Montage Resources Corporation Announces Second Quarter 2019 Outperformance, Raises Production Guidance, Lowers Cash Operating Costs Guidance and Lowers Capital Expenditure Guidance for the Full Year 2019
IRVING, Texas–(BUSINESS WIRE)–Montage Resources Corporation (NYSE:MR) (the “Company” or “Montage Resources”) today announced its second quarter 2019 financial and operational results along with initial third quarter 2019 and revised full year 2019 guidance. In addition, the Company will be posting an updated investor presentation to its corporate website.
Second Quarter 2019 Highlights:
- Average net daily production was 535.5 MMcfe per day, 4% above the high end of the Company’s previously issued guidance range and above analyst consensus expectations
- Average natural gas equivalent realized price was $2.94 per Mcfe, excluding cash settled derivatives and firm transportation expenses
- Per unit cash production costs (including lease operating, transportation, gathering and compression, production and ad valorem taxes) were $1.35 per Mcfe, including $0.37 per Mcfe in firm transportation expenses, with the per unit cash production costs outperforming the Company’s previously issued guidance and analyst consensus expectations
- Net income for the second quarter of 2019 was $27.5 million; Adjusted net income1 for the second quarter of 2019 was $14.6 million; and Adjusted EBITDAX1 for the second quarter of 2019 was $70.9 million, above analyst consensus expectations
Positive Revisions to Full Year 2019 Guidance:
- Full year 2019 production guidance of 535 to 555 MMcfe per day, an increase of approximately 3% based upon the midpoint of the Company’s previously issued guidance range
- Full year 2019 per unit cash production costs of $1.30 to $1.40 per Mcfe, lower by approximately 4% based upon the midpoint of the Company’s previously issued guidance range
- Full year 2019 capital expenditures of $345 to $370 million, lower by approximately 8% based upon the midpoint of the Company’s previously issued guidance range
| 1 |
Non-GAAP measure. See reconciliation for details |
John Reinhart, President and CEO, commented on the Company’s second quarter 2019 results, “During the second quarter, we continued to execute upon our `Focus Five’ strategy with an emphasis on capital efficiency, cash-margin optimization, disciplined growth and balance sheet protection. Throughout all stages of our drilling and completions program, the Montage technical team continues to exceed expectations, leading to a 30% reduction in cycle times over 2018 and well costs reaching the target of $870 per lateral foot in the 2019 plan. These top-tier operating efficiencies, in addition to outstanding well results, contributed to the second quarter production outperformance with capital expenditures below expectations. One of the most important components of delivering upon our strategy and continuing to gain the confidence of investors is our ability to demonstrate superior operational execution as we exhibit a strong track record of repeatable results.
“During the second quarter, the Company re-negotiated an advantageous processing contract with one of our existing midstream providers for our Marcellus acreage in Ohio. The contact allows for a significant improvement in gas processing costs, possesses no additional minimum volume commitments and provides full ethane rejection, which will further improve the overall rates of return and value of our liquids-rich Marcellus acreage. Given the Company’s focus on increasing liquids-rich production, we believe this will provide a significant benefit during the second half of 2019 as liquids production volumes are expected to grow by approximately 40% – 45% over the first half of 2019. The quarterly production beat and enhanced pricing across our products, when coupled with cash production costs per unit outperforming expectations, delivers cash operating margins that we believe are among the best in the Appalachian Basin. The company continues to focus on merger related synergies that may be achieved through commercial agreements that enhance cash margins.
“For the second quarter of 2019, the Company generated revenue of $155.5 million, a 50% increase over the second quarter of 2018, while also recognizing a 39% increase in Adjusted EBITDAX1 over the second quarter of 2018, despite the weaker commodity price environment. From an operations perspective, the efficiency gains and well productivity results achieved from the development strategy shift are allowing us to place high-quality wells to sales more quickly than originally expected. Given the recent production outperformance, the Company has realized an approximately 30% increase in the mid-year PV-10 value2 of its proved developed producing reserves to approximately $1 billion, based upon strip pricing as of June 30, 2019 from the pro forma year end 2018 value, based upon strip pricing as of December 31, 2018.
“The Company is pleased to announce we have raised our production guidance for the full year 2019 by approximately 15 Mmcfe per day and decreased our cash production costs by approximately $0.05 per Mmcfe. As we have previously highlighted, we are committed to maintaining operational flexibility in a cyclical business environment. The Company has reduced second half 2019 activity levels which results in lowered capital spending for the full year by approximately $30 million. The capital plan in 2019 has been further optimized to focus on the drill-bit, with less than 5% of that capital expected to be dedicated to land spending due to the significant amount of our acreage that is already held by production.
“Our focus remains on balancing disciplined growth and cash flow generation while maintaining low leverage and ample liquidity to facilitate strategic optionality. The natural gas macro environment we are currently experiencing reinforces the importance of being a low-cost producer with high quality assets, maintaining a top performing execution team, and having a Company that possesses limited commitments. We believe the second quarter results demonstrate the effectiveness of our development strategy, the strength of our business, the focus of our team and the fundamental belief in the long term prospects for our Company.”
| 1 |
Non-GAAP measure. See reconciliation for details |
| 2 |
Based upon the Company’s unaudited internal reserve estimates. See disclosure for further details |
Operational Discussion
The Company’s production for the three and six months ended June 30, 2019 and 2018 is set forth in the following table:
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
|
Production: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (MMcf) |
|
|
39,119.0 |
|
|
|
19,985.4 |
|
|
|
66,324.0 |
|
|
|
40,328.7 |
|
|
NGLs (Mbbls) |
|
|
1,033.3 |
|
|
|
813.6 |
|
|
|
2,013.8 |
|
|
|
1,586.2 |
|
|
Oil (Mbbls) |
|
|
569.0 |
|
|
|
489.1 |
|
|
|
1,167.0 |
|
|
|
1,054.6 |
|
|
Total (MMcfe) |
|
|
48,732.8 |
|
|
|
27,801.6 |
|
|
|
85,408.8 |
|
|
|
56,173.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily production volume: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (Mcf/d) |
|
|
429,879 |
|
|
|
219,620 |
|
|
|
366,431 |
|
|
|
222,810 |
|
|
NGLs (Bbls/d) |
|
|
11,355 |
|
|
|
8,941 |
|
|
|
11,126 |
|
|
|
8,764 |
|
|
Oil (Bbls/d) |
|
|
6,253 |
|
|
|
5,375 |
|
|
|
6,448 |
|
|
|
5,827 |
|
|
Total (MMcfe/d) |
|
|
535.5 |
|
|
|
305.5 |
|
|
|
471.9 |
|
|
|
310.4 |
|
Financial Discussion
Revenue for the three months ended June 30, 2019 totaled $155.5 million, compared to $103.6 million for the three months ended June 30, 2018. Adjusted Revenue3, which includes the impact of cash settled derivatives and excludes brokered natural gas and marketing revenue, totaled $145.9 million for the three months ended June 30, 2019 compared to $100.8 million for the three months ended June 30, 2018. Net Income (Loss) for the three months ended June 30, 2019 was $27.5 million, or $0.77 per share, compared to ($19.0) million, or $(0.95) per share4, for the three months ended June 30, 2018. Adjusted Net Income3 for the three months ended June 30, 2019 was $14.6 million, or $0.41 per share, compared to $2.5 million, or $0.12 per share4, for the three months ended June 30, 2018. Adjusted EBITDAX3 was $70.9 million for the three months ended June 30, 2019 compared to $51.1 million for the three months ended June 30, 2018.
|
3 |
Adjusted Revenue, Adjusted Net Income (Loss) and Adjusted EBITDAX are non-GAAP financial measures. Tables reconciling Adjusted Revenue, Adjusted Net Income (Loss) and Adjusted EBITDAX to the most directly comparable GAAP measures can be found at the end of the financial statements included in this press release. |
|
4 |
Retroactively reflects the 15-to-1 reverse stock split that took place at the close of the merger with Blue Ridge Mountain Resources, Inc. (“Blue Ridge”) on February 28, 2019. |
Average realized price calculations for the three and six months ended June 30, 2019 and 2018 are set forth in the table below:
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
|
Average realized price (excluding cash settled derivatives and firm transportation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
2.41 |
|
|
$ |
2.72 |
|
|
$ |
2.66 |
|
|
$ |
2.80 |
|
|
NGLs ($/Bbl) |
|
|
18.77 |
|
|
|
22.99 |
|
|
|
20.18 |
|
|
|
24.24 |
|
|
Oil ($/Bbl) |
|
|
52.14 |
|
|
|
61.65 |
|
|
|
50.07 |
|
|
|
58.89 |
|
|
Total average prices ($/Mcfe) |
|
|
2.94 |
|
|
|
3.71 |
|
|
|
3.22 |
|
|
|
3.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including cash settled derivatives, excluding firm transportation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
2.47 |
|
|
$ |
2.84 |
|
|
$ |
2.63 |
|
|
$ |
2.94 |
|
|
NGLs ($/Bbl) |
|
|
19.11 |
|
|
|
22.99 |
|
|
|
20.46 |
|
|
|
23.64 |
|
|
Oil ($/Bbl) |
|
|
51.68 |
|
|
|
51.94 |
|
|
|
50.65 |
|
|
|
52.12 |
|
|
Total average prices ($/Mcfe) |
|
|
2.99 |
|
|
|
3.62 |
|
|
|
3.21 |
|
|
|
3.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including firm transportation, excluding cash settled derivatives) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
1.95 |
|
|
$ |
2.16 |
|
|
$ |
2.15 |
|
|
$ |
2.33 |
|
|
NGLs ($/Bbl) |
|
|
18.77 |
|
|
|
22.99 |
|
|
|
20.18 |
|
|
|
24.24 |
|
|
Oil ($/Bbl) |
|
|
52.14 |
|
|
|
61.65 |
|
|
|
50.07 |
|
|
|
58.89 |
|
|
Total average prices ($/Mcfe) |
|
|
2.57 |
|
|
|
3.31 |
|
|
|
2.83 |
|
|
|
3.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including cash settled derivatives and firm transportation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
2.01 |
|
|
$ |
2.27 |
|
|
$ |
2.12 |
|
|
$ |
2.47 |
|
|
NGLs ($/Bbl) |
|
|
19.11 |
|
|
|
22.99 |
|
|
|
20.46 |
|
|
|
23.64 |
|
|
Oil ($/Bbl) |
|
|
51.68 |
|
|
|
51.94 |
|
|
|
50.65 |
|
|
|
52.12 |
|
|
Total average prices ($/Mcfe) |
|
|
2.62 |
|
|
|
3.22 |
|
|
|
2.82 |
|
|
|
3.42 |
|
Per unit cash production costs, which include $0.37 per Mcfe of firm transportation expense, were $1.35 per Mcfe for the second quarter of 2019, a decrease of approximately 8% compared to the second quarter of 2018. The Company’s cash production costs (which include lease operating, transportation, gathering and compression, production and ad valorem taxes) are shown in the table below.
General and administrative expense (including one-time merger-related expenses) was $13.6 million and $10.7 million for the three months ended June 30, 2019 and 2018, respectively, and is shown in the table below. Cash general and administrative expense5, excluding merger-related expenses and stock-based compensation expense, was $9.1 million and $8.7 million for the three months ended June 30, 2019 and 2018, respectively. General and administrative expense per Mcfe (including one-time merger-related expenses) was $0.28 in the three months ended June 30, 2019 compared to $0.38 in the three months ended June 30, 2018. Cash general and administrative expense5 per Mcfe, excluding merger-related expenses and stock-based compensation expense, declined 39% to $0.19 in the three months ended June 30, 2019 compared to $0.31 in the three months ended June 30, 2018.
|
5 |
Cash general and administrative expense is a non-GAAP financial measure. A table reconciling cash general and administrative expense to the most directly comparable GAAP measure can be found under “Cash General and Administrative Expense” in this press release. |
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
|
Operating expenses (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
$ |
10,141 |
|
|
$ |
7,324 |
|
|
$ |
17,666 |
|
|
$ |
16,714 |
|
|
Transportation, gathering and compression |
|
|
51,870 |
|
|
|
31,371 |
|
|
|
93,038 |
|
|
|
59,060 |
|
|
Production and ad valorem taxes |
|
|
4,009 |
|
|
|
2,178 |
|
|
|
6,857 |
|
|
|
4,623 |
|
|
Depreciation, depletion, amortization and accretion |
|
|
38,597 |
|
|
|
32,922 |
|
|
|
68,494 |
|
|
|
64,233 |
|
|
General and administrative1 |
|
|
13,564 |
|
|
|
10,697 |
|
|
|
42,494 |
|
|
|
20,454 |
|
|
Operating expenses per Mcfe: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
$ |
0.21 |
|
|
$ |
0.26 |
|
|
$ |
0.21 |
|
|
$ |
0.30 |
|
|
Transportation, gathering and compression |
|
|
1.06 |
|
|
|
1.13 |
|
|
|
1.09 |
|
|
|
1.06 |
|
|
Production and ad valorem taxes |
|
|
0.08 |
|
|
|
0.08 |
|
|
|
0.08 |
|
|
|
0.08 |
|
|
Depreciation, depletion, amortization and accretion |
|
|
0.79 |
|
|
|
1.18 |
|
|
|
0.80 |
|
|
|
1.14 |
|
|
General and administrative2 |
|
|
0.28 |
|
|
|
0.38 |
|
|
|
0.50 |
|
|
|
0.36 |
|
| 1 |
Includes stock-based compensation and merger-related expenses of $ 4.5 million and $ 2.0 million for the three months ended June 30, 2019 and 2018, respectively, and $ 25.1 million and $ 4.0 million for the six months ended June 30, 2019 and 2018, respectively |
| 2 |
Includes stock-based compensation and merger-related expenses of $ 0.09 per Mcfe and $ 0.07 per Mcfe for the three months ended June 30, 2019 and 2018, respectively, and $ 0.30 per Mcfe and $ 0.07 per Mcfe for the six months ended June 30, 2019 and 2018, respectively |
Capital Expenditures
Second quarter 2019 capital expenditures were $115.3 million, including $111.9 million for drilling and completions, and $3.4 million for land-related expenditures.
During the second quarter of 2019, the Company commenced drilling 12 gross (10.2 net) operated wells, commenced completions of 15 gross (13.0 net) operated wells and turned to sales 16 gross (11.4 net) operated wells.
Financial Position and Liquidity
As of June 30, 2019, the Company’s liquidity was $252.7 million, consisting of $9.4 million in cash and cash equivalents and $243.3 million in available borrowing capacity under the Company’s revolving credit facility (after giving effect to outstanding letters of credit issued by the Company of $29.2 million and $127.5 million in outstanding borrowings).
Michael Hodges, Executive Vice President and Chief Financial Officer, commented, “We remain highly focused on maintaining the strength of our balance sheet. With no near term debt maturities and a current leverage ratio of approximately 1.7 times6, we believe our superior financial condition positions us to dynamically respond to changes in the commodity price environment as demonstrated by the operational flexibility in our previously announced reduction in development activity for 2019. As we look to the future, our resolve to deliver free cash flow to our stakeholders has not changed. From a top-line revenue perspective, we believe Montage is differentiated amongst other Appalachian peers as crude oil provided over 20% of our Adjusted Revenue7 for the second quarter and we expect our leverage to crude oil to further increase for the balance of 2019 and into 2020 as we focus on the development of our liquids-rich locations. Our second quarter results highlight the strength of our cash margins, with cash production costs continuing to decline as a result of our operational success and increasing scale. Finally, we believe our strong hedge book for the remainder of 2019 and into 2020 provides cash flow assurance for the foreseeable future as we execute our development plans. We believe the benefits of the merger consummated earlier this year have positioned Montage for success, and we believe the unique combination of ample liquidity, low leverage, limited operational commitments and the peer-leading EBITDAX margins leave the Company well positioned to deliver value to its stakeholders in 2019 and beyond.”
|
6 |
Based upon net debt to pro forma last twelve months EBITDAX |
|
7 |
Non-GAAP measure. See reconciliation for details |
Commodity Derivatives
The Company engages in a number of different commodity trading program strategies as a risk management tool to attempt to mitigate the potential negative impact on cash flows caused by price fluctuations in natural gas, NGL and oil prices. Below is a table that illustrates the Company’s hedging activities as of June 30, 2019:
Natural Gas Derivatives:
|
Description |
|
Volume |
|
|
Production Period |
|
Weighted Average |
|
||
|
Natural Gas Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000 |
|
|
July 2019 – December 2019 |
|
$ |
2.84 |
|
|
|
|
|
15,000 |
|
|
July 2019 – September 2019 |
|
$ |
2.79 |
|
|
Natural Gas Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
75,000 |
|
|
July 2019 – September 2019 |
|
$ |
2.50 |
|
|
Ceiling sold price (call) |
|
|
75,000 |
|
|
July 2019 – September 2019 |
|
$ |
2.87 |
|
|
Floor purchase price (put) |
|
|
65,000 |
|
|
October 2019 – December 2019 |
|
$ |
2.65 |
|
|
Ceiling sold price (call) |
|
|
65,000 |
|
|
October 2019 – December 2019 |
|
$ |
2.96 |
|
|
Floor purchase price (put) |
|
|
30,000 |
|
|
January 2020 – March 2020 |
|
$ |
2.72 |
|
|
Ceiling sold price (call) |
|
|
30,000 |
|
|
January 2020 – March 2020 |
|
$ |
3.15 |
|
|
Floor purchase price (put) |
|
|
15,000 |
|
|
April 2020 – June 2020 |
|
$ |
2.50 |
|
|
Ceiling sold price (call) |
|
|
15,000 |
|
|
April 2020 – June 2020 |
|
$ |
2.80 |
|
|
Floor purchase price (put) |
|
|
30,000 |
|
|
January 2020 – December 2020 |
|
$ |
2.55 |
|
|
Ceiling sold price (call) |
|
|
30,000 |
|
|
January 2020 – December 2020 |
|
$ |
3.00 |
|
|
Natural Gas Three-way Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
77,500 |
|
|
July 2019 – December 2019 |
|
$ |
2.72 |
|
|
Floor sold price (put) |
|
|
77,500 |
|
|
July 2019 – December 2019 |
|
$ |
2.30 |
|
|
Ceiling sold price (call) |
|
|
77,500 |
|
|
July 2019 – December 2019 |
|
$ |
3.04 |
|
|
Floor purchase price (put) |
|
|
70,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.70 |
|
|
Floor sold price (put) |
|
|
70,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.25 |
|
|
Ceiling sold price (call) |
|
|
70,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.98 |
|
|
Floor purchase price (put) |
|
|
30,000 |
|
|
October 2019 – June 2020 |
|
$ |
2.90 |
|
|
Floor sold price (put) |
|
|
30,000 |
|
|
October 2019 – June 2020 |
|
$ |
2.50 |
|
|
Ceiling sold price (call) |
|
|
30,000 |
|
|
October 2019 – June 2020 |
|
$ |
3.15 |
|
|
Floor purchase price (put) |
|
|
30,000 |
|
|
January 2020 – December 2020 |
|
$ |
2.70 |
|
|
Floor sold price (put) |
|
|
30,000 |
|
|
January 2020 – December 2020 |
|
$ |
2.40 |
|
|
Ceiling sold price (call) |
|
|
30,000 |
|
|
January 2020 – December 2020 |
|
$ |
3.05 |
|
|
Natural Gas Call/Put Options: |
|
|
|
|
|
|
|
|
|
|
|
Call sold |
|
|
40,000 |
|
|
July 2019 – December 2019 |
|
$ |
3.44 |
|
|
Basis Swaps: |
|
|
|
|
|
|
|
|
|
|
|
Appalachia – Dominion |
|
|
12,500 |
|
|
July 2019 – October 2019 |
|
$ |
(0.52 |
) |
|
Appalachia – Dominion |
|
|
12,500 |
|
|
April 2020 – October 2020 |
|
$ |
(0.52 |
) |
|
Appalachia – Dominion |
|
|
20,000 |
|
|
January 2020 – December 2020 |
|
$ |
(0.59 |
) |
|
Appalachia – Dominion |
|
|
20,000 |
|
|
July 2019 – March 2020 |
|
$ |
(0.39 |
) |
|
Appalachia – Dominion |
|
|
17,500 |
|
|
July 2019 – December 2019 |
|
$ |
(0.50 |
) |
Oil Derivatives:
|
Description |
|
Volume |
|
|
Production Period |
|
Weighted Average |
|
||
|
Oil Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
July 2019 – December 2019 |
|
$ |
59.18 |
|
|
|
|
|
1,000 |
|
|
January 2020 – December 2020 |
|
$ |
58.60 |
|
|
Oil Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
1,500 |
|
|
July 2019 – December 2019 |
|
$ |
51.67 |
|
|
Ceiling sold price (call) |
|
|
1,500 |
|
|
July 2019 – December 2019 |
|
$ |
65.92 |
|
|
Floor purchase price (put) |
|
|
1,000 |
|
|
January 2020 – December 2020 |
|
$ |
51.50 |
|
|
Ceiling sold price (call) |
|
|
1,000 |
|
|
January 2020 – December 2020 |
|
$ |
64.25 |
|
|
Floor purchase price (put) |
|
|
500 |
|
|
July 2019 – March 2020 |
|
$ |
60.00 |
|
|
Ceiling sold price (call) |
|
|
500 |
|
|
July 2019 – March 2020 |
|
$ |
67.00 |
|
|
Oil Three-way Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
2,000 |
|
|
July 2019 – December 2019 |
|
$ |
50.00 |
|
|
Floor sold price (put) |
|
|
2,000 |
|
|
July 2019 – December 2019 |
|
$ |
40.00 |
|
|
Ceiling sold price (call) |
|
|
2,000 |
|
|
July 2019 – December 2019 |
|
$ |
60.56 |
|
|
Floor purchase price (put) |
|
|
2,000 |
|
|
January 2020 – June 2020 |
|
$ |
62.50 |
|
|
Floor sold price (put) |
|
|
2,000 |
|
|
January 2020 – June 2020 |
|
$ |
55.00 |
|
|
Ceiling sold price (call) |
|
|
2,000 |
|
|
January 2020 – June 2020 |
|
$ |
74.00 |
|
NGL Derivatives:
|
Description |
|
Volume |
|
|
Production Period |
|
Weighted Average |
|
||
|
Propane Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350 |
|
|
July 2019 – December 2019 |
|
$ |
39.90 |
|
Subsequent to the End of the Second Quarter:
The below table illustrates the Company’s hedging activities subsequent to the end of the second quarter 2019:
Natural Gas Derivatives:
|
Description |
|
Volume |
|
|
Production Period |
|
Weighted Average |
|
||
|
Natural Gas Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.70 |
|
|
|
|
|
50,000 |
|
|
January 2020 – December 2020 |
|
$ |
2.67 |
|
|
Natural Gas Call/Put Options: |
|
|
|
|
|
|
|
|
|
|
|
Ceiling purchase price (call) |
|
|
50,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.95 |
|
|
Floor sold price (put) |
|
|
50,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.70 |
|
|
Floor sold price (put) |
|
|
30,000 |
|
|
January 2020 – March 2020 |
|
$ |
2.25 |
|
|
Floor sold price (put) |
|
|
50,000 |
|
|
January 2020 – December 2020 |
|
$ |
2.30 |
|
Oil Derivatives:
|
Description |
|
Volume |
|
|
Production Period |
|
Weighted Average |
|
||
|
Oil Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500 |
|
|
July 2020 – December 2020 |
|
$ |
56.25 |
|
|
Oil Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
500 |
|
|
July 2020 – December 2020 |
|
$ |
52.00 |
|
|
Ceiling sold price (call) |
|
|
500 |
|
|
July 2020 – December 2020 |
|
$ |
60.00 |
|
Guidance
The Company is announcing third quarter and updated full year 2019 guidance (changes in italics) as set forth in the table below:
|
|
|
Q3 2019 |
|
FY 2019 |
|
Production MMcfe/d |
|
600 – 615 |
|
535 – 555 |
|
% Gas |
|
74% – 76% |
|
74% – 78% |
|
% NGL |
|
14% – 16% |
|
12% – 15% |
|
% Oil |
|
9% – 11% |
|
9% – 11% |
|
Gas Price Differential ($/Mcf)1,2 |
|
$(0.15) – $(0.25) |
|
$(0.15) – $(0.25) |
|
Oil Differential ($/Bbl)1 |
|
$(7.00) – $(7.50) |
|
$(7.00) – $(7.50) |
|
NGL Prices (% of WTI)1 |
|
27% – 33% |
|
30% – 35% |
|
Cash Production Costs ($/Mcfe)3 |
|
$1.30 – $1.40 |
|
$1.30 – $1.40 |
|
Cash G&A ($mm)4 |
|
$9 – $11 |
|
$34 – $38 |
|
CAPEX ($mm) |
|
|
|
$345 – $370 |
|
1 |
Excludes impact of hedges |
|
2 |
Excludes the cost of firm transportation |
|
3 |
Includes lease operating, transportation, gathering and compression, production and ad valorem taxes |
|
4 |
Non-GAAP financial measure which excludes non-cash compensation and merger related expenses, see reconciliation to the most comparable GAAP measure under “Cash General and Administrative Expense” in this press release |
Conference Call
A conference call to review the Company’s second quarter financial and operational results is scheduled for Wednesday, August 7, 2019 at 10:00 a.m. Eastern Time. To participate in the call, please dial 877-709-8150 or 201-689-8354 for international callers and reference Montage Resources Second Quarter 2019 Earnings Call. A replay of the call will be available through October 8, 2019. To access the phone replay, dial 877-660-6853 or 201-612-7415 for international callers. The conference ID is 13692325. A live webcast of the call may be accessed through the Investor Center on the Company’s website at www.montageresources.com. The webcast will be archived for replay on the Company’s website for six months.
|
MONTAGE RESOURCES CORPORATION |
||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
|
(In thousands, except share and per share amounts) |
||||||||
|
(Unaudited) |
||||||||
|
|
|
June 30, |
|
|
December 31, |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
9,448 |
|
|
$ |
5,959 |
|
|
Accounts receivable |
|
|
88,770 |
|
|
|
119,332 |
|
|
Assets held for sale |
|
|
2,474 |
|
|
|
— |
|
|
Other current assets |
|
|
26,757 |
|
|
|
8,639 |
|
|
Total current assets |
|
|
127,449 |
|
|
|
133,930 |
|
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT |
|
|
|
|
|
|
|
|
|
Oil and natural gas properties, successful efforts method: |
|
|
|
|
|
|
|
|
|
Unproved properties |
|
|
532,660 |
|
|
|
482,475 |
|
|
Proved oil and gas properties, net |
|
|
1,191,807 |
|
|
|
807,583 |
|
|
Other property and equipment, net |
|
|
12,550 |
|
|
|
6,300 |
|
|
Total property and equipment, net |
|
|
1,737,017 |
|
|
|
1,296,358 |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER NONCURRENT ASSETS |
|
|
|
|
|
|
|
|
|
Other assets |
|
|
8,875 |
|
|
|
3,481 |
|
|
Operating lease right-of-use asset |
|
|
38,187 |
|
|
|
— |
|
|
Assets held for sale |
|
|
8,748 |
|
|
|
— |
|
|
TOTAL ASSETS |
|
$ |
1,920,276 |
|
|
$ |
1,433,769 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
113,771 |
|
|
$ |
116,735 |
|
|
Accrued capital expenditures |
|
|
43,221 |
|
|
|
12,979 |
|
|
Accrued liabilities |
|
|
59,096 |
|
|
|
56,909 |
|
|
Accrued interest payable |
|
|
22,351 |
|
|
|
21,661 |
|
|
Liabilities associated with assets held for sale |
|
|
4,843 |
|
|
|
— |
|
|
Operating lease liability |
|
|
17,166 |
|
|
|
— |
|
|
Total current liabilities |
|
|
260,448 |
|
|
|
208,284 |
|
|
|
|
|
|
|
|
|
|
|
|
NONCURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Debt, net of unamortized discount and debt issuance costs |
|
|
499,155 |
|
|
|
497,778 |
|
|
Revolving credit facility |
|
|
127,500 |
|
|
|
32,500 |
|
|
Asset retirement obligations |
|
|
26,679 |
|
|
|
7,110 |
|
|
Other liabilities |
|
|
564 |
|
|
|
611 |
|
|
Operating lease liability |
|
|
22,321 |
|
|
|
— |
|
|
Liabilities associated with assets held for sale |
|
|
6,772 |
|
|
|
— |
|
|
Total liabilities |
|
|
943,439 |
|
|
|
746,283 |
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Preferred stock, 50,000,000 authorized, no shares issued and outstanding |
|
|
— |
|
|
|
— |
|
|
Common stock, $0.01 par value, 1,000,000,000 authorized, 35,687,207 and 20,169,063 shares issued and outstanding, respectively |
|
|
382 |
|
|
|
3,043 |
|
|
Additional paid in capital |
|
|
2,349,154 |
|
|
|
2,065,119 |
|
|
Treasury stock, shares at cost; 2,480,655 and 1,747,624 shares, respectively |
|
|
(8,794 |
) |
|
|
(3,357 |
) |
|
Accumulated deficit |
|
|
(1,363,905 |
) |
|
|
(1,377,319 |
) |
|
Total stockholders’ equity |
|
|
976,837 |
|
|
|
687,486 |
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
1,920,276 |
|
|
$ |
1,433,769 |
|
Contacts
Montage Resources Corporation
Douglas Kris, Investor Relations
814-325-2059
[email protected]
