Ascent Resources Utica Holdings, LLC reported fourth quarter 2021 earnings of $1.1 billion in net income, along with $76 million in adjusted net income and $283 million in adjusted EBITDAX.
The Oklahoma City company said its net income in the quarter was largely driven by a $1.1 billion unrealized commodity derivative fair value gain primarily due to a decrease in the forward strip of natural gas.
The company reported $187 million in total capital expenditures for the quarter including $156 million for well costs, another $20 million for acquisition and leasehold costs plus $11 million for capitalized interest.
Ascent also said it managed to generate $54 million of free cash flow in the quarter despite a realized hedge loss of nearly $534 million.
As a result of the fourth quarter finances, Ascent ended up for the full year with a net loss of $806 million, adjusted net income of $227 million and adjusted EBITDAX of $1 billion. The company said the net loss was driven by a $920 million unrealized commodity derivative fair value loss.
The fourth quarter finances compared to the third quarter that ended Sept. 30, 2021 when Ascent’s net loss was $1.9 billion. The company’s total debt outstanding at the time was also $2.6 billion.
Ascent’s full-year capital expenditures were $672 million including $566 million for ell costs. It also generated $175 million of free cash flow for the year ended Dec. 31, 2021 despite the realized hedge loss of approximately $824 million.
Still, Ascent Chairman and CEO Jeff Fisher thinks the company finished the year in what he called a “very strong fashion.” The company had more than 2.0 bcfe/d of production that generated $54 million of free cash flow.
“These key attributes have contributed to improved margins, reduced debt and leverage, and our second consecutive year of positive free cash flow generation despite over $800 million dollars in realized hedge losses during the year.”
He also predicted Ascent will continue to generate free cash flow throughout 2022 and the company will use the free cash flow to repay debt and improve its balance sheet.
Fourth quarter 2021 net production averaged 2,025 mmcfe per day, consisting of 1,877 mmcf per day of natural gas, 7,989 bbls per day of oil and 16,761 bbls per day of natural gas liquids (“NGL”).
Full-year 2021 production averaged 1,936 mmcfe per day, consisting of 1,769 mmcf per day of natural gas, 8,521 bbls per day of oil and 19,211 bbls per day of NGLs.
As of December 31, 2021, Ascent had total debt outstanding of approximately $2.6 billion, with $495 million of borrowings and $169 million of letters of credit issued under the revolving credit facility. Liquidity as of December 31, 2021 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.
During the fourth quarter of 2021, Ascent operated four drilling rigs and one fracture stimulation crew (with an additional spot crew in the month of December). The company spud 16 operated wells, hydraulically fractured 17 wells, and turned in line 18 wells with an average lateral length of 13,809 feet. As of December 31, 2021, Ascent had 668 gross operated producing Utica wells.
The company operated two fracture stimulation crews during the month of December and plans to employ a spot frac crew throughout 2022. It also expects its full-year 2022 capital budget to come in between $710 million to $770 million, and to be fully funded with operating cash flow.
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