Antero Resources' ROCE Trajectory Supports Long-Term Value Multiplication

Antero Resources (NYSE:AR) has seen a significant improvement in its return on capital employed (ROCE) to 4.6% from a loss-making position five years ago. The company's capital employed has remained relatively flat, but the higher returns could be due to prior investments paying off or increased efficiencies. However, investors should be aware that high growth requires not only increasing returns but also increasing capital employed.

Antero Resources Corporation (NYSE:AR), a leading natural gas and NGL company, has seen a notable improvement in its return on capital employed (ROCE) to 4.6% over the past five years. This represents a substantial turnaround from a loss-making position, highlighting the company's strategic investments and operational efficiencies. Despite the flat capital employed, the higher returns suggest that prior investments are paying off and that the company is achieving greater operational efficiency.

The company's ROCE improvement can be attributed to several factors. First, Antero Resources has increased its production guidance for the second consecutive year in 2025, demonstrating its ability to scale operations effectively. Second, the company has reduced its drilling and completion capital budget, indicating a focus on optimizing costs. Furthermore, Antero Resources has hedged approximately 20% of its expected natural gas volumes through 2026, which has lowered its free cash flow breakeven to $1.75 per Mcf for next year Here is Why Antero Resources Corporation (AR) is a Great Option to Invest in LNG^[2].

However, investors should be cautious. While the current ROCE improvement is promising, high growth often requires not only increasing returns but also increasing capital employed. Antero Resources' position as the most integrated natural gas and NGL business in the US, with a strong presence in the LNG export market, provides significant opportunities for future growth. Nevertheless, the company must continue to balance investment in new projects with operational efficiency to sustain and grow its ROCE.