ASCENT RESOURCES REPORTS FIRST QUARTER 2024 OPERATING AND FINANCIAL RESULTS

News provided by

Ascent Resources Utica Holdings, LLC

May 09, 2024, 16:00 ET

First Quarter Highlights:

Net production of 2.2 bcfe per day, with liquids production up 38% over the prior year period to ~37 mbbls per day
Net Income and Adjusted Net Income⁽¹⁾ of $86 million and $218 million, respectively
Adjusted EBITDAX⁽¹⁾ and Adjusted Free Cash Flow⁽¹⁾ of $456 million and $198 million, respectively
Received credit rating upgrades from both Moody's and Fitch subsequent to quarter-end
Reaffirmed the borrowing base and elected commitments under the credit facility at $3.0 billion and $2.0 billion, respectively, in April
Increased production guidance range to 2,050 to 2,125 mmcfe per day (no other changes)

⁽¹⁾A non-GAAP financial measure. See the non-GAAP reconciliations included in this press release for the definition of, and other important information regarding, this non-GAAP financial measure.

OKLAHOMA CITY, May 9, 2024 /PRNewswire/ -- Ascent Resources Utica Holdings, LLC ("Ascent", "our" or the "Company") today reported its first quarter 2024 operating and financial results. Additionally, Ascent announced a conference call with analysts and investors scheduled for 9 AM CT / 10 AM ET, Friday, May 10, 2024. For more detailed information on Ascent, please refer to our audited financials, the latest investor presentation and additional information located on our website at https://www.ascentresources.com/investors.

Commenting on the first quarter results, Ascent's Chairman and Chief Executive Officer, Jeff Fisher said, "I am excited to announce our exceptional financial and operational results during the quarter despite continuing market volatility. Our disciplined approach to cost management, focus on efficiencies and strong hedge book have allowed us to deliver outstanding results. Our commitment to maximizing and growing free cash flow remain our top priority, ensuring the sustainability of our business for many years to come."

Fisher continued, "As we move through the rest of the year, we will continue to focus on costs, efficiencies and margins to drive free cash flow and position the Company for long-term success. Our prudent financial strategy, including our hedge book, provide a solid foundation to navigate market conditions with confidence."

First Quarter 2024 Financial Results

First quarter 2024 net production averaged 2,215 mmcfe per day, consisting of 1,994 mmcf per day of natural gas, 9,396 bbls per day of oil and 27,429 bbls per day of natural gas liquids ("NGL").

First quarter 2024 price realizations, including the impact of settled commodity derivatives, were $3.73 per mcfe. Excluding the impact of settled commodity derivatives, price realizations were $2.61 per mcfe in the first quarter of 2024.

For the first quarter of 2024, Ascent reported Net Income of $86 million, Adjusted Net Income of $218 million, Adjusted EBITDAX of $456 million, along with Cash Flows from Operations of $369 million and Adjusted Free Cash Flow of $198 million. Ascent incurred $212 million of total capital expenditures in the first quarter of 2024 consisting of $180 million of D&C costs, $25 million of land and leasehold costs, and $7 million of capitalized interest.

Balance Sheet and Liquidity

As of March 31, 2024, Ascent had total debt of approximately $2.4 billion, with $645 million of borrowings and $169 million of letters of credit issued under the credit facility. Liquidity as of March 31, 2024 was approximately $1.2 billion, comprised of $1.2 billion of available borrowing capacity under the credit facility and $9 million of cash on hand. Our leverage ratio at the end of the quarter was 1.8x based on a LTM Adjusted EBITDAX basis.

Operational Update

During the first quarter of 2024, we spud 15 operated wells, hydraulically fractured 17 wells, and turned-in-line 10 wells with an average lateral length of approximately 15,700 feet. As of March 31, 2024, Ascent had 876 gross operated producing Utica wells.

Hedging Update

Ascent has significant hedges in place in order to reduce exposure to the volatility in commodity prices, as well as to protect our expected operating cash flow. As of March 31, 2024, Ascent had hedged 1,453,000 mmbtu per day of natural gas production for the remainder of 2024 at an average downside price of $3.51 per mmbtu, and 1,370,000 mmbtu per day in 2025 at an average downside price of $3.82 per mmbtu. Additionally, Ascent has hedged 10,000 bbls per day of crude oil production at an average price of $75.39 per bbl for the remainder of 2024, and 4,000 bbls per day in 2025 at an average price of $70.42. We also have a significant portion of our natural basis position hedged in 2024 and 2025 along with additional natural gas hedges in place through 2027. Please reference our financial statements for additional detail on our hedge position.

About Ascent Resources

Ascent is one of the largest private producers of natural gas in the United States and is focused on acquiring, developing, and operating natural gas and oil properties located in the Utica Shale in southern Ohio. With a continued focus on good corporate citizenship, Ascent is committed to delivering cleaner burning, affordable energy to our country and the world, while reducing environmental impacts.

Contact:
Chris Benton
Vice President – Finance and Investor Relations
405-252-7850
chris.benton@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)	2024	2023

Revenues:
Natural gas	$ 390,502	$ 611,560
Oil	58,368	63,993
NGL	77,424	43,741
Commodity derivative gain	116,259	921,649
Total Revenues	642,553	1,640,943
Operating Expenses:
Lease operating expenses	30,628	33,650
Gathering, processing and transportation expenses	262,663	240,292
Taxes other than income	11,048	11,497
Exploration expenses	6,021	607
General and administrative expenses	31,481	16,493
Depreciation, depletion and amortization	187,000	183,039
Total Operating Expenses	528,841	485,578
Income from Operations	113,712	1,155,365
Other Income (Expense):
Interest expense, net	(50,212)	(55,335)
Change in fair value of contingent payment right	(3,696)	3,880
Other income	25,921	536
Total Other Expense	(27,987)	(50,919)
Net Income	$ 85,725	$ 1,104,446

ASCENT RESOURCES UTICA HOLDINGS, LLC CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	March 31,	December 31,
($ in thousands)	2024	2023

Current Assets:
Cash and cash equivalents	$ 8,525	$ 6,718
Accounts receivable – natural gas, oil and NGL sales	198,879	266,906
Accounts receivable – joint interest and other	81,003	38,540
Short-term derivative assets	437,708	438,041
Other current assets	9,810	10,620
Total Current Assets	735,925	760,825
Property and Equipment:
Natural gas and oil properties, based on successful efforts accounting	11,772,088	11,565,453
Other property and equipment	43,526	42,542
Less: accumulated depreciation, depletion and amortization	(4,805,836)	(4,619,852)
Property and Equipment, net	7,009,778	6,988,143
Other Assets:
Long-term derivative assets	173,599	288,396
Other long-term assets	64,043	68,486
Total Assets	$ 7,983,345	$ 8,105,850

Current Liabilities:
Accounts payable	$ 87,575	$ 76,333
Accrued interest	45,927	44,665
Short-term derivative liabilities	7,453	13,157
Other current liabilities	493,562	551,894
Total Current Liabilities	634,517	686,049
Long-Term Liabilities:
Long-term debt, net	2,418,175	2,533,873
Long-term derivative liabilities	775	—
Other long-term liabilities	129,726	124,565
Total Long-Term Liabilities	2,548,676	2,658,438
Member's Equity	4,800,152	4,761,363
Total Liabilities and Member's Equity	$ 7,983,345	$ 8,105,850

ASCENT RESOURCES UTICA HOLDINGS, LLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended
	March 31,
($ in thousands)	2024	2023

Cash Flows from Operating Activities:
Net income	$ 85,725	$ 1,104,446
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	187,000	183,039
Gain on commodity derivatives	(116,259)	(921,649)
Settlements received (paid) for commodity derivatives	178,611	(66,818)
Impairment of unproved natural gas and oil properties	5,559	—
Non-cash interest expense	5,374	5,977
Long-term incentive compensation	9,314	831
Change in fair value of contingent payment right	3,696	(3,880)
Other	67	(1,423)
Changes in operating assets and liabilities	9,554	70,395
Net Cash Provided by Operating Activities	368,641	370,918
Cash Flows from Investing Activities:
Natural gas and oil capital expenditures	(218,589)	(259,916)
Additions to other property and equipment	(543)	(1,059)
Net Cash Used in Investing Activities	(219,132)	(260,975)
Cash Flows from Financing Activities:
Proceeds from credit facility borrowings	405,000	510,000
Repayment of credit facility borrowings	(525,000)	(545,000)
Cash received (paid) for settlements of commodity derivatives	29,480	(53,530)
Cash paid to Member for Parent's equity distributions	(56,250)	—
Cash paid to Member for Parent's long-term incentive Cash Awards	—	(17,856)
Other	(932)	(271)
Net Cash Used in Financing Activities	(147,702)	(106,657)
Net Increase in Cash and Cash Equivalents	1,807	3,286
Cash and Cash Equivalents, Beginning of Period	6,718	3,894
Cash and Cash Equivalents, End of Period	$ 8,525	$ 7,180

ASCENT RESOURCES UTICA HOLDINGS, LLC SUPPLEMENTAL TABLES

NATURAL GAS, OIL AND NGL PRODUCTION AND PRICES (Unaudited)

	Three Months Ended
	March 31,
	2024	2023

Net Production Volumes:
Natural gas (mmcf)	181,432	183,444
Oil (mbbls)	855	932
NGL (mbbls)	2,496	1,463
Natural Gas Equivalents (mmcfe)	201,532	197,811

Average Daily Net Production Volumes:
Natural gas (mmcf/d)	1,994	2,038
Oil (mbbls/d)	9	10
NGL (mbbls/d)	27	16
Natural Gas Equivalents (mmcfe/d)	2,215	2,198
% Natural Gas	90 %	93 %
% Liquids	10 %	7 %

Average Sales Prices:
Natural gas ($/mcf)	$ 2.15	$ 3.33
Oil ($/bbl)	$ 68.33	$ 68.71
NGL ($/bbl)	$ 31.02	$ 29.90

Natural Gas Equivalents ($/mcfe)	$ 2.61	$ 3.64
Settlements of commodity derivatives ($/mcfe)	1.12	(0.34)
Average sales price, after effects of settled derivatives ($/mcfe)	$ 3.73	$ 3.30

CAPITAL EXPENDITURES INCURRED (Unaudited)

	Three Months Ended
	March 31,
($ in thousands)	2024	2023

Capital Expenditures Incurred:
Drilling and completion costs incurred	$ 180,121	$ 239,232
Land and leasehold costs incurred	24,904	26,185
Capitalized interest incurred	7,133	10,270
Total Capital Expenditures Incurred	$ 212,158	$ 275,687

ASCENT RESOURCES UTICA HOLDINGS, LLC
NON-GAAP FINANCIAL MEASURES

Ascent uses certain non-GAAP measures as a supplement to our financial results prepared in accordance with generally accepted accounting principles (GAAP). These non-GAAP measures include Adjusted Net Income, Adjusted EBITDAX, Last Twelve Months (LTM) Adjusted EBITDAX, Net Debt and Adjusted Free Cash Flow. A reconciliation of each financial measure to its most directly comparable GAAP financial measure is included in the tables below. Ascent's management team believes these non-GAAP measures are useful to an investor in evaluating Ascent's financial performance because (a) management uses these financial measures to evaluate operating performance, in presentations to its Board of Managers and as a basis for strategic planning and forecasting, (b) these financial measures are more comparable to estimates used by analysts, and (c) items excluded are one-time items, non-cash items or items whose timing or amount cannot be reasonably estimated.

Ascent believes these non-GAAP measures provide meaningful information to our investors and lenders; however, they should not be used as a substitute for measures of performance that are calculated in accordance with GAAP. These non-GAAP measures, as used and defined by Ascent below, may not be comparable to similarly titled measures employed by other companies.

Adjusted Net Income: Adjusted Net Income is defined as net income (loss) before the revenue impact of changes in the fair value of commodity derivative instruments prior to settlement, unrealized (gain) loss on interest rate derivatives, change in fair value of contingent payment right, long-term incentive compensation, (gains) losses on purchases or exchanges of debt, impairment of unproved natural gas and oil properties and certain items management believes affect the comparability of results or that are not indicative of trends in the ongoing business. Adjusted Net Income is a supplemental measure of operating performance monitored by management that is not defined under GAAP and does not represent, and should not be considered as, an alternative to net income (loss), as determined by GAAP.

Adjusted EBITDAX and LTM Adjusted EBITDAX: Adjusted EBITDAX is defined as net income (loss) before exploration expenses, depreciation, depletion and amortization expense, interest expense (net), the revenue impact of changes in the fair value of commodity derivative instruments prior to settlement, change in fair value of contingent payment right, long-term incentive compensation, (gains) losses on purchases or exchanges of debt and certain items management believes affect the comparability of results or that are not indicative of trends in the ongoing business. Adjusted EBITDAX is a supplemental measure of operating performance monitored by management that is not defined under GAAP and does not represent, and should not be considered as, an alternative to net income (loss), as determined by GAAP.

Net Debt: Net Debt is defined 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 our cash and cash equivalents on hand. Net Debt does not represent, and should not be considered as, an alternative to total debt, as determined by GAAP.

Adjusted Free Cash Flow: Adjusted Free Cash Flow is defined as net cash provided by (used in) operating activities adjusted for changes in operating assets and liabilities, drilling and completion costs incurred, land and leasehold costs incurred, capitalized interest incurred, financing commodity derivative settlements, and certain items management believes affect the comparability of results or that are not indicative of trends in the ongoing business. Adjusted Free Cash Flow is an indicator of a company's ability to generate funding to maintain or expand its asset base, make equity distributions and repurchase or extinguish debt. Adjusted Free Cash Flow is a supplemental measure of liquidity monitored by management that is not defined under GAAP and that does not represent, and should not be considered as, an alternative to net cash provided by (used in) operating activities, as determined by GAAP.

RECONCILIATION OF ADJUSTED NET INCOME (Unaudited)

	Three Months Ended
	March 31,
($ in thousands)	2024	2023

Net Income (GAAP)	$ 85,725	$ 1,104,446
Adjustments to reconcile net income to Adjusted Net Income:
Gain on commodity derivatives	(116,259)	(921,649)
Settlements received (paid) for commodity derivatives	226,562	(66,818)
Unrealized (gain) loss on interest rate derivatives	(102)	835
Change in fair value of contingent payment right	3,696	(3,880)
Long-term incentive compensation^(a)	9,314	831
Impairment of unproved natural gas and oil properties	5,559	—
Non-recurring legal expense	3,272	—
Other	—	(1,477)
Adjusted Net Income (Non-GAAP)	$ 217,767	$ 112,288

RECONCILIATION OF ADJUSTED EBITDAX (Unaudited)

	Three Months Ended
	March 31,
($ in thousands)	2024	2023

Net Income (GAAP)	$ 85,725	$ 1,104,446
Adjustments to reconcile net income to Adjusted EBITDAX:
Exploration expenses	6,021	607
Depreciation, depletion and amortization	187,000	183,039
Interest expense, net	50,212	55,335
Gain on commodity derivatives	(116,259)	(921,649)
Settlements received (paid) for commodity derivatives	226,562	(66,818)
Change in fair value of contingent payment right	3,696	(3,880)
Long-term incentive compensation^(a)	9,314	831
Non-recurring legal expense	3,272	—
Other	—	(1,477)
Adjusted EBITDAX (Non-GAAP)	$ 455,543	$ 350,434

^(a)	The expense associated with the Long-Term Incentive Plan Cash Award of $4.8 million for the three months ended March 31, 2024 is non-cash to the Company as the Plan was established by our Parent, Ascent Resources, LLC. We did not recognize any expense associated with the Cash Award in 2023.

RECONCILIATION OF LTM ADJUSTED EBITDAX (Unaudited)

	Three Months Ended				Twelve Months Ended
	March 31,	December 31,	September 30,	June 30,	March 31,
($ in thousands)	2024	2023	2023	2023	2024

Net Income (GAAP)	$ 85,725	$ 757,202	$ 16,655	$ 250,036	$ 1,109,618
Adjustments to reconcile net income to Adjusted EBITDAX:
Exploration expenses	6,021	5,971	1,862	4,185	18,039
Depreciation, depletion and amortization	187,000	178,749	186,486	175,677	727,912
Interest expense, net	50,212	52,714	50,043	47,818	200,787
Gain on commodity derivatives	(116,259)	(758,301)	(69,253)	(348,982)	(1,292,795)
Settlements received for commodity derivatives	226,562	58,169	104,269	126,929	515,929
Change in fair value of contingent payment right	3,696	651	3,760	2,039	10,146
Losses on purchases or exchanges of debt	—	—	—	26,900	26,900
Long-term incentive compensation^(a)	9,314	1,006	999	859	12,178
Non-recurring legal expense	3,272	20,000	—	—	23,272
Adjusted EBITDAX (Non-GAAP)	$ 455,543	$ 316,161	$ 294,821	$ 285,461	$ 1,351,986

	Three Months Ended				Twelve Months Ended
	March 31,	December 31,	September 30,	June 30,	March 31,
($ in thousands)	2023	2022	2022	2022	2023

Net Income (GAAP)	$ 1,104,446	$ 1,600,999	$ 46,540	$ 284,927	$ 3,036,912
Adjustments to reconcile net income to Adjusted EBITDAX:
Exploration expenses	607	3,353	15,365	12,015	31,340
Depreciation, depletion and amortization	183,039	181,519	192,484	149,771	706,813
Interest expense, net	55,335	57,426	57,553	49,787	220,101
(Gain) loss on commodity derivatives	(921,649)	(993,155)	1,100,991	584,421	(229,392)
Settlements paid for commodity derivatives^(b)	(66,818)	(473,217)	(856,004)	(603,555)	(1,999,594)
Change in fair value of contingent payment right	(3,880)	1,955	(3,656)	(2,977)	(8,558)
Long-term incentive compensation^(a)	831	8,780	8,914	4,176	22,701
Non-recurring legal expense (benefit)	—	—	1,702	(10,564)	(8,862)
Other	(1,477)	(59)	(5,054)	8,999	2,409
Adjusted EBITDAX (Non-GAAP)	$ 350,434	$ 387,601	$ 558,835	$ 477,000	$ 1,773,870

^(a)

The expense associated with the Long-Term Incentive Plan Cash Award of $4.8 million, $6.5 million, $8.1 million and $3.3 million for the three months ended March 31, 2024, December 31, 2022, September 30, 2022 and June 30, 2022, respectively, is non-cash to the Company as the Plan was established by our Parent, Ascent Resources, LLC. We did not recognize any expense associated with the Cash Award in 2023.

^(b)

Excludes the one-time payment of $300 million in April 2022 to restructure a portion of our May through December 2022 natural gas swaps, resulting in an increase of our weighted average strike prices for these periods.

RECONCILIATION OF NET DEBT & NET DEBT TO LTM ADJUSTED EBITDAX (Unaudited)

	March 31,
($ in thousands)	2024	2023

Net Debt:
Total debt	$ 2,418,175	$ 2,444,189
Less: cash and cash equivalents	8,525	7,180
Net Debt	$ 2,409,650	$ 2,437,009

Net Debt to LTM Adjusted EBITDAX:
Net Debt	$ 2,409,650	$ 2,437,009
LTM Adjusted EBITDAX (Non-GAAP)^(a)	$ 1,351,986	$ 1,773,870
Net Debt to LTM Adjusted EBITDAX	1.8 x	1.4 x

^(a)	Only includes impact of XTO acquisition since August 5, 2022.

RECONCILIATION OF ADJUSTED FREE CASH FLOW (Unaudited)

	Three Months Ended
	March 31,
($ in thousands)	2024	2023

Net Cash Provided by Operating Activities (GAAP)	$ 368,641	$ 370,918
Adjustments to reconcile Net Cash Provided by Operating Activities to Adjusted Free Cash Flow:
Changes in operating assets and liabilities	(9,554)	(70,395)
Drilling and completion costs incurred	(180,121)	(239,232)
Land and leasehold costs incurred	(24,904)	(26,185)
Capitalized interest incurred	(7,133)	(10,270)
Financing commodity derivative settlements	47,951	—
Non-recurring legal expense	3,272	—
Adjusted Free Cash Flow (Non-GAAP)^(a)	$ 198,152	$ 24,836

^(a)

Adjusted Free Cash Flow does not include the impact of the Long-Term Incentive Cash Award of $4.8 million for the three months ended March 31, 2024. It is reflected in our consolidated financial statements as a non-cash equity contribution received from our Parent as the Plan was established by our Parent, Ascent Resources, LLC. We did not recognize any expense associated with the Cash Award in 2023.

SOURCE Ascent Resources Utica Holdings, LLC