Montage Resources Corporation (NYSE:MR) (the
“Company” or “Montage Resources”) today announced its first quarter
2019 financial and operational results along with second quarter
2019 and revised full year 2019 guidance. Financial and operational
results for the first quarter 2019 include the impact of the merger
with Blue Ridge Mountain Resources, Inc. (“Blue Ridge”) since the
closing of the transaction on February 28, 2019. In addition, the
Company will be posting an updated investor presentation to its
corporate website.
First Quarter 2019 Highlights:
- Average net daily production was 407.5
MMcfe per day, above the high end of the Company’s previously
issued guidance range and above analyst consensus
expectations.
- Realized an average natural gas price,
before the impact of cash settled derivatives and firm
transportation expenses, of $3.01 per Mcf, a $0.14 per Mcf discount
to the average monthly NYMEX settled natural gas price during the
quarter, with the price differential better than the Company’s
previously issued guidance and analyst consensus expectations.
- Per unit cash production costs
(including lease operating, transportation, gathering and
compression, production and ad valorem taxes) were $1.41 per Mcfe1,
including $0.41 per Mcfe in firm transportation expenses, with the
per unit cash production costs better than the Company’s previously
issued guidance and analyst consensus expectations.
- Net loss for the first quarter of 2019
was ($14.1) million; Adjusted net income2 for the first quarter of
2019 was $18.0 million; and Adjusted EBITDAX2 for the first quarter
of 2019 was $68.9 million, better than analyst consensus
expectations.
- Subsequent to the end of the first
quarter 2019, completed its spring borrowing base redetermination,
resulting in a $25 million borrowing base increase, or
approximately 7%, from $375 million to $400 million.
Positive Revisions to Full Year 2019 Guidance:
- Full year 2019 production guidance of
520 to 540 MMcfe per day, an increase of approximately 3% based
upon the midpoint of the Company’s previously issued guidance
range.
- Realized natural gas price differential
guidance of ($0.15) to ($0.25) per Mcf, better by $0.05 per Mcf
based upon the midpoint of the Company’s previously issued guidance
range.
- Per unit cash production costs of $1.35
to $1.45 per Mcfe1, lower by approximately 12.5% based upon the
midpoint of the Company’s previously issued guidance range.
1
Revenues include transportation expense
for NGLs related to Mariner East II; previous cash production cost
guidance included approximately $0.10 per Mcfe for NGLs related to
Mariner East II recorded as a reduction to revenue
2
Non-GAAP measure. See reconciliation for
details
John Reinhart, President and CEO, commented on the Company’s
first quarter 2019 results, “Our first quarter financials, which
include only one full month of consolidated results, highlight the
power of the combined entity and the harnessing of operational
synergies to drive improved cycle times, translating into higher
reported volumes. This production beat, coupled with better per
unit cash production costs, delivers cash operating margins that we
believe are among the best in the Appalachian Basin. The Company’s
focus on cost and operational improvements delivered on first
quarter cycle time improvements of approximately two weeks, on
average, relative to a very aggressive schedule. The Company is on
track to drive well costs down below the published 2019 total well
average of approximately $870 per foot. We believe that this level
of execution outperformance regarding cost and cycle times will
help to potentially accelerate our goals related to cash flow
generation while maintaining the balance sheet strength that the
Company possesses.
"For the first quarter of 2019, the Company generated revenue of
$141.5 million, a 28% increase over the first quarter of 2018,
while also realizing a 10% increase in adjusted EBITDAX1 over the
first quarter of 2018. From an operations perspective, the team has
been able to steadily achieve a completion cadence of approximately
9 stages per day on the last three pads, allowing us to place wells
to sales more quickly than originally budgeted. With the spud to
turn-to-sales timeline compressed and the continued outperformance
of our wells, we have raised our production guidance for the full
year 2019. As we look out at our capital program for the full year,
we remain highly confident in our ability to deliver on our
production targets while remaining at or below our guidance range
for capital expenditures.
"I believe this is a very exciting time for Montage Resources
and our shareholders, as the building blocks of our “Focus Five”
strategy takes hold. The natural gas macro environment we are
currently experiencing reinforces the importance of our belief in
being a low cost producer with high quality assets. With a sound
business model, clean balance sheet, operational excellence, low
leverage, disciplined growth and superior well performance, the
opportunity for significant valuation uplift from the current
levels remains extremely high."
1
Non-GAAP measure. See reconciliation for
details
Operational Discussion
The Company’s production for the three months ended
March 31, 2019 and 2018 is set forth in the following
table:
Three Months Ended March 31, 2019
2018 Production: Natural
gas (MMcf) 27,205.0 20,343.3 NGLs (Mbbls) 980.5 772.7 Oil (Mbbls)
598.0 565.4 Total (MMcfe) 36,676.0 28,371.9
Average daily production volume: Natural gas (Mcf/d) 302,278
226,037 NGLs (Bbls/d) 10,894 8,586 Oil (Bbls/d) 6,644
6,282 Total (MMcfe/d) 407.5 315.2
Financial Discussion
Revenue for the three months ended March 31, 2019 totaled
$141.5 million, compared to $110.2 million for the three months
ended March 31, 2018. Adjusted Revenue2, which includes the
impact of cash settled derivatives and excludes brokered natural
gas and marketing revenue, totaled $128.6 million for the three
months ended March 31, 2019 compared to $110.3 million for the
three months ended March 31, 2018. Net Income (Loss) for the
three months ended March 31, 2019 was ($14.1) million, or
$(0.55) per share, compared to ($2.6) million, or $(0.13) per
share3, for the three months ended March 31, 2018. Adjusted
Net Income2 for the three months ended March 31, 2019 was
$18.0 million, or $0.70 per share, compared to $10.2 million, or
$0.52 per share3, for the three months ended March 31, 2018.
Adjusted EBITDAX2 was $68.9 million for the three months ended
March 31, 2019 compared to $63.0 million for the three months
ended March 31, 2018.
2
Adjusted Revenue, Adjusted Net Income
(Loss) and Adjusted EBITDAX are non-GAAP financial measures. Tables
reconciling Adjusted Revenue, Adjusted Net Income (Loss) and
Adjusted EBITDAX to the most directly comparable GAAP measures can
be found at the end of the financial statements included in this
press release.
3
Retroactively reflects the 15-to-1 reverse
stock split that took place at the close of the merger with Blue
Ridge on February 28, 2019.
Average realized price calculations for the three months ended
March 31, 2019 and 2018 are set forth in the table below.
Realized price calculations for NGLs include costs related to
Mariner East II that are recorded as a reduction to revenue:
Three Months Ended March 31, 2019
2018
Average realized price (excluding cash
settled derivatives and firm transportation)
Natural gas ($/Mcf) $ 3.01 $ 2.87 NGLs ($/Bbl) 21.67 25.55 Oil
($/Bbl) 48.09 56.52 Total average prices ($/Mcfe) 3.59 3.88
Average realized price (including cash
settled derivatives, excluding firm transportation)
Natural gas ($/Mcf) $ 2.85 $ 3.05 NGLs ($/Bbl) 21.89 24.33 Oil
($/Bbl) 49.66 52.30 Total average prices ($/Mcfe) 3.52 3.89
Average realized price (including firm
transportation, excluding cash settled derivatives)
Natural gas ($/Mcf) $ 2.45 $ 2.49 NGLs ($/Bbl) 21.67 25.55 Oil
($/Bbl) 48.09 56.52 Total average prices ($/Mcfe) 3.18 3.61
Average realized price (including cash
settled derivatives
and firm transportation)
Natural gas ($/Mcf) $ 2.30 $ 2.67 NGLs ($/Bbl) 21.89 24.33 Oil
($/Bbl) 49.66 52.30 Total average prices ($/Mcfe) 3.10 3.62
Per unit cash production costs, which include $0.41 per Mcfe of
firm transportation expense, were $1.41 per Mcfe for the first
quarter of 2019, an increase of approximately 1% compared to the
first 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 $28.9 million and $9.8 million for the
three months ended March 31, 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, were $8.3 million and $7.8 million for the
three months ended March 31, 2019 and 2018 respectively.
General and administrative expense per Mcfe (including one-time
merger-related expenses) was $0.79 in the three months ended
March 31, 2019 compared to $0.34 in the three months ended
March 31, 2018. Cash general and administrative expense4 per
Mcfe, excluding merger-related expenses and stock-based
compensation, was $0.23 in the three months ended March 31,
2019 compared to $0.27 in the three months ended March 31,
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 March 31,
2019 2018 Operating expenses (in
thousands): Lease operating $ 7,525 $ 9,390 Transportation,
gathering and compression 41,168 27,689 Production and ad valorem
taxes 2,848 2,445 Depreciation, depletion and amortization 29,897
31,311 General and administrative1 28,930 9,757
Operating
expenses per Mcfe: Lease operating $ 0.21 $ 0.33
Transportation, gathering and compression 1.12 0.97 Production and
ad valorem taxes 0.08 0.09 Depreciation, depletion and amortization
0.82 1.10 General and administrative2 0.79 0.34
1
Includes stock-based compensation and
merger-related expenses of $ 20.6 million in 2019 and $ 2.0 million
in 2018
2
Includes stock-based compensation and
merger-related expenses of $ 0.56 per Mcfe in 2019 and $ 0.07 per
Mcfe in 2018
Capital Expenditures
First quarter 2019 capital expenditures were $103.9 million,
including $99.0 million for drilling and completions, $4.6 million
for land-related expenditures, and $0.3 million for
corporate-related expenditures.
During the first quarter of 2019, the Company commenced drilling
10 gross (8.0 net) operated wells, commenced completions of 9 gross
(6.3 net) operated wells and turned to sales 3 gross (2.1 net)
operated wells.
Financial Position and
Liquidity
As of March 31, 2019, the Company’s liquidity was $271.6
million, consisting of $7.6 million in cash and cash equivalents
and $264.0 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 $13.5
million and $97.5 million in outstanding borrowings).
Subsequent to March 31, 2019, the Company borrowed an
incremental $25 million under the revolving credit facility and
issued an additional $15.7 million in outstanding letters of
credit. On May 6, 2019, the Company completed the spring
redetermination of its revolving credit facility which resulted in
an increase in the borrowing base from $375 million to $400
million. Pro forma for the increase to the borrowing base, the
available borrowing capacity under the facility is $248.3
million.
Michael Hodges, Executive Vice President and Chief Financial
Officer, commented, “The Company is pleased to announce the 7%
increase in our borrowing base that will provide incremental
liquidity to Montage Resources as we execute our business plan and
reflects the strong production and reserve growth of the Company.
The recent increase in our borrowing base, along with the upgrade
in the credit rating of our high yield notes, helps to demonstrate
the long-term strength of our balance sheet. Our midstream and
downstream initiatives continue to deliver exceptional value for
the Company, as further evidenced by our Mariner East II sales
volumes that began this quarter. We believe we remain well balanced
in our firm transportation portfolio which we anticipate will allow
us the benefit of optimizing our equity gas at prices that are at a
premium to in-basin pricing. We believe our low leverage, ample
liquidity and operational flexibility will allow us to generate
significant value for our shareholders going forward.”
Commodity Derivatives
The Company engages in a number of different commodity trading
program strategies as a risk management tool to attempt to mitigate
the potential negative impact on cash flows caused by price
fluctuations in natural gas, NGL and oil prices. Below is a table
that illustrates the Company’s hedging activities as of
March 31, 2019:
Natural Gas Derivatives:
Volume Weighted Average Description
(MMBtu/d) Production Period Price ($/MMBtu)
Natural Gas Swaps: 90,000 April 2019 – December 2019
$ 2.84 15,000 April 2019 – September 2019 $ 2.79
Natural Gas
Collars: Floor purchase price (put) 55,000 April 2019 – June
2019 $ 2.51 Ceiling sold price (call) 55,000 April 2019 – June 2019
$ 2.81 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
Natural Gas Three-way Collars: Floor purchase
price (put) 77,500 April 2019 – December 2019 $ 2.72 Ceiling sold
price (call) 77,500 April 2019 – December 2019 $ 3.04 Floor sold
price (put) 77,500 April 2019 – December 2019 $ 2.30 Floor purchase
price (put) 40,000 April 2019 – June 2019 $ 2.65 Ceiling sold price
(call) 40,000 April 2019 – June 2019 $ 2.84 Floor sold price (put)
40,000 April 2019 – June 2019 $ 2.30 Floor purchase price (put)
70,000 January 2020 – June 2020 $ 2.70 Ceiling sold price (call)
70,000 January 2020 – June 2020 $ 2.98 Floor sold price (put)
70,000 January 2020 – June 2020 $ 2.25 Floor purchase price (put)
30,000 October 2019 – June 2020 $ 2.90 Ceiling sold price (call)
30,000 October 2019 – June 2020 $ 3.15 Floor sold price (put)
30,000 October 2019 – June 2020 $ 2.50
Natural Gas Call/Put
Options: Call sold 40,000 April 2019 – December 2019 $ 3.44
Basis Swaps: Appalachia - Dominion 12,500 April 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 17,500 April 2019 –
December 2019 $ (0.50 ) Appalachia - Dominion 20,000 April 2019 –
March 2020 $ (0.39 )
Oil Derivatives:
Volume Weighted Average Description
(Bbls/d) Production Period Price ($/Bbl)
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) 500 January 2020 – December 2020 $ 50.00
Ceiling sold price (call) 500 January 2020 – December 2020 $ 64.00
Oil Three-way Collars: Floor purchase price (put) 2,000
April 2019 – December 2019 $ 50.00 Ceiling sold price (call) 2,000
April 2019 – December 2019 $ 60.56 Floor sold price (put) 2,000
April 2019 – December 2019 $ 40.00 Floor purchase price (put) 2,000
January 2020 – June 2020 $ 62.50 Ceiling sold price (call) 2,000
January 2020 – June 2020 $ 74.00 Floor sold price (put) 2,000
January 2020 – June 2020 $ 55.00
NGL Derivatives:
Volume Weighted Average Description
(Bbls/d) Production Period Price ($/Bbl)
Propane Swaps: 350 April 2019 – December 2019 $ 39.90
Subsequent to the End of the First Quarter:
The below table illustrates the Company’s hedging activities
subsequent to the end of the first quarter 2019:
Natural Gas Derivatives:
Volume Weighted Average Description
(MMBtu/d)
Production Period
Price ($/MMBtu)
Natural Gas Collars: 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) 30,000 January
2020 – December 2020 $ 2.70 Ceiling sold price (call) 30,000
January 2020 – December 2020 $ 3.05 Floor sold price (put) 30,000
January 2020 – December 2020 $ 2.40
Oil Derivatives:
Volume Weighted Average Description
(Bbls/d) Production Period Price ($/Bbl)
Oil Collars: Floor purchase price (put) 500 January
2020 – December 2020 $ 53.00 Ceiling sold price (call) 500 January
2020 – December 2020 $ 64.50 Floor purchase price (put) 500 July
2019 – March 2020 $ 60.00 Ceiling sold price (call) 500 July 2019 –
March 2020 $ 67.00
Guidance
The Company is announcing second quarter and updated full year
2019 guidance (changes in italics) as set forth in the table
below:
Q2 2019 FY 2019 Production MMcfe/d 500
- 515 520 - 540 % Gas 80% - 82% 74% - 78% % NGL 12% - 14% 12% - 15%
% Oil 5% - 7% 9% - 11% Gas Price Differential ($/Mcf)1,2 $(0.10) -
$(0.20) $(0.15) - $(0.25) Oil Differential ($/Bbl)1 $(6.75) -
$(7.75) $(6.50) - $(7.50) NGL Prices (% of WTI)1,3 30% - 35% 30% -
40% Cash Production Costs ($/Mcfe)4,5 $1.40 - $1.50 $1.35 - $1.45
Cash G&A ($mm)6 $9 - $11 $34 - $38 CAPEX ($mm) $375 - $400
1
Excludes impact of hedges
2
Excludes the cost of firm
transportation
3
Previous guidance excluded an impact of
approximately 5%-10% related to expenses for NGLs related to
Mariner East II
4
Includes lease operating, transportation,
gathering and compression, production and ad valorem taxes
5
Revenues include transportation expense
for NGLs related to Mariner East II; previous cash production cost
guidance included approximately $0.10 per Mcfe for NGLs related to
Mariner East II that will be recorded as a reduction to revenue
6
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 first quarter
financial and operational results is scheduled for Wednesday, May
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 First Quarter 2019 Earnings Call. A
replay of the call will be available through June 12, 2019. To
access the phone replay, dial 877-660-6853 or 201-612-7415 for
international callers. The conference ID is 13690365. 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)
March 31, December 31, 2019 2018
ASSETS CURRENT ASSETS Cash and cash equivalents $
7,592 $ 5,959 Accounts receivable 120,802 119,332 Assets held for
sale 2,294 — Other current assets 6,347 8,639 Total
current assets 137,035 133,930
PROPERTY AND EQUIPMENT
Oil and natural gas properties, successful efforts method: Unproved
properties 557,583 482,475 Proved oil and gas properties, net
1,101,772 807,583 Other property and equipment, net 13,146
6,300 Total property and equipment, net 1,672,501 1,296,358
OTHER NONCURRENT ASSETS Other assets 8,182 3,481
Operating lease right-of-use asset 44,222 — Assets held for sale
8,514 —
TOTAL ASSETS $ 1,870,454
$ 1,433,769 LIABILITIES AND STOCKHOLDERS'
EQUITY CURRENT LIABILITIES Accounts payable $ 141,410 $
116,735 Accrued capital expenditures 25,116 12,979 Accrued
liabilities 61,960 56,909 Accrued interest payable 10,876 21,661
Liabilities associated with assets held for sale 8,212 — Operating
lease liability 19,787 — Total current liabilities
267,361 208,284
NONCURRENT LIABILITIES Debt, net of
unamortized discount and debt issuance costs 498,469 497,778
Revolving credit facility 97,500 32,500 Asset retirement
obligations 24,148 7,110 Other liabilities 1,021 611 Operating
lease liability 25,592 — Liabilities associated with assets held
for sale 6,639 — Total liabilities 920,730 746,283
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, 35,682,480 and 20,169,063 shares issued
and outstanding, respectively
382 3,043 Additional paid in capital 2,349,527 2,065,119
Treasury stock, shares at cost; 2,478,798
and 1,747,624 shares, respectively
(8,768 ) (3,357 ) Accumulated deficit (1,391,417 )
(1,377,319
) Total stockholders' equity 949,724
687,486
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $
1,870,454 $
1,433,769
MONTAGE RESOURCES CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended March 31,
2019 2018 REVENUES Natural gas, oil and
natural gas liquids sales $ 131,828 $ 110,184 Brokered natural gas
and marketing revenue 9,530 8 Other revenue 139 —
Total revenues 141,497 110,192
OPERATING EXPENSES
Lease operating 7,525 9,390 Transportation, gathering and
compression 41,168 27,689 Production and ad valorem taxes 2,848
2,445 Brokered natural gas and marketing expense 9,459 48
Depreciation, depletion, amortization and accretion 29,897 31,311
Exploration 16,789 15,278 General and administrative 28,930 9,757
(Gain) loss on sale of assets 2 (267 ) Other expense 24
— Total operating expenses 136,642 95,651
OPERATING INCOME 4,855 14,541 OTHER INCOME
(EXPENSE) Loss on derivative instruments (4,931 ) (4,215 )
Interest expense, net (13,840 ) (12,952 ) Total other
income (expense), net (18,771 ) (17,167 )
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES
(13,916 ) (2,626 ) Income tax benefit
(expense) — —
LOSS FROM CONTINUING OPERATIONS
(13,916 ) (2,626 ) Loss from
discontinued operations, net of income tax (182 ) —
NET LOSS $ (14,098 ) $
(2,626 ) NET LOSS PER COMMON SHARE
Basic
$ (0.55 ) $ (0.13 )
Diluted
$ (0.55 ) $ (0.13
) WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic
25,564 19,563 Diluted
25,564
19,563
Adjusted Revenue
Adjusted revenue is a non-GAAP financial measure. The Company
defines adjusted revenue as follows: total revenues plus net cash
receipts or payments on settled derivative instruments less
brokered natural gas and marketing revenue. The Company believes
adjusted revenue provides investors with helpful information with
respect to the performance of the Company’s operations and
management uses adjusted revenue to evaluate its ongoing operations
and for internal planning and forecasting purposes. See the table
below, which reconciles adjusted revenue and total revenues.
Three Months Ended March 31, $ thousands
2019 2018 Total revenues $ 141,497 $ 110,192
Net cash receipts (payments) on derivative instruments (3,186 ) 141
Brokered natural gas and marketing revenue (9,530 ) (8 ) Other
revenue (139 ) —
Adjusted revenue $
128,642 $ 110,325
Adjusted Net Income
(Loss)
Adjusted net income (loss) represents income (loss) before
income taxes adjusted for certain non-cash items as set forth in
the table below. We believe adjusted net income (loss) is used by
many investors and published research in making investment
decisions and evaluating operational trends of the Company and its
performance relative to other oil and gas producing companies.
Adjusted net income (loss) is not a measure of net income (loss) as
determined by GAAP. See the table below for a reconciliation of
adjusted net income (loss) and net income (loss), which
retroactively reflects the 15-to-1 reverse stock split that took
place at the close of the merger with Blue Ridge on February 28,
2019 for the three months ended March 31, 2018.
Three Months Ended March 31, $ thousands
2019 2018 Loss from continuing operations
before income taxes, as reported $ (13,916 ) $ (2,626 ) Loss on
derivative instruments 4,931 4,215 Net cash receipts (payments) on
settled derivatives (3,186 ) 141 Dry hole and other — 94
Stock-based compensation 6,001 1,981 Impairment of unproved
properties 9,600 6,696 (Gain) loss on sale of assets 2 (267 )
Merger-related expenses 14,583 — Income before income
taxes, as adjusted 18,015 10,234
Adjusted net
income $ 18,015 $ 10,234
Net loss per Common Share Basic
$ (0.55
) $ (0.13 ) Diluted
$
(0.55 ) $ (0.13 )
Adjusted net income per Common Share Basic
$
0.70 $ 0.52 Diluted
$ 0.70
$ 0.52 Weighted Average Common Shares
Outstanding Basic
25,564 19,563 Diluted
25,711 19,711
Adjusted EBITDAX
Adjusted EBITDAX is a supplemental non-GAAP measure that is used
by the Company to evaluate its financial results. The Company
defines Adjusted EBITDAX as net income or loss before interest
expense; income taxes; impairments; depreciation, depletion and
amortization (“DD&A”); gain (loss) on derivative instruments;
net cash receipts (payments on settled derivative instruments, and
premiums (paid) received on options that settled during the
period); non-cash compensation expense; gain or loss from sale of
interest in gas properties; exploration expenses; and other unusual
or infrequent items set forth in the table below. Adjusted EBITDAX
is not a measure of net income or loss as determined by GAAP. See
the table below for a reconciliation of Adjusted EBITDAX to net
income or net loss.
Three Months Ended March 31, $ thousands
2019 2018 Net loss $ (14,098 ) $ (2,626
) Depreciation, depletion, amortization and accretion 29,897 31,311
Exploration expense 16,789 15,278 Stock-based compensation 6,001
1,981 (Gain) loss on sale of assets 2 (267 ) Loss on derivative
instruments 4,931 4,215 Net cash receipts (payments) on settled
derivatives (3,186 ) 141 Interest expense, net 13,840 12,952
Merger-related expenses 14,583 — Loss from discontinued operations
182 —
Adjusted EBITDAX $ 68,941
$ 62,985
Cash General and Administrative
Expenses
Cash General and Administrative Expenses is a non-GAAP financial
measure used by the Company in the Guidance Table to provide a
measure of administrative expenses used by many investors and
published research in making investment decisions and evaluating
operational trends of the Company. See the table below for a
reconciliation of Cash General and Administrative Expenses and
General and Administrative Expenses.
Three Months Ended March 31,
Guidance Three Months Ending Year
Ending $ thousands
2019 2018 June 30, 2019
December 31, 2019
General and administrative expenses,
estimated to be reported
$ 28,930 $ 9,757 $14,000-$21,000 $73,000-$90,000 Stock-based
compensation (6,001 ) (1,981 ) (1,000-2,000)
(9,000-12,000)
Cash general and administrative
expenses
$ 22,929 $ 7,776 $13,000-$19,000 $64,000-$78,000 Merger-related
expenses (14,583 ) — (4,000-8,000) (30,000-40,000)
Cash general and administrative expenses,
excluding merger related expenses
$ 8,346 $ 7,776 $9,000-$11,000 $34,000-$38,000
About Montage Resources
Montage Resources is an exploration and production company with
approximately 218,000 net effective undeveloped acres currently
focused on the Utica and Marcellus Shales of southeast Ohio, West
Virginia and North Central Pennsylvania. For more information,
please visit the Company’s website at www.montageresources.com.
Forward-Looking
Statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical fact
included in this press release, regarding Montage Resources’
strategy, future operations, financial position, estimated revenues
and income/losses, projected costs and capital expenditures,
prospects, plans and objectives of management are forward-looking
statements. When used in this press release, the words “plan,”
“endeavor,” “will,” “would,””should,” “could,” “believe,”
“anticipate,” “intend,” “estimate,” “expect,” “continue,”
“position,” “potential,” “project” and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain such identifying words. These
forward-looking statements are based on Montage Resources’ current
expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of
future events. When considering forward-looking statements, you
should keep in mind the risk factors and other cautionary
statements described under the heading “Risk Factors” in Montage
Resources’ Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 15, 2019, (the “2018 Annual Report”),
in “Item 1A. Risk Factors” of Montage Resources’ Quarterly Reports
on Form 10-Q and in Montage Resources’ other filings and reports
with the Securities and Exchange Commission.
Forward-looking statements may include, but are not limited to,
statements about Montage Resources’ business strategy; reserves;
general economic conditions; financial strategy, liquidity and
capital required for developing its properties and timing related
thereto; realized natural gas, NGLs and oil prices; timing and
amount of future production of natural gas, NGLs and oil; its
hedging strategy and results; future drilling plans; competition
and government regulations, including those related to hydraulic
fracturing; the anticipated benefits under commercial agreements;
marketing of natural gas, NGLs and oil; leasehold and business
acquisitions; the costs, terms and availability of gathering,
processing, fractionation and other midstream services; the costs,
terms and availability of downstream transportation services;
credit markets; uncertainty regarding future operating results,
including initial production rates and liquid yields in type curve
areas; and plans, objectives, expectations and intentions contained
in this press release that are not historical, including, without
limitation, the guidance set forth herein. Forward-looking
statements also may include statements relating to the combination
with Blue Ridge, including statements regarding integration and
transition plans, synergies, cost savings, opportunities,
anticipated future performance, benefits of the transaction and its
impact on Montage Resources’ business, operations, assets, results
of operations, liquidity, and financial position, and any
statements of assumptions underlying any of the foregoing.
Montage Resources cautions you that all these forward-looking
statements are subject to risks and uncertainties, most of which
are difficult to predict and many of which are beyond the Company’s
control, incident to the exploration for and development,
production, gathering and sale of natural gas, NGLs and oil. These
risks include, but are not limited to, legal and environmental
risks, drilling and other operating risks, regulatory changes,
commodity price volatility and declines in the price of natural
gas, NGLs, and oil, inflation, lack of availability of drilling,
production and processing equipment and services, counterparty
credit risk, the uncertainty inherent in estimating natural gas,
NGLs and oil reserves and in projecting future rates of production,
cash flow and access to capital, the timing of development
expenditures, and the other risks described under the heading “Risk
Factors” in the 2018 Annual Report, in “Item 1A. Risk Factors” of
Montage Resources’ Quarterly Reports on Form 10-Q and in Montage
Resources’ other filings and reports with the Securities and
Exchange Commission. In addition, forward-looking statements are
subject to risks and uncertainties related to the combination with
Blue Ridge, including, without limitation, failure to realize or
delays in realizing expected synergies or other benefits of the
transaction, difficulties in integrating the combined operations,
disruption of management time from ongoing business operations due
to the transaction, adverse effects on the ability of Montage
Resources to retain and hire key personnel and maintain
relationships with suppliers and customers, negative effects of
consummation of the transaction on the market price of the
Company’s common stock, transaction costs, unknown liabilities or
unanticipated expenses.
All forward-looking statements, expressed or implied, included
in this press release are expressly qualified in their entirety by
this cautionary statement and are based on assumptions that Montage
Resources believes to be reasonable but that may not prove to be
accurate. This cautionary statement should also be considered in
connection with any subsequent written or oral forward-looking
statements that Montage Resources or persons acting on its behalf
may issue. Except as otherwise required by applicable law, Montage
Resources disclaims any duty to update any forward-looking
statements to reflect new information or events or circumstances
after the date of this press release. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof.
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version on businesswire.com: https://www.businesswire.com/news/home/20190507006060/en/
Montage Resources CorporationDouglas Kris, Investor
Relations814-325-2059dkris@mresources.com
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