ASCENT RESOURCES REPORTS SECOND QUARTER OPERATING AND FINANCIAL RESULTS

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

($ in thousands)

2023

2022

2023

2022

Revenues:

Natural gas

$    333,721

$ 1,214,653

$    945,281

$ 2,027,531

Oil

63,166

77,603

127,159

131,969

NGL

39,636

68,058

83,377

137,555

Commodity derivative gain (loss)

348,982

(584,421)

1,270,631

(2,579,981)

Total Revenues

785,505

775,893

2,426,448

(282,926)

Operating Expenses:

Lease operating expenses

30,317

21,786

63,967

47,193

Gathering, processing and transportation expenses

227,792

242,530

468,084

476,075

Taxes other than income

12,637

10,900

24,134

21,422

Exploration expenses

4,185

12,015

4,792

30,424

General and administrative expenses

18,479

7,257

34,972

27,100

Depreciation, depletion and amortization

175,677

149,771

358,716

302,050

Total Operating Expenses

469,087

444,259

954,665

904,264

Income (Loss) from Operations

316,418

331,634

1,471,783

(1,187,190)

Other Income (Expense):

Interest expense, net

(47,818)

(49,787)

(103,153)

(94,752)

Change in fair value of contingent payment right

(2,039)

2,977

1,841

(5,003)

Losses on purchases or exchanges of debt

(26,900)

—

(26,900)

—

Other income

10,375

103

10,911

785

Total Other Expense

(66,382)

(46,707)

(117,301)

(98,970)

Net Income (Loss)

$    250,036

$    284,927

$ 1,354,482

$  (1,286,160)

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30,

December 31,

($ in thousands)

2023

2022

Current Assets:

Cash and cash equivalents

$        8,415

$        3,894

Accounts receivable – natural gas, oil and NGL sales

192,619

530,385

Accounts receivable – joint interest and other

39,674

35,340

Short-term derivative assets

101,209

14,061

Other current assets

7,347

12,597

Total Current Assets

349,264

596,277

Property and Equipment:

Natural gas and oil properties, based on successful efforts accounting

11,086,721

10,558,533

Other property and equipment

40,105

39,641

Less: accumulated depreciation, depletion and amortization

(4,256,070)

(3,900,730)

Property and Equipment, net

6,870,756

6,697,444

Other Assets:

Long-term derivative assets

52,799

6,081

Other long-term assets

41,926

44,117

Total Assets

$ 7,314,745

$ 7,343,919

Current Liabilities:

Accounts payable

$      59,108

$      77,753

Accrued interest

44,118

50,375

Short-term derivative liabilities

66,225

684,204

Other current liabilities

520,332

771,062

Total Current Liabilities

689,783

1,583,394

Long-Term Liabilities:

Long-term debt, net

2,465,629

2,475,222

Long-term derivative liabilities

35,784

495,464

Other long-term liabilities

113,022

113,061

Total Long-Term Liabilities

2,614,435

3,083,747

Member's Equity

4,010,527

2,676,778

Total Liabilities and Member's Equity

$ 7,314,745

$ 7,343,919

ASCENT RESOURCES UTICA HOLDINGS, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

($ in thousands)

2023

2022

2023

2022

Cash Flows from Operating Activities:

Net income (loss)

$    250,036

$    284,927

$ 1,354,482

$  (1,286,160)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion and amortization

175,677

149,771

358,716

302,050

(Gain) loss on commodity derivatives

(348,982)

584,421

(1,270,631)

2,579,981

Settlements of commodity derivatives

126,929

(547,520)

60,111

(914,683)

Impairment of unproved natural gas and oil properties

3,814

11,649

3,814

29,507

Non-cash interest expense

3,271

4,981

9,248

8,102

Long-term incentive compensation

859

4,176

213

5,051

Change in fair value of contingent payment right

2,039

(2,977)

(1,841)

5,003

Losses on purchases or exchanges of debt

26,038

—

26,038

—

Other

79

(28)

133

(28)

Changes in operating assets and liabilities

44,747

(232,110)

115,142

(189,503)

Net Cash Provided by Operating Activities

284,507

257,290

655,425

539,320

Cash Flows from Investing Activities:

Natural gas and oil capital expenditures

(270,363)

(251,985)

(530,279)

(497,830)

Deposits on natural gas and oil property acquisition

—

(27,000)

—

(27,000)

Additions to other property and equipment

(769)

(406)

(1,828)

(995)

Net Cash Used in Investing Activities

(271,132)

(279,391)

(532,107)

(525,825)

Cash Flows from Financing Activities:

Proceeds from credit facility borrowings

910,000

1,235,000

1,420,000

2,080,000

Repayment of credit facility borrowings

(540,000)

(835,000)

(1,085,000)

(1,715,000)

Proceeds from issuance of long-term debt

210,000

—

210,000

—

Repayment of long-term debt

(549,822)

—

(549,822)

—

Cash paid for debt issuance and amendment costs

(11,219)

(16,731)

(11,219)

(16,731)

Cash paid for debt prepayment costs

(27,491)

—

(27,491)

—

Cash paid for settlements of commodity derivatives

—

(56,035)

(53,530)

(56,035)

Cash paid to restructure commodity derivatives

—

(300,000)

—

(300,000)

Distribution to Member for long-term incentive Cash Awards

—

—

(17,856)

—

Other

(3,608)

(4,360)

(3,879)

(4,576)

Net Cash Provided by (Used in) Financing Activities

(12,140)

22,874

(118,797)

(12,342)

Net Increase in Cash and Cash Equivalents

1,235

773

4,521

1,153

Cash and Cash Equivalents, Beginning of Period

7,180

6,054

3,894

5,674

Cash and Cash Equivalents, End of Period

$        8,415

$        6,827

$        8,415

$        6,827

ASCENT RESOURCES UTICA HOLDINGS, LLC

NATURAL GAS, OIL AND NGL PRODUCTION AND PRICES

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2023

2022

2023

2022

Net Production Volumes:

Natural gas (mmcf)

173,694

166,367

357,138

330,253

Oil (mbbls)

974

758

1,906

1,382

NGL (mbbls)

1,695

1,408

3,158

2,799

Natural Gas Equivalents (mmcfe)

189,712

179,359

387,523

355,339

Average Daily Net Production Volumes:

Natural gas (mmcf/d)

1,909

1,828

1,973

1,825

Oil (mbbls/d)

11

8

11

8

NGL (mbbls/d)

19

15

17

15

Natural Gas Equivalents (mmcfe/d)

2,085

1,971

2,141

1,963

% Natural Gas

92 %

92 %

92 %

93 %

% Liquids

8 %

8 %

8 %

7 %

Average Sales Prices:

Natural gas ($/mcf)

$       1.92

$       7.30

$       2.65

$       6.14

Oil ($/bbl)

$     64.79

$   102.34

$     66.71

$     95.48

NGL ($/bbl)

$     23.38

$     48.34

$     26.40

$     49.14

Natural Gas Equivalents ($/mcfe)

$       2.30

$       7.58

$       2.98

$       6.46

Settlements of commodity derivatives ($/mcfe)^(a)

0.67

(3.37)

0.16

(2.74)

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

$       2.97

$       4.21

$       3.14

$       3.72

^(a)

Excludes the one-time payment of $300 million in April 2022 to restructure a portion of our May through December 2022 natural gas swaps, resulting in an increase of our weighted average strike prices for these periods.

ASCENT RESOURCES UTICA HOLDINGS, LLC

CAPITAL EXPENDITURES INCURRED

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

($ in thousands)

2023

2022

2023

2022

Capital Expenditures Incurred:

Drilling and completion costs incurred

$      221,121

$      235,509

$   460,353

$    433,887

Land and leasehold costs incurred

27,615

23,919

53,800

55,155

Capitalized interest incurred

9,338

12,299

19,608

22,298

Total Capital Expenditures Incurred

$      258,074

$      271,727

$   533,761

$    511,340

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED NET INCOME (LOSS)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

($ in thousands)

2023

2022

2023

2022

Net Income (Loss) (GAAP)

$    250,036

$    284,927

$ 1,354,482

$  (1,286,160)

Adjustments to reconcile net income (loss) to Adjusted Net Income:

(Gain) loss on commodity derivatives

(348,982)

584,421

(1,270,631)

2,579,981

Commodity derivative settlements^(a)

126,929

(603,555)

60,111

(970,718)

Unrealized (gain) loss on interest rate derivatives

(1,840)

(1,837)

(1,005)

(3,575)

Change in fair value of contingent payment right

2,039

(2,977)

(1,841)

5,003

Long-term incentive compensation

859

4,176

213

5,051

Losses on purchases or exchanges of debt

26,900

—

26,900

—

Impairment of unproved natural gas and oil properties

3,814

11,649

3,814

29,507

Other

—

412

—

(1,372)

Adjusted Net Income (Non-GAAP)^(b)(c)

$      59,755

$    277,216

$    172,043

$    357,717

^(a)

Excludes the one-time payment of $300 million in April 2022 to restructure a portion of our May through December 2022 natural gas swaps, resulting in an increase of our weighted average strike prices for these periods.

^(b)

As shown above and on the following pages, Ascent uses Adjusted Net Income (Loss), Adjusted EBITDAX, Last Twelve Months ("LTM") 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.

^(c) 

Ascent defines "Adjusted Net Income (Loss)" as net income (loss) before impairment of unproved natural gas and oil properties; the revenue impact of changes in the fair value of commodity derivative instruments prior to settlement; unrealized (gain) loss on interest rate derivatives; change in fair value of contingent payment right; long-term incentive compensation;  (gains) losses on purchases or exchanges of debt; and other expense (benefits) including changes in legal reserves, settlements and other items which affect the comparability of results or that are not indicative of trends in the ongoing business.  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

Six Months Ended

June 30,

June 30,

($ in thousands)

2023

2022

2023

2022

Net Income (Loss) (GAAP)

$    250,036

$    284,927

$ 1,354,482

$  (1,286,160)

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

Exploration expenses

4,185

12,015

4,792

30,424

Depreciation, depletion and amortization

175,677

149,771

358,716

302,050

Interest expense, net

47,818

49,787

103,153

94,752

(Gain) loss on commodity derivatives

(348,982)

584,421

(1,270,631)

2,579,981

Commodity derivative settlements^(a)

126,929

(603,555)

60,111

(970,718)

Change in fair value of contingent payment right

2,039

(2,977)

(1,841)

5,003

Long-term incentive compensation

859

4,176

213

5,051

Losses on purchases or exchanges of debt

26,900

—

26,900

—

Other

—

(1,565)

—

(3,349)

Adjusted EBITDAX (Non-GAAP)^(b)(c)

$    285,461

$    477,000

$    635,895

$    757,034

^(a)

Excludes the one-time payment of $300 million in April 2022 to restructure a portion of our May through December 2022 natural gas swaps, resulting in an increase of our weighted average strike prices for these periods.

^(b)

See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) for a discussion of our uses of non-GAAP measures.

^(c)

Ascent defines "Adjusted EBITDAX" as net income (loss) before exploration expenses; depreciation, depletion and amortization; interest expense, net; the revenue impact of changes in the fair value of commodity derivative instruments prior to settlement; change in fair value of contingent payment right; long-term incentive compensation; (gains) losses on purchases or exchanges of debt; and other expenses (benefits) including changes in legal reserves, settlements and other items which affect the comparability of results or that are not indicative of trends in the ongoing business. 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

June 30,

March 31,

December 31,

September 30,

June 30,

($ in thousands)

2023

2023

2022

2022

2023

Net Income (GAAP)

$   250,036

$ 1,104,446

$  1,600,999

$      46,540

$  3,002,021

Adjustments to reconcile net income to Adjusted EBITDAX:

Exploration expenses

4,185

607

3,353

15,365

23,510

Depreciation, depletion and amortization

175,677

183,039

181,519

192,484

732,719

Interest expense, net

47,818

55,335

57,426

57,553

218,132

(Gain) loss on commodity derivatives

(348,982)

(921,649)

(993,155)

1,100,991

(1,162,795)

Commodity derivative settlements

126,929

(66,818)

(473,217)

(856,004)

(1,269,110)

Change in fair value of contingent payment right

2,039

(3,880)

1,955

(3,656)

(3,542)

Losses on purchases or exchanges of debt

26,900

—

—

—

26,900

Long-term incentive compensation

859

(646)

8,780

8,914

17,907

Other

—

—

(59)

(3,352)

(3,411)

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

$   285,461

$    350,434

$     387,601

$    558,835

$  1,582,331

Three Months

Ended

Twelve Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

($ in thousands)

2022

2022

2021

2021

2022

Net Income (Loss) (GAAP)

$   284,927

$  (1,571,087)

$  1,110,012

$  (1,256,435)

$  (1,432,583)

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

Exploration expenses

12,015

18,409

26,061

22,274

78,759

Depreciation, depletion and amortization

149,771

152,279

159,286

151,902

613,238

Interest expense, net

49,787

44,965

47,034

44,996

186,782

(Gain) loss on commodity derivatives

584,421

1,995,560

(532,585)

1,512,044

3,559,440

Commodity derivative settlements^(c)

(603,555)

(367,163)

(534,216)

(227,286)

(1,732,220)

Change in fair value of contingent payment right

(2,977)

7,980

(407)

1,544

6,140

Long-term incentive compensation

4,176

875

815

816

6,682

Other

(1,565)

(1,784)

7,219

—

3,870

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

$   477,000

$    280,034

$     283,219

$    249,855

$  1,290,108

^(a)

See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) for a discussion of 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; the revenue impact of changes in the fair value of commodity derivative instruments prior to settlement; change in fair value of contingent payment right; long-term incentive compensation; (gains) losses on purchases or exchanges of debt; and other expenses (benefits) including changes in legal reserves, settlements and other items which affect the comparability of results or that are not indicative of trends in the ongoing business. 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.

^(c)

Excludes the one-time payment of $300 million in April 2022 to restructure a portion of our May through December 2022 natural gas swaps, resulting in an increase of our weighted average strike prices for these periods.

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT (CONTINUED)

(Unaudited)

Net Debt and Net Debt to LTM Adjusted EBITDAX

June 30,

($ in thousands)

2023

2022

Net Debt:

Total debt

$  2,465,629

$  2,960,497

Less: cash and cash equivalents

8,415

6,827

Net Debt^(a)

$  2,457,214

$  2,953,670

Net Debt to LTM Adjusted EBITDAX:

Net Debt^(a)

$  2,457,214

$  2,953,670

LTM Adjusted EBITDAX (Non-GAAP)^(b)

$  1,582,331

$  1,290,108

Net Debt to LTM Adjusted EBITDAX^(c)

              1.6 x

              2.3 x

^(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)

Refer to our Reconciliations of Adjusted EBITDAX and Net Debt for more details regarding our LTM Adjusted EBITDAX calculations. Only includes impact of XTO acquisition since August 5, 2022.

^(c)

Our Net Debt to LTM Adjusted EBITDAX was 1.5x as of June 30, 2023 when including the full-year EBITDAX impact of the XTO acquisition, as provided by our debt covenant calculations.

ASCENT RESOURCES UTICA HOLDINGS, LLC

RECONCILIATIONS OF ADJUSTED FREE CASH FLOW

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

($ in thousands)

2023

2022

2023

2022

Net Cash Provided by Operating Activities (GAAP)

$    284,507

$    257,290

$    655,425

$    539,320

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

Changes in operating assets and liabilities

(44,747)

232,110

(115,142)

189,503

Drilling and completion costs incurred

(221,121)

(235,509)

(460,353)

(433,887)

Land and leasehold costs incurred

(27,615)

(23,919)

(53,800)

(55,155)

Capitalized interest incurred

(9,338)

(12,299)

(19,608)

(22,298)

Financing commodity derivative settlements

—

(56,035)

—

(56,035)

Other

862

(1,565)

862

(3,349)

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

$     (17,452)

$    160,073

$        7,384

$    158,099

^(a)

See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) for a discussion of 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; land and leasehold costs incurred; capitalized interest incurred; financing commodity derivative settlements; and certain other expenses (benefits) including changes in legal reserves, including settlements and other items which affect the comparability of results or that are not indicative of trends in the ongoing business.  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.