Market Overview

Montage Resources Corporation Announces Exceptional First Quarter 2019 Results Driven by Superior Operational Execution, Updates Full Year 2019 Guidance for Increased Production and Enhanced Cash Margins, and Obtains Borrowing Base Increase of 7%

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Montage Resources Corporation (NYSE:MR) (the "Company" or "Montage
Resources") today announced its first quarter 2019 financial and
operational results along with second quarter 2019 and revised full year
2019 guidance. Financial and operational results for the first quarter
2019 include the impact of the merger with Blue Ridge Mountain
Resources, Inc. ("Blue Ridge") since the closing of the transaction on
February 28, 2019. In addition, the Company will be posting an updated
investor presentation to its corporate website.

First Quarter 2019 Highlights:

  • Average net daily production was 407.5 MMcfe per day, above the high
    end of the Company's previously issued guidance range and above
    analyst consensus expectations.
  • Realized an average natural gas price, before the impact of cash
    settled derivatives and firm transportation expenses, of $3.01 per
    Mcf, a $0.14 per Mcf discount to the average monthly NYMEX settled
    natural gas price during the quarter, with the price differential
    better than the Company's previously issued guidance and analyst
    consensus expectations.
  • Per unit cash production costs (including lease operating,
    transportation, gathering and compression, production and ad valorem
    taxes) were $1.41 per Mcfe1, including $0.41 per
    Mcfe in firm transportation expenses, with the per unit cash
    production costs better than the Company's previously issued guidance
    and analyst consensus expectations.
  • Net loss for the first quarter of 2019 was ($14.1) million; Adjusted
    net income2 for the first quarter of 2019 was $18.0
    million; and Adjusted EBITDAX2 for the first quarter of
    2019 was $68.9 million, better than analyst consensus expectations.
  • Subsequent to the end of the first quarter 2019, completed its spring
    borrowing base redetermination, resulting in a $25 million borrowing
    base increase, or approximately 7%, from $375 million to $400 million.

Positive Revisions to Full Year 2019 Guidance:

  • Full year 2019 production guidance of 520 to 540 MMcfe per day, an
    increase of approximately 3% based upon the midpoint of the Company's
    previously issued guidance range.
  • Realized natural gas price differential guidance of ($0.15) to ($0.25)
    per Mcf, better by $0.05 per Mcf based upon the midpoint of the
    Company's previously issued guidance range.
  • Per unit cash production costs of $1.35 to $1.45 per Mcfe1,
    lower by approximately 12.5% based upon the midpoint of the Company's
    previously issued guidance range.
           

1

 

Revenues include transportation expense for NGLs related to
Mariner East II; previous cash production cost guidance included
approximately $0.10 per Mcfe for NGLs related to Mariner East II
recorded as a reduction to revenue

2

Non-GAAP measure. See reconciliation for details

 

John Reinhart, President and CEO, commented on the Company's first
quarter 2019 results, "Our first quarter financials, which include only
one full month of consolidated results, highlight the power of the
combined entity and the harnessing of operational synergies to drive
improved cycle times, translating into higher reported volumes. This
production beat, coupled with better per unit cash production costs,
delivers cash operating margins that we believe are among the best in
the Appalachian Basin. The Company's focus on cost and operational
improvements delivered on first quarter cycle time improvements of
approximately two weeks, on average, relative to a very aggressive
schedule. The Company is on track to drive well costs down below the
published 2019 total well average of approximately $870 per foot. We
believe that this level of execution outperformance regarding cost and
cycle times will help to potentially accelerate our goals related to
cash flow generation while maintaining the balance sheet strength that
the Company possesses.

"For the first quarter of 2019, the Company generated revenue of $141.5
million, a 28% increase over the first quarter of 2018, while also
realizing a 10% increase in adjusted EBITDAX1 over the first
quarter of 2018. From an operations perspective, the team has been able
to steadily achieve a completion cadence of approximately 9 stages per
day on the last three pads, allowing us to place wells to sales more
quickly than originally budgeted. With the spud to turn-to-sales
timeline compressed and the continued outperformance of our wells, we
have raised our production guidance for the full year 2019. As we look
out at our capital program for the full year, we remain highly confident
in our ability to deliver on our production targets while remaining at
or below our guidance range for capital expenditures.

"I believe this is a very exciting time for Montage Resources and our
shareholders, as the building blocks of our "Focus Five" strategy takes
hold. The natural gas macro environment we are currently experiencing
reinforces the importance of our belief in being a low cost producer
with high quality assets. With a sound business model, clean balance
sheet, operational excellence, low leverage, disciplined growth and
superior well performance, the opportunity for significant valuation
uplift from the current levels remains extremely high."

           

1

 

Non-GAAP measure. See reconciliation for details

 

Operational Discussion

The Company's production for the three months ended March 31, 2019 and
2018 is set forth in the following table:

 
Three Months Ended
March 31,
2019     2018
Production:    
Natural gas (MMcf) 27,205.0 20,343.3
NGLs (Mbbls) 980.5 772.7
Oil (Mbbls)   598.0   565.4
Total (MMcfe) 36,676.0 28,371.9
 
Average daily production volume:
Natural gas (Mcf/d) 302,278 226,037
NGLs (Bbls/d) 10,894 8,586
Oil (Bbls/d)   6,644   6,282
Total (MMcfe/d) 407.5 315.2
 

Financial Discussion

Revenue for the three months ended March 31, 2019 totaled $141.5
million, compared to $110.2 million for the three months ended March 31,
2018. Adjusted Revenue2, which includes the impact of cash
settled derivatives and excludes brokered natural gas and marketing
revenue, totaled $128.6 million for the three months ended March 31,
2019 compared to $110.3 million for the three months ended March 31,
2018. Net Income (Loss) for the three months ended March 31, 2019 was
($14.1) million, or $(0.55) per share, compared to ($2.6) million, or
$(0.13) per share3, for the three months ended March 31,
2018. Adjusted Net Income2 for the three months ended
March 31, 2019 was $18.0 million, or $0.70 per share, compared to $10.2
million, or $0.52 per share3, for the three months ended
March 31, 2018. Adjusted EBITDAX2 was $68.9 million for
the three months ended March 31, 2019 compared to $63.0 million for the
three months ended March 31, 2018.

           

2

 

Adjusted Revenue, Adjusted Net Income (Loss) and Adjusted
EBITDAX are non-GAAP financial measures. Tables reconciling
Adjusted Revenue, Adjusted Net Income (Loss) 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.

3

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.

 

Average realized price calculations for the three months ended March 31,
2019 and 2018 are set forth in the table below. Realized price
calculations for NGLs include costs related to Mariner East II that are
recorded as a reduction to revenue:

 
Three Months Ended
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