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Classified in: Oil industry, Business, Covid-19 virus
Subjects: ERN, CCA, ERP

Ascent Resources Utica Holdings Reports Second Quarter 2020 Operating And Financial Results


OKLAHOMA CITY, Aug. 12, 2020 /PRNewswire/ -- Ascent Resources Utica Holdings, LLC ("Ascent", the "Company" "we" or "our") today reported its second quarter 2020 operating and financial results and reiterated full year 2020 guidance.  In addition, Ascent announced a conference call with analysts and investors scheduled for 9 AM CDT / 10 AM EDT, Thursday, August 13, 2020.  For more detailed information on Ascent's assets and business, please refer to the latest investor presentation and additional information located at https://www.ascentresources.com/investors.

"As shown via our results, Ascent continues to deliver best-in-class operational results of any unconventional resource play in North America," said Jeff Fisher, Chairman and Chief Executive Officer.  "The second quarter saw our overall capital efficiency reach new records as we produced 2.1 bcfe net per day on only $160 million of quarterly capital expenditures incurred.  As a result, we are able to reiterate our production, capital and free cash flow guidance despite the many headwinds the country and the industry have faced.  This was all accomplished while still continuing to prioritize the health of our employees, contractors and communities where we operate."

Second Quarter 2020 Results

For the second quarter of 2020, Ascent reported a net loss of $291 million and adjusted net loss of $23 million, compared to net income of $356 million and adjusted net income of $64 million in the second quarter of 2019.  The Company's adjusted EBITDAX and capital expenditures incurred for the second quarter of 2020 were $211 million and $160 million, respectively.

Average net daily production for the second quarter of 2020 was 2,087 mmcfe per day, a 19% increase compared to the second quarter of 2019 and 4% above first quarter of 2020.  Second quarter 2020 production consisted of 1,869 mmcf per day of natural gas, 11,319 bbls per day of oil and 24,978 bbls per day of natural gas liquids ("NGL").

Balance Sheet and Hedge Position Update

As of June 30, 2020, Ascent's principal amount of debt outstanding was approximately $2.8 billion, including $1.2 billion drawn under its revolving credit facility, compared to $2.7 billion as of March 31, 2020.  As of June 30, 2020, Ascent had $155 million of letters of credit issued and $497 million of available capacity under its fully committed $1.85 billion borrowing base. Combined with $9 million of cash on hand, the Company had liquidity of $506 million.  As of June 30, 2020, Ascent's year-over-year leverage profile improved as highlighted by the net debt / LTM adjusted EBITDAX ratio of 2.5x, as compared to 2.6x as of June 30, 2019.

Ascent has a robust hedge portfolio in place for 2020 and beyond to prudently reduce its exposure to volatility in commodity prices and to protect our expected operating cash flow. As of June 30, 2020, the Company had hedged over 1.5 bcf per day of natural gas production for the remainder of the calendar year 2020 at approximately $2.64 per mmbtu ($2.82 per mcf).  In addition, the Company has hedged 4,600 bbls per day of crude oil production at an average price above $39.00 per bbl for the remainder of calendar year 2020.

Corporate Responsibility

During the second quarter of 2020, Ascent completed and issued its 2019 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 report can be found at: www.ascentresources.com/responsibility.

On June 15, 2020, the Company re-opened its Ohio and Oklahoma offices in accordance with the strictest social distancing and sanitation requirements recommended by federal, state and local government agencies in response to the COVID-19 pandemic.  The Company continues to closely monitor and analyze COVID-19 data issued by the State Department of Health in both Oklahoma and Ohio as well as guidance and recommendations issued by the Centers for Disease Control and Prevention.

About Ascent Resources:

Ascent is the eighth 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


Six Months Ended



June 30,


June 30,

($ in thousands)


2020


2019


2020


2019










Revenues:









Natural gas


$

275,088



$

360,136



$

567,606



$

820,514


Oil


21,005



65,212



70,559



102,755


NGL


17,344



26,150



53,347



61,592


Commodity derivative (loss) gain


(70,529)



339,681



137,954



182,492


Total Revenues


242,908



791,179



829,466



1,167,353


Operating Expenses:









Lease operating expenses


17,709



16,232



38,636



34,151


Gathering, processing and transportation expenses


229,936



200,176



462,649



400,271


Production and ad valorem taxes


9,201



7,975



18,999



16,447


Exploration expenses


22,858



18,484



49,811



57,738


General and administrative expenses


20,629



14,497



35,049



30,841


Natural gas and oil depreciation, depletion and amortization


201,331



156,376



376,881



315,508


Depreciation and amortization of other assets


942



782



1,866



1,547


Total Operating Expenses


502,606



414,522



983,891



856,503


(Loss) Income from Operations


(259,698)



376,657



(154,425)



310,850


Other (Expense) Income:









Interest expense, net


(31,233)



(24,868)



(65,153)



(46,011)


Change in fair value of embedded derivative


?



2,007



?



3,145


(Losses) gains on purchases or exchanges of debt


(190)



?



13,303



?


Other income


71



2,074



587



2,577


Total Other Expense


(31,352)



(20,787)



(51,263)



(40,289)


Net (Loss) Income


$

(291,050)



$

355,870



$

(205,688)



$

270,561


 

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS DATA

(Unaudited)




June 30,


December 31,

($ in thousands)


2020


2019






Total Current Assets


$

337,835



$

545,116







Property and equipment, net


6,350,004



6,374,276


Other long-term assets


28,159



91,026


Total Assets


$

6,715,998



$

7,010,418







Total Current Liabilities


$

502,213



$

485,292


Long-Term Liabilities:





Long-term debt, net of current portion


2,700,369



2,838,676


Other long-term liabilities


37,660



5,067


Total Long-Term Liabilities


2,738,029



2,843,743







Member's Equity


3,475,756



3,681,383


Total Liabilities and Member's Equity


$

6,715,998



$

7,010,418


 

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED CASH FLOW DATA

(Unaudited)




Three Months Ended


Six Months Ended



June 30,


June 30,

($ in thousands)


2020


2019


2020


2019










Cash and Cash Equivalents, Beginning of Period


$

12,978



$

10,445



$

7,346



$

11,030


Net Cash Provided by Operating Activities


179,441



248,489



471,564



590,228


Cash Flows from Investing Activities:









Drilling and completion costs


(188,023)



(329,194)



(345,880)



(597,712)


Acquisitions of natural gas and oil properties


(35,596)



(95,242)



(80,987)



(145,292)


Proceeds from divestitures of natural gas and oil properties


?



3,323



?



3,323


Additions to other property and equipment


(165)



(1,300)



(1,377)



(1,994)


Net Cash Used in Investing Activities


(223,784)



(422,413)



(428,244)



(741,675)


Net Cash Provided by (Used in) Financing Activities


40,326



169,929



(41,705)



146,867


Net (Decrease) Increase in Cash and Cash Equivalents


(4,017)



(3,995)



1,615



(4,580)


Cash and Cash Equivalents, End of Period


$

8,961



$

6,450



$

8,961



$

6,450


 

ASCENT RESOURCES UTICA HOLDINGS, LLC

NATURAL GAS, OIL AND NGL PRODUCTION AND PRICES

(Unaudited)




Three Months Ended


Six Months Ended



June 30,


June 30,



2020


2019


2020


2019










Production









Natural gas (mmcf)


170,086



142,115



325,900



286,759


Oil (mbbls)


1,030



1,230



2,283



1,997


NGL (mbbls)


2,273



1,676



5,523



3,317


Natural Gas Equivalents (mmcfe)


189,903



159,552



372,735



318,654











Daily Production









Natural gas (mmcf/d)


1,869



1,562



1,791



1,584


Oil (mbbls/d)


11



14



13



11


NGL (mbbls/d)


25



18



30



18


Natural Gas Equivalents (mmcfe/d)


2,087



1,753



2,048



1,761


% Natural Gas


90

%


89

%


87

%


90

%

% Liquids


10

%


11

%


13

%


10

%










Average Realized Prices









Natural gas ($/mcf)


$

1.62



$

2.53



$

1.74



$

2.86


Oil ($/bbl)


$

20.39


?


$

53.01



$

30.91



$

51.45


NGL ($/bbl)


$

7.63



$

15.60



$

9.66



$

18.57











Natural Gas Equivalents ($/mcfe)


$

1.65



$

2.83



$

1.86



$

3.09


Settlements of commodity derivatives ($/mcfe)


0.89



0.21



0.85



0.01


Average sales price, after effects of settled derivatives ($/mcfe)


$

2.54



$

3.04



$

2.71



$

3.10




















 

ASCENT RESOURCES UTICA HOLDINGS, LLC

CAPITAL EXPENDITURES INCURRED

(Unaudited)




Three Months Ended


Six Months Ended



June 30,


June 30,

($ in thousands)


2020


2019


2020


2019










Capital Expenditures Incurred:









Drilling and completion costs incurred


$

126,000



$

334,538



$

321,114



$

592,696


Acquisition and leasehold costs incurred


12,371



48,306



36,607



79,484


Capitalized interest incurred


21,952



32,805



44,636



70,160


Total Capital Expenditures Incurred


$

160,323



$

415,649



$

402,357



$

742,340



 

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED NET INCOME (LOSS)

(Unaudited)




Three Months Ended


Six Months Ended



June 30,


June 30,

($ in thousands)


2020


2019


2020


2019










Net (Loss) Income


$

(291,050)



$

355,870



$

(205,688)



$

270,561


Adjustments to reconcile net (loss) income to adjusted net (loss) income:









Impairment of unproved natural gas and oil properties


22,369



16,450



48,679



55,139


Change in fair value of commodity derivatives


239,847



(306,033)



177,472



(178,962)


Change in fair value of interest rate derivatives


502



?



502



?


Losses (gains) on purchases or exchanges of debt


190



?



(13,303)



?


Non-recurring legal expense


5,572



?



5,572



?


Change in fair value of embedded derivative


?



(2,007)



?



(3,145)


Other


?



76



?



252


Adjusted Net (Loss) Income (Non-GAAP)(a)(b)


$

(22,570)



$

64,356



$

13,234



$

143,845




(a)

As shown above, and on pages 9 and 10, Ascent uses adjusted net income (loss), 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 (loss) income" as net income (loss) before impairment of unproved natural gas and oil properties;  changes in fair value of commodity derivatives;  change in fair value of interest rate derivatives; (gains) losses on purchases or exchanges of debt; non-recurring legal expense (benefit); change in fair value of embedded derivative; acquisition expenses; impairment of other property and equipment; and other non-recurring items.

 

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF EBITDAX, ADJUSTED EBITDAX AND NET DEBT

(Unaudited)


EBITDAX and Adjusted EBITDAX



Three Months Ended


Six Months Ended



June 30,


June 30,

($ in thousands)


2020


2019


2020


2019










Net (Loss) Income


$

(291,050)



$

355,870



$

(205,688)



$

270,561


Adjustments to reconcile net (loss) income to EBITDAX:









Exploration expenses


22,858



18,484



49,811



57,738


Natural gas and oil depreciation, depletion and amortization


201,331



156,376



376,881



315,508


Depreciation and amortization of other assets


942



782



1,866



1,547


Interest expense, net


31,233



24,868



65,153



46,011


EBITDAX (Non-GAAP)(a)(b)


(34,686)



556,380



288,023



691,365


Adjustments to reconcile EBITDAX to Adjusted EBITDAX:









Change in fair value of commodity derivatives


239,847



(306,033)



177,472



(178,962)


Losses (gains) on purchases or exchanges of debt


190



?



(13,303)



?


Non-recurring legal expense


5,572



?



5,572



?


Change in fair value of embedded derivative


?



(2,007)



?



(3,145)


Other


?



76



?



252


Adjusted EBITDAX (Non-GAAP)(b)(c)


$

210,923



$

248,416



$

457,764



$

509,510




(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 fair value of commodity derivatives;  (gains) losses on purchases or exchanges of debt; non-recurring legal expense (benefit); acquisition expenses; change in fair value of embedded derivative; and other non-recurring items.


Net Debt and Net Debt to Last Twelve Months ("LTM") Adjusted EBITDAX




June 30,

($ in thousands)


2020


2019






Net Debt:





Total debt(a)


$

2,793,728



$

2,737,411


Less: cash and cash equivalents


8,961



6,450


Net Debt(b)


$

2,784,767



$

2,730,961







Net Debt to LTM Adjusted EBITDAX:





Net Debt(b)


$

2,784,767



$

2,730,961


LTM Adjusted EBITDAX(c)


$

1,099,355



$

1,068,027


Net Debt to LTM Adjusted EBITDAX


2.5

x


2.6

x



(a) 

Total debt includes the current portion of our long-term debt.

(b)

Ascent defines "Net Debt" as total debt less cash and cash equivalents. Management uses net debt to determine our outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand.

(c)

Adjusted EBITDAX for the LTM ended June 30, 2020.

 

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF DISCRETIONARY CASH FLOW AND FREE CASH FLOW

(Unaudited)




Three Months Ended


Six Months Ended



June 30,


June 30,

($ in thousands)


2020


2019


2020


2019










Net Cash Provided by Operating Activities


$

179,441



$

248,489



$

471,564



$

590,228


Adjustments to reconcile Net Cash Provided by Operating Activities to Discretionary Cash Flow:









Changes in operating assets and liabilities


4,441



(12,078)



(73,450)



(114,613)


Discretionary Cash Flow (Non-GAAP)(a)(b)


183,882



236,411



398,114



475,615


Adjustments to reconcile Discretionary Cash Flow to Free Cash Flow:









Drilling and completion costs


(188,023)



(329,194)



(345,880)



(597,712)


Acquisitions of natural gas and oil properties


(35,596)



(95,242)



(80,987)



(145,292)


Free Cash Flow (Non-GAAP)(b)(c)


$

(39,737)



$

(188,025)



$

(28,753)



$

(267,389)




(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.

 


SOURCE Ascent Resources, LLC


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