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ASCENT RESOURCES REPORTS FOURTH QUARTER AND FULL-YEAR 2023 OPERATING AND FINANCIAL RESULTS AND ISSUES INITIAL 2024 GUIDANCE


Fourth Quarter and Full-Year 2023 Highlights:

Net production of 2.10 and 2.14 bcfe per day for the quarter and year, respectively

Liquids production increased to 35 mbbls per day during the quarter, a 35% increase over the same prior year period

Full-year pre-hedge natural gas equivalent price of $2.86 per mcfe, which was a $0.12 per mcfe premium to NYMEX pricing

Net Income and Adjusted Net Income(1) of $757 million and $86 million for the quarter, and $2.1 billion and $317 million for the year, respectively

Adjusted EBITDAX(1) of $316 million for the quarter and more than $1.2 billion for the year

Year-end 2023 total proved reserves of 8.9 tcfe and a reserve replacement of 112%

Initial 2024 guidance with maintenance production of 2.0 to 2.1 bcfe per day, and D&C Capex of $625 - $675 million, a decrease of 23% from 2023

(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, Oklahoma, March 7, 2024 (PR Newswire) – Ascent Resources Utica Holdings, LLC (“Ascent”, "our" or the "Company") today reported its fourth quarter and full-year 2023 operating and financial results and issued initial 2024 guidance. Additionally, Ascent announced a conference call with analysts and investors scheduled for 9 AM CT / 10 AM ET, Friday, March 8, 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 fourth quarter and full-year 2023 results, Ascent's Chairman and Chief Executive Officer, Jeff Fisher said, “We finished the year on a strong note, exceeding the top-end of our production guidance range while coming in on target for capital. The team methodically executed on our development plan, substantially grew liquids production, improved efficiencies, and simplified the balance sheet all while generating positive free cash flow for a fourth consecutive year. Our continued commitment to a maintenance development plan optimizes sustainable free cash flow generation, while our thoughtful approach to hedging positions us to continue to navigate volatile markets."

Fisher continued, "As we move into 2024, our development plan will be more liquids focused, resulting in a modest reduction in gas production, as we continue to rebalance our capital allocation. We also expect to see a substantial reduction in capital intensity in 2024, which is being driven by continued efficiency gains coupled with shallower declines and a focus on optimization of our production base. These elements provide confidence in our plan and reaffirm our ability to generate significant free cash flow in 2024 and beyond. Ascent is well positioned, despite the near-term headwinds facing the industry, as we continue to focus on creating lasting value for our stakeholders."

Fourth Quarter 2023 Financial Results

Fourth quarter 2023 net production averaged 2,095 mmcfe per day, consisting of 1,888 mmcf per day of natural gas, 10,826 bbls per day of oil and 23,707 bbls per day of natural gas liquids ("NGL").

Fourth quarter 2023 price realizations, including the impact of settled commodity derivatives, were $3.24 per mcfe. Excluding the impact of settled commodity derivatives, price realizations were $2.94 per mcfe in the fourth quarter of 2023.

For the fourth quarter of 2023, Ascent reported net income of $757 million, Adjusted Net Income of $86 million and Adjusted EBITDAX of $316 million. Ascent incurred $234 million of total capital expenditures in the fourth quarter of 2023 consisting of $177 million of D&C costs, $49 million of land and leasehold costs, and $8 million of capitalized interest.

Full-Year 2023 Financial Results

Net production for the year ended December 31, 2023 averaged 2,135 mmcfe per day, consisting of 1,953 mmcf per day of natural gas, 10,244 bbls per day of oil and 20,230 bbls per day of NGLs.

Price realizations, including the impact of settled commodity derivatives, were $3.15 per mcfe for the year ended December 31, 2023. Excluding the impact of settled commodity derivatives, price realizations for the year were $2.86 per mcfe.

For the year ended December 31, 2023, Ascent reported net income of $2.1 billion, Adjusted Net Income of $317 million and Adjusted EBITDAX of $1.2 billion. Ascent incurred a total of $1.0 billion of capital expenditures during the year ended December 31, 2023 consisting of $844 million of D&C costs, $138 million of land and leasehold costs, and $36 million for capitalized interest.

Balance Sheet and Liquidity

As of December 31, 2023, Ascent had total debt of approximately $2.5 billion, with $765 million of borrowings and $169 million of letters of credit issued under the credit facility. Liquidity as of December 31, 2023 was approximately $1.1 billion, comprised of $1.1 billion of available borrowing capacity under the credit facility and $7 million of cash on hand. Our leverage ratio at the end of the quarter was 2.0x based on a LTM Adjusted EBITDAX basis.

Operational Update

During the fourth quarter of 2023, we spud 15 operated wells, hydraulically fractured 10 wells, and turned-in-line 19 wells with an average lateral length of approximately 16,700 feet. For the full-year Ascent spud 74 operated wells, hydraulically fractured 75 wells, and turned-in-line 71 wells with an average lateral length of approximately 14,200 feet. As of December 31, 2023, Ascent had 882 gross operated producing Utica wells.

2023 Year-End Reserves

Ascent reported year-end 2023 proved reserves, under SEC guidelines, of 8.89 tcfe, of which 68% were classified as proved developed and 32% as proved undeveloped. The 2023 drill-bit F&D costs for undeveloped reserves were $0.57 per mcfe as we replaced over 112% of reserves. A summary of the changes in Ascent's proved reserves for the full-year 2023 can be found in our financial statements.

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 January 10, 2024, Ascent had hedged 1,410,000 mmbtu per day of natural gas production in 2024 at an average downside price of $3.55 per mmbtu, and 1,350,000 mmbtu per day in 2025 at an average downside price of $3.82 per mmbtu. Additionally, Ascent has also hedged nearly 10,000 bbls per day of crude oil production at an average price of $75.46 per bbl in 2024, and 2,000 bbls per day in 2025 at an average price of $70.00. We also have significant natural gas hedges in place for 2026 and subsequent to year-end 2023 we had an opportunity to optimize a portion of that position, resulting in the Company receiving $81 million of proceeds in the first quarter of 2024. Please reference our financial statements for additional detail on our hedge position. 

Initial 2024 Guidance

The Company expects its full-year 2024 total capital budget to come in between $750 million and $810 million, be fully funded with operating cash flow and be more than sufficient to hold production flat on an annual basis. A detailed summary including production, differentials, expenses and operational counts is included in the table below:

Initial 2024 Guidance

Production

Total Production (mmcfe/d)

2,000 - 2,100

% Natural Gas

88% - 90%

Differentials

Natural Gas ($/mcf)

($0.25) - ($0.15)

Crude Oil ($/bbl)

($10.00) - ($9.00)

NGL (% of WTI)

27.5% - 32.5%

Operating Expenses

Total Operating Expense(1)

$1.55 - $1.65

G&A(2)

$0.08 - $0.10

Capital Expenditures Incurred ($mm)(3)

$750 - $810

D&C

$625 - $675

Land

$125 - $135

Operations / Well Counts

Operated Rigs

2.5 - 3.0

Wells Spud

60 - 65

Average Spud Lateral Length

16,000' - 16,500'


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

(2) Excludes long-term incentive 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, 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

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

Year Ended

December 31,

December 31,

($ in thousands)

2023

2022

2023

2022

Revenues:

Natural gas

$436,408

$1,047,484

$1,770,416

$4,700,531

Oil

69,213

62,182

257,708

246,866

NGL

61,956

46,757

198,018

239,071

Commodity derivative gain (loss)

758,301

993,155

2,098,185

(2,687,817)

Total Revenues

1,325,878

2,149,578

4,324,327

2,498,651

Operating Expenses:

Lease operating expenses

27,993

27,640

123,212

101,659

Gathering, processing and transportation expenses

253,682

245,044

975,245

979,987

Taxes other than income

11,454

11,574

47,372

45,724

Exploration expenses

5,971

3,353

12,625

49,142

General and administrative expenses

38,106

23,477

90,930

77,112

Depreciation, depletion and amortization

178,749

181,519

723,951

676,053

Total Operating Expenses

515,955

492,607

1,973,335

1,929,677

Income from Operations

809,923

1,656,971

2,350,992

568,974

Other Income (Expense):

Interest expense, net

(52,714)

(57,426)

(205,910)

(209,731)

Change in fair value of contingent payment right

(651)

(1,955)

(2,570)

(3,302)

Losses on purchases or exchanges of debt

(26,900)

Other income

644

3,409

12,727

5,438

Total Other Expense

(52,721)

(55,972)

(222,653)

(207,595)

Net Income

$757,202

$1,600,999

$2,128,339

$361,379


ASCENT RESOURCES UTICA HOLDINGS, LLC

CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31,

($ in thousands)

2023

2022

Current Assets:

Cash and cash equivalents

$6,718

$3,894

Accounts receivable – natural gas, oil and NGL sales

266,906

530,385

Accounts receivable – joint interest and other

38,540

35,340

Short-term derivative assets

438,041

14,061

Other current assets

10,620

12,597

Total Current Assets

760,825

596,277

Property and Equipment:

Natural gas and oil properties, based on successful efforts accounting

11,565,453

10,558,533

Other property and equipment

42,542

39,641

Less: accumulated depreciation, depletion and amortization

(4,619,852)

(3,900,730)

Property and Equipment, net

6,988,143

6,697,444

Other Assets:

Long-term derivative assets

288,396

6,081

Other long-term assets

68,486

44,117

Total Assets

$8,105,850

$7,343,919

Current Liabilities:

Accounts payable

$76,333

$77,753

Accrued interest

44,665

50,375

Short-term derivative liabilities

13,157

684,204

Other current liabilities

551,894

771,062

Total Current Liabilities

686,049

1,583,394

Long-Term Liabilities:

Long-term debt, net

2,533,873

2,475,222

Long-term derivative liabilities

495,464

Other long-term liabilities

124,565

113,061

Total Long-Term Liabilities

2,658,438

3,083,747

Member’s Equity

4,761,363

2,676,778

Total Liabilities and Member’s Equity

$8,105,850

$7,343,919


ASCENT RESOURCES UTICA HOLDINGS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended

Year Ended

December 31,

December 31,

($ in thousands)

2023

2022

2023

2022

Cash Flows from Operating Activities:

Net income

$757,202

$1,600,999

$2,128,339

$361,379

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization

178,749

181,519

723,951

676,053

(Gain) loss on commodity derivatives

(758,301)

(993,155)

(2,098,185)

2,687,817

Settlements of commodity derivatives

58,169

(339,328)

222,549

(1,868,139)

Impairment of unproved natural gas and oil properties

4,849

2,784

9,640

46,902

Non-cash interest expense

7,823

5,310

23,677

16,851

Long-term incentive compensation

1,006

8,780

3,695

22,745

Change in fair value of contingent payment right

651

1,955

2,570

3,302

Losses on purchases or exchanges of debt

26,038

Other

(36)

(1,249)

42

Changes in operating assets and liabilities

(Increase) decrease in accounts receivable and other assets

(53,888)

241,587

240,713

(96,350)

Increase (decrease) in accounts payable, liabilities and other

66,657

31,226

(134,679)

191,410

Net Cash Provided by Operating Activities

262,917

741,641

1,147,059

2,042,012

Cash Flows from Investing Activities:

Natural gas and oil capital expenditures

(266,553)

(226,648)

(1,056,348)

(962,335)

Cash paid for acquisition

(250,882)

Additions to other property and equipment

(618)

(559)

(2,769)

(2,096)

Net Cash Used in Investing Activities

(267,171)

(227,207)

(1,059,117)

(1,215,313)

Cash Flows from Financing Activities:

Proceeds from credit facility borrowings

420,000

725,000

2,240,000

4,245,000

Repayment of credit facility borrowings

(400,000)

(1,160,000)

(1,845,000)

(4,370,000)

Proceeds from issuance of long-term debt

210,000

Repayment of long-term debt

(2,970)

(549,822)

(2,970)

Cash paid for debt issuance and amendment costs

(3)

(11,219)

(16,855)

Cash paid for debt prepayment costs

(27,491)

Cash paid for settlements of commodity derivatives

(80,359)

(53,530)

(378,270)

Cash paid to restructure commodity derivatives

(300,000)

Cash paid to Member for Member's equity distributions

(12,500)

(25,003)

Cash paid to Member for Member's long-term incentive Cash Awards

(17,856)

Other

(943)

(332)

(5,197)

(5,384)

Net Cash Provided by (Used in) Financing Activities

6,557

(518,664)

(85,118)

(828,479)

Net Increase (Decrease) in Cash and Cash Equivalents

2,303

(4,230)

2,824

(1,780)

Cash and Cash Equivalents, Beginning of Period

4,415

8,124

3,894

5,674

Cash and Cash Equivalents, End of Period

$6,718

$3,894

$6,718

$3,894

ASCENT RESOURCES UTICA HOLDINGS, LLC

SUPPLEMENTAL TABLES


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


Three Months Ended

Year Ended

December 31,

December 31,

2023

2022

2023

2022

Net Production Volumes:

Natural gas (mmcf)

173,680

186,422

712,691

719,470

Oil (mbbls)

996

819

3,739

2,814

NGL (mbbls)

2,181

1,539

7,384

5,794

Natural Gas Equivalents (mmcfe)

192,742

200,572

779,429

771,119

Average Daily Net Production Volumes:

Natural gas (mmcf/d)

1,888