ASCENT RESOURCES UTICA HOLDINGS, LLC REPORTS FOURTH QUARTER AND YEAR-END 2021 OPERATING AND FINANCIAL RESULTS AND ISSUES INITIAL 2022 GUIDANCE
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.
Oklahoma City, Oklahoma, March 10, 2022 (PR Newswire) – 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.
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
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 | |||||||
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 | ||||||||
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 | ||||||||
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 | $881,771 | ||||
(a)See footnote (a) on the Reconciliations of Adjusted Net Income for a discussion around our uses of non-GAAP measures.
(b)Ascent defines "adjusted EBITDAX" as net income (loss) before exploration expenses; depreciation, depletion and amortization; interest expense, net; change in fair value of commodity derivatives; change in fair value of contingent payment right; (gains) losses on purchases or exchanges of debt; stock-based compensation; non-recurring legal expense; and other non-recurring items.
ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT (CONTINUED)
(Unaudited)
Last Twelve Months ("LTM") Adjusted EBITDAX
Three Months | Twelve Months | |||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||
($ 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 | ||||||||||
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 | (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 | $1,005,283 | |||||
Three Months | Twelve Months | |||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||
($ 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 | ||||||||||
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 | 6,518 | — | — | — | 6,518 | |||||
Losses (gains) on purchases or exchanges of | 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 | $881,771 | ||
Net Debt to LTM Adjusted EBITDAX | 2.6x | 3.1x | ||
(a)Ascent defines "Net Debt" as total debt less cash and cash equivalents. Management uses Net Debt to determine our outstanding debt obligations that would not be readily satisfied by our cash and cash equivalents on hand.
(b)Adjusted EBITDAX for the LTM ended December 31, 2021 and 2020, respectively. Refer to our Reconciliations of Adjusted EBITDAX and Net Debt for more details regarding our LTM Adjusted EBITDAX calculations.
ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF DISCRETIONARY CASH FLOW AND FREE CASH FLOW
(Unaudited)
Three Months Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
($ 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 | ||||||||
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 | ||||||||
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.