Ascent Resources Utica Holdings Reports First Quarter 2020 Operating Results And Announces Revised 2020 Guidance
OKLAHOMA CITY, May 8, 2020 /PRNewswire/ -- Ascent Resources Utica Holdings, LLC ("Ascent", the "Company" or "our") today announced its first quarter 2020 financial and operating results and revised full year 2020 guidance. In addition, Ascent announced a conference call with analysts and investors scheduled for 9 AM CDT / 10 AM EDT, Monday, May 11, 2020. For more detailed information on Ascent's assets and business, please refer to the first quarter 2020 investor presentation and additional information located at https://www.ascentresources.com/investors.
First Quarter 2020 Highlights:
-- Cash flow from operating activities was $292 million, and free cash flow
was approximately $11 million
-- Net income was $85 million, adjusted net income was $36 million and
adjusted EBITDAX was $247 million
-- Average net production exceeded 2.0 bcfe per day
-- Improved well costs by 15-20% compared to the midpoint of previous
guidance
-- Reduced net debt by nearly $100 million while maintaining approximately
$700 million of liquidity
Revised Full Year 2020 Guidance:
-- Reduced capital expenditures to range from $600 to $650 million,
excluding capitalized interest
-- Reiterated net production guidance at more than 2.0 bcfe per day
-- Reaffirmed positive free cash flow at current commodity prices and rig
activity
"Ascent delivered on the key operating objectives we set to accomplish in the first quarter," said Jeff Fisher, Chairman and Chief Executive Officer. "We took aggressive actions in response to the global pandemic, and have taken proactive steps to reduce and focus our capital on the strong performing dry gas areas of our position, secure our future free cash flow generation and reduce additional costs throughout the organization. Ascent will continue to prioritize the health of our employees, communities where we operate and the Company as we move forward."
First Quarter 2020 Results
For the first quarter of 2020, Ascent reported net income of $85 million and adjusted net income of $36 million, compared to a net loss of $85 million and adjusted net income of $79 million in the first quarter of 2019. The Company's adjusted EBITDAX for the first quarter of 2020 was $247 million, compared to $261 million for the first quarter of 2019.
Average net daily production for the first quarter of 2020 was 2,009 mmcfe per day, a 14% increase compared to the first quarter of 2019 and consisted of 1,712 mmcf per day of natural gas, 13,769 barrels (bbl) per day of oil and 35,714 bbl per day of natural gas liquids (NGL).
During the first quarter of 2020, Ascent generated positive free cash flow of $11 million. This is the second consecutive quarter of positive free cash flow and the Company is targeting positive free cash flow for calendar year 2020.
Revised 2020 Outlook
"During the first quarter we outperformed our guidance in terms of cost reductions and efficiency gains. These successes have resulted in us reducing our capital spending outlook while still maintaining our production guidance," said Mr. Fisher.
Ascent's 2020 full year guidance includes a revised capital budget of $600 to $650 million, a 17% reduction at the midpoint as compared to the midpoint of prior guidance. Average total net production is reiterated to exceed 2.0 bcfe per day. We still expect positive free cash flow in 2020 at current commodity prices utilizing our current three rig drilling program.
Capital Spending Overview
First quarter 2020 capital expenditures incurred decreased over 25% to $242 million, compared to $327 million in the first quarter 2019. A summary of the Company's first quarter 2020 and 2019 capital expenditures is provided in the table below:
Three Months Ended
March 31,
($ in thousands) 2020 2019
---
Capital Expenditures:
Drilling and
completion costs $
195,115 $
258,158
Acquisition and
leasehold costs 24,236 31,178
Capitalized interest 22,684 37,355
Total Capital
Expenditures $
242,035 $
326,691
Balance Sheet and Hedge Position Update
As of March 31, 2020, Ascent's principal amount of debt outstanding was approximately $2.7 billion, including $1.2 billion drawn under its revolving credit facility, compared to $2.8 billion as of December 31, 2019. As of March 31, 2020, Ascent had $163 million of letters of credit issued and $684 million of available capacity under its fully committed $2.0 billion borrowing base.
As of March 31, 2020, Ascent's leverage profile improved as highlighted by the net debt / LTM adjusted EBITDAX ratio of 2.4x, as compared to 2.6x on March 31, 2019. Ascent had total liquidity available of approximately $700 million as of March 31, 2020.
Subsequent to the end of the first quarter, we successfully closed our spring redetermination related to our credit facility, with a committed borrowing base of $1.85 billion.
Ascent has a robust hedge portfolio in place for 2020 to prudently reduce its exposure to volatility in commodity prices and to protect our expected operating cash flow. As of March 31, 2020, nearly 80% of the Company's forecasted natural gas production (at the midpoint of production guidance) was hedged at approximately $2.63 per mmbtu ($2.79 per mcf) for the remainder of calendar year 2020. Approximately 50% of Ascent's expected remainder of calendar year 2020 crude oil production was hedged at an average price above $43 per bbl.
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, Ascent highlighted and provided performance results related to greenhouse gas emissions, health and safety and social engagement. The Company plans to provide an updated report during the second quarter of 2020. The report can be found at: www.ascentresources.com.
On January 30, 2020, the World Health Organization (WHO) announced a global health emergency due to the spread of a novel coronavirus, which was classified as a pandemic in March 2020 based on the rapid increase in global exposure. Under the guidance of the WHO and the Centers for Disease Control and Prevention (CDC) and in an effort to slow the spread of the virus, many local, state and national governments implemented new laws and regulations which led to a steep decline in demand for natural gas and oil.
In order to safeguard the health of our employees, contractors and the community, while continuing to operate responsibly, we have implemented several precautionary steps which follow the guidance of the WHO, the CDC, municipalities and governments across our operations. These steps include the majority of our office staff working remotely and personnel in the field following guidelines to prevent the spread of the virus while maintaining critical operations.
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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
($ in thousands) 2020 2019
---
Revenues:
Natural gas $
292,518 $
460,378
Oil 49,554 37,543
NGL 36,003 35,442
Commodity derivative gain (loss) 208,483 (157,189)
Total Revenues 586,558 376,174
Operating Expenses:
Lease operating expenses 20,927 17,919
Gathering, processing and
transportation expenses 232,713 200,095
Production and ad valorem taxes 9,798 8,472
Exploration expenses 26,953 39,254
General and administrative expenses 14,420 16,344
Natural gas and oil depreciation,
depletion and amortization 175,550 159,132
Depreciation and amortization of other
assets 924 765
Total Operating Expenses 481,285 441,981
Income (Loss) from Operations 105,273 (65,807)
Other (Expense) Income:
Interest expense, net (33,920) (21,143)
Change in fair value of embedded
derivative 1,138
Gains on purchases or exchanges of debt 13,493
Other income 516 503
Total Other Expense (19,911) (19,502)
Net Income (Loss) $
85,362 $
(85,309)
ASCENT RESOURCES UTICA HOLDINGS, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS DATA
(Unaudited)
March 31, December 31,
($ in thousands) 2020 2019
---
Total Current Assets $
518,769 $
545,116
Property and equipment, net 6,414,125 6,374,276
Other long-term assets 72,053 91,026
Total Assets $
7,004,947 $
7,010,418
Total Current Liabilities $
580,178 $
485,292
Long-Term Liabilities:
Long-term debt, net of current
portion 2,653,788 2,838,676
Other long-term liabilities 4,206 5,067
Total Long-Term Liabilities 2,657,994 2,843,743
Member's Equity 3,766,775 3,681,383
Total Liabilities and Member's Equity $
7,004,947 $
7,010,418
ASCENT RESOURCES UTICA HOLDINGS, LLC
CONDENSED CONSOLIDATED CASH FLOW DATA
(Unaudited)
Three Months Ended
March 31,
($ in thousands) 2020 2019
---
Cash and Cash Equivalents, Beginning
of Period $
7,346 $
11,030
Net Cash Provided by Operating
Activities 292,123 341,739
Cash Flows from Investing Activities:
Drilling and completion costs (157,857) (268,518)
Acquisitions of natural gas and oil
properties (45,391) (50,050)
Additions to other property and
equipment (1,212) (694)
Net Cash Used in Investing Activities (204,460) (319,262)
Net Cash Used in Financing Activities (82,031) (23,062)
Net Increase /(Decrease) in Cash and
Cash Equivalents 5,632 (585)
Cash and Cash Equivalents, End of
Period $
12,978 $
10,445
ASCENT RESOURCES UTICA HOLDINGS, LLC
NATURAL GAS, OIL AND NGL PRODUCTION AND PRICES
(Unaudited)
Three Months Ended
March 31,
2020 2019
Production
Natural gas (mmcf) 155,814 144,644
Oil (mbbls) 1,253 767
NGL (mbbls) 3,250 1,641
Natural Gas Equivalents
(mmcfe) 182,832 159,102
Daily Production
Natural gas (mmcf/d) 1,712 1,607
Oil (mbbls/d) 14 9
NGL (mbbls/d) 36 18
Natural Gas Equivalents
(mmcfe/d) 2,009 1,768
% Natural Gas 85
% 91
%
% Liquids 15
% 9
%
Average Realized Prices
Natural gas ($/mcf) $
1.88 $
3.18
Oil ($/bbl) $
39.55 $
48.87
NGL ($/bbl) $
11.08 $
21.59
Natural Gas Equivalents
($/mcfe) $
2.07 $
3.35
Settlements of commodity
derivatives ($/mcfe) 0.80 (0.19)
Average sales price, after
effects of settled
derivatives ($/mcfe) $
2.87 $
3.16
ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED NET INCOME
(Unaudited)
Three Months Ended
March 31,
($ in thousands) 2020 2019
---
Net Income (Loss) $
85,362 $
(85,309)
Adjustments to reconcile net
income (loss) to adjusted
net income:
Impairment of unproved
natural gas and oil
properties 26,310 38,689
Change in fair value of
commodity derivatives (62,375) 127,071
Change in fair value of
embedded derivative (1,138)
Gains on purchases or
exchanges of debt (13,493)
Other 176
Adjusted Net Income (Non-
GAAP)(a)(b) $
35,804 $
79,489
(a) As shown above,
and on pages 9
and 10, 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,
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;
(gains) 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
March 31,
($ in thousands) 2020 2019
---
Net Income (Loss) $
85,362 $
(85,309)
Adjustments to reconcile net
income (loss) to EBITDAX:
Exploration expenses 26,953 39,254
Natural gas and oil
depreciation, depletion and
amortization 175,550 159,132
Depreciation and amortization of
other assets 924 765
Interest expense, net 33,920 21,143
EBITDAX (Non-GAAP)(a)(b) 322,709 134,985
Adjustments to reconcile EBITDAX
to Adjusted EBITDAX:
Change in fair value of
commodity derivatives (62,375) 127,071
Gains on purchases or exchanges
of debt (13,493)
Change in fair value of embedded
derivative (1,138)
Other 176
Adjusted EBITDAX (Non-
GAAP)(b)(c) $
246,841 $
261,094
(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 8 for a
discussion around our uses of
non-GAAP measures.
(c) Ascent defines "adjusted
EBITDAX" as EBITDAX before
changes in (gains) losses on
purchases or exchanges of debt;
changes in fair value of
commodity derivatives; non-
recurring legal expense
(benefit); acquisition
expenses; changes in 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
March 31,
($ in thousands) 2020 2019
---
Net Cash Provided by Operating
Activities $
292,123 $
341,739
Adjustments to reconcile Net
Cash Provided by Operating
Activities to Discretionary
Cash Flow:
Changes in operating assets
and liabilities (77,891) (102,535)
Discretionary Cash Flow (Non-
GAAP)(a)(b) 214,232 239,204
Adjustments to reconcile
Discretionary Cash Flow to
Free Cash Flow:
Drilling and completion costs (157,857) (268,518)
Acquisitions of natural gas
and oil properties (45,391) (50,050)
Free Cash Flow (Non-
GAAP)(b)(c) $
10,984 $
(79,364)
(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 8 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
