Montage Resources Corporation Announces Third Quarter 2019 Outperformance, Lowers Cash Production Costs Guidance and Increases Midpoint of Production Guidance for the Full Year 2019
IRVING, Texas–(BUSINESS WIRE)–Montage Resources Corporation (NYSE:MR) (the “Company” or “Montage Resources”) today announced its third quarter 2019 financial and operational results along with revised full year 2019 guidance. In addition, the Company will be posting an updated investor presentation to its corporate website.
Third Quarter 2019 Highlights:
- Average net daily production was 621.7 MMcfe per day, above the high end of the Company’s previously issued guidance range and above analyst consensus expectations
- Average natural gas equivalent realized price was $2.88 per Mcfe, including cash settled derivatives and excluding firm transportation expenses
- Per unit cash production costs (including lease operating, transportation, gathering and compression, production and ad valorem taxes) were $1.23 per Mcfe, with the per unit cash production costs outperforming the midpoint of the Company’s previously issued guidance by 9% and analyst consensus expectations
- Net income was $4.3 million; Income from continuing operations before income taxes was $5.5 million; Adjusted net income1 was $19.3 million; and Adjusted EBITDAX1 was $83.6 million, above analyst consensus expectations
- Capital expenditures were $65.4 million, approximately 17% better than analyst consensus expectations
- The Company remains in a strong liquidity position with the recent 25% increase in its borrowing base to $500 million, ending the third quarter with $355 million in liquidity
|
1 |
Non-GAAP measure. See reconciliation for details |
John Reinhart, President and CEO, commented on the Company’s third quarter 2019 results, “During the third quarter, we continued to demonstrate superior operational execution and prudent financial decision making as we exhibit a strong track record of what we believe are repeatable results that differentiate our performance from others in the Appalachian basin and our small-cap upstream peers. The quarter-over-quarter reduction in capital spending driven by a decrease in year to date cycle times of approximately 34% from the 2018 program helps to illustrate our improved capital efficiency. The drilling team routinely drills a mile a day in dry gas laterals and exceeds this pace in the Marcellus while completions activity is averaging approximately nine stages for the quarter. Our per unit cash production costs are 16% lower as compared to the third quarter of 2018 and we expect to exceed our targeted general and administrative expense synergies from the merger between Eclipse Resources and Blue Ridge Mountain Resources (excluding merger-related costs) in 2019. These top-tier operating efficiencies, in addition to outstanding well results, contributed to the third quarter production outperformance and, 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.
For the third quarter of 2019, the Company generated revenue of $163 million, a 25% increase over the third quarter of 2018, while also recognizing a 25% increase in Adjusted EBITDAX1 over the third quarter of 2018, despite the weaker commodity price environment. From a top-line revenue perspective, we believe Montage is differentiated amongst other Appalachian peers as crude oil provided approximately 28% of our revenue for the third quarter and we will continue to focus on the development of our highest returning liquids-rich locations. Our third quarter results further highlight the strength of our cash operating margins, which have expanded to 51% from 48%, or $1.47 per Mcfe, as compared to the second quarter 2019 despite an approximate 16% decline in natural gas pricing quarter over quarter. In addition, the Company is pleased to announce we have updated our production guidance for the full year 2019 to between 545 and 552 MMcfe per day and decreased our cash production costs guidance range to between $1.30 to $1.35 per Mcfe.
As we have previously highlighted, we are committed to maintaining operational flexibility in a dynamic business environment and will continue to run one gross operated rig through the remainder of 2019 and into 2020, while continuing to unlock value with our increased capital efficiency. Our focus remains on balancing disciplined growth and cash flow generation while maintaining low leverage and ample liquidity. 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 limited commitments. I believe we have managed our Company prudently and responsibly with the third quarter results demonstrating 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 Montage Resources.”
|
1 |
Non-GAAP measure. See reconciliation for details |
Operational Discussion
The Company’s production for the three and nine months ended September 30, 2019 and 2018 is set forth in the following table:
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||
|
|
|
2019 |
|
|
2018 |
|
2019 |
|
|
2018 |
||||
|
Production: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (MMcf) |
|
|
43,289.9 |
|
|
|
22,979.7 |
|
|
109,613.9 |
|
|
|
63,308.4 |
|
NGLs (Mbbls) |
|
|
1,401.1 |
|
|
|
906.4 |
|
|
3,414.9 |
|
|
|
2,492.6 |
|
Oil (Mbbls) |
|
|
916.2 |
|
|
|
574.8 |
|
|
2,083.3 |
|
|
|
1,629.4 |
|
Total (MMcfe) |
|
|
57,193.7 |
|
|
|
31,866.9 |
|
|
142,603.1 |
|
|
|
88,040.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily production volume: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (Mcf/d) |
|
|
470,542 |
|
|
|
249,779 |
|
|
401,516 |
|
|
|
231,899 |
|
NGLs (Bbls/d) |
|
|
15,229 |
|
|
|
9,852 |
|
|
12,509 |
|
|
|
9,130 |
|
Oil (Bbls/d) |
|
|
9,959 |
|
|
|
6,248 |
|
|
7,631 |
|
|
|
5,968 |
|
Total (MMcfe/d) |
|
|
621.7 |
|
|
|
346.4 |
|
|
522.4 |
|
|
|
322.5 |
Financial Discussion
Revenue for the three months ended September 30, 2019 totaled $163.3 million, compared to $130.1 million for the three months ended September 30, 2018. Adjusted Revenue2, which includes the impact of cash settled derivatives and excludes brokered natural gas and marketing revenue, totaled $164.8 million for the three months ended September 30, 2019 compared to $121.8 million for the three months ended September 30, 2018. Net Income (Loss) for the three months ended September 30, 2019 was $4.3 million, or $0.12 per share, compared to $4.0 million, or $0.20 per share3, for the three months ended September 30, 2018. Adjusted Net Income2 for the three months ended September 30, 2019 was $19.3 million, or $0.54 per share, compared to $14.1 million, or $0.70 per share3, for the three months ended September 30, 2018. Adjusted EBITDAX2 was $83.6 million for the three months ended September 30, 2019 compared to $66.8 million for the three months ended September 30, 2018.
|
2 |
Adjusted Revenue, Adjusted Net Income (Loss) and Adjusted EBITDAX are non-GAAP financial measures. Tables reconciling Adjusted Revenue, Adjusted Net Income (Loss) and Adjusted EBITDAX to the most directly comparable GAAP measures can be found at the end of the financial statements included in this press release. |
|
|
3 |
Retroactively reflects the 15-to-1 reverse stock split that took place at the close of the merger with Blue Ridge Mountain Resources, Inc. on February 28, 2019. |
Average realized price calculations for the three and nine months ended September 30, 2019 and 2018 are set forth in the table below:
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
||||
|
Average realized price (excluding cash settled derivatives and firm transportation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
2.03 |
|
|
$ |
2.86 |
|
|
$ |
2.41 |
|
|
$ |
2.82 |
|
NGLs ($/Bbl) |
|
|
14.42 |
|
|
|
27.66 |
|
|
|
17.82 |
|
|
|
25.48 |
|
Oil ($/Bbl) |
|
|
49.09 |
|
|
|
63.24 |
|
|
|
49.64 |
|
|
|
60.42 |
|
Total average prices ($/Mcfe) |
|
|
2.68 |
|
|
|
3.99 |
|
|
|
3.00 |
|
|
|
3.87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including cash settled derivatives, excluding firm transportation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
2.28 |
|
|
$ |
2.89 |
|
|
$ |
2.49 |
|
|
$ |
2.92 |
|
NGLs ($/Bbl) |
|
|
14.92 |
|
|
|
27.66 |
|
|
|
18.19 |
|
|
|
25.11 |
|
Oil ($/Bbl) |
|
|
49.53 |
|
|
|
52.67 |
|
|
|
50.15 |
|
|
|
52.32 |
|
Total average prices ($/Mcfe) |
|
|
2.88 |
|
|
|
3.82 |
|
|
|
3.08 |
|
|
|
3.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including firm transportation, excluding cash settled derivatives) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
1.60 |
|
|
$ |
2.19 |
|
|
$ |
1.94 |
|
|
$ |
2.28 |
|
NGLs ($/Bbl) |
|
|
14.42 |
|
|
|
27.66 |
|
|
|
17.82 |
|
|
|
25.48 |
|
Oil ($/Bbl) |
|
|
49.09 |
|
|
|
63.24 |
|
|
|
49.64 |
|
|
|
60.42 |
|
Total average prices ($/Mcfe) |
|
|
2.35 |
|
|
|
3.51 |
|
|
|
2.64 |
|
|
|
3.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including cash settled derivatives and firm transportation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
1.85 |
|
|
$ |
2.22 |
|
|
$ |
2.02 |
|
|
$ |
2.38 |
|
NGLs ($/Bbl) |
|
|
14.92 |
|
|
|
27.66 |
|
|
|
18.19 |
|
|
|
25.11 |
|
Oil ($/Bbl) |
|
|
49.53 |
|
|
|
52.67 |
|
|
|
50.15 |
|
|
|
52.32 |
|
Total average prices ($/Mcfe) |
|
|
2.56 |
|
|
|
3.34 |
|
|
|
2.72 |
|
|
|
3.39 |
|
*rounded to the nearest penny |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per unit cash production costs, which include $0.32 per Mcfe of firm transportation expense, were $1.23 per Mcfe for the third quarter of 2019, a decrease of approximately 16% compared to the third 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 $14.6 million and $12.9 million for the three months ended September 30, 2019 and 2018, respectively, and is shown in the table below. Cash general and administrative expense4 (excluding merger-related expenses and stock-based compensation expense) was $10.2 million and $7.8 million for the three months ended September 30, 2019 and 2018 respectively. General and administrative expense per Mcfe (including one-time merger-related expenses) was $0.25 in the three months ended September 30, 2019 compared to $0.41 in the three months ended September 30, 2018. Cash general and administrative expense4 per Mcfe (excluding merger-related expenses and stock-based compensation expense) declined 25% to $0.18 in the three months ended September 30, 2019 compared to $0.24 in the three months ended September 30, 2018.
|
4 |
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 |
|
|
Nine Months Ended |
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
||||
|
Operating expenses (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
$ |
11,986 |
|
|
$ |
5,312 |
|
|
$ |
29,651 |
|
|
$ |
22,026 |
|
Transportation, gathering and compression |
|
|
57,027 |
|
|
|
39,066 |
|
|
|
150,065 |
|
|
|
98,126 |
|
Production and ad valorem taxes |
|
|
1,660 |
|
|
|
2,604 |
|
|
|
8,519 |
|
|
|
7,226 |
|
Total cash production costs |
|
$ |
70,673 |
|
|
$ |
46,982 |
|
|
$ |
188,235 |
|
|
$ |
127,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
45,456 |
|
|
|
34,439 |
|
|
|
113,950 |
|
|
|
98,672 |
|
General and administrative1 |
|
|
14,580 |
|
|
|
12,937 |
|
|
|
57,074 |
|
|
|
33,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses per Mcfe: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
$ |
0.21 |
|
|
$ |
0.17 |
|
|
$ |
0.21 |
|
|
$ |
0.25 |
|
Transportation, gathering and compression |
|
|
0.99 |
|
|
|
1.21 |
|
|
|
1.04 |
|
|
|
1.11 |
|
Production and ad valorem taxes |
|
|
0.03 |
|
|
|
0.08 |
|
|
|
0.06 |
|
|
|
0.08 |
|
Total cash production costs |
|
$ |
1.23 |
|
|
$ |
1.46 |
|
|
$ |
1.31 |
|
|
$ |
1.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
0.79 |
|
|
|
1.08 |
|
|
|
0.80 |
|
|
|
1.12 |
|
General and administrative2 |
|
|
0.25 |
|
|
|
0.41 |
|
|
|
0.40 |
|
|
|
0.38 |
|
1 |
Includes stock-based compensation and merger-related expenses of $ 4.4 million and $ 5.2 million for the three months ended September 30, 2019 and 2018, respectively, and $ 29.4 million and $ 9.1 million for the nine months ended September 30, 2019 and 2018, respectively |
|
|
2 |
Includes stock-based compensation and merger-related expenses of $ 0.07 per Mcfe and $ 0.16 per Mcfe for the three months ended September 30, 2019 and 2018, respectively, and $ 0.20 per Mcfe and $ 0.10 per Mcfe for the nine months ended September 30, 2019 and 2018, respectively |
Cash Margins
The Company’s cash margins are detailed in the table below:
|
|
|
Three Months Ended |
|
Three Months |
||||||||
|
|
|
September 30, 2019 |
|
September 30, 2018 |
|
June 30, |
||||||
|
(per Mcfe) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including cash settled derivatives, excluding firm transportation) |
|
$ |
2.88 |
|
|
$ |
3.82 |
|
|
$ |
2.99 |
|
|
Total cash production costs1 |
|
|
1.23 |
|
|
|
1.46 |
|
|
|
1.35 |
|
|
Cash production margin |
|
$ |
1.65 |
|
|
$ |
2.36 |
|
|
$ |
1.64 |
|
|
Cash production margin % |
|
|
57 |
% |
|
|
62 |
% |
|
|
55 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash production margin |
|
$ |
1.65 |
|
|
$ |
2.36 |
|
|
$ |
1.64 |
|
|
Cash general and administrative expenses2 |
|
|
0.18 |
|
|
|
0.24 |
|
|
|
0.19 |
|
|
Cash operating margin |
|
$ |
1.47 |
|
|
$ |
2.12 |
|
|
$ |
1.45 |
|
|
Cash operating margin % |
|
|
51 |
% |
|
|
55 |
% |
|
|
48 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash operating margin |
|
$ |
1.47 |
|
|
$ |
2.12 |
|
|
$ |
1.45 |
|
|
Interest expense |
|
|
0.27 |
|
|
|
0.44 |
|
|
|
0.31 |
|
|
Corporate cash operating margin3 |
|
$ |
1.20 |
|
|
$ |
1.68 |
|
|
$ |
1.14 |
|
|
Corporate cash operating margin % |
|
|
42 |
% |
|
|
44 |
% |
|
|
38 |
% |
|
1 |
Includes lease operating, transportation, gathering and compression, production and ad valorem taxes |
|
|
2 |
Cash general & administrative expense is a 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 |
|
|
3 |
Includes lease operating, transportation, gathering and compression, production and ad valorem taxes, Cash general & administrative expense and interest expense. Cash general & administrative expense is a 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 |
Capital Expenditures
Third quarter 2019 capital expenditures were $65.4 million, including $63.6 million for drilling and completions, $1.4 million for land-related expenditures, and $0.4 million for corporate-related expenditures.
During the third quarter of 2019, the Company commenced drilling 4 gross (3.3 net) operated wells, commenced completions of 7 gross (5.2 net) operated wells and turned to sales 16 gross (13.9 net) operated wells.
Financial Position and Liquidity
As of September 30, 2019, the Company’s liquidity was $354.8 million, consisting of $11.5 million in cash and cash equivalents and $343.3 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 debt maturities for almost four years, a current leverage ratio of approximately 1.7 times5 and with the recent increase of our borrowing base providing liquidity of approximately $355 million, we believe our superior financial condition positions us to dynamically respond to changes in the commodity price environment while still achieving our goal of generating free cash flow by the end of 2019. From a gas marketing perspective, the Company has continued to endeavor to maximize realized pricing through our access to both in basin and out of basin markets and the optimization of the “commitment free” equity gas we produce. Finally, we believe our strong hedge book for the remainder of 2019 and into 2020 provides cash flow support for the foreseeable future as we execute our development plans. 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.”
|
5 |
Based upon net debt to pro forma last twelve months EBITDAX |
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 September 30, 2019:
Natural Gas Derivatives:
|
Description |
|
Volume |
|
|
Production Period |
|
Weighted Average |
|||
|
Natural Gas Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000 |
|
|
October 2019 – December 2019 |
|
$ |
2.80 |
|
|
|
|
|
50,000 |
|
|
January 2020 – December 2020 |
|
$ |
2.67 |
|
|
|
|
|
20,000 |
|
|
January 2020 – March 2020 |
|
$ |
2.80 |
|
|
|
|
|
50,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.70 |
|
|
|
|
|
20,000 |
|
|
April 2020 – June 2020 |
|
$ |
2.75 |
|
|
|
|
|
30,000 |
|
|
July 2020 – December 2020 |
|
$ |
2.60 |
|
|
Natural Gas Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
95,000 |
|
|
October 2019 – December 2019 |
|
$ |
2.60 |
|
|
Ceiling sold price (call) |
|
|
95,000 |
|
|
October 2019 – December 2019 |
|
$ |
2.91 |
|
|
Floor purchase price (put) |
|
|
50,000 |
|
|
January 2020 – December 2020 |
|
$ |
2.49 |
|
|
Ceiling sold price (call) |
|
|
50,000 |
|
|
January 2020 – December 2020 |
|
$ |
2.88 |
|
|
Floor purchase price (put) |
|
|
30,000 |
|
|
January 2020 – March 2020 |
|
$ |
2.65 |
|
|
Ceiling sold price (call) |
|
|
30,000 |
|
|
January 2020 – March 2020 |
|
$ |
2.98 |
|
|
Floor purchase price (put) |
|
|
15,000 |
|
|
April 2020 – June 2020 |
|
$ |
2.50 |
|
|
Ceiling sold price (call) |
|
|
15,000 |
|
|
April 2020 – June 2020 |
|
$ |
2.80 |
|
|
Natural Gas Three-way Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
77,500 |
|
|
October 2019 – December 2019 |
|
$ |
2.72 |
|
|
Floor sold price (put) |
|
|
77,500 |
|
|
October 2019 – December 2019 |
|
$ |
2.30 |
|
|
Ceiling sold price (call) |
|
|
77,500 |
|
|
October 2019 – December 2019 |
|
$ |
3.04 |
|
|
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 |
|
|
Floor purchase price (put) |
|
|
30,000 |
|
|
January 2020 – March 2020 |
|
$ |
2.72 |
|
|
Floor sold price (put) |
|
|
30,000 |
|
|
January 2020 – March 2020 |
|
$ |
2.25 |
|
|
Ceiling sold price (call) |
|
|
30,000 |
|
|
January 2020 – March 2020 |
|
$ |
3.15 |
|
|
Floor purchase price (put) |
|
|
20,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.70 |
|
|
Floor sold price (put) |
|
|
20,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.25 |
|
|
Ceiling sold price (call) |
|
|
20,000 |
|
|
January 2020 – June 2020 |
|
$ |
3.05 |
|
|
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 |
|
|
Natural Gas Call/Put Options: |
|
|
|
|
|
|
|
|
|
|
|
Ceiling sold price (call) |
|
|
40,000 |
|
|
October 2019 – December 2019 |
|
$ |
3.44 |
|
|
Floor sold price (put) |
|
|
50,000 |
|
|
January 2020 – December 2020 |
|
$ |
2.30 |
|
|
Floor sold price (put) |
|
|
50,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.25 |
|
|
Swaption sold price (call) |
|
|
50,000 |
|
|
January 2021 – December 2021 |
|
$ |
2.75 |
|
|
Swaption sold price (call) |
|
|
50,000 |
|
|
January 2022 – December 2022 |
|
$ |
3.00 |
|
|
Basis Swaps: |
|
|
|
|
|
|
|
|
|
|
|
Appalachia – Dominion |
|
|
12,500 |
|
|
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 |
|
|
October 2019 – March 2020 |
|
$ |
(0.39 |
) |
|
Appalachia – Dominion |
|
|
17,500 |
|
|
October 2019 – December 2019 |
|
$ |
(0.50 |
) |
Oil Derivatives:
|
Description |
|
Volume |
|
|
Production Period |
|
Weighted Average |
||
|
Oil Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
October 2019 – December 2019 |
|
$ |
59.18 |
|
|
|
|
1,000 |
|
|
January 2020 – December 2020 |
|
$ |
58.60 |
|
|
|
|
1,000 |
|
|
July 2020 – December 2020 |
|
$ |
56.53 |
|
Oil Collars: |
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
1,500 |
|
|
October 2019 – December 2019 |
|
$ |
51.67 |
|
Ceiling sold price (call) |
|
|
1,500 |
|
|
October 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 2020 – December 2020 |
|
$ |
52.00 |
|
Ceiling sold price (call) |
|
|
500 |
|
|
July 2020 – December 2020 |
|
$ |
60.00 |
|
Floor purchase price (put) |
|
|
500 |
|
|
October 2019 – March 2020 |
|
$ |
60.00 |
|
Ceiling sold price (call) |
|
|
500 |
|
|
October 2019 – March 2020 |
|
$ |
67.00 |
|
Oil Three-way Collars: |
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
2,000 |
|
|
October 2019 – December 2019 |
|
$ |
50.00 |
|
Floor sold price (put) |
|
|
2,000 |
|
|
October 2019 – December 2019 |
|
$ |
40.00 |
|
Ceiling sold price (call) |
|
|
2,000 |
|
|
October 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 |
|
Oil Call/Put Options: |
|
|
|
|
|
|
|
|
|
|
Swaption sold price (call) |
|
|
500 |
|
|
January 2021 – December 2021 |
|
$ |
56.80 |
NGL Derivatives:
|
Description |
|
Volume |
|
|
Production Period |
|
Weighted Average |
||
|
Propane Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
350 |
|
|
October 2019 – December 2019 |
|
$ |
39.90 |
Subsequent to the End of the Third Quarter:
The below table illustrates the Company’s hedging activities subsequent to the end of the third quarter 2019:
Natural Gas Derivatives:
|
Description |
|
Volume |
|
|
Production Period |
|
Weighted Average |
||
|
Natural Gas Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
January 2020 – June 2020 |
|
$ |
2.62 |
|
|
|
|
25,000 |
|
|
January 2020 – March 2021 |
|
$ |
2.60 |
|
|
|
|
20,000 |
|
|
July 2020 – March 2021 |
|
$ |
2.58 |
|
Natural Gas Three-way Collars: |
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
45,000 |
|
|
January 2021 – December 2021 |
|
$ |
2.55 |
|
Floor sold price (put) |
|
|
45,000 |
|
|
January 2021 – December 2021 |
|
$ |
2.25 |
|
Ceiling sold price (call) |
|
|
45,000 |
|
|
January 2021 – December 2021 |
|
$ |
2.81 |
Oil Derivatives:
|
Description |
|
Volume |
|
|
Production Period |
|
Weighted Average |
||
|
Oil Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
500 |
|
|
January 2020 – December 2020 |
|
$ |
54.00 |
|
|
|
|
250 |
|
|
July 2020 – March 2021 |
|
$ |
53.20 |
|
|
|
|
250 |
|
|
January 2021 – March 2021 |
|
$ |
53.00 |
|
Oil Call/Put Options: |
|
|
|
|
|
|
|
|
|
|
Floor sold price (put) |
|
|
500 |
|
|
January 2020 – December 2020 |
|
$ |
53.00 |
|
Ceiling sold price (call) |
|
|
500 |
|
|
January 2020 – December 2020 |
|
$ |
64.50 |
|
Floor sold price (put) |
|
|
500 |
|
|
July 2020 – December 2020 |
|
$ |
45.00 |
Guidance
The Company is announcing updated full year 2019 guidance (changes in italics) as set forth in the table below:
|
|
|
FY 2019 |
|
Production MMcfe/d |
|
545 – 552 |
|
% Gas |
|
74% – 78% |
|
% NGL |
|
12% – 15% |
|
% Oil |
|
9% – 11% |
|
Gas Price Differential ($/Mcf)1,2 |
|
$(0.20) – $(0.30) |
|
Oil Differential ($/Bbl)1 |
|
$(7.25) – $(7.75) |
|
NGL Prices (% of WTI)1 |
|
30% – 35% |
|
Cash Production Costs ($/Mcfe)3 |
|
$1.30 – $1.35 |
|
Cash G&A ($mm)4 |
|
$36 – $38 |
|
CAPEX ($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 third quarter financial and operational results is scheduled for Friday, November 8, 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 Third Quarter 2019 Earnings Call. A replay of the call will be available through January 8, 2020. To access the phone replay, dial 877-660-6853 or 201-612-7415 for international callers. The conference ID is 13695725. 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) |
||||||||
|
|
|
September 30, |
|
December 31, |
||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
11,531 |
|
|
$ |
5,959 |
|
|
Accounts receivable |
|
|
77,154 |
|
|
|
119,332 |
|
|
Assets held for sale |
|
|
1,485 |
|
|
|
— |
|
|
Other current assets |
|
|
35,239 |
|
|
|
8,639 |
|
|
Total current assets |
|
|
125,409 |
|
|
|
133,930 |
|
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT |
|
|
|
|
|
|
|
|
|
Oil and natural gas properties, successful efforts method: |
|
|
|
|
|
|
|
|
|
Unproved properties |
|
|
520,941 |
|
|
|
482,475 |
|
|
Proved oil and gas properties, net |
|
|
1,210,876 |
|
|
|
807,583 |
|
|
Other property and equipment, net |
|
|
12,349 |
|
|
|
6,300 |
|
|
Total property and equipment, net |
|
|
1,744,166 |
|
|
|
1,296,358 |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER NONCURRENT ASSETS |
|
|
|
|
|
|
|
|
|
Other assets |
|
|
9,278 |
|
|
|
3,481 |
|
|
Operating lease right-of-use assets |
|
|
42,936 |
|
|
|
— |
|
|
Assets held for sale |
|
|
8,724 |
|
|
|
— |
|
|
TOTAL ASSETS |
|
$ |
1,930,513 |
|
|
$ |
1,433,769 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
122,141 |
|
|
$ |
116,735 |
|
|
Accrued capital expenditures |
|
|
51,785 |
|
|
|
12,979 |
|
|
Accrued liabilities |
|
|
52,081 |
|
|
|
56,909 |
|
|
Accrued interest payable |
|
|
11,137 |
|
|
|
21,661 |
|
|
Liabilities associated with assets held for sale |
|
|
4,568 |
|
|
|
— |
|
|
Operating lease liability |
|
|
12,889 |
|
|
|
— |
|
|
Total current liabilities |
|
|
254,601 |
|
|
|
208,284 |
|
|
|
|
|
|
|
|
|
|
|
|
NONCURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Debt, net of unamortized discount and debt issuance costs |
|
|
499,848 |
|
|
|
497,778 |
|
|
Revolving credit facility |
|
|
127,500 |
|
|
|
32,500 |
|
|
Asset retirement obligations |
|
|
27,169 |
|
|
|
7,110 |
|
|
Other liabilities |
|
|
2,296 |
|
|
|
611 |
|
|
Operating lease liability |
|
|
30,185 |
|
|
|
— |
|
|
Liabilities associated with assets held for sale |
|
|
6,900 |
|
|
|
— |
|
|
Total liabilities |
|
|
948,499 |
|
|
|
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, 35,756,088 and 20,169,063 shares issued and outstanding, respectively |
|
|
382 |
|
|
|
3,043 |
|
|
Additional paid in capital |
|
|
2,350,072 |
|
|
|
2,065,119 |
|
|
Treasury stock, shares at cost; 2,488,525 and 1,747,624 shares, respectively |
|
|
(8,819 |
) |
|
|
(3,357 |
) |
|
Accumulated deficit |
|
|
(1,359,621 |
) |
|
|
(1,377,319 |
) |
|
Total stockholders’ equity |
|
|
982,014 |
|
|
|
687,486 |
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
1,930,513 |
|
|
$ |
1,433,769 |
|
Contacts
Montage Resources Corporation
Douglas Kris, Investor Relations
469-444-1736
[email protected]
