Montage Resources Corporation (NYSE:MR) (the “Company” or
“Montage Resources”) today announced its fourth quarter and full
year 2019 production and capital spending, its year-end 2019 proved
reserves and the Company’s earnings release schedule.
Highlights of the release include:
- Net production for the full year 2019 averaged 547.8 MMcfe per
day, within the Company’s most recent guidance range of 545-552
MMcfe per day and 6% above the midpoint of the Company’s initial
guidance range for the year of 500 – 525 MMcfe per day
- Net production for the fourth quarter 2019 averaged 623.4 MMcfe
per day, within the Company’s implied fourth quarter guidance
range
- Full year 2019 capital spending of approximately $361 million1,
within the Company’s most recent guidance range of $345-$370
million and 7% below the midpoint of the Company’s initial guidance
range for the year of $375 - $400 million
- Year-End 2019 proved developed reserves increased by 33%2 to
1,494 Bcfe, based upon SEC pricing, and by 34%2 to 1,506 Bcfe,
based upon December 31, 2019 strip pricing, over year-end 2018
- Year-End 2019 proved developed reserves PV103 increased 5%2 to
approximately $1.1 billion, based upon SEC pricing, and increased
30%2 to approximately $1.0 billion, based upon December 31, 2019
strip pricing, over year-end 2018
- The Company’s current equity market capitalization represents
an approximate 63% discount to year-end proved developed reserves
PV103 (based upon December 31, 2019 strip pricing) of $1.0 billion
less debt4
John Reinhart, President and CEO, commented, “The past year
represented a significant inflection point for the Company’s
operations with the progression to a business model that
prioritized capital efficiency, cost reductions, balance sheet
protection and a focus on cash flows. At a time when investor
attention has shifted from resource capture to capital discipline
and operational execution, Montage has delivered on its targets to
provide disciplined production growth within the context of a
significantly lower capital spend while achieving or exceeding the
respective 2019 guidance metrics. Given the well productivity
results, operational efficiencies and lower capital and expense
cost structure, the Company was also able to maintain its net debt
position over the second half of 2019 with no incremental net debt
incurred from the end of the second quarter of 2019 to year-end
2019. The Company also took the opportunity with the natural gas
price pullback in the fourth quarter to systematically shut-in some
production in order to complete a number of production enhancement
workover projects, in addition to realizing unscheduled
non-recurring third-party system downtime and associated
maintenance items, which impacted fourth quarter production volume.
We remain steadfast in our objective of long-term shareholder value
creation by employing prudent 2020 development plans and
maintaining continued flexibility on the pace of 2020 development
activity to drive cash flows from de-risked, repeatable investments
in our high-quality asset base.”
Fourth Quarter and Full Year 2019
Results
The Company reported fourth quarter 2019 average net production
of 623.4 MMcfe per day and reported full year 2019 average net
production of 547.8 MMcfe per day. For the fourth quarter of 2019,
the Company’s production mix was 78% natural gas, 13% natural gas
liquids (“NGLs”) and 9% oil, while the production mix for the full
year 2019 was 77% natural gas, 14% NGLs and 9% oil.
Proved Reserves
The Company has recently received its annual reserve report as
prepared by its independent reservoir engineering firm, Software
Integrated Solutions (SIS) Division of Schlumberger Technology
Corporation, which estimated the Company’s proved reserves (based
on SEC pricing) at December 31, 2019 to be 2.7 Tcfe, a 14%2
increase compared with proved reserves at December 31, 2018. The
composition by product of the year-end 2019 reserves was
approximately 78% natural gas, 7% oil and 15% NGLs. This increase
in reserves was driven predominately by an increase in proved
developed producing reserves which increased by approximately 33%2
to 1,430 Bcfe related to new wells coming into production during
2019. SEC prices for reserves were calculated as of December 31,
2019 and among other items calibrated for quality, energy content
and market differentials with the average adjusted product price
weighted by production over the remaining lives of the properties
being $48.71 per Bbl for oil, $2.44 per Mcf for natural gas, and
$22.36 per Bbl of NGLs. Utilizing SEC pricing as of December 31,
2019, the PV103 of the Company’s total proved reserves was
approximately $1.5 billion. The PV103 of the Company’s proved
developed reserves increased by 5%2 to approximately $1.1 billion
(utilizing SEC pricing as of December 31, 2019), compared with such
reserves at December 31, 2018.
1 Based upon preliminary unaudited
results
2 2018 reserves based upon the pro-forma
reserves of Eclipse Resources Corporation and Blue Ridge Mountain
Resources, Inc.
3 Non-GAAP measure. See disclosures in
this press release for details
4 Includes approximately $511 million of
senior notes outstanding and $127.5 million of outstanding
borrowings under the Company’s revolving credit facility as of
September 30, 2019
Non-GAAP Disclosure
Year-end pre-tax PV10 value is a non-GAAP financial measure as
defined by the SEC. Montage Resources believes that the
presentation of pre-tax PV10 value is relevant and useful to the
Company’s investors because it presents the discounted future net
cash flows attributable to Montage Resources’ reserves prior to
taking into account corporate future income taxes and the Company’s
current tax structure. Montage Resources further believes investors
and creditors use pre-tax PV10 value as a basis for comparison of
the relative size and value of the Company’s reserves as compared
with other companies. Moreover, Montage Resources believes that
PV10 estimates using strip pricing of is a non-GAAP financial
measure that can be used within the industry and by creditors and
securities analysts to evaluate estimated net cash flows in the
current commodity price environment (using NYMEX futures prices)
rather than SEC pricing. PV10 estimates using strip pricing are not
adjusted for the likelihood that the pricing scenario will occur,
and thus they may not be comparable to PV10 value using SEC
pricing. Neither the PV10 based upon SEC pricing, the PV10 using
strip pricing, nor the Standardized Measure (described below)
represents an estimate of fair market value of the Company’s
natural gas, NGL, or oil properties.
The GAAP financial measure most directly comparable to pre-tax
PV10 is the standardized measure of discounted future net cash
flows ("Standardized Measure"). Montage Resources is not yet able
to provide a reconciliation of pre-tax PV10 to Standardized Measure
because the discounted future income taxes associated with the
Company’s reserves is not yet calculable. Montage Resources expects
to include a full reconciliation of pre-tax PV10 to Standardized
Measure in its Annual Report on Form 10-K for the year ended
December 31, 2019.
Earnings Release and Conference
Call
The Company will release its fourth quarter and full year 2019
financial and operational results after the market close on
Thursday, March 5, 2020.
A conference call to review the Company’s fourth quarter and
full year 2019 financial and operational results is scheduled for
Friday, March 6, 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 Full Year
2019 Earnings Call. A replay of the call will be available through
May 6, 2020. To access the phone replay, dial 877-660-6853 or
201-612-7415 for international callers. The conference ID is
13699118. 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.
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, including statements 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 Mountain Resources, Inc, 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/20200225005185/en/
Montage Resources Corporation Douglas Kris Vice President,
Investor Relations 469-444-1736 dkris@mresources.com
Montage Resources (NYSE:MR)
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