Montage Resources Corporation (NYSE:MR) (the “Company” or
“Montage Resources”) today announced its fourth quarter and full
year 2019 operational and financial results. In addition, the
Company will be posting an updated investor presentation to its
corporate website.
Fourth Quarter 2019 Highlights:
- Average net daily production was 623.4 MMcfe per day
- Average natural gas equivalent realized price was $3.01 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 $1.33 per Mcfe
- Net income was $14.1 million; Income from continuing operations
before income taxes was $14.0 million; Adjusted net income1 was
$31.8 million; and Adjusted EBITDAX1 was $87.6 million, above of
analyst consensus expectations
Full Year 2019 Highlights:
- Average net daily production was 547.8 MMcfe per day
- Average natural gas equivalent realized price was $3.06 per
Mcfe, including cash settled derivatives and excluding firm
transportation expense
- Per unit cash production costs (including lease operating,
transportation, gathering and compression, production and ad
valorem taxes) were $1.32 per Mcfe
- Net income was $31.8 million; Income from continuing operations
before income taxes was $30.4 million; Adjusted net income1 was
$84.9 million; and Adjusted EBITDAX1 was $311.1 million, above
analyst consensus expectations.
John Reinhart, President and CEO, commented on the Company’s
operational and financial results, “In 2019 the Company delivered
higher production, lower operating costs, lower overhead costs,
increased net income, improved adjusted EBITDAX1, and lower capital
spending than initially guided, all while adding over $275 million
in borrowing base capacity and keeping financial leverage2 below 2
times. I am extremely proud of the team and the numerous successes
realized, all while managing through the integration since the
transformational Blue Ridge merger one year ago, as well as a
challenging commodity price environment. The current operating
environment reinforces the importance of being a low-cost producer
with high quality assets, maintaining a top performing execution
team and having limited commitments.
In 2020, Montage Resources will continue its focus on the
execution of a business plan that positions the company favorably
with moderate scale, a low-cost structure and solid balance sheet.
We remain advantaged from an operational flexibility standpoint and
maintain the optionality to adjust capital expenditures during 2020
as commodity prices dictate in order to target a cash flow positive
position. The Company has established a track record of realizing
fundamental corporate value enhancements and will continue to
evaluate a full range of strategic, tactical and operational
opportunities aimed at maximizing long-term shareholder value.”
1
Non-GAAP measure. See
reconciliation for details
2
Based upon net debt to pro forma
last twelve months EBITDAX
Operational Discussion
The Company’s production for the three and twelve months ended
December 31, 2019 and 2018 is set forth in the following table:
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Production:
Natural gas (MMcf)
44,523.6
26,657.3
154,137.5
89,965.7
NGLs (Mbbls)
1,271.4
1,010.5
4,686.3
3,503.1
Oil (Mbbls)
867.5
748.6
2,950.8
2,378.0
Total (MMcfe)
57,357.0
37,211.9
199,960.1
125,252.3
Average daily production
volume:
Natural gas (Mcf/d)
483,952
289,753
422,295
246,481
NGLs (Bbls/d)
13,820
10,984
12,839
9,598
Oil (Bbls/d)
9,429
8,137
8,084
6,515
Total (MMcfe/d)
623.4
404.5
547.8
343.2
Financial Discussion
Revenue for the three months ended December 31, 2019 totaled
$174.1 million, compared to $171.2 million for the three months
ended December 31, 2018. Adjusted Revenue3, which includes the
impact of cash settled derivatives and excludes brokered natural
gas and marketing revenue and other revenue, totaled $172.7 million
for the three months ended December 31, 2019 compared to $138.7
million for the three months ended December 31, 2018. Net Income
for the three months ended December 31, 2019 was $14.1 million, or
$0.39 per share, compared to $36.5 million, or $1.81 per share4,
for the three months ended December 31, 2018. Adjusted Net Income3
for the three months ended December 31, 2019 was $31.8 million, or
$0.89 per share, compared to $24.6 million, or $1.22 per share4 for
the three months ended December 31, 2018. Adjusted EBITDAX3 was
$87.6 million for the three months ended December 31, 2019 compared
to $80.7 million for the three months ended December 31, 2018.
Revenue for the year ended December 31, 2019 totaled $634.4
million, compared to $515.1 million for the year ended December 31,
2018. Adjusted Revenue3, which includes the impact of cash settled
derivatives and excludes brokered natural gas and marketing revenue
and other revenue, totaled $612.0 million for the year ended
December 31, 2019 compared to $471.6 million for the year ended
December 31, 2018. Net Income for the year ended December 31, 2019
was $31.8 million, or $0.96 per share, compared to $18.8 million,
or $0.94 per share4 for the year ended December 31, 2018. Adjusted
Net Income3 for the year ended December 31, 2019 was $84.9 million,
or $2.56 per share, compared to $51.4 million, or $2.57 per share4
for the year ended December 31, 2018. Adjusted EBITDAX3 was $311.1
million for the year ended December 31, 2019 compared to $261.6
million for the year ended December 31, 2018.
3
Adjusted Revenue, Adjusted Net
Income and Adjusted EBITDAX are non-GAAP financial measures. Tables
reconciling Adjusted Revenue, Adjusted Net Income and Adjusted
EBITDAX to the most directly comparable GAAP measures can be found
at the end of the financial statements included in this press
release.
4
Retroactively reflects the
15-to-1 reverse stock split that took place at the close of the
merger with Blue Ridge Mountain Resources, Inc. (“Blue Ridge”) on
February 28, 2019.
Average realized price calculations for the three and twelve
months ended December 31, 2019 and 2018 are set forth in the table
below:
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Average realized price (excluding cash
settled derivatives and firm transportation)
Natural gas ($/Mcf)
$
2.19
$
3.59
$
2.34
$
3.05
NGLs ($/Bbl)
18.65
22.40
18.04
24.59
Oil ($/Bbl)
48.90
53.10
49.42
58.12
Total average prices ($/Mcfe)
2.85
4.25
2.96
3.98
Average realized price (including cash
settled derivatives, excluding firm transportation)
Natural gas ($/Mcf)
$
2.36
$
3.05
$
2.45
$
2.96
NGLs ($/Bbl)
19.14
22.40
18.45
24.32
Oil ($/Bbl)
49.67
46.44
50.01
50.47
Total average prices ($/Mcfe)
3.01
3.73
3.06
3.77
Average realized price (including firm
transportation, excluding cash settled derivatives)
Natural gas ($/Mcf)
$
1.74
$
3.03
$
1.88
$
2.50
NGLs ($/Bbl)
18.65
22.40
18.04
24.59
Oil ($/Bbl)
48.90
53.10
49.42
58.12
Total average prices ($/Mcfe)
2.50
3.85
2.60
3.59
Average realized price (including cash
settled derivatives and firm transportation)
Natural gas ($/Mcf)
$
1.92
$
2.50
$
1.99
$
2.41
NGLs ($/Bbl)
19.14
22.40
18.45
24.32
Oil ($/Bbl)
49.67
46.44
50.01
50.47
Total average prices ($/Mcfe)
2.66
3.33
2.70
3.37
*rounded to the nearest penny
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 $0.35 per Mcfe of firm
transportation expense, were $1.33 per Mcfe for the fourth quarter
of 2019, a decrease of approximately 1% compared to the fourth
quarter of 2018. For the year ended December 31, 2019 per unit cash
production costs, which include $0.36 per Mcfe of firm
transportation expense, were $1.32 per Mcfe, a decrease of
approximately 6% compared to the year ended December 31, 2018.
General and administrative expense (including one-time
merger-related expenses) was $13.9 million and $11.0 million for
the three months ended December 31, 2019 and 2018, respectively,
and is shown in the table below. Cash general and administrative
expense5 (excluding merger-related expenses and stock-based
compensation expense) was $9.0 million and $8.2 million for the
three months ended December 31, 2019 and 2018, respectively.
General and administrative expense per Mcfe (including one-time
merger-related expenses) was $0.24 in the three months ended
December 31, 2019 compared to $0.30 in the three months ended
December 31, 2018. Cash general and administrative expense5 per
Mcfe (excluding merger-related expenses and stock-based
compensation expense) declined approximately 27% to $0.16 in the
three months ended December 31, 2019 compared to $0.22 in the three
months ended December 31, 2018.
General and administrative expense (including one-time
merger-related expense) was $70.9 million and $44.4 million for the
years ended December 31, 2019 and 2018, respectively, and is shown
in the table below. Cash general and administrative expense5
(excluding merger-related expenses and stock-based compensation
expense) was $36.6 million and $32.5 million for the years ended
December 31, 2019 and 2018, respectively. General and
administrative expense per Mcfe (including one-time merger-related
expenses) was $0.35 in the year ended December 31, 2019 compared to
$0.35 in the year ended December 31, 2018. Cash general and
administrative expense5 per Mcfe (excluding merger-related expenses
and stock-based compensation expense) declined approximately 31% to
$0.18 in the year ended December 31, 2019 compared to $0.26 in the
year ended December 31, 2018.
5
Cash general and administrative expense is
a non-GAAP financial measure. A table reconciling cash general and
administrative expense to the most directly comparable GAAP measure
can be found under “Cash General and Administrative Expense” in
this press release.
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Operating expenses (in
thousands):
Lease operating
$
13,708
$
6,263
$
43,359
$
28,289
Transportation, gathering and
compression
58,761
40,640
208,826
138,766
Production and ad valorem taxes
3,622
2,915
12,141
10,141
Total cash production costs
$
76,091
$
49,818
$
264,326
$
177,196
Depreciation, depletion, amortization and
accretion
42,052
36,268
156,003
134,940
General and administrative1
13,867
10,998
70,941
44,389
Operating expenses per Mcfe:
Lease operating
$
0.24
$
0.17
$
0.22
$
0.23
Transportation, gathering and
compression
1.03
1.09
1.04
1.10
Production and ad valorem taxes
0.06
0.08
0.06
0.08
Total cash production costs
$
1.33
$
1.34
$
1.32
$
1.41
Depreciation, depletion, amortization and
accretion
0.72
0.97
0.77
1.07
General and administrative2
0.24
0.30
0.35
0.35
1
Includes stock-based compensation
and merger-related expenses of $ 4.9 million and $ 2.8 million for
the three months ended December 31, 2019 and 2018, respectively,
and $ 34.3 million and $ 11.9 million for the twelve months ended
December 31, 2019 and 2018, respectively
2
Includes stock-based compensation
and merger-related expenses of $ 0.08 per Mcfe and $ 0.08 per Mcfe
for the three months ended December 31, 2019 and 2018,
respectively, and $ 0.17 per Mcfe and $ 0.09 per Mcfe for the
twelve months ended December 31, 2019 and 2018, respectively
Cash Margins
The Company’s cash margins are detailed in the table below:
Three Months Ended
Three Months Ended
December 31, 2019
December 31, 2018
September 30, 2019
(per Mcfe)
Average realized price (including cash
settled derivatives, excluding firm transportation)
$
3.01
$
3.73
$
2.88
Total cash production costs1
1.33
1.34
1.23
Cash production margin
$
1.68
$
2.39
$
1.65
Cash production margin %
56
%
64
%
57
%
Cash production margin
$
1.68
$
2.39
$
1.65
Cash general and administrative
expenses2
0.16
0.22
0.18
Cash operating margin
$
1.52
$
2.17
$
1.47
Cash operating margin %
50
%
58
%
51
%
Cash operating margin
$
1.52
$
2.17
$
1.47
Interest expense
0.26
0.38
0.27
Corporate cash operating margin3
$
1.26
$
1.79
$
1.20
Corporate cash operating margin %
42
%
48
%
42
%
1
Includes lease operating,
transportation, gathering and compression, production and ad
valorem taxes
2
Cash general and administrative
expense is a non-GAAP financial measure which excludes stock-based
compensation expense 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 and administrative expense is a
non-GAAP financial measure which excludes stock-based compensation
expense and merger related expenses, see reconciliation to the most
comparable GAAP measure under “Cash General and Administrative
Expense” in this press release
Capital Expenditures
Fourth quarter 2019 capital expenditures were $81.6 million,
including $65.1 million for drilling and completions and $16.5
million for land-related expenditures.
For the year ended December 31, 2019 capital expenditures were
$366.2 million, including $339.7 million for drilling and
completions, $25.9 million for land-related expenditures, and $0.6
million for corporate-related expenditures.
During the fourth quarter of 2019, the Company commenced
drilling 6 gross (5.1 net) operated wells, commenced completions of
5 gross (4.5 net) operated wells and turned to sales 4 gross (3.4
net) operated wells.
During the year ended December 31, 2019, the Company commenced
drilling 32 gross (28.2 net) operated wells, commenced completions
of 36 gross (30.0 net) operated wells and turned to sales 39 gross
(30.8 net) operated wells.
Financial Position and
Liquidity
As of December 31, 2019, the Company’s liquidity was $352.9
million, consisting of $12.1 million in cash and cash equivalents
and $340.8 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 $130.0 million in outstanding borrowings).
Michael Hodges, Executive Vice President and Chief Financial
Officer, commented, “We are very proud of the financial results in
2019 that have allowed Montage to increase its financial strength
despite a weakening commodity price environment throughout the
year. In 2019, we increased our net income by approximately 69%,
increased our adjusted EBITDAX by approximately 19%, lowered our
financial leverage by about 10% and more than doubled our year-end
available liquidity as compared to 2018. We believe the votes of
confidence we have received in 2019 from our lending group (an
increase in our borrowing base of $275 million) and from the credit
ratings agencies (our credit ratings have been reaffirmed or
upgraded while many Appalachian peers have been downgraded) provide
objective third-party evidence of the financial strength of
Montage. Given our ample liquidity, low leverage and no debt
maturities for more than three years, we believe we are uniquely
positioned to navigate the current commodity price landscape.
Our gas marketing team’s ability to optimize our production
stream continues to allow the Company to achieve an uplift relative
to in-basin Appalachian pricing and, when coupled with our highly
advantaged Marcellus processing contract, allows the Company to
realize one of the best all-in product prices in Appalachia. Moving
forward, we believe that Montage’s conservative 2020 operating
plan, which incorporates significantly less near-term activity and
a capital budget of approximately $200 million (based upon the
midpoint of guidance) continues to protect our balance sheet with
over 56% of our produced natural gas and 52% of our produced oil
hedged at an average of price $2.64 per MMbtu and $57.13 per Bbl,
respectively, for 2020."
Commodity Derivatives
The Company engages in a number of different commodity trading
program strategies as a risk management tool to attempt to mitigate
the potential negative impact on cash flows caused by price
fluctuations in natural gas, NGL and oil prices. Below is a table
that illustrates the Company’s hedging activities as of December
31, 2019:
Natural Gas Derivatives:
Description
Volume (MMBtu/d)
Production Period
Weighted Average Price
($/MMBtu)
Natural Gas Swaps:
50,000
January 2020 – December 2020
$
2.67
20,000
January 2020 – March 2020
$
2.80
80,000
January 2020 – June 2020
$
2.67
20,000
April 2020 – June 2020
$
2.75
30,000
July 2020 – December 2020
$
2.60
25,000
January 2020 – March 2021
$
2.60
20,000
July 2020 – March 2021
$
2.58
Natural Gas Collars:
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)
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)
50,000
January 2020 – June 2020
$
2.82
Floor sold price (put)
50,000
January 2020 – June 2020
$
2.40
Ceiling sold price (call)
50,000
January 2020 – June 2020
$
3.11
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
Natural Gas Call/Put Options:
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
April 2020 – October 2020
$
(0.52
)
Appalachia - Dominion
20,000
January 2020 – December 2020
$
(0.59
)
Appalachia - Dominion
20,000
January 2020 – March 2020
$
(0.39
)
Oil Derivatives:
Description
Volume (Bbls/d)
Production Period
Weighted Average Price
($/Bbl)
Oil Swaps:
1,500
January 2020 – December 2020
$
57.07
1,000
July 2020 – December 2020
$
56.53
250
July 2020 – March 2021
$
53.20
250
January 2021 – March 2021
$
53.00
Oil Collars:
Floor purchase price (put)
500
January 2020 – December 2020
$
50.00
Ceiling sold price (call)
500
January 2020 – December 2020
$
64.00
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
January 2020 – March 2020
$
60.00
Ceiling sold price (call)
500
January 2020 – March 2020
$
67.00
Oil Three-way Collars:
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
Floor sold price (put)
500
July 2020 – December 2020
$
45.00
NGL Derivatives:
Description
Volume (Bbls/d)
Production Period
Weighted Average Price
($/Bbl)
Propane Swaps:
750
January 2020 – December 2020
$
21.46
Guidance
The Company is reiterating first quarter and full year 2020
guidance as set forth in the table below:
Q1 2020
FY 2020
Production MMcfe/d
585 - 600
570 - 590
% Gas
79% - 81%
79% - 81%
% NGL
11% - 13%
11% - 13%
% Oil
7% - 9%
7% - 9%
Gas Price Differential ($/Mcf)1,2
$(0.10) - $(0.20)
$(0.20) - $(0.30)
Oil Differential ($/Bbl)1
$(7.75) - $(8.75)
$(7.75) - $(8.75)
NGL Prices (% of WTI)1
30% - 35%
30% - 35%
Cash Production Costs ($/Mcfe)3
$1.25 - $1.35
$1.25 - $1.35
Cash G&A ($mm)4
$9 - $11
$33 - $37
CAPEX ($mm)
$190 - $210
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 stock-based compensation expense 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 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.
MONTAGE RESOURCES
CORPORATION
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share and
per share amounts)
December 31, 2019
December 31, 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
12,056
$
5,959
Accounts receivable
77,402
119,332
Assets held for sale
1,047
—
Other current assets
35,509
8,639
Total current assets
126,014
133,930
PROPERTY AND EQUIPMENT
Oil and natural gas properties, successful
efforts method:
Unproved properties
508,576
482,475
Proved oil and gas properties, net
1,251,105
807,583
Other property and equipment, net
11,226
6,300
Total property and equipment, net
1,770,907
1,296,358
OTHER NONCURRENT ASSETS
Other assets
7,616
3,481
Operating lease right-of-use assets
36,975
—
Assets held for sale
9,665
—
TOTAL ASSETS
$
1,951,177
$
1,433,769
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable
$
119,907
$
116,735
Accrued capital expenditures
43,500
12,979
Accrued liabilities
53,866
56,909
Accrued interest payable
21,308
21,661
Liabilities associated with assets held
for sale
2,815
—
Operating lease liability
12,666
—
Total current liabilities
254,062
208,284
NONCURRENT LIABILITIES
Debt, net of unamortized discount and debt
issuance costs
500,541
497,778
Revolving credit facility
130,000
32,500
Asset retirement obligations
29,877
7,110
Other liabilities
8,029
611
Operating lease liability
24,569
—
Liabilities associated with assets held
for sale
7,013
—
Total liabilities
954,091
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, 35,770,934 and 20,169,063 shares issued
and outstanding, respectively
383
3,043
Additional paid in capital
2,352,309
2,065,119
Treasury stock, shares at cost; 2,508,485
and 1,747,624 shares, respectively
(10,049
)
(3,357
)
Accumulated deficit
(1,345,557
)
(1,377,319
)
Total stockholders’ equity
997,086
687,486
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
1,951,177
$
1,433,769
MONTAGE RESOURCES
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share
data)
For the Year Ended December
31,
2019
2018
2017
REVENUES
Natural gas, oil and natural gas liquids
sales
$
591,699
$
498,593
$
380,178
Brokered natural gas and marketing
revenue
42,274
16,552
3,481
Other revenue
468
—
—
Total revenues
634,441
515,145
383,659
OPERATING EXPENSES
Lease operating
43,359
28,289
20,525
Transportation, gathering and
compression
208,826
138,766
124,839
Production and ad valorem taxes
12,141
10,141
8,490
Brokered natural gas and marketing
expense
42,700
16,886
3,191
Depreciation, depletion, amortization and
accretion
156,003
134,940
119,362
Exploration
58,917
49,563
50,208
General and administrative
70,941
44,389
44,553
Rig termination and standby
1,081
—
1
Gain on sale of assets
(476
)
(1,815
)
(179
)
Other expense
60
—
—
Total operating expenses
593,552
421,159
370,990
OPERATING INCOME
40,889
93,986
12,669
OTHER INCOME (EXPENSE)
Gain (loss) on derivative instruments
48,596
(21,169
)
45,365
Interest expense, net
(59,055
)
(53,990
)
(49,490
)
Other income (expense)
16
(1
)
(19
)
Total other expense, net
(10,443
)
(75,160
)
(4,144
)
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
30,446
18,826
8,525
Income tax benefit (expense)
—
—
—
INCOME FROM CONTINUING
OPERATIONS
30,446
18,826
8,525
Income from discontinued operations, net
of income tax
1,316
—
—
NET INCOME
$
31,762
$
18,826
$
8,525
EARNINGS PER SHARE OF COMMON
STOCK
Basic:
Weighted average common stock
outstanding
33,211
19,999
17,479
Income from continuing operations
$
0.92
$
0.94
$
0.49
Income from discontinued operations
0.04
—
—
Net income
$
0.96
$
0.94
$
0.49
Diluted:
Weighted average common stock
outstanding
33,324
20,087
17,679
Income from continuing operations
$
0.91
$
0.94
$
0.48
Income from discontinued operations
0.04
—
—
Net income
$
0.95
$
0.94
$
0.48
Adjusted Revenue
Adjusted revenue is a non-GAAP financial measure. The Company
defines adjusted revenue as follows: total revenues plus or minus
net cash receipts or payments on settled derivative instruments
less brokered natural gas and marketing revenue and other 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 for the three and twelve months
ended December 31, 2019 and 2018.
Three Months Ended December
31,
Year Ended December
31,
$ thousands
2019
2018
2019
2018
Total revenues
$
174,108
$
171,208
$
634,441
$
515,145
Net cash receipts (payments) on derivative
instruments
9,251
(19,261
)
20,323
(26,985
)
Brokered natural gas and marketing
revenue
(10,527
)
(13,235
)
(42,274
)
(16,552
)
Other revenue
(161
)
—
(468
)
—
Adjusted revenue
$
172,671
$
138,712
$
612,022
$
471,608
Adjusted Net Income
(Loss)
Adjusted net income (loss) represents income (loss) from
continuing operations 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) from continuing operations as determined by GAAP.
See the table below for a reconciliation of adjusted net income
(loss) and net income (loss) from continuing operations before
income taxes, 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 and twelve months ended
December 31, 2019 and 2018.
Three Months Ended December
31,
Year Ended December
31,
$ thousands
2019
2018
2019
2018
Income from continuing operations before
income taxes, as reported
$
14,036
$
36,489
$
30,446
$
18,826
(Gain) loss on derivative instruments
(7,977
)
(2,886
)
(48,596
)
21,169
Net cash receipts (payments) on settled
derivatives
9,251
(19,261
)
20,323
(26,985
)
Rig termination and standby
(140
)
—
1,081
—
Dry hole and other
1,855
525
2,018
716
Stock-based compensation
1,171
1,761
8,784
7,891
Impairment of unproved properties
9,600
6,971
45,757
27,608
(Gain) loss on sale of assets
255
(1
)
(476
)
(1,815
)
Merger-related expenses
3,728
1,024
25,539
4,017
Income before income taxes, as
adjusted
31,779
24,622
84,876
51,427
Adjusted net income
$
31,779
$
24,622
$
84,876
$
51,427
Net income per Common Share
Basic
$
0.39
$
1.81
$
0.96
$
0.94
Diluted
$
0.39
$
1.80
$
0.95
$
0.94
Adjusted net income per Common
Share
Basic
$
0.89
$
1.22
$
2.56
$
2.57
Diluted
$
0.89
$
1.22
$
2.55
$
2.56
Weighted Average Common Shares
Outstanding
Basic
35,769
20,154
33,211
19,999
Diluted
35,841
20,258
33,324
20,087
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,
amortization and accretion; gain or loss on derivative instruments;
net cash receipts or payments on settled derivative instruments,
and premiums paid or 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 December
31,
Year Ended December
31,
$ thousands
2019
2018
2019
2018
Net income
$
14,067
$
36,489
$
31,762
$
18,826
Depreciation, depletion, amortization and
accretion
42,052
36,268
156,003
134,940
Exploration expense
10,315
13,336
58,917
49,563
Rig termination and standby
(140
)
—
1,081
—
Stock-based compensation
1,171
1,761
8,784
7,891
(Gain) loss on sale of assets
255
(1
)
(476
)
(1,815
)
(Gain) loss on derivative instruments
(7,977
)
(2,886
)
(48,596
)
21,169
Net cash receipts (payments) on settled
derivatives
9,251
(19,261
)
20,323
(26,985
)
Interest expense, net
14,914
14,015
59,055
53,990
Other (income) expense
(8
)
—
(16
)
1
Merger-related expenses
3,728
1,024
25,539
4,017
Income from discontinued operations
(31
)
—
(1,316
)
—
Adjusted EBITDAX
$
87,597
$
80,745
$
311,060
$
261,597
Cash General and Administrative
Expenses
Cash general and administrative expenses is a non-GAAP financial
measure used by the Company to provide a measure of administrative
expenses used by many investors and in 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 December
31,
Year Ended December
31,
Guidance
$ thousands
2019
2018
2019
2018
For the Three Months Ending
March 31, 2020
For the Year Ending December
31, 2020
General and administrative expenses,
estimated to be reported
$
13,867
$
10,998
$
70,941
$
44,389
$10,000-$14,000
$39,000-$46,000
Stock-based compensation expenses
(1,171
)
(1,761
)
(8,784
)
(7,891
)
(1,000 - 2,000)
(6,000 - 8,000)
Cash general and administrative
expenses
$
12,696
$
9,237
$
62,157
$
36,498
$9,000-$12,000
$33,000-$38,000
Merger-related expenses
(3,728
)
(1,024
)
(25,539
)
(4,017
)
(0 - 1,000)
(0 - 1,000)
Cash general and administrative
expenses,
excluding merger-related expenses
$
8,968
$
8,213
$
36,618
$
32,481
$9,000-$11,000
$33,000-$37,000
About Montage Resources
Montage Resources is an exploration and production company with
approximately 195,000 net effective core 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, and prospects, and 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,” “committed,” “target,
”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. Annual Report on form 10-K for
the fiscal year ended December 31, 2019, expected to be filed with
the Securities and Exchange Commission on or about March 6,
2020.
Forward-looking statements may include, but are not limited to,
statements about 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; 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.
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.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200305005819/en/
Montage Resources Corporation Douglas Kris, Investor Relations
469-444-1736 dkris@mresources.com
Montage Resources (NYSE:MR)
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