Ascent Resources Utica Holdings Reports Fourth Quarter And Full Year 2019 Operating Results And Announces 2020 Guidance
OKLAHOMA CITY, Feb. 21, 2020 /PRNewswire/ -- Ascent Resources Utica Holdings, LLC ("Ascent" or "the Company" or "our") today announced its fourth quarter and full year 2019 financial and operating results and 2020 outlook. In addition, Ascent announced a conference call with analysts and investors scheduled for 7 AM CST / 8 AM EST, Monday, February 24, 2020. For more detailed information on Ascent's assets and business, please refer to the presentation and additional information located at https://www.ascentresources.com/investors.
Fourth Quarter 2019 Highlights:
-- Cash flows from operating activities were $221 million, and free cash
flow was $17 million
-- Net income was $65 million, adjusted net income was $98 million and
adjusted EBITDAX was $341 million
-- Net production averaged 2,272 mmcfe per day
-- Net liquids production averaged over 47,000 bbl per day
-- Extended maturity of $2.5 billion revolving credit facility to April
2024
-- Reaffirmed $2.0 billion borrowing base on revolving credit facility
Full Year 2019 Highlights:
-- Net income was $466 million, adjusted net income was $328 million and
adjusted EBITDAX was $1.2 billion
-- Net production averaged 1,970 mmcfe per day
-- SEC proved reserves grew 21% year-over-year to 9.3 tcfe
-- Year-end leverage decreased to less than 2.5x net debt / LTM adjusted
EBITDAX
2020 Outlook:
-- Full year 2020 capital expenditures are projected to range from $700 to
$800 million, excluding capitalized interest
-- Net production in 2020 is projected to average 2.0 to 2.3 bcfe per day
-- Free cash flow for 2020 is expected at current commodity prices and rig
activity
"Ascent successfully delivered on our operational and financial objectives in 2019," said Jeff Fisher, Chairman and Chief Executive Officer. "Our results reflect the strength of the Southern Utica and the talents of our team to develop this prolific asset. As a result, our business plan has successfully transitioned Ascent into a sustainable free cash flow generating company of scale in today's upstream energy market."
Fourth Quarter 2019 Results
For the fourth quarter of 2019, Ascent reported net income of $65 million and adjusted net income of $98 million, compared to net income of $124 million and adjusted net income of $132 million in the fourth quarter of 2018. The Company's adjusted EBITDAX for the fourth of quarter 2019 was $341 million, which is a 7% increase compared to $318 million for the fourth quarter of 2018.
Average daily production for the fourth quarter of 2019 was 2,272 mmcfe per day, a 28% increase compared to the fourth quarter of 2018 and consisted of 1,988 mmcf per day of natural gas, 14,652 barrels (bbl) per day of oil and 32,630 bbl per day of natural gas liquids (NGL).
During the fourth quarter of 2019, Ascent generated positive free cash flow of $17 million. This is Ascent's first quarter of positive free cash flow, and the Company believes it will generate increasing amounts of free cash flow in 2020 and beyond.
As previously reported, Ascent amended its $2.5 billion credit facility with its lenders in order to extend the maturity of the facility to April 2024. Additionally, the bank group, led by JPMorgan Chase NA as administrative agent, reaffirmed the borrowing base at $2.0 billion.
Full Year 2019 Results
For the full year 2019, Ascent reported net income of $466 million and adjusted net income of $328 million, compared to a net loss of $4 million and adjusted net income of $244 million in the full year 2018. Adjusted EBITDAX for the full year was $1.2 billion, which is a 36% increase compared to $844 million for full year 2018.
Average daily production for full year 2019 was 1,970 mmcfe per day, a 45% increase compared to the full year 2018 and consisted of 1,749 mmcf per day of natural gas, 13,134 bbl per day of oil and 23,795 bbl per day of natural gas liquids (NGL). Total net liquids production for the full year 2019 averaged 36,929 bbl per day, which represents a 116% increase as compared to the full year 2018.
Ascent's disciplined focus on cost improvements resulted in an 11% year-over-year improvement to gathering, processing and transportation expenses in 2019 to $1.19 per mcfe, compared to $1.33 per mcfe in 2018, by more fully optimizing our firm transportation commitments and in-basin sales. Additionally, general and administrative per unit costs have reduced 35% year-over-year to $0.08 per mcfe, compared to $0.13 per mcfe in 2018.
2020 Outlook
"We exited 2019 as indicated on prior investor calls, with approximately 2.3 bcfe per day of net daily production, substantial liquidity and, more importantly, free cash flow generation that will allow us to create sustainable value growth for our investors," said Mr. Fisher. "Our team has led the industry in efficiently building the seventh largest producer of natural gas in the United States, capable of generating substantial free cash flow into the future. Our focus has shifted from production growth to free cash flow generation and liquidity growth. Our core competencies in industry-leading, low-cost, high-return development underpinned by strong financial discipline and risk management have distinguished Ascent in the sector," added Mr. Fisher.
Ascent's 2020 full year outlook includes a capital budget of $700 to $800 million, and average total net production is expected to range between 2.0 and 2.3 bcfe per day. Full year 2020 free cash flow is expected at current commodity prices and rig activity.
Capital Spending Overview
Fourth quarter and full year 2019 capital expenditures incurred decreased to $205 million and $1.3 billion, respectively, compared to $374 million and $2.8 billion((a)) in the fourth quarter and full year 2018, respectively. A summary of the Company's 2019 and 2018 capital expenditures is provided in the table below:
Three Months Ended Years Ended
December 31, December 31,
($ in thousands) 2019 2018 2019 2018
---
Capital Expenditures:
Drilling and completion costs $
149,821 $
263,737 $
1,030,294 $
923,141
Acquisition and leasehold
costs(a) 30,483 75,301 141,631 1,725,144
Capitalized interest 24,474 34,637 123,370 126,406
Total Capital Expenditures $
204,778 $
373,675 $
1,295,295 $
2,774,691
(a) Acquisition and leasehold
costs for the full year 2018
included $1.5 billion related
to significant acquisitions
in the third quarter 2018.
Balance Sheet and Hedge Position Update
As of December 31, 2019, Ascent's principal amount of debt outstanding was approximately $2.8 billion, including $1.2 billion drawn under its revolving credit facility, compared to $2.6 billion as of December 31, 2018. As of December 31, 2019, Ascent had $171 million of letters of credit issued and $641 million of available capacity under the $2.0 billion borrowing base.
As of December 31, 2019, Ascent's leverage profile improved as highlighted by the net debt / LTM adjusted EBITDAX ratio below 2.5x, as compared to 3.0x on December 31, 2018. Ascent had total liquidity available of approximately $650 million as of December 31, 2019.
Ascent has a robust hedge portfolio in place for 2020 to prudently reduce its exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility. As of December 31, 2019 nearly 80% of the Company's forecasted natural gas production (at the midpoint of production guidance) was hedged at approximately $2.71 per mmbtu ($2.87 per mcf) for calendar year 2020. More than 35% of Ascent's expected calendar year 2020 crude oil production was hedged at an average price of $56.89 per bbl. The mark-to-market value of our hedge portfolio was approximately $420 million as of February 17, 2020.
2019 Year End Reserves
Ascent's proved reserves under SEC guidelines grew 21% year-over-year to 9.3 trillion cubic feet equivalent (tcfe) as of December 31, 2019, replacing 327% of full year 2019 production and the PV-10 of Ascent's proved reserves was approximately $4.0 billion as of the same date. A summary of changes to Ascent's proved reserves for the full year 2019 is included in the table below:
Year Ended
December 31,
(in mmcfe)
2019
---
Proved Reserves at December
31, 2018 7,615,763
Extensions, discoveries and
other additions 2,982,736
Revisions (630,831)
Purchases of reserves 12,407
Sales of reserves (9,247)
Production (719,113)
Proved Reserves at December
31, 2019 9,251,715
Proved developed reserves 3,910,032
Proved developed reserves 42
percentage %
Standardized Measure of
Discounted Future Net Cash
Flows ($ in
thousands)(GAAP) $
3,957,652
Add: Present value of future
income taxes discounted at
10% per annum(a)
PV-10 ($ in thousands)
(Non-GAAP)(a) $
3,957,652
(a) Reserve volumes and PV-10 were
estimated using SEC reserve
recognition standards and pricing
assumptions based on the
unweighted arithmetic average of
the prices on the first day of
each month within the 12-month
period ended December 31, 2019.
The prices used in Ascent's
reserve reports were $2.58 per
mmbtu of natural gas and $55.85
per bbl of oil and condensate,
before basis differential
adjustments. PV-10 is a non-GAAP
measure that typically differs
from the standardized measure,
because the former does not
include the effects of estimated
future income tax expense.
However, because Ascent is a
disregarded entity for income tax
purposes, it has estimated no
future income tax expense and the
two measures are the same as of
December 31, 2019, as calculated
in the reconciliation above. PV-
10 can be used within the industry
and by creditors and securities
analysts to evaluate estimated net
cash flows from proved reserves on
a more comparable basis.
Corporate Responsibility
During the fourth quarter of 2019, Ascent issued its first Environmental, Social & Governance Report highlighting Ascent's commitment to sustainable business practices and social responsibility. Specifically, the Company highlighted and provided performance results related to greenhouse gas emissions, health and safety and social engagement. Additional updates of the report will be published on a regular basis going forward. The report can be found at www.ascentresources.com/investors.
About Ascent Resources:
Ascent is the seventh largest producer of natural gas in the United States in terms of daily production and is focused on acquiring, exploring for, developing, producing, and operating natural gas and oil properties located in the Utica Shale in Southeast Ohio. With a continued focus on good corporate citizenship, Ascent is committed to delivering low cost clean burning energy to our country and the world, while reducing environmental impacts. For more information, visit www.ascentresources.com.
Contact:
James Short - Director of Strategic Planning & Investor Relations
investor.relations@ascentresources.com
This news release contains forward-looking statements within the meaning of US federal securities laws. Forward-looking statements express views of Ascent regarding future plans and expectations. Forward-looking statements in this news release include, but are not limited to, statements regarding future operations, business strategy, liquidity and cash flows of Ascent. These statements are based on numerous assumptions and are subject to known and unknown risks and uncertainties, including, commodity price volatility, inherent uncertainty in estimating natural gas, oil and NGL reserves, environmental and regulatory risks, availability of capital, and the other risks described in Ascent's most recent investor presentation provided at www.ascentresources.com/investors. Actual future results may vary materially from those expressed or implied in this news release and Ascent's business, financial condition, results of operations and cash flow could be materially and adversely affected by such risks and uncertainties. As a result, forward-looking statements should be understood to be only predictions and statements of Ascent's current beliefs; they are not guarantees of performance.
ASCENT RESOURCES UTICA HOLDINGS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
($ in thousands) 2019 2018 2019 2018
---
Revenues:
Natural gas $
415,718 $
559,511 $
1,589,099 $
1,444,368
Oil 66,593 37,789 241,521 133,786
NGL 57,668 41,144 148,639 109,221
Commodity derivative gain (loss) 83,616 20,489 441,139 (90,881)
Total Revenues 623,595 658,933 2,420,398 1,596,494
Operating Expenses:
Lease operating expenses 20,327 15,736 72,606 50,163
Gathering, processing and
transportation expenses 236,158 201,512 856,126 658,117
Production and ad valorem taxes 8,198 7,697 34,167 23,362
Exploration expenses 41,561 40,513 124,477 156,450
General and administrative expenses 15,322 26,712 61,027 63,794
Acquisition expenses 277 9,407
Natural gas and oil depreciation,
depletion and amortization 203,091 158,327 702,414 500,773
Depreciation and amortization of other
assets 875 1,030 3,239 3,912
Total Operating Expenses 525,532 451,804 1,854,056 1,465,978
Income from Operations 98,063 207,129 566,342 130,516
Other (Expense) Income:
Interest expense, net (34,249) (25,732) (109,114) (92,227)
Change in fair value of embedded
derivative 622 4,704 5,026 18,865
Losses on purchases or exchanges of
debt (62,233) (62,233)
Other income 819 371 3,711 683
Total Other Expense (32,808) (82,890) (100,377) (134,912)
Net Income (Loss) $
65,255 $
124,239 $
465,965 $
(4,396)
ASCENT RESOURCES UTICA HOLDINGS, LLC
CONSOLIDATED BALANCE SHEETS DATA
(Unaudited)
December 31,
($ in thousands) 2019 2018
---
Total Current Assets $
545,116 $
521,914
Property and equipment, net 6,374,276 5,908,629
Other long-term assets 91,026 56,279
Total Assets $
7,010,418 $
6,486,822
Total Current Liabilities $
485,292 $
656,108
Long-Term Liabilities:
Long-term debt, net 2,838,676 2,582,820
Other long-term liabilities 5,067 32,797
Total Long-Term Liabilities 2,843,743 2,615,617
Member's Equity 3,681,383 3,215,097
Total Liabilities and Member's
Equity $
7,010,418 $
6,486,822
ASCENT RESOURCES UTICA HOLDINGS, LLC
CONSOLIDATED CASH FLOW DATA
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
($ in thousands) 2019 2018 2019 2018
---
Cash and Cash Equivalents, Beginning
of Period $
6,798 $
10,868 $
11,030 $
119,215
Net Cash Provided by Operating
Activities 220,908 181,442 1,140,118 688,733
Cash Flows from Investing
Activities:
Drilling and completion costs (235,338) (270,630) (1,125,216) (906,064)
Acquisitions of natural gas and oil
properties (55,860) (114,673) (258,001) (1,409,494)
Proceeds from divestitures of
natural gas and oil properties (2,067) 12,474 6,564
Additions to other property and
equipment (583) (263) (3,547) (1,512)
Net Cash Used in Investing
Activities (293,848) (385,566) (1,374,290) (2,310,506)
Net Cash Provided by Financing
Activities 73,488 204,286 230,488 1,513,588
Net Increase /(Decrease) in Cash
and Cash Equivalents 548 162 (3,684) (108,185)
Cash and Cash Equivalents, End of
Period $
7,346 $
11,030 $
7,346 $
11,030
ASCENT RESOURCES UTICA HOLDINGS, LLC
NATURAL GAS, OIL AND NGL PRODUCTION AND PRICES
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
2019 2018 2019 2018
Production
Natural gas (mmcf) 182,913 148,815 638,243 457,747
Oil (mbbls) 1,348 713 4,794 2,262
NGL (mbbls) 3,002 1,684 8,685 3,974
Natural Gas Equivalents
(mmcfe) 209,016 163,190 719,113 495,168
Daily Production
Natural gas (mmcf/d) 1,988 1,618 1,749 1,254
Oil (bbls/d) 15 8 13 6
NGL (bbls/d) 33 18 24 11
Natural Gas Equivalents
(mmcfe/d) 2,272 1,774 1,970 1,357
% Natural Gas 88 91
% 89
% % 92
%
% Liquids 12 9
% 11
% % 8
%
Average Realized Prices
Natural gas ($/mcf) $
2.27 $
3.76 $
2.49 $
3.16
Oil ($/bbl) $
49.40 $
53.03 $
50.38 $
59.15
NGL ($/bbl) $
19.21 $
24.44 $
17.11 $
27.48
Natural Gas Equivalents
($/mcfe) $
2.58 $
3.91 $
2.75 $
3.41
Settlements of commodity
derivatives ($/mcfe) 0.39 (0.48) 0.27 (0.11)
Average sales price, after
effects of settled
derivatives ($/mcfe) $
2.97 $
3.43 $
3.02 $
3.30
ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED NET INCOME
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
($ in thousands) 2019 2018 2019 2018
---
Net Income (Loss) $
65,255 $
124,239 $
465,965 $
(4,396)
Adjustments to reconcile
net income (loss) to
adjusted net income:
Impairment of unproved
natural gas and oil
properties 36,450 39,231 115,802 153,047
Change in fair value of
commodity derivatives (3,077) (98,754) (249,457) 34,138
Change in fair value of
embedded derivative (622) (4,704) (5,026) (18,865)
Losses on purchases or
exchanges of debt 62,233 62,233
Non-recurring legal
expense 9,428 9,428
Acquisition expenses and
other 61 358 375 8,063
Adjusted Net Income (Non-
GAAP)(a)(b) $
98,067 $
132,031 $
327,659 $
243,648
(a) As shown above,
and on pages 10
and 11, Ascent
uses adjusted
net income,
EBITDAX,
adjusted
EBITDAX,
discretionary
cash flow and
free cash flow
(non-GAAP
measures) as
supplemental
measures to
evaluate the
performance of
its assets.
Ascent believes
these non-GAAP
measures provide
meaningful
information to
our investors,
as discussed
below. These
non-GAAP
measures, as
used and defined
by Ascent, are
not measures of
performance as
determined by
United States
generally
accepted
accounting
principles (US
GAAP) and may
not be
comparable to
similarly titled
measures
employed by
other companies.
Non-GAAP
measures should
not be
considered in
isolation or as
substitutes for
operating
income, net
income or loss,
cash flows
provided by
operating,
investing and
financing
activities or
other income or
cash flow
statement data
prepared in
accordance with
US GAAP. Non-
GAAP measures
provide no
information
regarding a
company's
capital
structure,
borrowings,
interest costs,
capital
expenditures and
working capital
movement. Non-
GAAP measures do
not represent
funds available
for
discretionary
use because
those funds may
be required for
debt service,
capital
expenditures,
working capital,
taxes,
exploration
expenses and
other
commitments and
obligations.
However,
Ascent's
management team
believes these
non-GAAP
measures are
useful to an
investor in
evaluating
Ascent's
financial
performance
because these
measures:
-- Are widely used by investors in
the natural gas and oil industry
to measure a company's operating
performance without regard to
items excluded from the
calculation of such term, which
can vary substantially from
company to company depending upon
accounting methods and book value
of assets, capital structure, and
the method by which assets were
acquired, among other factors;
-- Are more comparable to estimates
used by analysts;
-- Help investors to more
meaningfully evaluate and compare
the results of Ascent's
operations from period to period
by removing the effect of its
capital structure from its
operating structure;
-- Excludes one-time items, non-
cash items or items whose timing
cannot be reasonably estimated;
and
-- Are used by Ascent's management
team for various purposes,
including as a measure of
operating performance, in
presentations to its Board of
Managers and as a basis for
strategic planning and
forecasting.
There are
significant
limitations to
using non-GAAP
measures as
measures of
performance,
including the
inability to
analyze the
effect of
certain
recurring and
non-recurring
items that
materially
affect Ascent's
net income or
loss, the lack
of comparability
of results of
operations of
different
companies, and
the different
methods of
calculating non-
GAAP measures
reported by
different
companies.
(b) Ascent defines
"adjusted net
income" as net
income (loss)
before
impairment of
unproved natural
gas and oil
properties;
losses on
purchases or
exchanges of
debt; changes in
fair value of
commodity
derivatives;
changes in fair
value of
embedded
derivative; non-
recurring legal
expense
(benefit);
acquisition
expenses and
other; and
impairment of
other property
and equipment.
ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF EBITDAX AND ADJUSTED EBITDAX
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
($ in thousands) 2019 2018 2019 2018
---
Net Income (Loss) $
65,255 $
124,239 $
465,965 $
(4,396)
Adjustments to reconcile net
income (loss) to EBITDAX:
Exploration expenses 41,561 40,513 124,477 156,450
Natural gas and oil
depreciation, depletion and
amortization 203,091 158,327 702,414 500,773
Depreciation and amortization
of other assets 875 1,030 3,239 3,912
Interest expense, net 34,249 25,732 109,114 92,227
EBITDAX (Non-GAAP)(a)(b) 345,031 349,841 1,405,209 748,966
Adjustments to reconcile
EBITDAX to Adjusted EBITDAX:
Change in fair value of
embedded derivative (622) (4,704) (5,026) (18,865)
Change in fair value of
commodity derivatives (3,077) (98,754) (249,457) 34,138
Losses on purchases or
exchanges of debt 62,233 62,233
Non-recurring legal expense 9,428 9,428
Acquisition expenses and other 61 358 375 8,063
Adjusted EBITDAX (Non-
GAAP)(b)(c) $
341,393 $
318,402 $
1,151,101 $
843,963
(a) Ascent defines "EBITDAX" as net
income (loss) before
exploration expenses;
depreciation, depletion and
amortization; and interest
expense, net.
(b) See footnote (a) on page 9 for a
discussion around our uses of
non-GAAP measures.
(c) Ascent defines "adjusted
EBITDAX" as EBITDAX before
changes in losses on purchases
or exchanges of debt; changes
in fair value of commodity
derivatives; non-recurring
legal expense (benefit);
acquisition expenses; fair
value of embedded derivative;
and other unusual items.
ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF DISCRETIONARY CASH FLOW AND FREE CASH FLOW
(Unaudited)
Three Months Ended
December 31,
($ in thousands) 2019
---
Net Cash Provided by
Operating Activities $
220,908
Adjustments to reconcile Net
Cash Provided by Operating
Activities to Discretionary
Cash Flow:
Increase in accounts
receivable and other assets 44,958
Decrease in accounts
payable, liabilities and
other 42,281
Discretionary Cash Flow
(Non-GAAP)(a)(b) 308,147
Adjustments to reconcile
Discretionary Cash Flow to
Free Cash Flow:
Drilling and completion
costs (235,338)
Acquisitions of natural gas
and oil properties (55,860)
Free Cash Flow (Non-
GAAP)(b)(c) $
16,949
(a) Discretionary cash flow is widely
accepted as a financial indicator
of a natural gas and oil
company's ability to generate
cash which is used to internally
fund exploration and development
activities and service debt.
Ascent defines "discretionary
cash flow" as net cash provided
by operating activities before
changes in operating assets and
liabilities.
(b) See footnote (a) on page 9 for a
discussion around our uses of
non-GAAP measures.
(c) Free cash flow is an indicator of
a company's ability to generate
funding to maintain or expand its
asset base, make distributions
and repurchase or extinguish
debt. Ascent defines "free cash
flow" as discretionary cash flow
less cash drilling and completion
costs and acquisitions of natural
gas and oil properties.
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SOURCE Ascent Resources, LLC
