—Summary of Significant Accounting Policies, Industry Segments and Geographic Information, to the unaudited condensed consolidated financial statements for a description of the Company’s determination of its reportable segments. Revenues from gathering and processing and water handling and treatment operations were primarily derived from intersegment transactions for services provided to the Company’s exploration and production operations prior to the closing of the Transactions. Through March 12, 2019, the results of Antero Midstream Partners were included in the consolidated financial statements of Antero Resources. Effective March 13, 2019, the results of Antero Midstream Partners are no longer consolidated in Antero Resources’ results; however, the Company’s segment disclosures include the results of our unconsolidated affiliates due to their significance to the Company’s operations. See Note 3—Deconsolidation of Antero Midstream Partners LP to the unaudited condensed consolidated financial statements for further discussion on the Transactions. Marketing revenues are primarily derived from activities to purchase and sell third-party natural gas and NGLs and to market excess firm transportation capacity to third parties.

Operating segments are evaluated based on their contribution to consolidated results, which is primarily determined by the respective operating income (loss) of each segment. General and administrative expenses were allocated to the midstream segment based on the nature of the expenses and on a combination of the segments’ proportionate share of the Company’s consolidated property and equipment, capital expenditures, and labor costs, as applicable. General and administrative expenses related to the marketing segment are not allocated because they are immaterial. Other income, income taxes, and interest expense are primarily managed and evaluated on a consolidated basis. Intersegment sales were transacted at prices which approximate market. Accounting policies for each segment are the same as the Company’s accounting policies described in Note 2—Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements.

The operating results and assets of the Company’s reportable segments were as follows for the three months ended June 30, 2019 and 2020 (in thousands):


					Equity Method		Elimination of
					Investment in		intersegment
	Exploration				Antero		transactions and
	and				Midstream		unconsolidated		Consolidated
	production		Marketing		Corporation		affiliates		total
Three months ended June 30, 2019:
Sales and revenues:
Third-party	$	1,234,824		63,080		46		—		1,297,950
Intersegment		1,760		—		255,572		(255,618)		1,714
Total	$	1,236,584		63,080		255,618		(255,618)		1,299,664

Operating expenses:
Lease operating	$	40,857		—		50,549		(50,549)		40,857
Gathering, compression, processing, and transportation		566,834		—		12,311		(12,311)		566,834
Impairment of oil and gas properties		130,999		—		—		—		130,999
Impairment of midstream assets		—		—		594		(594)		—
Depletion, depreciation, and amortization		242,302		—		36,447		(36,447)		242,302
General and administrative		42,382		—		34,622		(34,622)		42,382
Other		38,755		137,539		3,504		(3,504)		176,294
Total		1,062,129		137,539		138,027		(138,027)		1,199,668
Operating income (loss)	$	174,455		(74,459)		117,591		(117,591)		99,996
Equity in earnings of unconsolidated affiliates	$	13,585		—		13,623		(13,623)		13,585
Investments in unconsolidated affiliates	$	1,967,203		—		1,186,161		(1,186,161)		1,967,203
Segment assets	$	17,305,519		25,361		6,769,009		(6,769,009)		17,330,880
Capital expenditures for segment assets	$	342,253		—		125,185		(125,185)		342,253


					Equity Method		Elimination of
					Investment in		intersegment
	Exploration				Antero		transactions and
	and				Midstream		unconsolidated		Consolidated
	production		Marketing		Corporation		affiliates		total
Three months ended June 30, 2020:
Sales and revenues:
Third-party	$	419,919		64,285		—		—		484,204
Intersegment		707		—		219,736		(219,736)		707
Total	$	420,626		64,285		219,736		(219,736)		484,911

Operating expenses:
Lease operating	$	24,742		—		—		—		24,742
Gathering, compression, processing, and transportation		631,845		—		42,067		(42,067)		631,845
Impairment of oil and gas properties		37,350		—		—		—		37,350
Depletion, depreciation, and amortization		214,035		—		27,745		(27,745)		214,035
General and administrative		38,403		—		12,422		(12,422)		38,403
Other		32,405		113,053		2,776		(2,776)		145,458
Total		978,780		113,053		85,010		(85,010)		1,091,833
Operating income (loss)	$	(558,154)		(48,768)		134,726		(134,726)		(606,922)
Equity in earnings of unconsolidated affiliates	$	20,228		—		20,947		(20,947)		20,228
Investments in unconsolidated affiliates	$	279,805		—		729,823		(729,823)		279,805
Segment assets	$	13,711,749		32,241		5,715,055		(5,715,055)		13,743,990
Capital expenditures for segment assets	$	263,522		—		55,431		(55,431)		263,522

The operating results and assets of the Company’s reportable segments were as follows for the six months ended June 30, 2019 and 2020 (in thousands):


					Equity Method		Elimination of
					Investment in		intersegment
	Exploration				Antero		transactions and
	and				Midstream		unconsolidated		Consolidated
	production		Marketing		Corporation		affiliates		total
Six months ended June 30, 2019:
Sales and revenues:
Third-party	$	2,176,459		154,266		50		—		2,330,775
Intersegment		3,518		—		309,676		(306,898)		6,296
Total	$	2,179,977		154,266		309,726		(306,898)		2,337,071

Operating expenses:
Lease operating	$	83,826		—		62,377		(63,614)		82,589
Gathering, compression, processing, and transportation		1,101,849		—		15,233		(125,719)		991,363
Impairment of oil and gas properties		212,243		—		—		—		212,243
Impairment of midstream assets		—		—		7,576		(594)		6,982
Depletion, depreciation, and amortization		460,796		—		44,097		(22,390)		482,503
General and administrative		92,290		—		54,431		(36,137)		110,584
Other		82,892		300,623		4,795		(3,792)		384,518
Total		2,033,896		300,623		188,509		(252,246)		2,270,782
Operating income (loss)	$	146,081		(146,357)		121,217		(54,652)		66,289
Equity in earnings of unconsolidated affiliates	$	15,402		—		16,503		(4,239)		27,666
Investments in unconsolidated affiliates	$	1,967,203		—		1,186,161		(1,186,161)		1,967,203
Segment assets	$	17,305,519		25,361		6,769,009		(6,769,009)		17,330,880
Capital expenditures for segment assets	$	761,034		—		141,190		(88,038)		814,186


					Equity Method		Elimination of
					Investment in		intersegment
	Exploration				Antero		transactions and
	and				Midstream		unconsolidated		Consolidated
	production		Marketing		Corporation		affiliates		total
Six months ended June 30, 2020:
Sales and revenues:
Third-party	$	1,690,153		110,358		—		—		1,800,511
Intersegment		1,505		—		463,444		(463,444)		1,505
Total	$	1,691,658		110,358		463,444		(463,444)		1,802,016

Operating expenses:
Lease operating	$	50,386		—		—		—		50,386
Gathering, compression, processing, and transportation		1,220,469		—		90,795		(90,795)		1,220,469
Impairment of oil and gas properties		126,570		—		—		—		126,570
Impairment of midstream assets		—		—		664,544		(664,544)		—
Depletion, depreciation, and amortization		413,712		—		55,088		(55,088)		413,712
General and administrative		69,624		—		25,959		(25,959)		69,624
Other		59,418		206,326		11,496		(11,496)		265,744
Total		1,940,179		206,326		847,882		(847,882)		2,146,505
Operating loss	$	(248,521)		(95,968)		(384,438)		384,438		(344,489)
Equity in earnings (loss) of unconsolidated affiliates	$	(107,827)		—		40,024		(40,024)		(107,827)
Investments in unconsolidated affiliates	$	279,805		—		729,823		(729,823)		279,805
Segment assets	$	13,711,749		32,241		5,715,055		(5,715,055)		13,743,990
Capital expenditures for segment assets	$	575,133		—		123,414		(123,414)		575,133