Oklahoma City’s Ascent Resources Utica Holdings, LLC says it’s accelerating its drilling activity n the Utica play following results of its second quarter earnings.
The company reported $285 million in net income, adjusted net income of $277 million and adjusted EBITDAX of $477 million. It also incurred $272 million of total capital expenditures including $236 million for well costs and $12 million for capitalized interest.
Ascent generated $160 million of adjusted free cash flow during the quarter despite a realized hedge loss of nearly $604 million.
“The second quarter was one of exceptional execution for Ascent. While production for the quarter averaged 2.0 bcfe/d, we brought online 31 wells, with nearly half of those in the month of June, and exited the quarter at 2.2 bcfe/d. The business continues to be anchored by our strong operational execution and continued improvements to our balance sheet,” Ascent’s Chairman and Chief Executive Officer, Jeff Fisher said.
“We have elected to accelerate some activity from 2023 into the back half of this year in order to take advantage of service availability and a supportive macro backdrop. As a result of this change, and the continued inflationary headwinds, we are increasing our capital budget for the year while also revising our 2022 production guidance higher,” he added.
“We believe this change strikes the appropriate balance, allowing us to sell incremental unhedged volumes while de-risking our 2023 development plan. The prospects for the standalone business are stronger than ever as we remain well positioned to capitalize on the current macro environment.”
Second quarter 2022 net production averaged 1,971 mmcfe per day, consisting of 1,828 mmcf per day of natural gas, 8,330 bbls per day of oil and 15,473 bbls per day of natural gas liquids (“NGL”).
Second quarter 2022 price realizations, including the impact of settled commodity derivatives, were $4.21 per mcfe. Excluding the impact of settled commodity derivatives, price realizations were $7.58 per mcfe in the second quarter of 2022.
Net production for the six months ended June 30, 2022 averaged 1,963 mmcfe per day, consisting of 1,825 mmcf per day of natural gas, 7,635 bbls per day of oil and 15,464 bbls per day of NGLs.
Price realizations, including the impact of settled commodity derivatives, were $3.72 per mcfe for the six months ended June 30, 2022. Excluding the impact of settled commodity derivatives, price realizations were $6.46 per mcfe for the year-to-date period.
For the six months ended June 30, 2022, Ascent reported a net loss of $1.3 billion, Adjusted Net Income of $358 million and Adjusted EBITDAX of $757 million. Ascent incurred a total of $511 million of capital expenditures during the six months ended June 30, 2022 including $434 million for well costs, $55 million for acquisition and leasehold costs, and $22 million for capitalized interest. The Company generated $158 million of Adjusted Free Cash Flow during the six months ended June 30, 2022, despite a realized hedge loss of approximately $971 million.
As of June 30, 2022, Ascent had total debt of approximately $3.0 billion, with $860 million of borrowings and $169 million of letters of credit issued under the Credit Facility. Liquidity as of June 30, 2022 was $978 million, comprised of $971 million of available borrowing capacity under the revolving credit facility and $7 million of cash on hand. Our leverage ratio at the end of the quarter was 2.3x based on an LTM Adjusted EBITDAX basis, and 1.5x on an LQA Adjusted EBITDAX basis.
In June, Ascent entered into an amended and restated credit agreement with a syndicate of banks to extend the maturity of the Credit Facility to June 2027 while increasing the borrowing base and elected commitment amount to $3.0 billion and $2.0 billion, respectively. The Credit Facility will be governed by the lesser of the borrowing base and the elected commitment amount.
During the second quarter of 2022, the company said it had spud 22 operated wells, hydraulically fractured 22 wells, and turned in line 31 wells with an average lateral length of approximately 14,600 feet. As of June 30, 2022, Ascent had 708 gross operated producing Utica wells.
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