Montage Resources Corporation Announces Second Quarter 2020 Financial Results, Provides Details of Capital Efficiency Improvements and Updates Guidance for Full Year 2020
IRVING, Texas–(BUSINESS WIRE)–Montage Resources Corporation (NYSE:MR) (the “Company” or “Montage Resources”) today announced its second quarter 2020 operational and financial results and updated full year 2020 guidance. In addition, the Company will be posting an updated investor presentation to its corporate website.
Second Quarter 2020 Highlights:
- Average net daily production was 551.7 MMcfe per day, above the midpoint of the Company’s previously issued guidance range, consisting of 83% natural gas and 17% liquids
- Realized an average natural gas price, before the impact of cash settled commodity derivatives and firm transportation expenses, of $1.57 per Mcf, a $0.15 per Mcf discount to the average monthly NYMEX settled natural gas price during the quarter, better than analyst consensus expectations
- Average natural gas equivalent realized price was $2.15 per Mcfe, including cash settled commodity derivatives and excluding firm transportation expenses
- Per unit cash production costs (including lease operating, transportation, gathering and compression, production and ad valorem taxes) were $1.25 per Mcfe, better than analyst consensus expectations
- Cash general and administrative expenses1 were approximately $7.4 million, a decrease of approximately 14% compared to the first quarter of 2020 and approximately 19% compared to the second quarter of 2019 and better than analyst consensus expectations
- Capital spending for the quarter was $29.1 million, approximately 20% better than analyst consensus expectations
- Operational efficiency achievements yielded a Company record average number of completion stages per day for the quarter at 10, a Company record number of completion stages on a single pad at 11.5, and a Company record number of completion stages in one day at 15. Recent normalized well costs of approximately $808 per foot are below current type curve estimates of approximately $825 per foot in Utica Dry Gas area
- Subsequent to the end of the second quarter 2020, the Company announced a non-binding letter of intent to sell its non-core wellhead gathering infrastructure
| 1 |
Non-GAAP measure. See reconciliation for details |
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John Reinhart, President and CEO, commented on the Company’s operational and financial results, “This was another solid earnings report which illustrated our consistent focus on execution and efficiency. The continued outperformance of our wells along with our operating cadence, has allowed us to maintain our full year outlook on production expectations, despite the meaningful curtailment of production during the second quarter. The Company’s swift response to market conditions early in the year with the adjustment in our development plan towards increased dry gas production allows us to capture the benefits of the improving natural gas macro conditions during the second half of 2020 and 2021. Our strong operational performance driven by our robust planning process has allowed the Company to realize additional savings on our all-in drilling and completion costs from our initial 2020 plan. Our most recent dry gas Utica pad achieved costs of approximately $808 per foot when normalized to a 13,000 foot lateral length, and the Company set new internal records for completions stages, averaging 11.5 stages per day on our most recent pad and setting a single day record of 15 stages in one day. Despite a significant amount of commodity price volatility during the second quarter 2020, we have again been able to deliver a strong natural gas realized price with our ability to optimize this production to buyers needing to fill unutilized capacity and continue to view this opportunity as a competitive advantage, given the highly uncommitted nature and flexibility of our production base. Our ongoing financial discipline has strengthened our balance sheet and liquidity position, which would be further enhanced by the closing of our recently announced non-binding letter of intent to sell our non-core gathering assets in Ohio. Our proven track record of execution throughout 2019 and into 2020 has solidified our position not just as a cost and efficiency leader, but also as a team with a winning strategy that remains well positioned to leverage our experience to achieve our goals of free cash flow generation and debt reduction.”
Operational Discussion
The Company’s net production for the three and six months ended June 30, 2020 and 2019 is set forth in the following table:
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Production: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (MMcf) |
|
|
41,720.8 |
|
|
|
39,119.0 |
|
|
|
86,019.4 |
|
|
|
66,324.0 |
|
|
NGLs (Mbbls) |
|
|
973.9 |
|
|
|
1,033.3 |
|
|
|
2,192.1 |
|
|
|
2,013.8 |
|
|
Oil (Mbbls) |
|
|
440.1 |
|
|
|
569.0 |
|
|
|
1,101.8 |
|
|
|
1,167.0 |
|
|
Total (MMcfe) |
|
|
50,204.8 |
|
|
|
48,732.8 |
|
|
|
105,782.8 |
|
|
|
85,408.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily production volume: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas (Mcf/d) |
|
|
458,470 |
|
|
|
429,879 |
|
|
|
472,634 |
|
|
|
366,431 |
|
|
NGLs (Bbls/d) |
|
|
10,702 |
|
|
|
11,355 |
|
|
|
12,045 |
|
|
|
11,126 |
|
|
Oil (Bbls/d) |
|
|
4,836 |
|
|
|
6,253 |
|
|
|
6,054 |
|
|
|
6,448 |
|
|
Total (MMcfe/d) |
|
|
551.7 |
|
|
|
535.5 |
|
|
|
581.2 |
|
|
|
471.9 |
|
Financial Discussion
Revenue for the three months ended June 30, 2020 totaled $90.7 million, compared to $155.5 million for the three months ended June 30, 2019. Adjusted Revenue2, which includes the impact of cash settled commodity derivatives and excludes brokered natural gas and marketing revenue and other revenue, totaled $107.9 million for the three months ended June 30, 2020 compared to $145.9 million for the three months ended June 30, 2019. Net Loss for the three months ended June 30, 2020 was ($68.9) million, or $(1.92) per share, compared to Net Income of $27.5 million, or $0.77 per share, for the three months ended June 30, 2019. Adjusted Net Income (Loss)2 for the three months ended June 30, 2020 was $(20.6) million, or $(0.57) per share, compared to $14.6 million, or $0.41 per share for the three months ended June 30, 2019. Adjusted EBITDAX2 was $37.5 million for the three months ended June 30, 2020 compared to $70.9 million for the three months ended June 30, 2019.
|
2 |
Adjusted Revenue, Adjusted Net Income and Adjusted EBITDAX are non-GAAP financial measures. Tables reconciling Adjusted Revenue, Adjusted Net Income and Adjusted EBITDAX to the most directly comparable GAAP measures can be found at the end of the financial statements included in this press release. |
Average realized price calculations for the three and six months ended June 30, 2020 and 2019 are set forth in the table below:
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Average realized price (excluding cash settled commodity derivatives and firm transportation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
1.57 |
|
|
$ |
2.41 |
|
|
$ |
1.68 |
|
|
$ |
2.66 |
|
|
NGLs ($/Bbl) |
|
|
8.18 |
|
|
|
18.77 |
|
|
|
12.09 |
|
|
|
20.18 |
|
|
Oil ($/Bbl) |
|
|
21.66 |
|
|
|
52.14 |
|
|
|
32.46 |
|
|
|
50.07 |
|
|
Total average prices ($/Mcfe) |
|
|
1.65 |
|
|
|
2.94 |
|
|
|
1.96 |
|
|
|
3.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including cash settled commodity derivatives, excluding firm transportation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
1.98 |
|
|
$ |
2.47 |
|
|
$ |
2.07 |
|
|
$ |
2.63 |
|
|
NGLs ($/Bbl) |
|
|
8.67 |
|
|
|
19.11 |
|
|
|
12.50 |
|
|
|
20.46 |
|
|
Oil ($/Bbl) |
|
|
38.38 |
|
|
|
51.68 |
|
|
|
40.11 |
|
|
|
50.65 |
|
|
Total average prices ($/Mcfe) |
|
|
2.15 |
|
|
|
2.99 |
|
|
|
2.36 |
|
|
|
3.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including firm transportation, excluding cash settled commodity derivatives) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
1.06 |
|
|
$ |
1.95 |
|
|
$ |
1.21 |
|
|
$ |
2.15 |
|
|
NGLs ($/Bbl) |
|
|
8.18 |
|
|
|
18.77 |
|
|
|
12.09 |
|
|
|
20.18 |
|
|
Oil ($/Bbl) |
|
|
21.66 |
|
|
|
52.14 |
|
|
|
32.46 |
|
|
|
50.07 |
|
|
Total average prices ($/Mcfe) |
|
|
1.23 |
|
|
|
2.57 |
|
|
|
1.58 |
|
|
|
2.83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including cash settled commodity derivatives and firm transportation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) |
|
$ |
1.47 |
|
|
$ |
2.01 |
|
|
$ |
1.61 |
|
|
$ |
2.12 |
|
|
NGLs ($/Bbl) |
|
|
8.67 |
|
|
|
19.11 |
|
|
|
12.50 |
|
|
|
20.46 |
|
|
Oil ($/Bbl) |
|
|
38.38 |
|
|
|
51.68 |
|
|
|
40.11 |
|
|
|
50.65 |
|
|
Total average prices ($/Mcfe) |
|
|
1.72 |
|
|
|
2.62 |
|
|
|
1.98 |
|
|
|
2.82 |
|
|
*rounded to the nearest penny |
|
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|
|
|
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|
|
|
|
|
|
|
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|
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. Per unit cash production costs, which include $0.42 per Mcfe of firm transportation expense, were $1.25 per Mcfe for the second quarter of 2020, a decrease of approximately 7% compared to the second quarter of 2019.
General and administrative expense (including one-time merger-related expenses and severance) was $11.6 million and $13.6 million for the three months ended June 30, 2020 and 2019, respectively, and is shown in the table below. Cash general and administrative expense3 (excluding merger-related expenses, severance and stock-based compensation expense) was $7.4 million and $9.1 million for the three months ended June 30, 2020 and 2019, respectively. General and administrative expense per Mcfe (including one-time merger-related expenses and severance) was $0.23 in the three months ended June 30, 2020 compared to $0.28 in the three months ended June 30, 2019. Cash general and administrative expense3 per Mcfe (excluding merger-related expenses, severance and stock-based compensation expense) decreased approximately 26% to $0.14 in the three months ended June 30, 2020 compared to $0.19 in the three months ended June 30, 2019.
|
3 |
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, |
|
||||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Operating expenses (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
$ |
9,900 |
|
|
$ |
10,141 |
|
|
$ |
21,943 |
|
|
$ |
17,666 |
|
|
Transportation, gathering and compression |
|
|
51,387 |
|
|
|
51,870 |
|
|
|
105,512 |
|
|
|
93,038 |
|
|
Production and ad valorem taxes |
|
|
1,600 |
|
|
|
4,009 |
|
|
|
6,468 |
|
|
|
6,857 |
|
|
Total cash production costs |
|
$ |
62,887 |
|
|
$ |
66,020 |
|
|
$ |
133,923 |
|
|
$ |
117,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
42,768 |
|
|
|
38,597 |
|
|
|
86,903 |
|
|
|
68,494 |
|
|
General and administrative1 |
|
|
11,569 |
|
|
|
13,564 |
|
|
|
21,450 |
|
|
|
42,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses per Mcfe: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
$ |
0.20 |
|
|
$ |
0.21 |
|
|
$ |
0.21 |
|
|
$ |
0.21 |
|
|
Transportation, gathering and compression |
|
|
1.02 |
|
|
|
1.06 |
|
|
|
0.99 |
|
|
|
1.09 |
|
|
Production and ad valorem taxes |
|
|
0.03 |
|
|
|
0.08 |
|
|
|
0.06 |
|
|
|
0.08 |
|
|
Total cash production costs |
|
$ |
1.25 |
|
|
$ |
1.35 |
|
|
$ |
1.26 |
|
|
$ |
1.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
0.85 |
|
|
|
0.79 |
|
|
|
0.82 |
|
|
|
0.80 |
|
|
General and administrative2 |
|
|
0.23 |
|
|
|
0.28 |
|
|
|
0.20 |
|
|
|
0.50 |
|
|
1 |
Includes stock-based compensation, merger-related expenses and severance of $ 4.2 million and $ 4.5 million for the three months ended June 30, 2020 and 2019, respectively, and $ 5.5 million and $ 25.1 million for the six months ended June 30, 2020 and 2019, respectively |
|
|
2 |
Includes stock-based compensation, merger-related expenses and severance of $ 0.09 per Mcfe and $ 0.09 per Mcfe for the three months ended June 30, 2020 and 2019, respectively, and $ 0.05 per Mcfe and $ 0.30 per Mcfe for the six months ended June 30, 2020 and 2019, respectively |
Cash Margins
The Company’s cash margins are detailed in the table below:
|
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||||||
|
|
|
June 30, 2020 |
|
|
June 30, 2019 |
|
|
March 31, 2020 |
|
|||
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(per Mcfe) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price (including cash settled commodity derivatives, excluding firm transportation) |
|
$ |
2.15 |
|
|
$ |
2.99 |
|
|
$ |
2.56 |
|
|
Total cash production costs1 |
|
|
1.25 |
|
|
|
1.35 |
|
|
|
1.28 |
|
|
Cash production margin |
|
$ |
0.90 |
|
|
$ |
1.64 |
|
|
$ |
1.28 |
|
|
Cash production margin % |
|
|
42 |
% |
|
|
55 |
% |
|
|
50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash production margin |
|
$ |
0.90 |
|
|
$ |
1.64 |
|
|
$ |
1.28 |
|
|
Cash general and administrative expenses2 |
|
|
0.14 |
|
|
|
0.19 |
|
|
|
0.15 |
|
|
Cash operating margin |
|
$ |
0.76 |
|
|
$ |
1.45 |
|
|
$ |
1.13 |
|
|
Cash operating margin % |
|
|
35 |
% |
|
|
48 |
% |
|
|
44 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash operating margin |
|
$ |
0.76 |
|
|
$ |
1.45 |
|
|
$ |
1.13 |
|
|
Interest expense |
|
|
0.30 |
|
|
|
0.31 |
|
|
|
0.27 |
|
|
Corporate cash operating margin3 |
|
$ |
0.46 |
|
|
$ |
1.14 |
|
|
$ |
0.86 |
|
|
Corporate cash operating margin % |
|
|
22 |
% |
|
|
38 |
% |
|
|
34 |
% |
|
1 |
Includes lease operating, transportation, gathering and compression, and production and ad valorem taxes |
|
|
2 |
Cash general and administrative expense is a non-GAAP financial measure which excludes stock-based compensation expense, merger related expenses and severance. 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 and administrative expense is a non-GAAP financial measure which excludes stock-based compensation expense, merger related expenses and severance See reconciliation to the most comparable GAAP measure under “Cash General and Administrative Expense” in this press release |
Capital Expenditures
Second quarter 2020 capital expenditures were $29.1 million, including $27.6 million for drilling and completions, $1.4 million for land-related expenditures and $0.1 million for other expenditures.
During the second quarter of 2020, the Company commenced drilling 5 gross (3.4 net) operated wells, commenced completions of 7 gross (5.4 net) operated wells and turned to sales 7 gross (6.1 net) operated wells.
Financial Position and Liquidity
As of June 30, 2020, the Company’s liquidity was $295.0 million, consisting of $9.2 million in cash and cash equivalents and $285.8 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 $160.0 million in outstanding borrowings).
Michael Hodges, Executive Vice President and Chief Financial Officer, commented, “We are very proud of the results in the second quarter of 2020 that have allowed the Company to solidify its financial strength despite a volatile commodity price environment. We believe that the flexibility of our portfolio and our continued improvement in operating costs will allow us to navigate the current operating environment without adding stress to our balance sheet. Finally, our strong hedge book remains a key element of our strategy, with approximately 70% of our natural gas hedged and approximately 60% of our oil hedged (based on our revised production profile) for 2020, providing us with a high level of cash flow certainty and confidence in the long-term health of our balance sheet.”
Commodity Derivatives
The Company engages in a number of different commodity trading program strategies as a risk management tool to attempt to mitigate the potential negative impact on cash flows caused by price fluctuations in natural gas, NGL and oil prices. Below is a table that illustrates the Company’s hedging activities as of June 30, 2020:
Natural Gas Derivatives:
|
Description |
|
Volume (MMBtu/d) |
|
|
Production Period |
|
Weighted Average Price ($/MMBtu) |
|
||
|
Natural Gas Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
|
|
July 2020 – September 2020 |
|
$ |
2.32 |
|
|
|
|
|
80,000 |
|
|
July 2020 – December 2020 |
|
$ |
2.64 |
|
|
|
|
|
95,000 |
|
|
July 2020 – March 2021 |
|
$ |
2.54 |
|
|
|
|
|
50,000 |
|
|
August 2020 – December 2020 |
|
$ |
2.06 |
|
|
|
|
|
50,000 |
|
|
October 2020 – March 2021 |
|
$ |
2.65 |
|
|
|
|
|
50,000 |
|
|
January 2021 – March 2022 |
|
$ |
2.51 |
|
|
|
|
|
25,000 |
|
|
April 2021 – March 2022 |
|
$ |
2.47 |
|
|
Natural Gas Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
25,000 |
|
|
January 2021 – December 2021 |
|
$ |
2.15 |
|
|
Ceiling sold price (call) |
|
|
25,000 |
|
|
January 2021 – December 2021 |
|
$ |
3.03 |
|
|
Natural Gas Three-way Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
80,000 |
|
|
July 2020 – December 2020 |
|
$ |
2.60 |
|
|
Floor sold price (put) |
|
|
80,000 |
|
|
July 2020 – December 2020 |
|
$ |
1.90 |
|
|
Ceiling sold price (call) |
|
|
80,000 |
|
|
July 2020 – December 2020 |
|
$ |
2.94 |
|
|
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 |
|
|
Floor purchase price (put) |
|
|
20,000 |
|
|
April 2021 – March 2022 |
|
$ |
2.62 |
|
|
Floor sold price (put) |
|
|
20,000 |
|
|
April 2021 – March 2022 |
|
$ |
2.20 |
|
|
Ceiling sold price (call) |
|
|
20,000 |
|
|
April 2021 – March 2022 |
|
$ |
3.10 |
|
|
Natural Gas Call/Put Options: |
|
|
|
|
|
|
|
|
|
|
|
Floor sold price (put) |
|
|
15,000 |
|
|
July 2020 – September 2020 |
|
$ |
1.60 |
|
|
Floor sold price (put) |
|
|
50,000 |
|
|
July 2020 – December 2020 |
|
$ |
2.30 |
|
|
Swaption sold price (call) |
|
|
50,000 |
|
|
January 2021 – December 2021 |
|
$ |
2.75 |
|
|
Swaption sold price (call) |
|
|
50,000 |
|
|
January 2022 – December 2022 |
|
$ |
3.00 |
|
|
Floor sold price (put) |
|
|
50,000 |
|
|
January 2021 – March 2022 |
|
$ |
2.00 |
|
|
Ceiling sold price (call) |
|
|
50,000 |
|
|
January 2022 – December 2022 |
|
$ |
3.00 |
|
|
Ceiling sold price (call) |
|
|
80,000 |
|
|
January 2023 – December 2023 |
|
$ |
3.00 |
|
|
Basis Swaps: |
|
|
|
|
|
|
|
|
|
|
|
Appalachia – Dominion |
|
|
12,500 |
|
|
July 2020 – October 2020 |
|
$ |
(0.52 |
) |
|
Appalachia – Dominion |
|
|
20,000 |
|
|
July 2020 – December 2020 |
|
$ |
(0.59 |
) |
Oil Derivatives:
|
Description |
|
Volume (Bbls/d) |
|
|
Production Period |
|
Weighted Average Price ($/Bbl) |
|
||
|
Oil Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500 |
|
|
July 2020 – December 2020 |
|
$ |
57.41 |
|
|
|
|
|
250 |
|
|
July 2020 – March 2021 |
|
$ |
53.20 |
|
|
|
|
|
250 |
|
|
January 2021 – March 2021 |
|
$ |
53.00 |
|
|
Oil Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
1,000 |
|
|
July 2020 – December 2020 |
|
$ |
51.00 |
|
|
Ceiling sold price (call) |
|
|
1,000 |
|
|
July 2020 – December 2020 |
|
$ |
62.00 |
|
|
Oil Three-way Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
500 |
|
|
January 2021 – December 2021 |
|
$ |
31.25 |
|
|
Floor sold price (put) |
|
|
500 |
|
|
January 2021 – December 2021 |
|
$ |
22.50 |
|
|
Ceiling sold price (call) |
|
|
500 |
|
|
January 2021 – December 2021 |
|
$ |
45.00 |
|
|
Oil Call/Put Options: |
|
|
|
|
|
|
|
|
|
|
|
Floor sold price (put) |
|
|
500 |
|
|
July 2020 – December 2020 |
|
$ |
45.00 |
|
|
Swaption sold price (call) |
|
|
500 |
|
|
January 2021 – December 2021 |
|
$ |
42.50 |
|
NGL Derivatives:
|
Description |
|
Volume (Bbls/d) |
|
|
Production Period |
|
Weighted Average Price ($/Bbl) |
|
||
|
Propane Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
July 2020 – December 2020 |
|
$ |
20.68 |
|
|
|
|
|
500 |
|
|
January 2021 – December 2021 |
|
$ |
18.01 |
|
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 2020:
Natural Gas Derivatives:
|
Description |
|
Volume (MMBtu/d) |
|
|
Production Period |
|
Weighted Average Price ($/MMBtu) |
|
||
|
Natural Gas Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
30,000 |
|
|
April 2021 – March 2022 |
|
$ |
2.40 |
|
|
Ceiling sold price (call) |
|
|
30,000 |
|
|
April 2021 – March 2022 |
|
$ |
3.05 |
|
|
Basis Swaps: |
|
|
|
|
|
|
|
|
|
|
|
Appalachia – Dominion |
|
|
30,000 |
|
|
August 2020 – October 2020 |
|
$ |
(0.50 |
) |
Oil Derivatives:
|
Description |
|
Volume (Bbls/d) |
|
|
Production Period |
|
Weighted Average Price ($/Bbl) |
|
||
|
Oil Collars: |
|
|
|
|
|
|
|
|
|
|
|
Floor purchase price (put) |
|
|
500 |
|
|
January 2021 – December 2021 |
|
$ |
37.50 |
|
|
Ceiling sold price (call) |
|
|
500 |
|
|
January 2021 – December 2021 |
|
$ |
45.50 |
|
NGL Derivatives:
|
Description |
|
Volume (Bbls/d) |
|
|
Production Period |
|
Weighted Average Price ($/Bbl) |
|
||
|
Propane Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500 |
|
|
August 2020 – December 2020 |
|
$ |
21.74 |
|
|
|
|
|
500 |
|
|
January 2021 – December 2021 |
|
$ |
19.74 |
|
Guidance
The Company is providing its initial third quarter and updated full year 2020 guidance as set forth in the table below (updated guidance in italics).
|
|
|
Q3 2020 |
|
FY 2020 |
|
Production MMcfe/d |
|
580 – 600 |
|
565 – 585 |
|
% Gas |
|
81% – 83% |
|
81% – 83% |
|
% NGL |
|
11% – 13% |
|
10% – 12% |
|
% Oil |
|
5% – 7% |
|
6% – 8% |
|
Gas Price Differential ($/Mcf)1,2 |
|
$(0.15) – $(0.30) |
|
$(0.15) – $(0.25) |
|
Oil Differential ($/Bbl)1,3 |
|
$(9.00) – $(11.00) |
|
$(6.50) – $(7.50) |
|
NGL Prices (% of WTI)1 |
|
27% – 32% |
|
30% – 35% |
|
Cash Production Costs ($/Mcfe)4 |
|
$1.25 – $1.35 |
|
$1.25 – $1.35 |
|
Cash G&A ($mm)5 |
|
$6 – $8 |
|
$29 – $32 |
|
CAPEX ($mm) |
|
|
|
$120 – $140 |
|
1 |
Excludes impact of hedges |
|
|
2 |
Excludes the cost of firm transportation |
|
|
3 |
Full year 2020 amount (FY 2020) includes the impact of declining WTI price on reported oil differential in first quarter of 2020 |
|
|
4 |
Includes lease operating, transportation, gathering and compression, production and ad valorem taxes |
|
|
5 |
Non-GAAP financial measure which excludes stock-based compensation expense, merger related expenses and severance. 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 2020 financial and operational results is scheduled for Friday, August 7, 2020, 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 2020 Earnings Call. A replay of the call will be available through October 7, 2020. To access the phone replay, dial 877-660-6853 or 201-612-7415 for international callers. The conference ID is 13707434. 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, 2020 |
|
|
December 31, 2019 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
9,221 |
|
|
$ |
12,056 |
|
|
Accounts receivable |
|
|
59,804 |
|
|
|
77,402 |
|
|
Assets held for sale |
|
|
1,115 |
|
|
|
1,047 |
|
|
Other current assets |
|
|
36,609 |
|
|
|
35,509 |
|
|
Total current assets |
|
|
106,749 |
|
|
|
126,014 |
|
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT |
|
|
|
|
|
|
|
|
|
Oil and natural gas properties, successful efforts method: |
|
|
|
|
|
|
|
|
|
Unproved properties |
|
|
487,066 |
|
|
|
508,576 |
|
|
Proved oil and gas properties, net |
|
|
1,248,999 |
|
|
|
1,251,105 |
|
|
Other property and equipment, net |
|
|
10,638 |
|
|
|
11,226 |
|
|
Total property and equipment, net |
|
|
1,746,703 |
|
|
|
1,770,907 |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER NONCURRENT ASSETS |
|
|
|
|
|
|
|
|
|
Other assets |
|
|
5,688 |
|
|
|
7,616 |
|
|
Operating lease right-of-use assets |
|
|
33,692 |
|
|
|
36,975 |
|
|
Assets held for sale |
|
|
3,430 |
|
|
|
9,665 |
|
|
TOTAL ASSETS |
|
$ |
1,896,262 |
|
|
$ |
1,951,177 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
133,741 |
|
|
$ |
119,907 |
|
|
Accrued capital expenditures |
|
|
19,510 |
|
|
|
43,500 |
|
|
Accrued liabilities |
|
|
29,283 |
|
|
|
53,866 |
|
|
Accrued interest payable |
|
|
22,282 |
|
|
|
21,308 |
|
|
Liabilities associated with assets held for sale |
|
|
4,052 |
|
|
|
2,815 |
|
|
Operating lease liability |
|
|
13,826 |
|
|
|
12,666 |
|
|
Total current liabilities |
|
|
222,694 |
|
|
|
254,062 |
|
|
|
|
|
|
|
|
|
|
|
|
NONCURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
Debt, net of unamortized discount and debt issuance costs |
|
|
501,928 |
|
|
|
500,541 |
|
|
Revolving credit facility |
|
|
160,000 |
|
|
|
130,000 |
|
|
Asset retirement obligations |
|
|
29,952 |
|
|
|
29,877 |
|
|
Other liabilities |
|
|
21,240 |
|
|
|
8,029 |
|
|
Operating lease liability |
|
|
20,247 |
|
|
|
24,569 |
|
|
Liabilities associated with assets held for sale |
|
|
6,978 |
|
|
|
7,013 |
|
|
Total liabilities |
|
|
963,039 |
|
|
|
954,091 |
|
|
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, 36,034,837 and 35,770,934 shares issued and outstanding, respectively |
|
|
386 |
|
|
|
383 |
|
|
Additional paid in capital |
|
|
2,354,929 |
|
|
|
2,352,309 |
|
|
Treasury stock, shares at cost; 2,600,672 and 2,508,485 shares, respectively |
|
|
(10,511 |
) |
|
|
(10,049 |
) |
|
Accumulated deficit |
|
|
(1,411,581 |
) |
|
|
(1,345,557 |
) |
|
Total stockholders’ equity |
|
|
933,223 |
|
|
|
997,086 |
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
1,896,262 |
|
|
$ |
1,951,177 |
|
|
MONTAGE RESOURCES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (In thousands, except per share data) (Unaudited) |
||||||||||||||||
|
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas, oil and natural gas liquids sales |
|
$ |
83,082 |
|
|
$ |
143,429 |
|
|
$ |
206,953 |
|
|
$ |
275,257 |
|
|
Brokered natural gas and marketing revenue |
|
|
7,540 |
|
|
|
11,989 |
|
|
|
17,028 |
|
|
|
21,519 |
|
|
Other revenue |
|
|
62 |
|
|
|
122 |
|
|
|
127 |
|
|
|
261 |
|
|
Total revenues |
|
|
90,684 |
|
|
|
155,540 |
|
|
|
224,108 |
|
|
|
297,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating |
|
|
9,900 |
|
|
|
10,141 |
|
|
|
21,943 |
|
|
|
17,666 |
|
|
Transportation, gathering and compression |
|
|
51,387 |
|
|
|
51,870 |
|
|
|
105,512 |
|
|
|
93,038 |
|
|
Production and ad valorem taxes |
|
|
1,600 |
|
|
|
4,009 |
|
|
|
6,468 |
|
|
|
6,857 |
|
|
Brokered natural gas and marketing expense |
|
|
7,746 |
|
|
|
11,983 |
|
|
|
17,004 |
|
|
|
21,443 |
|
|
Depreciation, depletion, amortization and accretion |
|
|
42,768 |
|
|
|
38,597 |
|
|
|
86,903 |
|
|
|
68,494 |
|
|
Exploration |
|
|
9,073 |
|
|
|
15,193 |
|
|
|
22,344 |
|
|
|
31,981 |
|
|
General and administrative |
|
|
11,569 |
|
|
|
13,564 |
|
|
|
21,450 |
|
|
|
42,494 |
|
|
(Gain) loss on sale of assets |
|
|
(1,911 |
) |
|
|
1 |
|
|
|
(1,357 |
) |
|
|
2 |
|
|
Other expense |
|
|
19 |
|
|
|
12 |
|
|
|
34 |
|
|
|
38 |
|
|
Total operating expenses |
|
|
132,151 |
|
|
|
145,370 |
|
|
|
280,301 |
|
|
|
282,013 |
|
|
OPERATING INCOME (LOSS) |
|
|
(41,467 |
) |
|
|
10,170 |
|
|
|
(56,193 |
) |
|
|
15,024 |
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on derivative instruments |
|
|
(10,925 |
) |
|
|
29,738 |
|
|
|
29,207 |
|
|
|
24,808 |
|
|
Interest expense, net |
|
|
(14,930 |
) |
|
|
(15,109 |
) |
|
|
(29,764 |
) |
|
|
(28,949 |
) |
|
Other income |
|
|
4 |
|
|
|
8 |
|
|
|
17 |
|
|
|
8 |
|
|
Total other income (expense), net |
|
|
(25,851 |
) |
|
|
14,637 |
|
|
|
(540 |
) |
|
|
(4,133 |
) |
|
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
|
|
(67,318 |
) |
|
|
24,807 |
|
|
|
(56,733 |
) |
|
|
10,891 |
|
|
Income tax benefit (expense) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
INCOME (LOSS) FROM CONTINUING OPERATIONS |
|
|
(67,318 |
) |
|
|
24,807 |
|
|
|
(56,733 |
) |
|
|
10,891 |
|
|
Income (loss) from discontinued operations, net of income tax |
|
|
(1,533 |
) |
|
|
2,705 |
|
|
|
(9,291 |
) |
|
|
2,523 |
|
|
NET INCOME (LOSS) |
|
$ |
(68,851 |
) |
|
$ |
27,512 |
|
|
$ |
(66,024 |
) |
|
$ |
13,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER SHARE OF COMMON STOCK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding |
|
|
35,856 |
|
|
|
35,678 |
|
|
|
35,816 |
|
|
|
30,645 |
|
|
Income (loss) from continuing operations |
|
$ |
(1.88 |
) |
|
$ |
0.69 |
|
|
$ |
(1.58 |
) |
|
$ |
0.36 |
|
|
Income (loss) from discontinued operations |
|
|
(0.04 |
) |
|
|
0.08 |
|
|
|
(0.26 |
) |
|
|
0.08 |
|
|
Net income (loss) |
|
$ |
(1.92 |
) |
|
$ |
0.77 |
|
|
$ |
(1.84 |
) |
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common stock outstanding |
|
|
35,856 |
|
|
|
35,826 |
|
|
|
35,816 |
|
|
|
30,830 |
|
|
Income (loss) from continuing operations |
|
$ |
(1.88 |
) |
|
$ |
0.69 |
|
|
$ |
(1.58 |
) |
|
$ |
0.36 |
|
|
Income (loss) from discontinued operations |
|
|
(0.04 |
) |
|
|
0.08 |
|
|
|
(0.26 |
) |
|
|
0.08 |
|
|
Net income (loss) |
|
$ |
(1.92 |
) |
|
$ |
0.77 |
|
|
$ |
(1.84 |
) |
|
$ |
0.44 |
|
Contacts
Montage Resources Corporation
Douglas Kris, Investor Relations
469-444-1736
[email protected]
