(3) Transactions

On June 15, 2020, the Company announced the consummation of a transaction with an affiliate of Sixth Street Partners, LLC (“Sixth Street”) relating to certain overriding royalty interests across the Company’s existing asset base (the “ORRIs”). In connection with the transaction, the Company contributed the ORRIs to Martica and Sixth Street contributed $300 million in cash (subject to customary adjustments) and agreed to contribute up to an additional $102 million in cash if certain production thresholds attributable to the ORRIs were achieved in 2020 and 2021. The Company met these production thresholds and received the $102 million of additional contributions from Sixth Street during 2020 and 2021. All cash contributed by Sixth Street at the initial closing and received as part of these additional contributions was distributed to the Company.

The ORRIs include an overriding royalty interest of 1.25% of the Company’s working interest in all of its operated proved developed properties in West Virginia and Ohio, subject to certain excluded wells (the “Initial PDP Override”), and an overriding royalty interest of 3.75% of the Company’s working interest in all of its undeveloped properties in West Virginia and Ohio (the “Development Override”). Wells turned to sales after April 1, 2020 and prior to the later of (a) the date on which the Company turns to sales 2.2 million lateral feet (net to the Company’s interest) of horizontal wells burdened by the Development Override or (b) the earlier of (i) April 1, 2023 or (ii) the date on which the Company turns to sales 3.82 million lateral feet (net to the Company’s interest) of horizontal wells are subject to the Development Override. As of April 1, 2023, Sixth Street no longer has the right to participate in any new wells, and Martica reconveyed the Development Override to the Company, except for the portion relating to wells turned to sales prior to April 1, 2023.

The ORRIs also include an additional overriding royalty interest of 2.00% of the Company’s working interest in the properties underlying the Initial PDP Override (the “Incremental Override”). The Incremental Override (or a portion thereof, as applicable) could be re-conveyed to the Company (at the Company’s election) if certain production targets attributable to the ORRIs were achieved through March 31, 2023. Any portion of the Incremental Override that could not be re-conveyed to the Company based on the Company failing to achieve such production volumes through March 31, 2023 will remain with Martica. As of March 31, 2023, 24% of the Incremental Override (or a 0.48% overriding royalty interest) will remain with Martica.

Prior to Sixth Street achieving an internal rate of return of 13% and 1.5x cash-on-cash return (the “Hurdle”), Sixth Street will receive all distributions in respect of the Initial PDP Override and the Development Override, and 24% of all distributions in respect of the Incremental Override, and the Company will receive 76% of all distributions in respect of the Incremental Override. Following Sixth Street achieving the Hurdle, the Company will receive 85% of the distributions in respect of the ORRIs to which Sixth Street was entitled immediately prior to the Hurdle being achieved. The Company expects the Hurdle be achieved during the first half of 2026.

On February 17, 2021, the Company announced the formation of a drilling partnership with QL, an affiliate of Quantum Energy Partners, for the Company’s 2021 through 2024 drilling program. Under the terms of the arrangement, each year in which QL participated represented an annual tranche, and QL was conveyed a working interest in any wells spud by the Company during such tranche year. For 2021 through 2024, the Company and QL agreed to the estimated IRR of the Company’s capital budget for each annual tranche, and QL agreed to participate in all four annual tranches. The Company developed and managed the drilling program associated with each tranche, including the selection of wells. Additionally, for each annual tranche, the Company and QL entered into assignments, bills of sale and conveyances pursuant to which QL was conveyed a proportionate working interest percentage in each well spud in that year, which conveyances are not subject to any reversion. Capital costs in excess of, and cost savings below, a specified percentage of budgeted amounts for each annual tranche were for the Company’s account. Subject to the preceding sentence, for any wells included in a tranche, QL is obligated and responsible for its working interest share of costs and liabilities, and is entitled to its working interest share of revenues, associated with such wells for the life of such wells.

Under the terms of the arrangement, QL funded development capital of 20% for wells spud in 2021 and 2024, 15% for wells spud in 2022 and 2023, which funding amounts represented QL’s proportionate working interest in such wells. Additionally, the Company may receive a carry in the form of a one-time payment from QL for each annual tranche if the IRR for such tranche exceeded certain specified returns, which will be determined no earlier than October 31 and no later than December 1 following the end of each tranche year. The Company received a total carry of $117 million for the 2021-2024 Drilling Partnership, including $29 million, $32 million and $27 million during the years ended December 31, 2023, 2024 and 2025, respectively.

The Company has accounted for the 2021-2024 Drilling Partnership as a conveyance under ASC 932 and such conveyances are recorded in the consolidated financial statements as QL obtains its proportionate working interest in each well. No gain or loss was recognized for any of the interests conveyed to QL during the term of the 2021-2024 Drilling Partnership.

On December 11, 2024, the Company entered into a drilling partnership with an unaffiliated third-party. Under the terms of the arrangement, the third-party will participate in and fund a share of total development capital expenses for wells spud by the Company during the 2025 calendar year. For each well spud during the 2025 calendar year, the third-party will receive a 15% working interest in such wells and will fund greater than 15% of total development capital expenses for such wells. Subject to the preceding sentence, for any wells spud in the calendar year 2025, the third-party is obligated and responsible for its working interest share of costs and liabilities, and is entitled to its working interest share of revenues, associated with such wells for the life of such wells. Additionally, for each well in the partnership, the Company will enter into an assignment, bill of sale and conveyance pursuant to which the third-party will be conveyed a proportionate working interest percentage in such well, which conveyances will not be subject to any reversion.

The Company has accounted for the 2025 Drilling Partnership as a conveyance under ASC 932 and such conveyances are recorded in the consolidated financial statements as the third-party obtains its proportionate working interest in each well. No gain or loss was recognized for any of the interests conveyed during the year ended December 31, 2025.

Asset Acquisitions

During the year ended December 31, 2025, the Company acquired additional working and royalty interests in certain Antero-operated producing wells for a total of approximately $260 million, before closing adjustments. The Company accounted for these transactions as asset acquisitions and as such, substantially all of the cash consideration was allocated to proved properties in the consolidated balance sheets.

HG Acquisition

On December 5, 2025, the Company entered into a definitive agreement to acquire 100% of the issued and outstanding equity interests of HG Production for total cash consideration of $2.8 billion, subject to the term and conditions thereof. The HG Acquisition includes approximately 385,000 net acres in the core of the Marcellus Shale in West Virginia. Pursuant to the same agreement, Antero Midstream Partners agreed to acquire 100% of the issued and outstanding equity interests of HG Midstream for cash consideration of $1.1 billion, subject to the terms and conditions thereof. The HG Midstream Acquisition includes gathering pipelines and integrated water handling assets in the core of the Marcellus Shale in West Virginia. In connection with the Company’s entry into the definitive purchase agreement, the Company and Antero Midstream agreed to allocate between the parties certain benefits and costs under the agreement and the buyer-side representations and warranties insurance policies. On December 8, 2025, the Company deposited $210 million into escrow to be credited towards the cash consideration payable at the closing of the HG Acquisition, which is classified as restricted cash on the Company’s consolidated balance sheets as of December 31, 2025. These acquisitions closed on February 3, 2026, with effective dates of January 1, 2026. The Company intends to make certain modifications to its existing commercial arrangements with Antero Midstream to provide for on-pad compression with respect to certain wells and to provide a transition period through 2026 before certain water services would be provided under the Company’s existing agreements with Antero Midstream.

The disclosure of certain financial information required by FASB ASC Topic 805, Business Combinations, has been omitted as it is impracticable to provide such information due to the timing of the closing of the HG Acquisition and issuance of the Company’s consolidated financial statements.

(e) Utica Shale Divestiture

On December 5, 2025, the Company entered into a purchase and sale agreement with the Buyer Parties to sell the Company’s Utica Shale Properties, for aggregate cash consideration of $800 million, subject to the terms and conditions thereof. The Utica Shale Properties include approximately 80,000 gross (70,000 net) acres located in Ohio and proved reserves of approximately 600 Bcfe as of December 31, 2025. The Utica Shale Divestiture is expected to close in February 2026, with an effective date of July 1, 2025, subject to the satisfaction of certain customary closing conditions.

The Utica Shale Properties and its associated assets and liabilities have been classified as held for sale as of December 31, 2025 on the Company’s consolidated balance sheets, which relate to the Company’s exploration and production reportable segment. The Utica Shale Divestiture does not qualify as a discontinued operation under FASB ASC Topic 205, Presentation of Financial Statements, as it does not represent a strategic shift that will have a major effect on the Company's operations or financial results.

The following table sets forth the carrying value of the Utica Shale Properties assets and liabilities held for sale (in thousands):

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