Market Overview

Montage Resources Corporation Announces Fourth Quarter and Full Year 2018 Operational and Financial Results

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Montage Resources Corporation (NYSE:MR) (the "Company" or "Montage
Resources") today announced its fourth quarter 2018 and full year 2018
financial and operational results.

Fourth Quarter 2018 Highlights:

  • Average net daily production was 404.5 MMcfe per day, consisting of
    72% natural gas and 28% liquids.
  • Realized an average natural gas price, before the impact of cash
    settled derivatives and firm transportation expenses, of $3.59 per
    Mcf, a $0.05 per Mcf discount to the average monthly NYMEX settled
    natural gas price during the quarter.
  • Realized an average oil price, before the impact of cash settled
    derivatives, of $53.10 per barrel, a $6.87 per barrel discount to the
    average WTI oil price during the quarter.
  • Realized an average natural gas liquids ("NGL") price, before the
    impact of cash settled derivatives, of $22.40 per barrel, or
    approximately 37% of the average WTI oil price during the quarter.
  • Per unit cash production costs (including lease operating,
    transportation, gathering and compression, production and ad valorem
    taxes) were $1.34 per Mcfe, including $0.40 per Mcfe in
    firm transportation expenses.
  • Net income for the fourth quarter of 2018 was $36.5 million; Adjusted
    net income1 for the fourth quarter of 2018 was $23.6
    million; and Adjusted EBITDAX1 for the fourth quarter of
    2018 was $80.7 million.
  • The Company commenced drilling 9 gross (5.7 net) operated wells,
    commenced completions of 6 gross (3.1 net) operated wells and turned
    to sales 3 gross (0.8 net) operated Utica Shale wells.

Full Year 2018 Highlights

  • Average net daily production was 343.2 MMcfe per day, consisting of
    72% natural gas and 28% liquids.
  • Realized an average natural gas price, before the impact of cash
    settled derivatives and firm transportation expenses, of $3.05 per
    Mcf, a $0.04 per Mcf discount to the average monthly NYMEX settled
    natural gas price during the year.
  • Realized an average oil price, before the impact of cash settled
    derivatives, of $58.12 per barrel, a $7.11 per barrel discount to the
    average WTI oil price during the year.
  • Realized an average NGL price, before the impact of cash settled
    derivatives, of $24.59 per barrel, or approximately 38% of the average
    WTI oil price during the year.
  • Per unit cash production costs (including lease operating,
    transportation, gathering and compression, production and ad valorem
    taxes) were $1.41 per Mcfe, including $0.39 per Mcfe in firm
    transportation expenses.
  • Net income for the year was $18.8 million; Adjusted net income1
    for the year was $47.4 million; and Adjusted EBITDAX1 for
    the year was $261.6 million.
  • Capital expenditures were $250.0 million, including $223.7 million for
    drilling and completions, $13.7 million for midstream expenditures,
    $11.8 million for land-related expenditures, and $0.8 million for
    corporate-related expenditures.
  • Proved reserves grew 28% over the previous year to approximately 1.86
    Tcfe at SEC pricing.

1

 

Non-GAAP measure. See reconciliation for details

 

John Reinhart, President and CEO, commented on the Company's fourth
quarter and full year 2018 results, "The fourth quarter's results
represent yet another solid performance by the team with the continued
focus on execution and efficiency generating cash flows above
expectations, continued improvement in production and operating expenses
along with strong well performance in all of our project areas. This
level of execution and performance helps to potentially accelerate our
goals related to cash flow generation while maintaining balance sheet
strength.

For the fourth quarter of 2018, the Company was able to achieve record
revenue of $171.2 million, a 64% increase over the fourth quarter of
2017, while also posting a 51% increase in adjusted EBITDAX1
over the fourth quarter of 2017, which came in at a new Company record
of $80.7 million. From a capital spending perspective, the Company
illustrated its focus on capital discipline with the roughly 20%
reduction in year over year spend and it managed its capital expenditure
plan consistent with guidance that was previously provided, ending the
year on the target of approximately $250 million. These achievements
highlight the strength of the portfolio of assets, the demonstration of
the business model to generate positive free cash flow and the ability
to drive value for shareholders.

The industry is clearly faced with a new set of operational and
financial expectations and as we move through 2019 we will execute on
the plan we have created that mirrors our five strategic priorities and
commitment to generating organic free cash flow, while still moderately
growing our production base. Decreasing our cycle times while continuing
to build scale will allow the Company to enhance its operating margins,
lower its cost of capital, be well positioned in terms of base
production and significantly improve its cost structure. We are looking
forward to the continued integration of the teams and the potential
opportunities this business model can provide."

1

 

Non-GAAP measure. See reconciliation for details

 

Operational Discussion

The Company's production for the three and twelve months ended
December 31, 2018 and 2017 is set forth in the following table:

   
Three Months Ended Year Ended
December 31, December 31,
2018   2017 2018   2017
Production:        
Natural gas (MMcf) 26,657.3 21,178.4 89,965.7 87,404.2
NGLs (Mbbls) 1,010.5 711.0 3,503.1 2,713.7
Oil (Mbbls)   748.6   539.2   2,378.0   1,622.4
Total (MMcfe) 37,211.9 28,679.7 125,252.3 113,420.8
 
Average daily production volume:
Natural gas (Mcf/d) 289,753 230,201 246,481 239,464
NGLs (Bbls/d) 10,984 7,728 9,598 7,435
Oil (Bbls/d)   8,137   5,861   6,515   4,445
Total (MMcfe/d) 404.5 311.7
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