ASCENT RESOURCES UTICA HOLDINGS, LLC REPORTS THIRD QUARTER OPERATING AND FINANCIAL RESULTS

⁽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⁾

Includes the full-year Adjusted EBITDAX impact of the XTO acquisition

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

($ in thousands)

2022

2021

2022

2021

Revenues:

Natural gas

$   1,625,516

$       656,562

$   3,653,047

$   1,534,239

Oil

52,715

43,480

184,684

136,235

NGL

54,759

64,888

192,314

172,749

Commodity derivative loss

(1,100,991)

(1,512,044)

(3,680,972)

(2,276,477)

Total Revenues

631,999

(747,114)

349,073

(433,254)

Operating Expenses:

Lease operating expenses

26,826

21,099

74,019

59,323

Gathering, processing and transportation expenses

258,868

244,668

734,943

704,364

Taxes other than income

12,728

9,928

34,150

29,316

Exploration expenses

15,365

22,274

45,789

57,306

General and administrative expenses

26,535

13,885

53,635

42,977

Depreciation, depletion and amortization

192,484

151,902

494,534

439,121

Total Operating Expenses

532,806

463,756

1,437,070

1,332,407

Income (Loss) from Operations

99,193

(1,210,870)

(1,087,997)

(1,765,661)

Other Income (Expense):

Interest expense, net

(57,553)

(44,996)

(152,305)

(127,806)

Change in fair value of contingent payment right

3,656

(1,544)

(1,347)

(20,328)

Losses on purchases or exchanges of debt

—

—

—

(3,822)

Other income

1,244

975

2,029

1,320

Total Other Expense

(52,653)

(45,565)

(151,623)

(150,636)

Net Income (Loss)

$         46,540

$  (1,256,435)

$  (1,239,620)

$  (1,916,297)

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30,

December 31,

($ in thousands)

2022

2021

Current Assets:

Cash and cash equivalents

$           8,124

$           5,674

Accounts receivable – natural gas, oil and NGL sales

769,425

453,464

Accounts receivable – joint interest and other

36,719

8,309

Short-term derivative assets

4,076

6,866

Other current assets

9,974

9,012

Total Current Assets

828,318

483,325

Property and Equipment:

Natural gas and oil properties, based on successful efforts accounting

10,331,895

9,383,879

Other property and equipment

39,014

36,318

Less: accumulated depreciation, depletion and amortization

(3,719,561)

(3,225,844)

Property and Equipment, net

6,651,348

6,194,353

Other Assets:

Long-term derivative assets

2,469

522

Other long-term assets

49,097

46,241

Total Assets

$    7,531,232

$    6,724,441

Current Liabilities:

Accounts payable

$         72,981

$         86,812

Accrued interest

57,060

45,929

Short-term derivative liabilities

1,635,824

648,873

Other current liabilities

683,588

517,953

Total Current Liabilities

2,449,453

1,299,567

Long-Term Liabilities:

Long-term debt, net

2,909,287

2,588,248

Long-term derivative liabilities

996,375

435,022

Other long-term liabilities

109,118

104,796

Total Long-Term Liabilities

4,014,780

3,128,066

Member's Equity

1,066,999

2,296,808

Total Liabilities and Member's Equity

$    7,531,232

$    6,724,441

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

($ in thousands)

2022

2021

2022

2021

Cash Flows from Operating Activities:

Net income (loss)

$         46,540

$ (1,256,435)

$ (1,239,620)

$ (1,916,297)

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

Depreciation, depletion and amortization

192,484

151,902

494,534

439,121

Loss on commodity derivatives

1,100,991

1,512,044

3,680,972

2,276,477

Settlements of commodity derivatives

(614,128)

(224,908)

(1,528,811)

(278,112)

Impairment of unproved natural gas and oil properties

14,611

20,077

44,118

53,458

Non-cash interest expense

3,439

4,515

11,541

13,734

Stock-based compensation

8,914

816

13,965

2,801

Change in fair value of contingent payment right

(3,656)

1,544

1,347

20,328

Losses on purchases or exchanges of debt

—

—

—

3,810

Other

106

124

78

104

Changes in operating assets and liabilities

11,750

(48,469)

(177,753)

(59,964)

Net Cash Provided by Operating Activities

761,051

161,210

1,300,371

555,460

Cash Flows from Investing Activities:

Natural gas and oil capital expenditures

(237,857)

(161,916)

(735,687)

(441,486)

Cash paid for acquisition

(223,882)

—

(250,882)

—

Additions to other property and equipment

(542)

(194)

(1,537)

(329)

Net Cash Used in Investing Activities

(462,281)

(162,110)

(988,106)

(441,815)

Cash Flows from Financing Activities:

Proceeds from credit facility borrowings

1,440,000

540,000

3,520,000

1,250,000

Repayment of credit facility borrowings

(1,495,000)

(540,000)

(3,210,000)

(1,660,000)

Proceeds from issuance of long-term debt

—

—

—

400,000

Repayment of long-term debt

—

—

—

(84,173)

Cash paid for debt issuance costs

(121)

(413)

(16,852)

(7,221)

Settlements of commodity derivatives

(241,876)

(2,378)

(297,911)

(11,188)

Cash paid to restructure commodity derivatives

—

—

(300,000)

—

Other

(476)

(273)

(5,052)

(3,852)

Net Cash Used in Financing Activities

(297,473)

(3,064)

(309,815)

(116,434)

Net Increase (Decrease) in Cash and Cash Equivalents

1,297

(3,964)

2,450

(2,789)

Cash and Cash Equivalents, Beginning of Period

6,827

10,018

5,674

8,843

Cash and Cash Equivalents, End of Period

$           8,124

$           6,054

$           8,124

$           6,054

ASCENT RESOURCES UTICA HOLDINGS, LLC

NATURAL GAS, OIL AND NGL PRODUCTION AND PRICES

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2022

2021

2022

2021

Net Production Volumes:

Natural gas (mmcf)

202,795

168,236

533,048

473,089

Oil (mbbls)

613

678

1,995

2,375

NGL (mbbls)

1,456

1,612

4,255

5,471

Natural Gas Equivalents (mmcfe)

215,208

181,975

570,547

520,160

Average Daily Net Production Volumes:

Natural gas (mmcf/d)

2,204

1,829

1,953

1,733

Oil (mbbls/d)

7

7

7

9

NGL (mbbls/d)

16

18

16

20

Natural Gas Equivalents (mmcfe/d)

2,339

1,978

2,090

1,905

% Natural Gas

94 %

93 %

94 %

91 %

% Liquids

6 %

7 %

6 %

9 %

Average Sales Prices:

Natural gas ($/mcf)

$        8.02

$        3.90

$        6.85

$        3.24

Oil ($/bbl)

$      86.00

$      64.13

$      92.58

$      57.36

NGL ($/bbl)

$      37.61

$      40.25

$      45.20

$      31.58

Natural Gas Equivalents ($/mcfe)

$        8.05

$        4.20

$        7.06

$        3.54

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

(3.98)

(1.25)

(3.20)

(0.56)

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

$        4.07

$        2.95

$        3.86

$        2.98

^(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)

2022

2021

2022

2021

Capital Expenditures Incurred:

Drilling and completion costs incurred

$         195,150

$          149,538

$      629,037

$       409,955

Land and leasehold costs incurred

23,902

20,096

79,057

37,976

Capitalized interest incurred

10,221

11,523

32,519

37,497

Total Capital Expenditures Incurred^(a)

$         229,273

$          181,157

$      740,613

$       485,428

^(a)

Excludes the $250.9 million paid for the XTO acquisition.

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED NET INCOME (LOSS)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

($ in thousands)

2022

2021

2022

2021

Net Income (Loss) (GAAP)

$         46,540

$  (1,256,435)

$  (1,239,620)

$  (1,916,297)

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

Impairment of unproved natural gas and oil properties

14,611

20,077

44,118

53,458

Loss on commodity derivatives

1,100,991

1,512,044

3,680,972

2,276,477

Commodity derivative settlements^(a)

(856,004)

(227,286)

(1,826,722)

(289,300)

Unrealized gain on interest rate derivatives

(1,527)

(161)

(5,102)

(357)

Change in fair value of contingent payment right

(3,656)

1,544

1,347

20,328

Stock-based compensation

8,914

816

13,965

2,801

Losses on purchases or exchanges of debt

—

—

—

3,822

Other operating expenses

(3,352)

—

(6,701)

—

Deferred debt issuance costs write-off

—

—

1,977

—

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

$       306,517

$         50,599

$       664,234

$       150,932

^(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, Last Quarter Annualized ("LQA") 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; stock-based compensation;  (gains) losses on purchases or exchanges of debt; and other operating expenses 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)

2022

2021

2022

2021

Net Income (Loss) (GAAP)

$         46,540

$  (1,256,435)

$  (1,239,620)

$  (1,916,297)

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

Exploration expenses

15,365

22,274

45,789

57,306

Depreciation, depletion and amortization

192,484

151,902

494,534

439,121

Interest expense, net

57,553

44,996

152,305

127,806

Loss on commodity derivatives

1,100,991

1,512,044

3,680,972

2,276,477

Commodity derivative settlements^(a)

(856,004)

(227,286)

(1,826,722)

(289,300)

Change in fair value of contingent payment right

(3,656)

1,544

1,347

20,328

Stock-based compensation

8,914

816

13,965

2,801

Losses on purchases or exchanges of debt

—

—

—

3,822

Other operating expenses

(3,352)

—

(6,701)

—

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

$      558,835

$       249,855

$    1,315,869

$       722,064

^(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)

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

^(c)

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; stock-based compensation; (gains) losses on purchases or exchanges of debt; and other operating expenses 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)

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^(a)

(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

Stock-based compensation

8,914

4,176

875

815

14,780

Other operating expenses

(3,352)

(1,565)

(1,784)

7,219

518

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

$     558,835

$     477,000

$     280,034

$     283,219

$   1,599,088

Three Months

Ended

Twelve Months
Ended

September 30,

June 30,

March 31,

December 31,

September 30,

($ in thousands)

2021

2021

2021

2020

2021

Net Income (Loss) (GAAP)

$ (1,256,435)

$   (616,942)

$      (42,920)

$     168,636

$ (1,747,661)

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

Exploration expenses

22,274

16,539

18,493

26,323

83,629

Depreciation, depletion and amortization

151,902

147,763

139,456

162,431

601,552

Interest expense, net

44,996

41,353

41,457

35,791

163,597

(Gain) loss on commodity derivatives

1,512,044

665,763

98,670

(228,899)

2,047,578

Commodity derivative settlements

(227,286)

(41,003)

(21,011)

26,279

(263,021)

Change in fair value of contingent payment right

1,544

13,338

5,446

6,518

26,846

Losses on purchases or exchanges of debt

—

3,822

—

15,708

19,530

Stock-based compensation

816

902

1,083

1,065

3,866

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

$     249,855

$     231,535

$     240,674

$     213,852

$      935,916

^(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)

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

^(c)

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; stock-based compensation; (gains) losses on purchases or exchanges of debt; and other operating expenses 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)

Net Debt, Net Debt to LTM Adjusted EBITDAX and Net Debt to LQA Adjusted EBITDAX

September 30,

($ in thousands)

2022

2021

Net Debt:

Total debt

$ 2,909,287

$ 2,632,758

Less: cash and cash equivalents

8,124

6,054

Net Debt^(a)

$ 2,901,163

$ 2,626,704

Net Debt to LTM Adjusted EBITDAX:

Net Debt^(a)

$ 2,901,163

$ 2,626,704

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

$ 1,599,088

$     935,916

Net Debt to LTM Adjusted EBITDAX^(c)

                1.8 x

                2.8 x

Net Debt to LQA Adjusted EBITDAX:

Net Debt^(a)

$ 2,901,163

$ 2,626,704

LQA Adjusted EBITDAX (Non-GAAP)

$ 2,235,340

$     999,420

Net Debt to LQA Adjusted EBITDAX

                1.3 x

                2.6 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)

Adjusted EBITDAX for the LTM ended September 30, 2022 and 2021, respectively. Refer to our Reconciliations of Adjusted EBITDAX and Net Debt for more details regarding our LTM Adjusted EBITDAX calculations.

^(c)

Our Net Debt to LTM Adjusted EBITDAX was 1.7x as of September 30, 2022 when including the full-year EBITDAX impact of the XTO acquisition, as provided by our debt covenant calculations.

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED FREE CASH FLOW

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

($ in thousands)

2022

2021

2022

2021

Net Cash Provided by Operating Activities (GAAP)

$       761,051

$       161,210

$    1,300,371

$       555,460

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

Changes in operating assets and liabilities

(11,750)

48,469

177,753

59,964

Drilling and completion costs incurred

(195,150)

(149,538)

(629,037)

(409,955)

Land and leasehold costs incurred

(23,902)

(20,096)

(79,057)

(37,976)

Capitalized interest incurred

(10,221)

(11,523)

(32,519)

(37,497)

Financing commodity derivative settlements

(241,876)

(2,378)

(297,911)

(11,188)

Other operating expenses

(3,352)

—

(6,701)

—

Other

2,052

2,344

2,052

2,356

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

$      276,852

$         28,488

$      434,951

$      121,164

^(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 operating expenses 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.