Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurement

v3.21.1
Fair Value Measurement
3 Months Ended
Mar. 31, 2021
Fair Value Measurement  
Fair Value Measurement

(12) Fair Value Measurement

Goodwill

The Company estimated the fair value of its assets in performing its goodwill impairment analysis in the first quarter of 2020. The Company utilized a combination of approaches to discounted cash flow approach, comparable company method and the market value approach. The Company used a weighted-average cost of capital of 18.0% as of March 31, 2020, which is based on significant inputs not observable in the market, and thus represents a Level 3 measurement within the fair value hierarchy.

Property and equipment

The Company estimated the undiscounted future cash flow projections to assess its property and equipment for impairment. The carrying values of certain freshwater permanent buried pipelines and equipment and fresh water surface pipelines and equipment were deemed not recoverable. As a result, the carrying values have been reduced to the estimated fair values, which are based on discounted future cash flows using assumptions as to revenues, costs, and a discount rate typical of third-party market participants of 19.0% as of March 31, 2020, which is a Level 3 fair value measurement within the fair value hierarchy.

Contingent Acquisition Consideration

In connection with Antero Resources’ contribution of Antero Water and certain water handling assets to Antero Midstream Partners in September 2015 (the “Water Acquisition”), Antero Midstream Partners agreed to pay Antero Resources (a) $125 million in cash if Antero Midstream Partners delivered 176,295,000 barrels or more of fresh water during the period between January 1, 2017 and December 31, 2019 and (b) an additional $125 million in cash if Antero Midstream Partners delivered 219,200,000 barrels or more of fresh water during the period between January 1, 2018 and December 31, 2020. This contingent consideration liability is valued based on Level 3 inputs related to expected average volumes and weighted average cost of capital.

In January 2020, Antero Midstream Partners paid Antero Resources $125 million and, as of December 31, 2020, no additional contingent acquisition consideration was earned.

Senior Unsecured Notes

As of December 31, 2020 and March 31, 2021, the fair value and carrying value of the Company’s Senior Notes were as follows:

(Unaudited)

December 31, 2020

March 31, 2021

(in thousands)

Fair Value (1)

Carrying Value (2)

Fair Value (1)

Carrying Value (2)

2024 Notes

$

633,750

646,391

656,435

646,606

2026 Notes

569,250

543,267

591,525

543,511

2027 Notes

637,000

645,390

650,130

645,530

2028 Notes

624,000

643,078

647,725

643,281

Total

$

2,464,000

2,478,126

2,545,815

2,478,928

(1) Fair values are based on Level 2 market data inputs.
(2) Carrying values are presented net of unamortized debt issuance costs and debt premiums.

Other Assets and Liabilities

The carrying values of accounts receivable and accounts payable at December 31, 2020 and March 31, 2021 approximated fair value because of their short-term nature. The carrying value of the amounts under the Credit Facility at December 31, 2020 and March 31, 2021 approximated fair value because the variable interest rates are reflective of current market conditions.