ASCENT RESOURCES REPORTS THIRD QUARTER OPERATING AND FINANCIAL RESULTS AND ANNOUNCES UPDATED 2023 GUIDANCE

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.

Updated 2023 Guidance

Production

Total Production (mmcfe/d)

2,025 - 2,125

% Natural Gas

90% - 92%

Differentials

Natural Gas ($/mcf)

($0.25) - ($0.15)

Crude Oil ($/bbl)

($9.00) - ($8.00)

NGL (% of WTI)

30% - 35%

Operating Expenses

Total Operating Expense⁽¹⁾

$1.45 - $1.55

G&A⁽²⁾

$0.08 - $0.09

Capital Expenditures Incurred ($mm)⁽³⁾

$955 - $990

D&C

$825 - $850

Land

$130 - $140

Operations / Well Counts

Operated Rigs

3.5 - 4.0

Wells Spud

70 - 75

Average Spud Lateral Length

14,250'

⁽¹⁾ Includes GP&T, LOE, and Taxes Other than Income

⁽²⁾ Excludes long-term incentive compensation expense

⁽³⁾ Excludes capitalized interest

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

($ in thousands)

2023

2022

2023

2022

Revenues:

Natural gas

$    388,727

$ 1,625,516

$ 1,334,008

$ 3,653,047

Oil

61,336

52,715

188,495

184,684

NGL

52,685

54,759

136,062

192,314

Commodity derivative gain (loss)

69,253

(1,100,991)

1,339,884

(3,680,972)

Total Revenues

572,001

631,999

2,998,449

349,073

Operating Expenses:

Lease operating expenses

31,252

26,826

95,219

74,019

Gathering, processing and transportation expenses

253,479

258,868

721,563

734,943

Taxes other than income

11,784

12,728

35,918

34,150

Exploration expenses

1,862

15,365

6,654

45,789

General and administrative expenses

17,852

26,535

52,824

53,635

Depreciation, depletion and amortization

186,486

192,484

545,202

494,534

Total Operating Expenses

502,715

532,806

1,457,380

1,437,070

Income (Loss) from Operations

69,286

99,193

1,541,069

(1,087,997)

Other Income (Expense):

Interest expense, net

(50,043)

(57,553)

(153,196)

(152,305)

Change in fair value of contingent payment right

(3,760)

3,656

(1,919)

(1,347)

Losses on purchases or exchanges of debt

—

—

(26,900)

—

Other income

1,172

1,244

12,083

2,029

Total Other Expense

(52,631)

(52,653)

(169,932)

(151,623)

Net Income (Loss)

$      16,655

$      46,540

$ 1,371,137

$  (1,239,620)

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30,

December 31,

($ in thousands)

2023

2022

Current Assets:

Cash and cash equivalents

$        4,415

$        3,894

Accounts receivable – natural gas, oil and NGL sales

234,079

530,385

Accounts receivable – joint interest and other

44,791

35,340

Short-term derivative assets

103,204

14,061

Other current assets

6,818

12,597

Total Current Assets

393,307

596,277

Property and Equipment:

Natural gas and oil properties, based on successful efforts accounting

11,336,438

10,558,533

Other property and equipment

41,139

39,641

Less: accumulated depreciation, depletion and amortization

(4,441,944)

(3,900,730)

Property and Equipment, net

6,935,633

6,697,444

Other Assets:

Long-term derivative assets

21,280

6,081

Other long-term assets

45,030

44,117

Total Assets

$ 7,395,250

$ 7,343,919

Current Liabilities:

Accounts payable

$      75,890

$      77,753

Accrued interest

45,938

50,375

Short-term derivative liabilities

69,317

684,204

Other current liabilities

517,215

771,062

Total Current Liabilities

708,360

1,583,394

Long-Term Liabilities:

Long-term debt, net

2,509,692

2,475,222

Long-term derivative liabilities

39,551

495,464

Other long-term liabilities

121,969

113,061

Total Long-Term Liabilities

2,671,212

3,083,747

Member's Equity

4,015,678

2,676,778

Total Liabilities and Member's Equity

$ 7,395,250

$ 7,343,919

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

($ in thousands)

2023

2022

2023

2022

Cash Flows from Operating Activities:

Net income (loss)

$      16,655

$      46,540

$ 1,371,137

$  (1,239,620)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion and amortization

186,486

192,484

545,202

494,534

(Gain) loss on commodity derivatives

(69,253)

1,100,991

(1,339,884)

3,680,972

Settlements of commodity derivatives

104,269

(614,128)

164,380

(1,528,811)

Impairment of unproved natural gas and oil properties

977

14,611

4,791

44,118

Non-cash interest expense

6,606

3,439

15,854

11,541

Long-term incentive compensation

999

8,914

1,212

13,965

Change in fair value of contingent payment right

3,760

(3,656)

1,919

1,347

Losses on purchases or exchanges of debt

—

—

26,038

—

Other

95

106

228

78

Changes in operating assets and liabilities

(21,877)

11,750

93,265

(177,753)

Net Cash Provided by Operating Activities

228,717

761,051

884,142

1,300,371

Cash Flows from Investing Activities:

Natural gas and oil capital expenditures

(259,516)

(237,857)

(789,795)

(735,687)

Cash paid for acquisition

—

(223,882)

—

(250,882)

Additions to other property and equipment

(323)

(542)

(2,151)

(1,537)

Net Cash Used in Investing Activities

(259,839)

(462,281)

(791,946)

(988,106)

Cash Flows from Financing Activities:

Proceeds from credit facility borrowings

400,000

1,440,000

1,820,000

3,520,000

Repayment of credit facility borrowings

(360,000)

(1,495,000)

(1,445,000)

(3,210,000)

Proceeds from issuance of long-term debt

—

—

210,000

—

Repayment of long-term debt

—

—

(549,822)

—

Cash paid for debt issuance and amendment costs

—

(121)

(11,219)

(16,852)

Cash paid for debt prepayment costs

—

—

(27,491)

—

Cash paid for settlements of commodity derivatives

—

(241,876)

(53,530)

(297,911)

Cash paid to restructure commodity derivatives

—

—

—

(300,000)

Cash paid to Member for long-term incentive Cash Awards

—

—

(17,856)

—

Cash paid to Member for equity distribution

(12,503)

—

(12,503)

—

Other

(375)

(476)

(4,254)

(5,052)

Net Cash Provided by (Used in) Financing Activities

27,122

(297,473)

(91,675)

(309,815)

Net (Decrease) Increase in Cash and Cash Equivalents

(4,000)

1,297

521

2,450

Cash and Cash Equivalents, Beginning of Period

8,415

6,827

3,894

5,674

Cash and Cash Equivalents, End of Period

$        4,415

$        8,124

$        4,415

$        8,124

ASCENT RESOURCES UTICA HOLDINGS, LLC

NATURAL GAS, OIL AND NGL PRODUCTION AND PRICES

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022

Net Production Volumes:

Natural gas (mmcf)

181,873

202,795

539,011

533,048

Oil (mbbls)

838

613

2,744

1,995

NGL (mbbls)

2,044

1,456

5,202

4,255

Natural Gas Equivalents (mmcfe)

199,163

215,208

586,687

570,547

Average Daily Net Production Volumes:

Natural gas (mmcf/d)

1,977

2,204

1,974

1,953

Oil (mbbls/d)

9

7

10

7

NGL (mbbls/d)

22

16

19

16

Natural Gas Equivalents (mmcfe/d)

2,165

2,339

2,149

2,090

% Natural Gas

91 %

94 %

92 %

94 %

% Liquids

9 %

6 %

8 %

6 %

Average Sales Prices:

Natural gas ($/mcf)

$       2.14

$       8.02

$       2.47

$       6.85

Oil ($/bbl)

$     73.23

$     86.00

$     68.69

$     92.58

NGL ($/bbl)

$     25.78

$     37.61

$     26.16

$     45.20

Natural Gas Equivalents ($/mcfe)

$       2.52

$       8.05

$       2.83

$       7.06

Settlements of commodity derivatives ($/mcfe)^(a)

0.52

(3.98)

0.28

(3.20)

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

$       3.04

$       4.07

$       3.11

$       3.86

^(a)

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.

ASCENT RESOURCES UTICA HOLDINGS, LLC

CAPITAL EXPENDITURES INCURRED

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

($ in thousands)

2023

2022

2023

2022

Capital Expenditures Incurred:

Drilling and completion costs incurred

$      206,088

$      195,150

$   666,441

$    629,037

Land and leasehold costs incurred

36,176

23,902

89,976

79,057

Capitalized interest incurred

8,377

10,221

27,985

32,519

Total Capital Expenditures Incurred ^(a)

$      250,641

$      229,273

$   784,402

$    740,613

^(a)

Excludes the $250.9 million paid for the XTO Acquisition in 2022.

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED NET INCOME (LOSS)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

($ in thousands)

2023

2022

2023

2022

Net Income (Loss) (GAAP)

$      16,655

$      46,540

$ 1,371,137

$  (1,239,620)

Adjustments to reconcile net income (loss) to Adjusted Net Income:

(Gain) loss on commodity derivatives

(69,253)

1,100,991

(1,339,884)

3,680,972

Commodity derivative settlements^(a)

104,269

(856,004)

164,380

(1,826,722)

Unrealized (gain) loss on interest rate derivatives

1,366

(1,527)

361

(5,102)

Change in fair value of contingent payment right

3,760

(3,656)

1,919

1,347

Long-term incentive compensation

999

8,914

1,212

13,965

Losses on purchases or exchanges of debt

—

—

26,900

—

Impairment of unproved natural gas and oil properties

977

14,611

4,791

44,118

Other

—

(3,352)

—

(4,724)

Adjusted Net Income (Non-GAAP)^(b)(c)

$      58,773

$    306,517

$    230,816

$    664,234

^(a)

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.

^(b)

As shown above and on the following pages, Ascent uses Adjusted Net Income (Loss), Adjusted EBITDAX, Last Twelve Months ("LTM") Adjusted EBITDAX, Net Debt, and Adjusted 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 and lenders, 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 or used in operating, investing and financing activities or other income or cash flow statement data prepared in accordance with 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 terms, 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 or amount 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.

^(c)

Ascent defines "Adjusted Net Income (Loss)" as net income (loss) before impairment of unproved natural gas and oil properties; 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; and other expense (benefits) including changes in legal reserves, settlements and other items which 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.

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT

(Unaudited)

Adjusted EBITDAX

Three Months Ended

Nine Months Ended

September 30,

September 30,

($ in thousands)

2023

2022

2023

2022

Net Income (Loss) (GAAP)

$      16,655

$      46,540

$ 1,371,137

$  (1,239,620)

Adjustments to reconcile net income (loss) to Adjusted EBITDAX:

Exploration expenses

1,862

15,365

6,654

45,789

Depreciation, depletion and amortization

186,486

192,484

545,202

494,534

Interest expense, net

50,043

57,553

153,196

152,305

(Gain) loss on commodity derivatives

(69,253)

1,100,991

(1,339,884)

3,680,972

Commodity derivative settlements^(a)

104,269

(856,004)

164,380

(1,826,722)

Change in fair value of contingent payment right

3,760

(3,656)

1,919

1,347

Long-term incentive compensation^(b)

999

8,914

1,212

13,965

Losses on purchases or exchanges of debt

—

—

26,900

—

Other

—

(3,352)

—

(6,701)

Adjusted EBITDAX (Non-GAAP)^(c)(d)

$    294,821

$    558,835

$    930,716

$ 1,315,869

^(a)

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.

^(b)

The expense associated with the Long Term Incentive Plan Cash Award of $8.1 million and $11.4 million for the three and nine months ended September 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.

^(c)

See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) for a discussion of our uses of non-GAAP measures.

^(d)

Ascent defines "Adjusted EBITDAX" as net income (loss) before exploration expenses; depreciation, depletion and amortization; 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 other expenses (benefits) including changes in legal reserves, settlements and other items which 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.

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT (CONTINUED)

(Unaudited)

LTM Adjusted EBITDAX

Three Months

Ended

Twelve Months
Ended

September 30,

June 30,

March 31,

December 31,

September 30,

($ in thousands)

2023

2023

2023

2022

2023

Net Income (GAAP)

$      16,655

$   250,036

$  1,104,446

$  1,600,999

$  2,972,136

Adjustments to reconcile net income to Adjusted EBITDAX:

Exploration expenses

1,862

4,185

607

3,353

10,007

Depreciation, depletion and amortization

186,486

175,677

183,039

181,519

726,721

Interest expense, net

50,043

47,818

55,335

57,426

210,622

(Gain) loss on commodity derivatives

(69,253)

(348,982)

(921,649)

(993,155)

(2,333,039)

Commodity derivative settlements

104,269

126,929

(66,818)

(473,217)

(308,837)

Change in fair value of contingent payment right

3,760

2,039

(3,880)

1,955

3,874

Losses on purchases or exchanges of debt

—

26,900

—

—

26,900

Long-term incentive compensation^(c)

999

859

(646)

8,780

9,992

Other

—

—

—

(59)

(59)

Adjusted EBITDAX (Non-GAAP)^(a)

$    294,821

$   285,461

$     350,434

$    387,601

$  1,318,317

Three Months

Ended

Twelve Months
Ended

September 30,

June 30,

March 31,

December 31,

September 30,

($ in thousands)

2022

2022

2022

2021

2022

Net Income (Loss) (GAAP)

$      46,540

$   284,927

$ (1,571,087)

$  1,110,012

$   (129,608)

Adjustments to reconcile net income (loss) to Adjusted EBITDAX:

Exploration expenses

15,365

12,015

18,409

26,061

71,850

Depreciation, depletion and amortization

192,484

149,771

152,279

159,286

653,820

Interest expense, net

57,553

49,787

44,965

47,034

199,339

(Gain) loss on commodity derivatives

1,100,991

584,421

1,995,560

(532,585)

3,148,387

Commodity derivative settlements^(b)

(856,004)

(603,555)

(367,163)

(534,216)

(2,360,938)

Change in fair value of contingent payment right

(3,656)

(2,977)

7,980

(407)

940

Long-term incentive compensation^(c)

8,914

4,176

875

815

14,780

Other

(3,352)

(1,565)

(1,784)

7,219

518

Adjusted EBITDAX (Non-GAAP)^(a)

$     558,835

$   477,000

$     280,034

$    283,219

$  1,599,088

^(a)

See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) for a discussion of our uses of non-GAAP measures.

^(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.

^(c)

The expense associated with the Long Term Incentive Plan Cash Award of $6.5 million, $8.1 million and $3.3 million for the three months ended 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.

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT (CONTINUED)

(Unaudited)

Net Debt and Net Debt to LTM Adjusted EBITDAX

September 30,

($ in thousands)

2023

2022

Net Debt:

Total debt

$  2,509,692

$  2,909,287

Less: cash and cash equivalents

4,415

8,124

Net Debt^(a)

$  2,505,277

$  2,901,163

Net Debt to LTM Adjusted EBITDAX:

Net Debt^(a)

$  2,505,277

$  2,901,163

LTM Adjusted EBITDAX (Non-GAAP)^(b)

$  1,318,317

$  1,599,088

Net Debt to LTM Adjusted EBITDAX

              1.9 x

              1.8 x

^(a)

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 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.

^(b)

Refer to our Reconciliations of Adjusted EBITDAX and Net Debt for more details regarding our LTM Adjusted EBITDAX calculations. Only includes impact of XTO acquisition since August 5, 2022.

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED FREE CASH FLOW

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

($ in thousands)

2023

2022

2023

2022

Net Cash Provided by Operating Activities (GAAP)

$    228,717

$    761,051

$    884,142

$ 1,300,371

Adjustments to reconcile Net Cash Provided by Operating Activities to Adjusted Free Cash Flow:

Changes in operating assets and liabilities

21,877

(11,750)

(93,265)

177,753

Drilling and completion costs incurred

(206,088)

(195,150)

(666,441)

(629,037)

Land and leasehold costs incurred

(36,176)

(23,902)

(89,976)

(79,057)

Capitalized interest incurred

(8,377)

(10,221)

(27,985)

(32,519)

Financing commodity derivative settlements

—

(241,876)

—

(297,911)

Other

3,039

(1,300)

3,901

(4,649)

Adjusted Free Cash Flow (Non-GAAP)^(a)(b)(c)

$        2,992

$    276,852

$      10,376

$    434,951

^(a)

See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) for a discussion of our uses of non-GAAP measures.

^(b)

Adjusted 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 "Adjusted Free Cash Flow" as net cash provided by 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 other expenses (benefits) including changes in legal reserves, including settlements and other items which affect the comparability of results or that are not indicative of trends in the ongoing business.  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 operating activities, as determined by GAAP.

^(c)

Adjusted Free Cash Flow does not include the impact of the Long Term Incentive Cash Award of $8.1 million and $11.4 million for the three and nine months ended September 30, 2022, respectively.  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.