ASCENT RESOURCES UTICA HOLDINGS, LLC REPORTS FOURTH QUARTER AND YEAR-END 2021 OPERATING AND FINANCIAL RESULTS AND ISSUES INITIAL 2022 GUIDANCE

News provided by

Ascent Resources Utica Holdings, LLC

Mar 10, 2022, 15:45 ET

OKLAHOMA CITY, March 10, 2022 /PRNewswire/ --

Fourth Quarter and Full-Year 2021 Highlights:

Averaged net production of 2.03 bcfe/d for the quarter and 1.94 bcfe/d for the full-year 2021
Generated Adjusted EBITDAX⁽¹⁾ of $283 million for the quarter and $1.0 billion for the full-year 2021
Averaged $573 per lateral foot⁽²⁾ in well costs during the quarter and $565 per lateral foot for the full-year 2021, which was in-line with our guidance range and an 8% year-over-year reduction
Generated $54 million of positive free cash flow⁽¹⁾during the quarter and $175 million for the full-year 2021, our second consecutive year of free cash flow generation
Reported year-end 2021 proved reserves and PV-10 of 9.24 tcfe and $9.1 billion using SEC pricing, respectively
Certified our first responsibly sourced gas in January 2022 through our pilot program with Project Canary and received their TrustWell™ Platinum certification for 2022
Initial 2022 production guidance of 2.0 to 2.1 bcfe/d with total capital of $710 to $770 million

⁽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.
⁽²⁾	Well costs include drilling, completions, facility and pad costs.

Ascent Resources Utica Holdings, LLC ("Ascent", "our" or the "Company") today reported its fourth quarter and full-year 2021 operating and financial results and issued initial 2022 guidance. Additionally, Ascent announced a conference call with analysts and investors at 9 AM CST / 10 AM EST, Friday, March 11, 2022. For more detailed information on Ascent, please refer to the latest investor presentation and additional information located on our website at https://www.ascentresources.com/investors.

Commenting on fourth quarter and full-year 2021 performance, Ascent's Chairman and Chief Executive Officer, Jeff Fisher said, "The team finished the year in very strong fashion by exceeding 2.0 bcfe/d of production and generating $54 million of free cash flow and $283 million of Adjusted EBITDAX during the fourth quarter. Our peer-leading capital efficiency, well performance and operational execution serve as the foundation upon which the company continues to build and excel. These key attributes have contributed to improved margins, reduced debt and leverage, and our second consecutive year of positive free cash flow generation despite over $800 million dollars in realized hedge losses during the year."

Fisher continued, "Heading into 2022, we remain committed to a maintenance-level production program, as we continue to prioritize free cash flow over growth. We expect to continue to generate free cash flow throughout the year and, consistent with our previously stated strategy, plan to use this free cash flow to repay debt, improve our balance sheet and push towards our stated leverage target of 2.0x by year-end 2022. We also continue to advance our ESG efforts and are excited to announce that we received certification for our first responsibly sourced gas in January 2022 through our pilot program with Project Canary. These efforts are representative of the Company's commitment to responsible and sustainable operations and support our ultimate purpose of providing reliable, affordable, clean energy to a world in need."

Fourth Quarter 2021 Financial Results

Fourth quarter 2021 net production averaged 2,025 mmcfe per day, consisting of 1,877 mmcf per day of natural gas, 7,989 bbls per day of oil and 16,761 bbls per day of natural gas liquids ("NGL").

Fourth quarter 2021 price realizations, including the impact of settled derivatives, were $3.02 per mcfe. Excluding the impact of settled derivatives, price realizations were $5.89 per mcfe in the fourth quarter of 2021.

For the fourth quarter of 2021, Ascent reported net income of $1.1 billion, adjusted net income of $76 million and Adjusted EBITDAX of $283 million. During the fourth quarter of 2021, net income was largely driven by a $1.1 billion unrealized commodity derivative fair value gain primarily due to a decrease in the forward strip for natural gas. Ascent incurred $187 million of total capital expenditures in the fourth quarter of 2021 including $156 million for well costs, $20 million for acquisition and leasehold costs, and $11 million for capitalized interest. The Company generated $54 million of free cash flow in the fourth quarter of 2021, despite a realized hedge loss of approximately $534 million.

Full-Year 2021 Financial Results

Full-year 2021 production averaged 1,936 mmcfe per day, consisting of 1,769 mmcf per day of natural gas, 8,521 bbls per day of oil and 19,211 bbls per day of NGLs.

Price realizations, including the impact of settled derivatives, were $2.99 per mcfe for the year ended December 31, 2021. Excluding the impact of derivatives, full-year 2021 price realizations were $4.16 per mcfe.

For the year ended December 31, 2021, Ascent reported a net loss of $806 million, adjusted net income of $227 million and Adjusted EBITDAX of $1.0 billion. During the year ended December 31, 2021, the net loss was driven by a $920 million unrealized commodity derivative fair value loss, which was primarily due to an increase in the forward strip for natural gas. Ascent incurred a total of $672 million of capital expenditures during the full-year 2021 including $566 million for well costs, $58 million for acquisition and leasehold costs, and $48 million for capitalized interest. The Company generated $175 million of free cash flow during the year ended December 31, 2021, despite a realized hedge loss of approximately $824 million.

Balance Sheet and Liquidity

As of December 31, 2021, Ascent had total debt outstanding of approximately $2.6 billion, with $495 million of borrowings and $169 million of letters of credit issued under the revolving credit facility. Liquidity as of December 31, 2021 was $1.2 billion, comprised of $1.2 billion of available borrowing capacity under the revolving credit facility and $6 million of cash on hand. Our leverage ratio at the end of the year was 2.3x based on fourth quarter annualized Adjusted EBITDAX and 2.6x based on LTM Adjusted EBITDAX.

Operational Update

During the fourth quarter of 2021, Ascent operated four drilling rigs and one fracture stimulation crew (with an additional spot crew in the month of December). The Company spud 16 operated wells, hydraulically fractured 17 wells, and turned in line 18 wells with an average lateral length of 13,809 feet. As of December 31, 2021, Ascent had 668 gross operated producing Utica wells.

Well costs averaged approximately $573 per lateral foot during the fourth quarter of 2021, and $565 per lateral foot for the full-year 2021. Well costs were in-line with our full year guidance of between $550 and $575 per lateral foot, and were down 8% year-over-year. The Company continues to execute at a high level and realize sustainable and repeatable efficiency gains. Throughout 2021, the Company realized a substantial improvement in drilling efficiencies, as we continued to reduce cycle times while increasing lateral feet developed per day. On the completions side, we operated two fracture stimulation crews during the month of December as efficient drilling operations necessitated a spot crew to ensure optimal and timely development. We plan to periodically employ a spot frac crew throughout 2022 in order to optimize the development plan and to provide additional operational flexibility.

2021 Year-End Reserves

Ascent reported year-end 2021 proved reserves, under SEC guidelines, of 9.24 tcfe, of which 53% were classified as proved developed and 47% as proved undeveloped. The 2021 drill-bit F&D costs for undeveloped reserves were $0.29 per mcfe. A summary of the changes in Ascent's proved reserves for the full-year 2021 is included in the table below and a detailed reconciliation can be found in our financial statements.

Year-End 2021 Proved Reserves (Bcfe)
Balance at December 31, 2020		8,991
Extensions, discoveries and other additions		868
Revisions of prior estimates		88
Production		(706)
Balance at December 31, 2021		9,241

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 December 31, 2021, Ascent had hedged 1,471,000 mmbtu per day of natural gas production (not including sold calls) in 2022 at an average price of $2.70 per mmbtu ($2.89 per mcfe). In addition, Ascent had also hedged 5,000 bbls per day of crude oil production at an average price of $57.50 per bbl in 2022. We also have significant commodity hedges in place for 2023 and beyond (please reference our financial statements for additional detail).

2022 Guidance

The Company expects its full-year 2022 capital budget to come in between $710 million to $770 million, and to be fully funded with operating cash flow. A detailed summary including production, differentials, expenses and operational counts is included in the table below:

Updated 2022 Guidance

Production
Total Production (mmcfe/d)		2,000 - 2,100
% Natural Gas		92% - 94%

Differentials
Natural Gas ($/mcf)		($0.30) - ($0.20)
Crude Oil ($/bbl)		($7.50) - ($7.00)
NGL (% of WTI)		40% - 45%

Operating Expenses
Total Operating Expense⁽¹⁾		$1.40 - $1.45
G&A⁽²⁾		$0.08 - $0.09

Capital Expenditures Incurred ($mm)⁽³⁾		$710 - $770
D&C		$625 - $675
Land		$85 - $95

Operations / Well Counts
Operated Rigs		3.5
Wells Spud		80 - 85
Wells TIL'd		75 - 80
Average Lateral Length of TILs		13,800'
Drilling, Completion, Facility and Pad Cost (per lateral ft.)		$600 - $620


⁽¹⁾	Includes GP&T, LOE, and Taxes Other than Income
⁽²⁾	G&A (less stock-based compensation expense)
⁽³⁾	Excludes Capitalized Interest

About Ascent Resources

Ascent is one of the largest private producers of natural gas in the United States and is focused on acquiring, developing, producing, 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 low-cost clean-burning energy to our country and the world, while reducing environmental impacts.

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		Year Ended
	December 31,		December 31,
($ in thousands)	2021	2020	2021	2020

Revenues:
Natural gas	$ 975,911	$ 390,345	$ 2,510,150	$ 1,258,594
Oil	51,841	30,987	188,076	138,723
NGL	68,982	37,634	241,731	118,224
Commodity derivative gain (loss)	532,585	228,899	(1,743,892)	(19,167)
Total Revenues	1,629,319	687,865	1,196,065	1,496,374
Operating Expenses:
Lease operating expenses	24,963	20,346	90,719	77,521
Gathering, processing and transportation expenses	238,203	230,090	936,134	919,986
Taxes other than income	9,672	9,152	38,988	37,495
Exploration expenses	26,061	26,323	83,367	104,230
General and administrative expenses	15,357	13,713	58,334	63,825
Depreciation, depletion and amortization	159,286	162,431	598,407	737,717
Total Operating Expenses	473,542	462,055	1,805,949	1,940,774
Income (Loss) from Operations	1,155,777	225,810	(609,884)	(444,400)
Other (Expense) Income:
Interest expense, net	(47,034)	(35,791)	(174,840)	(134,259)
Change in fair value of contingent payment right	407	(6,518)	(19,921)	(6,518)
Losses on purchases or exchanges of debt	—	(15,708)	(3,822)	(6,037)
Other income	862	843	2,182	1,850
Total Other Expense	(45,765)	(57,174)	(196,401)	(144,964)
Net Income (Loss)	$ 1,110,012	$ 168,636	$ (806,285)	$ (589,364)

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

	December 31,
($ in thousands)	2021	2020

Current Assets:
Cash and cash equivalents	$ 5,674	$ 8,843
Accounts receivable – natural gas, oil and NGL sales	453,464	223,976
Accounts receivable – joint interest and other	8,309	8,466
Short-term derivative assets	6,866	8,202
Other current assets	9,012	8,316
Total Current Assets	483,325	257,803
Property and Equipment:
Natural gas and oil properties, based on successful efforts accounting	9,383,879	8,790,870
Other property and equipment	36,318	34,076
Less: accumulated depreciation, depletion and amortization	(3,225,844)	(2,628,150)
Property and Equipment, net	6,194,353	6,196,796
Other Assets:
Long-term derivative assets	522	2,401
Other long-term assets	46,241	34,560
Total Assets	$ 6,724,441	$ 6,491,560

Current Liabilities:
Accounts payable	$ 86,812	$ 36,736
Accrued interest	45,929	31,287
Current portion of long-term debt, net	—	12,498
Short-term derivative liabilities	648,873	54,144
Other current liabilities	517,953	354,169
Total Current Liabilities	1,299,567	488,834
Long-Term Liabilities:
Long-term debt, net of current portion	2,588,248	2,707,382
Long-term derivative liabilities	435,022	113,160
Other long-term liabilities	104,796	79,594
Total Long-Term Liabilities	3,128,066	2,900,136
Member's Equity	2,296,808	3,102,590
Total Liabilities and Member's Equity	$ 6,724,441	$ 6,491,560

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

	Three Months Ended		Year Ended
	December 31,		December 31,
($ in thousands)	2021	2020	2021	2020

Cash Flows from Operating Activities:
Net income (loss)	$ 1,110,012	$ 168,636	$ (806,285)	$ (589,364)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	159,286	162,431	598,407	737,717
Change in fair value of commodity derivatives	(1,066,801)	(202,620)	920,376	475,027
Change in fair value of interest rate derivatives	(213)	41	(570)	569
Impairment of unproved natural gas and oil properties	25,535	25,201	78,993	100,207
Non-cash interest expense	4,780	5,953	18,871	25,347
Stock-based compensation	815	1,065	3,616	1,775
Change in fair value of contingent payment right	(407)	6,518	19,921	6,518
Losses (gains) on purchases or exchanges of debt	—	1,803	3,810	(11,500)
Other	56	(13)	11,348	(1,560)
Changes in operating assets and liabilities	(27,886)	(50,321)	(87,850)	29,100
Net Cash Provided by Operating Activities	205,177	118,694	760,637	773,836
Cash Flows from Investing Activities:
Drilling and completion costs	(131,923)	(99,627)	(508,311)	(571,860)
Acquisitions of natural gas and oil properties	(24,262)	(27,607)	(89,360)	(139,106)
Additions to other property and equipment	(1,115)	(48)	(1,444)	(1,509)
Net Cash Used in Investing Activities	(157,300)	(127,282)	(599,115)	(712,475)
Cash Flows from Financing Activities:
Proceeds from credit facility borrowings	850,000	370,000	2,100,000	1,065,000
Repayment of credit facility borrowings	(898,000)	(585,000)	(2,558,000)	(1,300,000)
Proceeds from issuance of long-term debt	—	300,000	400,000	300,000
Repayment of long-term debt	—	(87,769)	(84,173)	(138,764)
Proceeds from exchange of debt	—	20,000	—	20,000
Cash paid for debt issuance costs	(8)	(4,548)	(7,229)	(6,842)
Commodity derivative settlements	—	—	(11,188)	1,557
Other	(249)	(220)	(4,101)	(815)
Net Cash (Used in) Provided by Financing Activities	(48,257)	12,463	(164,691)	(59,864)
Net (Decrease) Increase in Cash and Cash Equivalents	(380)	3,875	(3,169)	1,497
Cash and Cash Equivalents, Beginning of Period	6,054	4,968	8,843	7,346
Cash and Cash Equivalents, End of Period	$ 5,674	$ 8,843	$ 5,674	$ 8,843

ASCENT RESOURCES UTICA HOLDINGS, LLC
NATURAL GAS, OIL AND NGL PRODUCTION AND PRICES
(Unaudited)

	Three Months Ended		Year Ended
	December 31,		December 31,
	2021	2020	2021	2020

Net Production Volumes:
Natural gas (mmcf)	172,663	156,874	645,752	646,982
Oil (mbbls)	735	888	3,110	4,291
NGL (mbbls)	1,542	1,881	7,012	9,304
Natural Gas Equivalents (mmcfe)	186,324	173,484	706,484	728,553

Average Daily Net Production Volumes:
Natural gas (mmcf/d)	1,877	1,705	1,769	1,768
Oil (mbbls/d)	8	10	9	12
NGL (mbbls/d)	17	20	19	25
Natural Gas Equivalents (mmcfe/d)	2,025	1,886	1,936	1,991
% Natural Gas	93 %	90 %	91 %	89 %
% Liquids	7 %	10 %	9 %	11 %

Average Sales Prices:
Natural gas ($/mcf)	$ 5.65	$ 2.49	$ 3.89	$ 1.95
Oil ($/bbl)	$ 70.53	$ 34.90	$ 60.47	$ 32.33
NGL ($/bbl)	$ 44.74	$ 20.01	$ 34.47	$ 12.71

Natural Gas Equivalents ($/mcfe)	$ 5.89	$ 2.65	$ 4.16	$ 2.08
Settlements of commodity derivatives ($/mcfe)	(2.87)	0.15	(1.17)	0.63
Average sales price, after effects of settled derivatives ($/mcfe)	$ 3.02	$ 2.80	$ 2.99	$ 2.71

ASCENT RESOURCES UTICA HOLDINGS, LLC
CAPITAL EXPENDITURES INCURRED
(Unaudited)

	Three Months Ended		Year Ended
	December 31,		December 31,
($ in thousands)	2021	2020	2021	2020

Capital Expenditures Incurred:
Drilling and completion costs incurred	$ 156,103	$ 104,100	$ 566,058	$ 516,863
Acquisition and leasehold costs incurred	19,738	10,852	57,714	58,018
Capitalized interest incurred	10,961	18,089	48,458	82,208
Total Capital Expenditures Incurred	$ 186,802	$ 133,041	$ 672,230	$ 657,089

ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED NET INCOME (LOSS)
(Unaudited)

	Three Months Ended		Year Ended
	December 31,		December 31,
($ in thousands)	2021	2020	2021	2020

Net Income (Loss) (GAAP)	$ 1,110,012	$ 168,636	$ (806,285)	$ (589,364)
Adjustments to reconcile net income (loss) to adjusted net income:
Impairment of unproved natural gas and oil properties	25,535	25,201	78,993	100,207
Change in fair value of commodity derivatives	(1,066,801)	(202,620)	920,376	475,027
Change in fair value of interest rate derivatives	(213)	41	(570)	569
Change in fair value of contingent payment right	(407)	6,518	19,921	6,518
Losses on purchases or exchanges of debt	—	15,708	3,822	6,037
Stock-based compensation	815	1,065	3,616	1,775
Non-recurring legal expense	1,372	—	1,372	5,572
Other	5,847	—	5,847	—
Adjusted Net Income (Non-GAAP)^(a)(b)	$ 76,160	$ 14,549	$ 227,092	$ 6,341


^(a)	As shown above and on the following pages, Ascent uses adjusted net income (loss), 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 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.
^(b)	Ascent defines "adjusted net income (loss)" as net income (loss) before impairment of unproved natural gas and oil properties; change in fair value of commodity derivatives; change in fair value of interest rate derivatives; change in fair value of contingent payment right; (gains) losses on purchases or exchanges of debt; stock-based compensation; non-recurring legal expense (benefit); acquisition expenses; impairment of other property and equipment; and other non-recurring items.

ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT
(Unaudited)

Adjusted EBITDAX

	Three Months Ended		Year Ended
	December 31,		December 31,
($ in thousands)	2021	2020	2021	2020

Net Income (Loss) (GAAP)	$ 1,110,012	$ 168,636	$ (806,285)	$ (589,364)
Adjustments to reconcile net income (loss) to adjusted EBITDAX:
Exploration expenses	26,061	26,323	83,367	104,230
Depreciation, depletion and amortization	159,286	162,431	598,407	737,717
Interest expense, net	47,034	35,791	174,840	134,259
Change in fair value of commodity derivatives	(1,066,801)	(202,620)	920,376	475,027
Change in fair value of contingent payment right	(407)	6,518	19,921	6,518
Losses on purchases or exchanges of debt	—	15,708	3,822	6,037
Stock-based compensation	815	1,065	3,616	1,775
Non-recurring legal expense	1,372	—	1,372	5,572
Other	5,847	—	5,847	—
Adjusted EBITDAX (Non-GAAP)^(a)(b)	$ 283,219	$ 213,852	$ 1,005,283	$ 881,771


^(a)	See footnote (a) on the Reconciliations of Adjusted Net Income for a discussion around our uses of non-GAAP measures.
^(b)	Ascent defines "adjusted EBITDAX" as net income (loss) before exploration expenses; depreciation, depletion and amortization; interest expense, net; change in fair value of commodity derivatives; change in fair value of contingent payment right; (gains) losses on purchases or exchanges of debt; stock-based compensation; non-recurring legal expense; and other non-recurring items.

ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT (CONTINUED)
(Unaudited)

Last Twelve Months ("LTM") Adjusted EBITDAX

	Three Months Ended				Twelve Months Ended
	December 31,	September 30,	June 30,	March 31,	December 31,
($ in thousands)	2021	2021	2021	2021	2021

Net Income (Loss) (GAAP)	$ 1,110,012	$ (1,256,435)	$ (616,942)	$ (42,920)	$ (806,285)
Adjustments to reconcile net income (loss) to adjusted EBITDAX:
Exploration expenses	26,061	22,274	16,539	18,493	83,367
Depreciation, depletion and amortization	159,286	151,902	147,763	139,456	598,407
Interest expense, net	47,034	44,996	41,353	41,457	174,840
Change in fair value of commodity derivatives	(1,066,801)	1,284,758	624,760	77,659	920,376
Change in fair value of contingent payment right	(407)	1,544	13,338	5,446	19,921
Losses on purchases or exchanges of debt	—	—	3,822	—	3,822
Stock-based compensation	815	816	902	1,083	3,616
Non-recurring legal expense	1,372	—	—	—	1,372
Other	5,847	—	—	—	5,847
Adjusted EBITDAX (Non-GAAP)^(a)(b)	$ 283,219	$ 249,855	$ 231,535	$ 240,674	$ 1,005,283

	Three Months Ended				Twelve Months Ended
	December 31,	September 30,	June 30,	March 31,	December 31,
($ in thousands)	2020	2020	2020	2020	2020

Net Income (Loss) (GAAP)	$ 168,636	$ (552,389)	$ (291,046)	$ 85,435	$ (589,364)
Adjustments to reconcile net income (loss) to adjusted EBITDAX:
Exploration expenses	26,323	28,096	22,858	26,953	104,230
Depreciation, depletion and amortization	162,431	196,232	202,446	176,608	737,717
Interest expense, net	35,791	33,292	31,245	33,931	134,259
Change in fair value of commodity derivatives	(202,620)	500,175	239,847	(62,375)	475,027
Change in fair value of contingent payment right	6,518	—	—	—	6,518
Losses (gains) on purchases or exchanges of debt	15,708	3,632	190	(13,493)	6,037
Stock-based compensation	1,065	710	—	—	1,775
Non-recurring legal expense	—	—	5,572	—	5,572
Adjusted EBITDAX (Non-GAAP)^(a)(b)	$ 213,852	$ 209,748	$ 211,112	$ 247,059	$ 881,771


^(a)	See footnote (a) on the Reconciliations of Adjusted Net Income for a discussion around our uses of non-GAAP measures.
^(b)	Ascent defines "adjusted EBITDAX" as net income (loss) before exploration expenses; depreciation, depletion and amortization; interest expense, net; change in fair value of commodity derivatives; change in fair value of contingent payment right; (gains) losses on purchases or exchanges of debt; stock-based compensation; non-recurring legal expense; and other non-recurring items.

ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT (CONTINUED)
(Unaudited)

Net Debt and Net Debt to LTM Adjusted EBITDAX

	December 31,
($ in thousands)	2021	2020

Net Debt:
Total debt	$ 2,588,248	$ 2,719,880
Less: cash and cash equivalents	5,674	8,843
Net Debt^(a)	$ 2,582,574	$ 2,711,037

Net Debt to LTM Adjusted EBITDAX:
Net Debt^(a)	$ 2,582,574	$ 2,711,037
LTM Adjusted EBITDAX (Non-GAAP)^(b)	$ 1,005,283	$ 881,771
Net Debt to LTM Adjusted EBITDAX	2.6 x	3.1 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.
^(b)	Adjusted EBITDAX for the LTM ended December 31, 2021 and 2020, respectively. Refer to our Reconciliations of Adjusted EBITDAX and Net Debt for more details regarding our LTM Adjusted EBITDAX calculations.

ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF DISCRETIONARY CASH FLOW AND FREE CASH FLOW
(Unaudited)

	Three Months Ended		Year Ended
	December 31,		December 31,
($ in thousands)	2021	2020	2021	2020

Net Cash Provided by Operating Activities (GAAP)	$ 205,177	$ 118,694	$ 760,637	$ 773,836
Adjustments to reconcile Net Cash Provided by Operating Activities to Discretionary Cash Flow:
Changes in operating assets and liabilities	27,886	50,321	87,850	(29,100)
Discretionary Cash Flow (Non-GAAP)^(a)(b)	233,063	169,015	848,487	744,736
Adjustments to reconcile Discretionary Cash Flow to Free Cash Flow:
Drilling and completion costs incurred	(156,103)	(104,100)	(566,058)	(516,863)
Acquisition and leasehold costs incurred	(19,738)	(10,852)	(57,714)	(58,018)
Capitalized interest incurred	(10,961)	(18,089)	(48,458)	(82,208)
Financing commodity derivative settlements	—	—	(11,188)	—
Non-recurring legal expense	1,372	—	1,372	5,572
Debt exchange fees	—	13,905	12	17,537
Other	6,153	4,271	8,497	4,271
Free Cash Flow (Non-GAAP)^(b)(c)	$ 53,786	$ 54,150	$ 174,950	$ 115,027


^(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 the Reconciliations of Adjusted Net Income 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 drilling and completion costs incurred, acquisition and leasehold costs incurred, capitalized interest incurred, non-recurring legal expense, financing commodity derivative settlements, debt exchange fees and certain non-recurring items.

ASCENT RESOURCES UTICA HOLDINGS, LLC
ROLL-FORWARD OF PROVED RESERVES
(Unaudited)

		Year Ended
		December 31,
(in mmcfe)		2021

Proved Reserves at December 31, 2020		8,990,875
Extensions, discoveries and other additions		868,234
Revisions		87,862
Production		(706,484)
Proved Reserves at December 31, 2021		9,240,487

Proved developed reserves		4,890,355
Proved developed reserves percentage		53 %
Standardized Measure of Discounted Future Net Cash Flows ($ in thousands)(GAAP)		$ 9,135,560
Add: Present value of future income taxes discounted at 10% per annum^(a)		—
PV-10 ($ in thousands) (Non-GAAP)^(a)		$ 9,135,560

^(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, 2021. The average adjusted prices used in Ascent's reserve reports were $3.56 per mcf of natural gas, $59.39 per bbl of oil and $31.89 per bbl of NGL utilizing a benchmark of $3.60 per mmbtu of natural gas and $66.55 per bbl of oil and condensate. 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, 2021, 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.

SOURCE Ascent Resources Utica Holdings, LLC