Ascent Resources Reports 4th Quarter & Full Year 2023 Results

Source: www.gulfoilandgas.com 3/7/2024, Location: North America

Fourth Quarter and Full-Year 2023 Highlights:
Net production of 2.10 and 2.14 bcfe per day for the quarter and year, respectively
Liquids production increased to 35 mbbls per day during the quarter, a 35% increase over the same prior year period
Full-year pre-hedge natural gas equivalent price of $2.86 per mcfe, which was a $0.12 per mcfe premium to NYMEX pricing
Net Income and Adjusted Net Income(1) of $757 million and $86 million for the quarter, and $2.1 billion and $317 million for the year, respectively
Adjusted EBITDAX(1) of $316 million for the quarter and more than $1.2 billion for the year
Year-end 2023 total proved reserves of 8.9 tcfe and a reserve replacement of 112%
Initial 2024 guidance with maintenance production of 2.0 to 2.1 bcfe per day, and D&C Capex of $625 - $675 million, a decrease of 23% from 2023

Ascent Resources Utica Holdings, LLC ("Ascent", "our" or the "Company") reported its fourth quarter and full-year 2023 operating and financial results and issued initial 2024 guidance. Additionally, Ascent announced a conference call with analysts and investors scheduled for 9 AM CT / 10 AM ET, Friday, March 8, 2024. For more detailed information on Ascent, please refer to our audited financials, the latest investor presentation and additional information located on our website at https://www.ascentresources.com/investors.

Commenting on the fourth quarter and full-year 2023 results, Ascent's Chairman and Chief Executive Officer, Jeff Fisher said, "We finished the year on a strong note, exceeding the top-end of our production guidance range while coming in on target for capital. The team methodically executed on our development plan, substantially grew liquids production, improved efficiencies, and simplified the balance sheet all while generating positive free cash flow for a fourth consecutive year. Our continued commitment to a maintenance development plan optimizes sustainable free cash flow generation, while our thoughtful approach to hedging positions us to continue to navigate volatile markets."

Fisher continued, "As we move into 2024, our development plan will be more liquids focused, resulting in a modest reduction in gas production, as we continue to rebalance our capital allocation. We also expect to see a substantial reduction in capital intensity in 2024, which is being driven by continued efficiency gains coupled with shallower declines and a focus on optimization of our production base. These elements provide confidence in our plan and reaffirm our ability to generate significant free cash flow in 2024 and beyond. Ascent is well positioned, despite the near-term headwinds facing the industry, as we continue to focus on creating lasting value for our stakeholders."

Fourth Quarter 2023 Financial Results
Fourth quarter 2023 net production averaged 2,095 mmcfe per day, consisting of 1,888 mmcf per day of natural gas, 10,826 bbls per day of oil and 23,707 bbls per day of natural gas liquids ("NGL").

Fourth quarter 2023 price realizations, including the impact of settled commodity derivatives, were $3.24 per mcfe. Excluding the impact of settled commodity derivatives, price realizations were $2.94 per mcfe in the fourth quarter of 2023.

For the fourth quarter of 2023, Ascent reported net income of $757 million, Adjusted Net Income of $86 million and Adjusted EBITDAX of $316 million. Ascent incurred $234 million of total capital expenditures in the fourth quarter of 2023 consisting of $177 million of D&C costs, $49 million of land and leasehold costs, and $8 million of capitalized interest. Full-Year 2023 Financial Results
Net production for the year ended December 31, 2023 averaged 2,135 mmcfe per day, consisting of 1,953 mmcf per day of natural gas, 10,244 bbls per day of oil and 20,230 bbls per day of NGLs.

Price realizations, including the impact of settled commodity derivatives, were $3.15 per mcfe for the year ended December 31, 2023. Excluding the impact of settled commodity derivatives, price realizations for the year were $2.86 per mcfe.

For the year ended December 31, 2023, Ascent reported net income of $2.1 billion, Adjusted Net Income of $317 million and Adjusted EBITDAX of $1.2 billion. Ascent incurred a total of $1.0 billion of capital expenditures during the year ended December 31, 2023 consisting of $844 million of D&C costs, $138 million of land and leasehold costs, and $36 million for capitalized interest.

Balance Sheet and Liquidity
As of December 31, 2023, Ascent had total debt of approximately $2.5 billion, with $765 million of borrowings and $169 million of letters of credit issued under the credit facility. Liquidity as of December 31, 2023 was approximately $1.1 billion, comprised of $1.1 billion of available borrowing capacity under the credit facility and $7 million of cash on hand. Our leverage ratio at the end of the quarter was 2.0x based on a LTM Adjusted EBITDAX basis.

Operational Update
During the fourth quarter of 2023, we spud 15 operated wells, hydraulically fractured 10 wells, and turned-in-line 19 wells with an average lateral length of approximately 16,700 feet. For the full-year Ascent spud 74 operated wells, hydraulically fractured 75 wells, and turned-in-line 71 wells with an average lateral length of approximately 14,200 feet. As of December 31, 2023, Ascent had 882 gross operated producing Utica wells.

2023 Year-End Reserves
Ascent reported year-end 2023 proved reserves, under SEC guidelines, of 8.89 tcfe, of which 68% were classified as proved developed and 32% as proved undeveloped. The 2023 drill-bit F&D costs for undeveloped reserves were $0.57 per mcfe as we replaced over 112% of reserves. A summary of the changes in Ascent's proved reserves for the full-year 2023 can be found in our financial statements.

Hedging Update
Ascent has significant hedges in place in order to reduce exposure to the volatility in commodity prices, as well as to protect our expected operating cash flow. As of January 10, 2024, Ascent had hedged 1,410,000 mmbtu per day of natural gas production in 2024 at an average downside price of $3.55 per mmbtu, and 1,350,000 mmbtu per day in 2025 at an average downside price of $3.82 per mmbtu. Additionally, Ascent has also hedged nearly 10,000 bbls per day of crude oil production at an average price of $75.46 per bbl in 2024, and 2,000 bbls per day in 2025 at an average price of $70.00. We also have significant natural gas hedges in place for 2026 and subsequent to year-end 2023 we had an opportunity to optimize a portion of that position, resulting in the Company receiving $81 million of proceeds in the first quarter of 2024. Please reference our financial statements for additional detail on our hedge position.

Initial 2024 Guidance

The Company expects its full-year 2024 total capital budget to come in between $750 million and $810 million, be fully funded with operating cash flow and be more than sufficient to hold production flat on an annual basis.


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