ASCENT RESOURCES UTICA HOLDINGS, LLC REPORTS FIRST QUARTER OPERATING AND FINANCIAL RESULTS

News provided by

Ascent Resources Utica Holdings, LLC

May 10, 2022, 15:45 ET

First Quarter Highlights:

Net production averaged 2.0 bcfe per day for the quarter, a 9% increase over the first quarter of 2021
Realized pre-hedge natural gas equivalent price of $5.32 per mcfe, a $0.37 premium to NYMEX pricing
Generated Adjusted EBITDAX⁽¹⁾ of $280 million and net cash flow provided by operating activities of $282 million for the quarter
Incurred $199 million of D&C costs and $31 million of acquisition and leasehold costs during the quarter
Executed a $300 million hedge restructuring in April that materially increased the weighted average strike price of our natural gas swaps for the remainder of 2022
Reaffirmed our borrowing base at $1.85 billion in April

⁽¹⁾	A non-GAAP financial measure. See the Non-GAAP reconciliations included in this press release for the definition of, and other important information regarding, this non-GAAP financial measure.

OKLAHOMA CITY, May 10, 2022 /PRNewswire/ -- Ascent Resources Utica Holdings, LLC ("Ascent", "our" or the "Company") today reported its first quarter 2022 operating and financial results. Additionally, Ascent announced a conference call with analysts and investors scheduled for 9 AM CT / 10 AM ET, Wednesday, May 11, 2022. For more detailed information on Ascent, please refer to the latest investor presentation and additional information located on our website at https://www.ascentresources.com/investors.

Commenting on first quarter performance, Ascent's Chairman and Chief Executive Officer, Jeff Fisher said, "The team had a strong start to the year, with production averaging 2.0 bcfe/d while generating $280 million of Adjusted EBITDAX during the first quarter. The business continues to be anchored by our strong operational execution, which is now being further propelled by a structural shift in natural gas fundamentals. We believe that, taken together, these key attributes make a compelling case for Ascent's long-term value proposition."

Fisher continued, "The hedge restructuring is another avenue that allows us to accelerate balance sheet improvement. As we move forward, we will continue to evaluate opportunities that allow us to create value through our best-in-class operational execution and capital efficiency while maintaining our commitment to responsible operations in order to maximize returns and improve our financial metrics."

First Quarter 2022 Financial Results

First quarter 2022 net production averaged 1,955 mmcfe per day, consisting of 1,821 mmcf per day of natural gas, 6,933 bbls per day of oil and 15,456 bbls per day of natural gas liquids ("NGL").

First quarter 2022 price realizations, including the impact of settled derivatives, were $3.23 per mcfe. Excluding the impact of settled derivatives, price realizations were $5.32 per mcfe in the first quarter of 2022.

For the first quarter of 2022, Ascent reported a net loss of $1.6 billion, Adjusted Net Income of $81 million and Adjusted EBITDAX of $280 million. During the first quarter of 2022, the net loss was largely driven by a $1.6 billion unrealized commodity derivative fair value loss primarily due to an increase in the forward strip for natural gas. Ascent incurred $240 million of total capital expenditures in the first quarter of 2022 including $199 million for well costs, $31 million for acquisition and leasehold costs, and $10 million for capitalized interest.

Balance Sheet and Liquidity

As of March 31, 2022, Ascent had total debt outstanding of approximately $2.6 billion, with $460 million of borrowings and $169 million of letters of credit issued under the revolving credit facility. Liquidity as of March 31, 2022 was $1.2 billion, comprised of $1.2 billion of available borrowing capacity under the revolving credit facility and $6 million of cash on hand. Our leverage ratio at the end of the quarter was 2.3x based on LQA Adjusted EBITDAX and 2.4x based on LTM Adjusted EBITDAX.

In April 2022, Ascent's borrowing base was reaffirmed at $1.85 billion pursuant to the regularly scheduled semiannual borrowing base redetermination under our credit agreement.

Operational Update

During the first quarter of 2022, Ascent operated four drilling rigs and two fracture stimulation crews. The Company spud 17 operated wells, hydraulically fractured 19 wells, and turned in line 10 wells with an average lateral length of approximately 15,500 feet. As of March 31, 2022, Ascent had 677 gross operated producing Utica wells.

Well costs averaged approximately $636 per lateral foot during the first quarter of 2022, in line with internal expectations. We employed two fracture stimulation crews during the first quarter, which will accelerate turn-in-line activity in the second and third quarters. However, this level of activity on the completion side resulted in increased costs and lower efficiencies as the second crew was not deployed on a continuous basis. The Company continues to execute at a high level, but additional inflationary pressures are becoming more prevalent, including commodity prices and labor. We are actively evaluating this situation for potential impacts to both our capital budget and development plan.

Hedging Update

Subsequent to quarter end, Ascent executed on $300 million of hedge restructurings to increase the weighted average strike price from $2.75 to $3.57 per mmbtu on certain existing natural gas swap contracts in place for the remainder of 2022, with no change to volumes hedged. This restructuring is expected to substantially increase 2022 Adjusted EBITDAX and Adjusted Free Cash Flow while reducing our year-end 2022 leverage ratio.

About Ascent Resources

Ascent is one of the largest private producers of natural gas in the United States and is focused on acquiring, developing, and operating natural gas and oil properties located in the Utica Shale in southern Ohio. With a continued focus on good corporate citizenship, Ascent is committed to delivering low-cost clean-burning energy to our country and the world, while reducing environmental impacts.

This news release contains forward-looking statements within the meaning of US federal securities laws. Forward-looking statements express views of Ascent regarding future plans and expectations. Forward-looking statements in this news release include, but are not limited to, statements regarding future operations, business strategy, liquidity and cash flows of Ascent. These statements are based on numerous assumptions and are subject to known and unknown risks and uncertainties, including, commodity price volatility, inherent uncertainty in estimating natural gas, oil and NGL reserves, environmental and regulatory risks, availability of capital, and the other risks described in Ascent's most recent investor presentation provided at www.ascentresources.com/investors. Actual future results may vary materially from those expressed or implied in this news release and Ascent's business, financial condition, results of operations and cash flow could be materially and adversely affected by such risks and uncertainties. As a result, forward-looking statements should be understood to be only predictions and statements of Ascent's current beliefs; they are not guarantees of performance.

ASCENT RESOURCES UTICA HOLDINGS, LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended
	March 31,
($ in thousands)	2022	2021

Revenues:
Natural gas	$ 812,878	$ 430,198
Oil	54,366	41,958
NGL	69,497	55,532
Commodity derivative loss	(1,995,560)	(98,670)
Total Revenues	(1,058,819)	429,018
Operating Expenses:
Lease operating expenses	27,827	21,154
Gathering, processing and transportation expenses	231,125	220,671
Taxes other than income	10,522	9,040
Exploration expenses	18,409	18,493
General and administrative expenses	19,843	16,569
Depreciation, depletion and amortization	152,279	139,456
Total Operating Expenses	460,005	425,383
Income (Loss) from Operations	(1,518,824)	3,635
Other Income (Expense):
Interest expense, net	(44,965)	(41,457)
Change in fair value of contingent payment right	(7,980)	(5,446)
Other income	682	348
Total Other Expense	(52,263)	(46,555)
Net Loss	$ (1,571,087)	$ (42,920)

ASCENT RESOURCES UTICA HOLDINGS, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	March 31,	December 31,
($ in thousands)	2022	2021

Current Assets:
Cash and cash equivalents	$ 6,054	$ 5,674
Accounts receivable – natural gas, oil and NGL sales	399,306	453,464
Accounts receivable – joint interest and other	7,908	8,309
Short-term derivative assets	221	6,866
Other current assets	10,650	9,012
Total Current Assets	424,139	483,325
Property and Equipment:
Natural gas and oil properties, based on successful efforts accounting	9,605,634	9,383,879
Other property and equipment	37,061	36,318
Less: accumulated depreciation, depletion and amortization	(3,377,960)	(3,225,844)
Property and Equipment, net	6,264,735	6,194,353
Other Assets:
Long-term derivative assets	1,517	522
Other long-term assets	38,431	46,241
Total Assets	$ 6,728,822	$ 6,724,441

Current Liabilities:
Accounts payable	$ 59,805	$ 86,812
Accrued interest	51,654	45,929
Short-term derivative liabilities	1,913,870	648,873
Other current liabilities	515,643	517,953
Total Current Liabilities	2,540,972	1,299,567
Long-Term Liabilities:
Long-term debt, net	2,556,825	2,588,248
Long-term derivative liabilities	791,034	435,022
Other long-term liabilities	113,395	104,796
Total Long-Term Liabilities	3,461,254	3,128,066
Member's Equity	726,596	2,296,808
Total Liabilities and Member's Equity	$ 6,728,822	$ 6,724,441

ASCENT RESOURCES UTICA HOLDINGS, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended
	March 31,
($ in thousands)	2022	2021

Cash Flows from Operating Activities:
Net loss	$ (1,571,087)	$ (42,920)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization	152,279	139,456
Change in fair value of commodity derivatives	1,628,397	77,659
Change in fair value of interest rate derivatives	(1,738)	(139)
Impairment of unproved natural gas and oil properties	17,858	17,394
Non-cash interest expense	4,859	4,686
Stock-based compensation	875	1,083
Change in fair value of contingent payment right	7,980	5,446
Other	—	3,463
Changes in operating assets and liabilities	42,607	4,218
Net Cash Provided by Operating Activities	282,030	210,346
Cash Flows from Investing Activities:
Drilling and completion costs	(208,610)	(110,551)
Acquisitions of natural gas and oil properties	(37,235)	(20,601)
Additions to other property and equipment	(589)	(93)
Net Cash Used in Investing Activities	(246,434)	(131,245)
Cash Flows from Financing Activities:
Proceeds from credit facility borrowings	845,000	325,000
Repayment of credit facility borrowings	(880,000)	(390,000)
Repayment of long-term debt	—	(12,781)
Cash paid for debt issuance costs	—	(447)
Commodity derivative settlements	—	(3,456)
Other	(216)	(226)
Net Cash Used in Financing Activities	(35,216)	(81,910)
Net Increase (Decrease) in Cash and Cash Equivalents	380	(2,809)
Cash and Cash Equivalents, Beginning of Period	5,674	8,843
Cash and Cash Equivalents, End of Period	$ 6,054	$ 6,034

ASCENT RESOURCES UTICA HOLDINGS, LLC
NATURAL GAS, OIL AND NGL PRODUCTION AND PRICES
(Unaudited)

	Three Months Ended
	March 31,
	2022	2021

Net Production Volumes:
Natural gas (mmcf)	163,886	143,967
Oil (mbbls)	624	840
NGL (mbbls)	1,391	2,028
Natural Gas Equivalents (mmcfe)	175,980	161,171

Average Daily Net Production Volumes:
Natural gas (mmcf/d)	1,821	1,600
Oil (mbbls/d)	7	9
NGL (mbbls/d)	15	23
Natural Gas Equivalents (mmcfe/d)	1,955	1,791
% Natural Gas	93 %	89 %
% Liquids	7 %	11 %

Average Sales Prices:
Natural gas ($/mcf)	$ 4.96	$ 2.99
Oil ($/bbl)	$ 87.13	$ 49.95
NGL ($/bbl)	$ 49.96	$ 27.38

Natural Gas Equivalents ($/mcfe)	$ 5.32	$ 3.27
Settlements of commodity derivatives ($/mcfe)	(2.09)	(0.13)
Average sales price, after effects of settled derivatives ($/mcfe)	$ 3.23	$ 3.14

ASCENT RESOURCES UTICA HOLDINGS, LLC
CAPITAL EXPENDITURES INCURRED
(Unaudited)

	Three Months Ended
	March 31,
($ in thousands)	2022	2021

Capital Expenditures Incurred:
Drilling and completion costs incurred	$ 198,378	$ 126,491
Acquisition and leasehold costs incurred	31,236	8,402
Capitalized interest incurred	9,999	13,303
Total Capital Expenditures Incurred	$ 239,613	$ 148,196

ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED NET INCOME (LOSS)
(Unaudited)

	Three Months Ended
	March 31,
($ in thousands)	2022	2021

Net Loss (GAAP)	$ (1,571,087)	$ (42,920)
Adjustments to reconcile net loss to Adjusted Net Income:
Impairment of unproved natural gas and oil properties	17,858	17,394
Change in fair value of commodity derivatives	1,628,397	77,659
Change in fair value of interest rate derivatives	(1,738)	(139)
Change in fair value of contingent payment right	7,980	5,446
Stock-based compensation	875	1,083
Other	(1,784)	—
Adjusted Net Income (Non-GAAP)^(a)(b)	$ 80,501	$ 58,523

(a)	As shown above and on the following pages, Ascent uses Adjusted Net Income (Loss), Adjusted EBITDAX, Last Twelve Months ("LTM") Adjusted EBITDAX, Last Quarter Annualized ("LQA") Adjusted EBITDAX, Net Debt, and Adjusted Free Cash Flow (non-GAAP measures) as supplemental measures to evaluate the performance of its assets. Ascent believes these non-GAAP measures provide meaningful information to our investors and lenders, as discussed below. These non-GAAP measures, as used and defined by Ascent, are not measures of performance as determined by United States generally accepted accounting principles (US GAAP) and may not be comparable to similarly titled measures employed by other companies.

	Non-GAAP measures should not be considered in isolation or as substitutes for operating income, net income or loss, cash flows provided by or used in operating, investing and financing activities or other income or cash flow statement data prepared in accordance with GAAP. Non-GAAP measures provide no information regarding a company's capital structure, borrowings, interest costs, capital expenditures and working capital movement. Non-GAAP measures do not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, exploration expenses and other commitments and obligations. However, Ascent's management team believes these non-GAAP measures are useful to an investor in evaluating Ascent's financial performance because these measures:

		•	are widely used by investors in the natural gas and oil industry to measure a company's operating performance without regard to items excluded from the calculation of such terms, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;

		•	are more comparable to estimates used by analysts;

		•	help investors to more meaningfully evaluate and compare the results of Ascent's operations from period to period by removing the effect of its capital structure from its operating structure;

		•	excludes one-time items, non-cash items or items whose timing or amount cannot be reasonably estimated; and

		•	are used by Ascent's management team for various purposes, including as a measure of operating performance, in presentations to its Board of Managers and as a basis for strategic planning and forecasting.

	There are significant limitations to using non-GAAP measures as measures of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect Ascent's net income or loss, the lack of comparability of results of operations of different companies, and the different methods of calculating non-GAAP measures reported by different companies.

(b)	Ascent defines "Adjusted Net Income (Loss)" as net income (loss) before impairment of unproved natural gas and oil properties; change in fair value of commodity derivatives; change in fair value of interest rate derivatives; change in fair value of contingent payment right; stock-based compensation; and other non-recurring items. Adjusted Net Income is a supplemental measure of operating performance monitored by management that is not defined under GAAP and does not represent, and should not be considered as, an alternative to net income (loss), as determined by GAAP.

ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT
(Unaudited)

Adjusted EBITDAX

	Three Months Ended
	March 31,
($ in thousands)	2022	2021

Net Loss (GAAP)	$ (1,571,087)	$ (42,920)
Adjustments to reconcile net loss to Adjusted EBITDAX:
Exploration expenses	18,409	18,493
Depreciation, depletion and amortization	152,279	139,456
Interest expense, net	44,965	41,457
Change in fair value of commodity derivatives	1,628,397	77,659
Change in fair value of contingent payment right	7,980	5,446
Stock-based compensation	875	1,083
Other	(1,784)	—
Adjusted EBITDAX (Non-GAAP)^(a)(b)	$ 280,034	$ 240,674


(a)	See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) for a discussion around our uses of non-GAAP measures.

(b)	Ascent defines "Adjusted EBITDAX" as net income (loss) before exploration expenses; depreciation, depletion and amortization; interest expense, net; change in fair value of commodity derivatives; change in fair value of contingent payment right; stock-based compensation; and other non-recurring items. Adjusted EBITDAX is a supplemental measure of operating performance monitored by management that is not defined under GAAP and does not represent, and should not be considered as, an alternative to net income (loss), as determined by GAAP.

ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT (CONTINUED)
(Unaudited)

LTM Adjusted EBITDAX

	Three Months Ended				Twelve Months Ended
	March 31,	December 31,	September 30,	June 30,	March 31,
($ in thousands)	2022	2021	2021	2021	2022
Net Income (Loss) (GAAP)	$ (1,571,087)	$ 1,110,012	$ (1,256,435)	$ (616,942)	$ (2,334,452)
Adjustments to reconcile net income (loss) to Adjusted EBITDAX:
Exploration expenses	18,409	26,061	22,274	16,539	83,283
Depreciation, depletion and amortization	152,279	159,286	151,902	147,763	611,230
Interest expense, net	44,965	47,034	44,996	41,353	178,348
Change in fair value of commodity derivatives	1,628,397	(1,066,801)	1,284,758	624,760	2,471,114
Change in fair value of contingent payment right	7,980	(407)	1,544	13,338	22,455
Losses on purchases or exchanges of debt	—	—	—	3,822	3,822
Stock-based compensation	875	815	816	902	3,408
Non-recurring legal expense	—	1,372	—	—	1,372
Other	(1,784)	5,847	—	—	4,063
Adjusted EBITDAX (Non-GAAP)^(a)(b)	$ 280,034	$ 283,219	$ 249,855	$ 231,535	$ 1,044,643


	Three Months Ended				Twelve Months Ended
	March 31,	December 31,	September 30,	June 30,	March 31,
($ in thousands)	2021	2020	2020	2020	2021
Net Income (Loss) (GAAP)	$ (42,920)	$ 168,636	$ (552,389)	$ (291,046)	$ (717,719)
Adjustments to reconcile net income (loss) to Adjusted EBITDAX:
Exploration expenses	18,493	26,323	28,096	22,858	95,770
Depreciation, depletion and amortization	139,456	162,431	196,232	202,446	700,565
Interest expense, net	41,457	35,791	33,292	31,245	141,785
Change in fair value of commodity derivatives	77,659	(202,620)	500,175	239,847	615,061
Change in fair value of contingent payment right	5,446	6,518	—	—	11,964
Losses on purchases or exchanges of debt	—	15,708	3,632	190	19,530
Stock-based compensation	1,083	1,065	710	—	2,858
Non-recurring legal expense	—	—	—	5,572	5,572
Adjusted EBITDAX (Non-GAAP)^(a)(b)	$ 240,674	$ 213,852	$ 209,748	$ 211,112	$ 875,386


(a)	See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) for a discussion around our uses of non-GAAP measures.

(b)	Ascent defines "Adjusted EBITDAX" as net income (loss) before exploration expenses; depreciation, depletion and amortization; interest expense, net; change in fair value of commodity derivatives; change in fair value of contingent payment right; stock-based compensation; and other non-recurring items. Adjusted EBITDAX is a supplemental measure of operating performance monitored by management that is not defined under GAAP and does not represent, and should not be considered as, an alternative to net income (loss), as determined by GAAP.

ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED EBITDAX AND NET DEBT (CONTINUED)
(Unaudited)

Net Debt, Net Debt to LTM Adjusted EBITDAX and Net Debt to LQA Adjusted EBITDAX

	March 31,
($ in thousands)	2022	2021

Net Debt:
Total debt	$ 2,556,825	$ 2,645,558
Less: cash and cash equivalents	6,054	6,034
Net Debt^(a)	$ 2,550,771	$ 2,639,524

Net Debt to LTM Adjusted EBITDAX:
Net Debt^(a)	$ 2,550,771	$ 2,639,524
LTM Adjusted EBITDAX (Non-GAAP)^(b)	$ 1,044,643	$ 875,386
Net Debt to LTM Adjusted EBITDAX	2.4 x	3.0 x

Net Debt to LQA Adjusted EBITDAX:
Net Debt^(a)	$ 2,550,771	$ 2,639,524
LQA Adjusted EBITDAX (Non-GAAP)	$ 1,120,136	$ 962,696
Net Debt to LQA Adjusted EBITDAX	2.3 x	2.7 x


(a)	Ascent defines "Net Debt" as total debt less cash and cash equivalents. Management uses Net Debt to determine our outstanding debt obligations that would not be readily satisfied by our cash and cash equivalents on hand. Net Debt does not represent, and should not be considered as, an alternative to total debt, as determined by GAAP.

(b)	Adjusted EBITDAX for the LTM ended March 31, 2022 and 2021, respectively. Refer to our Reconciliations of Adjusted EBITDAX and Net Debt for more details regarding our LTM Adjusted EBITDAX calculations.

ASCENT RESOURCES UTICA HOLDINGS, LLC
RECONCILIATIONS OF ADJUSTED FREE CASH FLOW
(Unaudited)

	Three Months Ended
	March 31,
($ in thousands)	2022	2021

Net Cash Provided by Operating Activities (GAAP)	$ 282,030	$ 210,346
Adjustments to reconcile Net Cash Provided by Operating Activities to Adjusted Free Cash Flow:
Changes in operating assets and liabilities	(42,607)	(4,218)
Drilling and completion costs incurred	(198,378)	(126,491)
Acquisition and leasehold costs incurred	(31,236)	(8,402)
Capitalized interest incurred	(9,999)	(13,303)
Financing commodity derivative settlements	—	(3,456)
Other	(1,784)	—
Adjusted Free Cash Flow (Non-GAAP)^(a)(b)	$ (1,974)	$ 54,476


(a)	See footnote (a) on the Reconciliations of Adjusted Net Income (Loss) for a discussion around our uses of non-GAAP measures.

(b)	Adjusted Free Cash Flow is an indicator of a company's ability to generate funding to maintain or expand its asset base, make distributions and repurchase or extinguish debt. Ascent defines "Adjusted Free Cash Flow" as net cash provided by operating activities adjusted for changes in operating assets and liabilities; drilling and completion costs incurred; acquisition and leasehold costs incurred; capitalized interest incurred; financing commodity derivative settlements; and certain other non-recurring items. Adjusted Free Cash Flow is a supplemental measure of liquidity monitored by management that is not defined under GAAP and that does not represent, and should not be considered as, an alternative to net cash provided by operating activities, as determined by GAAP.