Third Quarter 2020 Highlights:
- Averaged net production of 2.0 bcfe per day, despite nearly 210 mmcfe per day of elective curtailments
- Decreased average well cost to approximately $569 per lateral foot during the quarter, resulting in capital expenditures incurred of $122 million
- Adjusted EBITDAX(1) of $210 million and net cash provided by operating activities of $183 million
- Generated $59 million of free cash flow(1) during the quarter
- Deliberate, multi-year hedge program delivered realizations totaling $114 million, or $0.63 per mcfe
- Successfully exchanged 92.7% of our 10% Senior Notes due 2022 while extending our weighted average maturity profile to approximately five years
- Borrowing base reaffirmed at $1.85 billion in November 2020
- Reiterating production, free cash flow and capital guidance for the year
(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.
Ascent Resources Utica Holdings, LLC reported its third quarter 2020 operating and financial results and reiterated full year 2020 guidance.
"The third quarter of 2020 was yet another example of Ascent demonstrating our ability to deliver best-in-class operational results and basin-leading capital efficiencies while reaffirming our ability to generate sustainable positive free cash flow," said Jeff Fisher, Chairman and Chief Executive Officer of Ascent. "During the quarter, we saw our overall capital efficiency continue to improve as we produced 2.0 bcfe net per day while only incurring $122 million of capital expenditures. We also made the strategic decision to curtail approximately 210 mmcfe per day of net production during the quarter due to low commodity prices and increased volatility. Our outstanding results this quarter were accomplished while continuing to prioritize the health and safety of our employees, contractors and the communities in which we operate. We are excited to reiterate our production and free cash flow guidance while projecting total capital to come in at the low end of our guidance range."
Third Quarter 2020 Results
For the third quarter of 2020, Ascent reported a net loss of $552 million and adjusted net loss of $22 million, compared to net income of $130 million and adjusted net income of $86 million in the third quarter of 2019. Ascent's adjusted EBITDAX and capital expenditures incurred for the third quarter of 2020 were $210 million and $122 million, respectively. Free cash flow increased by $130 million, to $59 million in the third quarter of 2020 compared to the same quarter last year.
Average net daily production for the third quarter of 2020 was 1,982 mmcfe per day, and if you include the 19 bcfe of net curtailments, this represents a 5% increase relative to the third quarter of 2019. Net production during the quarter consisted of 1,785 mmcf per day of natural gas, 12,185 bbls per day of oil and 20,652 bbls per day of natural gas liquids ("NGL").
As of September 30, 2020, Ascent's principal amount of debt outstanding was approximately $2.8 billion, including $1.2 billion drawn under its revolving credit facility. As of September 30, 2020, Ascent had $155 million of letters of credit issued and $527 million of available capacity under its fully committed $1.85 billion borrowing base. Combined with $5 million of cash on hand, Ascent had total liquidity of $532 million exiting the third quarter. As of September 30, 2020, Ascent's leverage ratio was 2.7x.
In November 2020, Ascent's borrowing base was reaffirmed at $1.85 billion pursuant to the scheduled semi-annual borrowing base redetermination under our credit agreement.
Successful Exchange of 2022 Senior Notes Completed
Subsequent to quarter end, Ascent successfully completed the exchange of $857 million, or 92.7%, of the outstanding principal value of its Senior Notes due 2022. The 2022 Notes were exchanged for $538 million of New Term Loans due 2025 and $340 million of New Senior Notes due 2027. Additionally, as part of the exchange, our sponsors contributed $20 million of new capital in a clean-up facility in order to provide incremental liquidity to the business and underscore their continued support of Ascent. "We are extremely pleased with the positive results and participation in the exchange as we believe it validates our high-quality assets, management team and operational capabilities that we have worked hard to establish. The transaction extends our weighted average maturity profile to approximately five years and provides us with the ability to use free cash flow to deleverage the balance sheet going forward," said Brooks Shughart, Chief Financial Officer of Ascent.
Ascent has significant hedges in place for the balance of 2020 and beyond to prudently reduce exposure to volatility in commodity prices as well as to protect our expected operating cash flow. As of September 30, 2020, Ascent had hedged over 1.5 bcf per day of natural gas production for the remainder of the calendar year 2020 at approximately $2.68 per mmbtu ($2.87 per mcf). In addition, Ascent has hedged 2,500 bbls per day of crude oil production at an average price above $48.00 per bbl for the remainder of calendar year 2020.