Ascent Resources Reports Q1 Operating & Financial Results

Source: www.gulfoilandgas.com 5/11/2023, Location: North America

First Quarter Highlights:
- Averaged net production of 2.2 bcfe per day, a 12% increase over the first quarter of 2022
- Realized pre-hedge natural gas equivalent price of $3.64 per mcfe, a $0.22 per mcfe premium to NYMEX pricing
- Reported Net Income and Adjusted Net Income(1) of $1.1 billion and $112 million, respectively
- Generated Net Cash from Operating Activities of $371 million and Adjusted EBITDAX(1) of $350 million
- Adjusted Free Cash Flow(1) was $25 million for the quarter

Post-Quarter End Highlights:
- Prepaid the entirety of the Second Lien Term Loan due 2025 in May, simplifying the capital structure while extending our maturity profile and reducing interest expense
- Issued $213 million of 8.25% senior notes due 2028 in an add-on offering in May with proceeds used to repay borrowings under our revolving credit facility
- Reaffirmed the borrowing base and elected commitment amount under the credit facility at $3.0 billion and $2.0 billion, respectively, in April

Ascent Resources Utica Holdings, LLC ("Ascent") reported its first quarter 2023 operating and financial results. Commenting on the first quarter results, Ascent's Chairman and Chief Executive Officer, Jeff Fisher said, "We had another strong and steady quarter of operational and financial results despite the ongoing commodity price volatility. Operationally, we maintained a consistent and balanced development cadence that allowed us to maintain production while substantially increasing our liquids volumes. The growth in our oil volumes this past quarter helped to offset some of the impact of the depressed natural gas prices, increasing our cash margins and contributing to the $25 million of Adjusted Free Cash Flow that we generated."

Fisher continued, "I am also pleased to announce that we successfully refinanced our $550 million Second Lien Term Loan. This refinancing reaffirms our disciplined financial strategy that is focused on simplifying the balance sheet and managing our debt maturity profile. We remain committed to reducing our absolute debt over the next several years while continuing to increase equity value for our shareholders."

First Quarter 2023 Financial Results
First quarter 2023 net production averaged 2,198 mmcfe per day, consisting of 2,038 mmcf per day of natural gas, 10,356 bbls per day of oil and 16,256 bbls per day of natural gas liquids ("NGL").

First quarter 2023 price realizations, including the impact of settled commodity derivatives, were $3.30 per mcfe. Excluding the impact of settled commodity derivatives, price realizations were $3.64 per mcfe in the first quarter of 2023.

For the first quarter of 2023, Ascent reported net income of $1.1 billion, Adjusted Net Income of $112 million and Adjusted EBITDAX of $350 million. Ascent incurred $275 million of total capital expenditures in the first quarter of 2023 consisting of $239 million of D&C costs, $26 million of land and leasehold costs, and $10 million of capitalized interest. The Company generated $25 million of Adjusted Free Cash Flow during the three months ended March 31, 2023, despite commodity hedge loss settlements of approximately $67 million.

Balance Sheet and Liquidity
As of March 31, 2023, Ascent had total debt of approximately $2.4 billion, with $335 million of borrowings and $168 million of letters of credit issued under the credit facility. Liquidity as of March 31, 2023 was approximately $1.5 billion, comprised of $1.5 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 1.4x based on an LTM Adjusted EBITDAX basis.

Subsequent to quarter end, the Company continued to improve its financial profile through a series of transactions aimed at simplifying the balance sheet and optimizing the debt maturity profile. In May 2023, Ascent prepaid the entirety of the 2025 Second Lien Term Loan, utilizing borrowings under the credit facility. The Company also issued an additional $213 million in aggregate principal amount of its existing 8.25% Senior Notes due 2028, bringing the total outstanding principal amount to $513 million, to repay borrowings under the credit facility. Additionally, in April, Ascent reaffirmed its borrowing base and commitment amount under the credit facility at $3.0 billion and $2.0 billion, respectively, pursuant to the scheduled semi-annual borrowing base redetermination.

Operational Update
During the first quarter of 2023, we spud 19 operated wells, hydraulically fractured 19 wells, and turned-in-line 12 wells with an average lateral length of approximately 15,500 feet. As of March 31, 2023, Ascent had 823 gross operated producing Utica wells.

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 March 31, 2023, Ascent had hedged 1,447,000 mmbtu per day of natural gas production in 2023 at an average downside price of $3.19 per mmbtu. In addition, Ascent had also hedged 6,000 bbls per day of crude oil production at an average price of $72.30 per bbl in 2023. We also have significant commodity hedges in place in 2024 through 2026, as well as basis hedges to limit exposure to price volatility at our actual sales points.


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