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

First Quarter Highlights:

Net production averaged 2.0 bcfe per day for the quarter, a 9% increase over the first quarter of 2021

Realized pre-hedge natural gas equivalent price of $5.32 per mcfe, a $0.37 premium to NYMEX pricing

Generated Adjusted EBITDAX(1) of $280 million and net cash flow provided by operating activities of $282 million for the quarter

Incurred $199 million of D&C costs and $31 million of acquisition and leasehold costs during the quarter

Executed a $300 million hedge restructuring in April that materially increased the weighted average strike price of our natural gas swaps for the remainder of 2022

Reaffirmed our borrowing base at $1.85 billion in April


(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, May 10, 2022 (PR Newswire) – Ascent Resources Utica Holdings, LLC (“Ascent”, "our" or the "Company") today reported its first quarter 2022 operating and financial results.  Additionally, Ascent announced a conference call with analysts and investors scheduled for 9 AM CT / 10 AM ET, Wednesday, May 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 first quarter performance, Ascent's Chairman and Chief Executive Officer, Jeff Fisher said, “The team had a strong start to the year, with production averaging 2.0 bcfe/d while generating $280 million of Adjusted EBITDAX during the first quarter. The business continues to be anchored by our strong operational execution, which is now being further propelled by a structural shift in natural gas fundamentals. We believe that, taken together, these key attributes make a compelling case for Ascent's long-term value proposition."

Fisher continued, "The hedge restructuring is another avenue that allows us to accelerate balance sheet improvement. As we move forward, we will continue to evaluate opportunities that allow us to create value through our best-in-class operational execution and capital efficiency while maintaining our commitment to responsible operations in order to maximize returns and improve our financial metrics."

First Quarter 2022 Financial Results

First quarter 2022 net production averaged 1,955 mmcfe per day, consisting of 1,821 mmcf per day of natural gas, 6,933 bbls per day of oil and 15,456 bbls per day of natural gas liquids ("NGL").

First quarter 2022 price realizations, including the impact of settled derivatives, were $3.23 per mcfe. Excluding the impact of settled derivatives, price realizations were $5.32 per mcfe in the first quarter of 2022.

For the first quarter of 2022, Ascent reported a net loss of $1.6 billion, Adjusted Net Income of $81 million and Adjusted EBITDAX of $280 million. During the first quarter of 2022, the net loss was largely driven by a $1.6 billion unrealized commodity derivative fair value loss primarily due to an increase in the forward strip for natural gas. Ascent incurred $240 million of total capital expenditures in the first quarter of 2022 including $199 million for well costs, $31 million for acquisition and leasehold costs, and $10 million for capitalized interest.

Balance Sheet and Liquidity

As of March 31, 2022, Ascent had total debt outstanding of approximately $2.6 billion, with $460 million of borrowings and $169 million of letters of credit issued under the revolving credit facility. Liquidity as of March 31, 2022 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 quarter was 2.3x based on LQA Adjusted EBITDAX and 2.4x based on LTM Adjusted EBITDAX.

In April 2022, Ascent's borrowing base was reaffirmed at $1.85 billion pursuant to the regularly scheduled semiannual borrowing base redetermination under our credit agreement.

Operational Update

During the first quarter of 2022, Ascent operated four drilling rigs and two fracture stimulation crews. The Company spud 17 operated wells, hydraulically fractured 19 wells, and turned in line 10 wells with an average lateral length of approximately 15,500 feet. As of March 31, 2022, Ascent had 677 gross operated producing Utica wells.

Well costs averaged approximately $636 per lateral foot during the first quarter of 2022, in line with internal expectations. We employed two fracture stimulation crews during the first quarter, which will accelerate turn-in-line activity in the second and third quarters. However, this level of activity on the completion side resulted in increased costs and lower efficiencies as the second crew was not deployed on a continuous basis. The Company continues to execute at a high level, but additional inflationary pressures are becoming more prevalent, including commodity prices and labor. We are actively evaluating this situation for potential impacts to both our capital budget and development plan.

Hedging Update

Subsequent to quarter end, Ascent executed on $300 million of hedge restructurings to increase the weighted average strike price from $2.75 to $3.57 per mmbtu on certain existing natural gas swap contracts in place for the remainder of 2022, with no change to volumes hedged. This restructuring is expected to substantially increase 2022 Adjusted EBITDAX and Adjusted Free Cash Flow while reducing our year-end 2022 leverage ratio.




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 low-cost clean-burning energy to our country and the world, while reducing environmental impacts.

Contact:

Chris Benton

Director – Finance and Investor Relations

405-252-7850

chris.benton@ascentresources.com

This news release contains forward-looking statements within the meaning of US federal securities laws.  Forward-looking statements express views of Ascent regarding future plans and expectations.  Forward-looking statements in this news release include, but are not limited to, statements regarding future operations, business strategy, liquidity and cash flows of Ascent.  These statements are based on numerous assumptions and are subject to known and unknown risks and uncertainties, including, commodity price volatility, inherent uncertainty in estimating natural gas, oil and NGL reserves, environmental and regulatory risks, availability of capital, and the other risks described in Ascent’s most recent investor presentation provided at www.ascentresources.com/investors.  Actual future results may vary materially from those expressed or implied in this news release and Ascent’s business, financial condition, results of operations and cash flow could be materially and adversely affected by such risks and uncertainties.  As a result, forward-looking statements should be understood to be only predictions and statements of Ascent’s current beliefs; they are not guarantees of performance.

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

March 31,

($ in thousands)

2022

2021

Revenues:

Natural gas

$812,878

$430,198

Oil

54,366

41,958

NGL

69,497

55,532

Commodity derivative loss

(1,995,560)

(98,670)

Total Revenues

(1,058,819)

429,018

Operating Expenses:

Lease operating expenses

27,827

21,154

Gathering, processing and transportation expenses

231,125

220,671

Taxes other than income

10,522

9,040

Exploration expenses

18,409

18,493

General and administrative expenses

19,843

16,569

Depreciation, depletion and amortization

152,279

139,456

Total Operating Expenses

460,005

425,383

Income (Loss) from Operations

(1,518,824)

3,635

Other Income (Expense):

Interest expense, net

(44,965)

(41,457)

Change in fair value of contingent payment right

(7,980)

(5,446)

Other income

682

348

Total Other Expense

(52,263)

(46,555)

Net Loss

$(1,571,087)

$(42,920)


ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31,

December 31,

($ in thousands)

2022

2021

Current Assets:

Cash and cash equivalents

$6,054

$5,674

Accounts receivable – natural gas, oil and NGL sales

399,306

453,464

Accounts receivable – joint interest and other

7,908

8,309

Short-term derivative assets

221

6,866

Other current assets

10,650

9,012

Total Current Assets

424,139

483,325

Property and Equipment:

Natural gas and oil properties, based on successful efforts accounting

9,605,634

9,383,879

Other property and equipment

37,061

36,318

Less: accumulated depreciation, depletion and amortization

(3,377,960)

(3,225,844)

Property and Equipment, net

6,264,735

6,194,353

Other Assets:

Long-term derivative assets

1,517

522

Other long-term assets

38,431

46,241

Total Assets

$6,728,822

$6,724,441

Current Liabilities:

Accounts payable

$59,805

$86,812

Accrued interest

51,654

45,929

Short-term derivative liabilities

1,913,870

648,873

Other current liabilities

515,643

517,953

Total Current Liabilities

2,540,972

1,299,567

Long-Term Liabilities:

Long-term debt, net

2,556,825

2,588,248

Long-term derivative liabilities

791,034

435,022

Other long-term liabilities

113,395

104,796

Total Long-Term Liabilities

3,461,254

3,128,066

Member’s Equity

726,596

2,296,808

Total Liabilities and Member’s Equity

$6,728,822

$6,724,441


ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended

March 31,

($ in thousands)

2022

2021

Cash Flows from Operating Activities:

Net loss

$(1,571,087)

$(42,920)

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

Depreciation, depletion and amortization

152,279

139,456

Change in fair value of commodity derivatives

1,628,397

77,659

Change in fair value of interest rate derivatives

(1,738)

(139)

Impairment of unproved natural gas and oil properties

17,858

17,394

Non-cash interest expense

4,859

4,686

Stock-based compensation

875

1,083

Change in fair value of contingent payment right

7,980

5,446

Other

3,463

Changes in operating assets and liabilities

42,607

4,218

Net Cash Provided by Operating Activities

282,030

210,346

Cash Flows from Investing Activities:

Drilling and completion costs

(208,610)

(110,551)

Acquisitions of natural gas and oil properties

(37,235)

(20,601)

Additions to other property and equipment

(589)

(93)

Net Cash Used in Investing Activities

(246,434)

(131,245)

Cash Flows from Financing Activities:

Proceeds from credit facility borrowings

845,000

325,000

Repayment of credit facility borrowings

(880,000)

(390,000)

Repayment of long-term debt

(12,781)

Cash paid for debt issuance costs

(447)

Commodity derivative settlements

(3,456)

Other

(216)

(226)

Net Cash Used in Financing Activities

(35,216)

(81,910)

Net Increase (Decrease) in Cash and Cash Equivalents

380

(2,809)

Cash and Cash Equivalents, Beginning of Period

5,674

8,843

Cash and Cash Equivalents, End of Period

$6,054

$6,034

ASCENT RESOURCES UTICA HOLDINGS, LLC

NATURAL GAS, OIL AND NGL PRODUCTION AND PRICES

(Unaudited)

Three Months Ended

March 31,

2022

2021

Net Production Volumes:

Natural gas (mmcf)

163,886

143,967

Oil (mbbls)

624

840

NGL (mbbls)

1,391

2,028

Natural Gas Equivalents (mmcfe)

175,980

161,171

Average Daily Net Production Volumes:

Natural gas (mmcf/d)

1,821

1,600

Oil (mbbls/d)

7

9

NGL (mbbls/d)

15

23

Natural Gas Equivalents (mmcfe/d)

1,955

1,791

% Natural Gas

93%

89%

% Liquids

7%

11%

Average Sales Prices:

Natural gas ($/mcf)

$4.96

$2.99

Oil ($/bbl)

$87.13

$49.95

NGL ($/bbl)

$49.96

$27.38

Natural Gas Equivalents ($/mcfe)

$5.32

$3.27

Settlements of commodity derivatives ($/mcfe)

(2.09)

(0.13)

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

$3.23

$3.14

ASCENT RESOURCES UTICA HOLDINGS, LLC

CAPITAL EXPENDITURES INCURRED

(Unaudited)

Three Months Ended

March 31,

($ in thousands)

2022

2021

Capital Expenditures Incurred:

Drilling and completion costs incurred

$198,378

$126,491

Acquisition and leasehold costs incurred

31,236

8,402

Capitalized interest incurred

9,999

13,303

Total Capital Expenditures Incurred

$239,613

$148,196


ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED NET INCOME (LOSS)

(Unaudited)

Three Months Ended

March 31,

($ in thousands)

2022

2021

Net Loss (GAAP)

$(1,571,087)

$(42,920)

Adjustments to reconcile net loss to Adjusted Net Income:

Impairment of unproved natural gas and oil properties

17,858

17,394

Change in fair value of commodity derivatives

1,628,397

77,659

Change in fair value of interest rate derivatives

(1,738)

(139)

Change in fair value of contingent payment right

7,980

5,446

Stock-based compensation

875

1,083

Other

(1,784)

Adjusted Net Income (Non-GAAP)(a)(b)

$80,501

$58,523

(a)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.

(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; stock-based compensation; and other non-recurring items.  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

March 31,

($ in thousands)

2022

2021

Net Loss (GAAP)

$(1,571,087)

$(42,920)

Adjustments to reconcile net loss to Adjusted EBITDAX:

Exploration expenses

18,409

18,493

Depreciation, depletion and amortization

152,279

139,456

Interest expense, net

44,965

41,457

Change in fair value of commodity derivatives

1,628,397

77,659

Change in fair value of contingent payment right

7,980

5,446

Stock-based compensation

875

1,083

Other

(1,784)

Adjusted EBITDAX (Non-GAAP)(a)(b)

$280,034

$240,674

(a)See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) 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; stock-based compensation; and other non-recurring items.  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

March 31,

December 31,

September 30,

June 30,

March 31,

($ in thousands)

2022

2021

2021

2021

2022

Net Income (Loss) (GAAP)

$(1,571,087)

$1,110,012

$(1,256,435)

$(616,942)

$(2,334,452)

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

Exploration expenses

18,409

26,061

22,274

16,539

83,283

Depreciation, depletion and amortization

152,279

159,286

151,902

147,763

611,230

Interest expense, net

44,965

47,034

44,996

41,353

178,348

Change in fair value of commodity derivatives

1,628,397

(1,066,801)

1,284,758

624,760

2,471,114

Change in fair value of contingent payment
right

7,980

(407)

1,544

13,338

22,455

Losses on purchases or exchanges of debt

3,822

3,822

Stock-based compensation

875

815

816

902

3,408

Non-recurring legal expense

1,372

1,372

Other

(1,784)

5,847

4,063

Adjusted EBITDAX (Non-GAAP)(a)(b)

$280,034

$283,219

$249,855

$231,535

$1,044,643


Three Months
Ended

Twelve Months
Ended

March 31,

December 31,

September 30,

June 30,

March 31,

($ in thousands)

2021

2020

2020

2020

2021

Net Income (Loss) (GAAP)

$(42,920)

$168,636

$(552,389)

$(291,046)

$(717,719)

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

Exploration expenses

18,493

26,323

28,096

22,858

95,770

Depreciation, depletion and amortization

139,456

162,431

196,232

202,446

700,565

Interest expense, net

41,457

35,791

33,292

31,245

141,785

Change in fair value of commodity derivatives

77,659

(202,620)

500,175

239,847

615,061

Change in fair value of contingent payment
right

5,446

6,518

11,964

Losses on purchases or exchanges of debt

15,708

3,632

190

19,530

Stock-based compensation

1,083

1,065

710

2,858

Non-recurring legal expense

5,572

5,572

Adjusted EBITDAX (Non-GAAP)(a)(b)

$240,674

$213,852

$209,748

$211,112

$875,386

 

(a)See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) 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; stock-based compensation; and other non-recurring items.  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

March 31,

($ in thousands)

2022

2021

Net Debt:

Total debt

$2,556,825

$2,645,558

Less: cash and cash equivalents

6,054

6,034

Net Debt(a)

$2,550,771

$2,639,524

Net Debt to LTM Adjusted EBITDAX:

Net Debt(a)

$2,550,771

$2,639,524

LTM Adjusted EBITDAX (Non-GAAP)(b)

$1,044,643

$875,386

Net Debt to LTM Adjusted EBITDAX

2.4x

3.0x

Net Debt to LQA Adjusted EBITDAX:

Net Debt(a)

$2,550,771

$2,639,524

LQA Adjusted EBITDAX (Non-GAAP)

$1,120,136

$962,696

Net Debt to LQA Adjusted EBITDAX

2.3x

2.7x


(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 March 31, 2022 and 2021, 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 ADJUSTED FREE CASH FLOW

(Unaudited)

Three Months Ended

March 31,

($ in thousands)

2022

2021

Net Cash Provided by Operating Activities (GAAP)

$282,030

$210,346

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

Changes in operating assets and liabilities

(42,607)

(4,218)

Drilling and completion costs incurred

(198,378)

(126,491)

Acquisition and leasehold costs incurred

(31,236)

(8,402)

Capitalized interest incurred

(9,999)

(13,303)

Financing commodity derivative settlements

(3,456)

Other

(1,784)

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

$(1,974)

$54,476


(a)See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) for a discussion around 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; acquisition and leasehold costs incurred; capitalized interest incurred; financing commodity derivative settlements; and certain other non-recurring items.  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.