Reportable Segments

9 Months Ended

Sep. 30, 2021

Reportable Segments

Reportable Segments

(16) Reportable Segments

Management evaluated how the Company is organized and managed and identified the following segments: (i) the exploration, development, and production of natural gas, NGLs, and oil; (ii) marketing and utilization of excess firm transportation capacity and (iii) midstream services through the Company’s equity method investment in Antero Midstream Corporation. All of the Company’s assets are located in the United States and substantially all of its production revenues are attributable to customers located

in the United States; however, some of the Company’s production revenues are attributable to customers who then transport the Company’s production to foreign countries for resale or consumption.

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 September 30, 2020 and 2021 (in thousands):

	Three Months Ended September 30, 2020
					Equity Method		Elimination of
					Investment in		Intersegment
	Exploration				Antero		Transactions and
	and				Midstream		Unconsolidated		Consolidated
	Production		Marketing		Corporation		Affiliates		Total
Sales and revenues:
Third-party	$	288,419		91,497		—		—		379,916
Intersegment		675		—		233,415		(233,415)		675
Total revenue	$	289,094		91,497		233,415		(233,415)		380,591
Operating expenses:
Lease operating	$	21,450		—		—		—		21,450
Gathering, compression, processing, and transportation		656,615		—		38,052		(38,052)		656,615
Impairment of oil and gas properties		29,392		—		—		—		29,392
Depletion, depreciation, and amortization		238,418		—		26,801		(26,801)		238,418
General and administrative		31,640		—		13,232		(13,232)		31,640
Other		28,605		128,580		3,513		(3,513)		157,185
Total operating expenses		1,006,120		128,580		81,598		(81,598)		1,134,700
Operating income (loss)	$	(717,026)		(37,083)		151,817		(151,817)		(754,109)
Equity in earnings of unconsolidated affiliates	$	24,419		—		23,173		(23,173)		24,419
Investments in unconsolidated affiliates	$	272,926		—		—		—		272,926
Segment assets	$	13,349,739		—		5,673,504		(5,673,504)		13,349,739
Capital expenditures for segment assets	$	151,269		—		41,851		(41,851)		151,269

	Three Months Ended September 30, 2021
					Equity Method		Elimination of
					Investment in		Intersegment
	Exploration				Antero		Transactions and
	and				Midstream		Unconsolidated		Consolidated
	Production		Marketing		Corporation		Affiliates		Total
Sales and revenues:
Third-party	$	301,207		232,685		242,472		(242,472)		533,892
Intersegment		530		—		(17,668)		17,668		530
Total revenue	$	301,737		232,685		224,804		(224,804)		534,422
Operating expenses:
Lease operating	$	25,363		—		—		—		25,363
Gathering, compression, processing, and transportation		628,225		—		39,499		(39,499)		628,225
Impairment of oil and gas properties		26,253		—		—		—		26,253
Depletion, depreciation, and amortization		182,810		—		27,487		(27,487)		182,810
General and administrative		32,442		—		14,810		(14,810)		32,442
Other		56,652		266,751		1,187		(1,187)		323,403
Total operating expenses		951,745		266,751		82,983		(82,983)		1,218,496
Operating income (loss)	$	(650,008)		(34,066)		141,821		(141,821)		(684,074)
Equity in earnings of unconsolidated affiliates	$	21,450		—		24,088		(24,088)		21,450
Investments in unconsolidated affiliates	$	236,597		—		703,780		(703,780)		236,597
Segment assets	$	13,375,515		96,023		5,533,633		(5,533,633)		13,471,538
Capital expenditures for segment assets	$	387,783		—		82,583		(82,583)		387,783

The operating results and assets of the Company’s reportable segments were as follows for the nine months ended September 30, 2020 and 2021 (in thousands):

	Nine Months Ended September 30, 2020
					Equity Method		Elimination of
					Investment in		Intersegment
	Exploration				Antero		Transactions and
	and				Midstream		Unconsolidated		Consolidated
	Production		Marketing		Corporation		Affiliates		Total
Sales and revenues:
Third-party	$	1,978,572		201,855		—		—		2,180,427
Intersegment		2,180		—		696,859		(696,859)		2,180
Total revenue	$	1,980,752		201,855		696,859		(696,859)		2,182,607
Operating expenses:
Lease operating	$	71,836		—		—		—		71,836
Gathering, compression, processing, and transportation		1,877,084		—		128,847		(128,847)		1,877,084
Impairment of oil and gas properties		155,962		—		—		—		155,962
Impairment of midstream assets		—		—		665,491		(665,491)		—
Depletion, depreciation, and amortization		652,130		—		81,889		(81,889)		652,130
General and administrative		101,264		—		39,191		(39,191)		101,264
Other		88,023		334,906		14,062		(14,062)		422,929
Total operating expenses		2,946,299		334,906		929,480		(929,480)		3,281,205
Operating loss	$	(965,547)		(133,051)		(232,621)		232,621		(1,098,598)
Equity in earnings (loss) of unconsolidated affiliates	$	(83,408)		—		63,197		(63,197)		(83,408)
Investments in unconsolidated affiliates	$	272,926		—		—		—		272,926
Segment assets	$	13,349,739		—		5,673,504		(5,673,504)		13,349,739
Capital expenditures for segment assets	$	726,402		—		165,265		(165,265)		726,402

	Nine Months Ended September 30, 2021
					Equity Method		Elimination of
					Investment in		Intersegment
	Exploration				Antero		Transactions and
	and				Midstream		Unconsolidated		Consolidated
	Production		Marketing		Corporation		Affiliates		Total
Sales and revenues:
Third-party	$	1,664,509		562,928		—		—		2,227,437
Intersegment		551		—		681,712		(681,712)		551
Total revenue	$	1,665,060		562,928		681,712		(681,712)		2,227,988
Operating expenses:
Lease operating	$	71,555		—		—		—		71,555
Gathering, compression, processing, and transportation		1,874,664		—		118,368		(118,368)		1,874,664
Impairment of oil and gas properties		69,618		—		—		—		69,618
Depletion, depreciation, and amortization		564,166		—		80,956		(80,956)		564,166
General and administrative		108,693		—		46,991		(46,991)		108,693
Other		143,954		627,822		8,590		(8,590)		771,776
Total operating expenses		2,832,650		627,822		254,905		(254,905)		3,460,472
Operating income (loss)	$	(1,167,590)		(64,894)		426,807		(426,807)		(1,232,484)
Equity in earnings of unconsolidated affiliates	$	57,621		—		66,347		(66,347)		57,621
Investments in unconsolidated affiliates	$	236,597		—		703,780		(703,780)		236,597
Segment assets	$	13,375,515		96,023		5,533,633		(5,533,633)		13,471,538
Capital expenditures for segment assets	$	510,941		—		156,948		(156,948)		510,941