The third quarter for Oklahoma City-based Ascent Resources Utica Holdings, LLC was so strong that Chairman and CEO Jeff Fisher said he expects the company to finish 2022 on a “strong note.”
Ascent, a company with more than 700 wells in the Utica play, reported net income of $47 million, Adjusted Net Income of $307 million and Adjusted EBITDAX of $559 million. The company incurred $229 million of total capital expenditures in the third quarter of 2022 including $195 million for D&C costs, $24 million for land and leasehold costs, and $10 million for capitalized interest.
Ascent also generated $277 million of Adjusted Free Cash Flow during the three months ended September 30, 2022, despite a realized commodity hedge loss of approximately $856 million.
“The third quarter was excellent, both operationally and financially as the team continues to execute on our plan,” said Fisher.
“We are excited about the opportunity in front of us as we close out the year and move into 2023.”
Third quarter 2022 net production averaged 2,339 mmcfe per day, consisting of 2,204 mmcf per day of natural gas, 6,663 bbls per day of oil and 15,826 bbls per day of natural gas liquids (“NGL”).
Third quarter 2022 price realizations, including the impact of settled commodity derivatives, were $4.07 per mcfe. Excluding the impact of settled commodity derivatives, price realizations were $8.05 per mcfe in the third quarter of 2022.
Net production for the nine months ended September 30, 2022 averaged 2,090 mmcfe per day, consisting of 1,953 mmcf per day of natural gas, 7,308 bbls per day of oil and 15,586 bbls per day of NGLs.
Price realizations, including the impact of settled commodity derivatives, were $3.86 per mcfe for the nine months ended September 30, 2022. Excluding the impact of settled commodity derivatives, price realizations were $7.06 per mcfe for the year-to-date period.
For the nine months ended September 30, 2022, Ascent reported a net loss of $1.24 billion, Adjusted Net Income of $664 million and Adjusted EBITDAX of $1.32 billion. Ascent incurred a total of $741 million of capital expenditures during the nine months ended September 30, 2022 including $629 million for D&C costs, $79 million for land and leasehold costs, and $33 million for capitalized interest. The Company generated $435 million of Adjusted Free Cash Flow during the nine months ended September 30, 2022, despite a realized commodity hedge loss of approximately $1.83 billion.
As of September 30, 2022, Ascent had total debt of approximately $2.91 billion, with $805 million of borrowings and $169 million of letters of credit issued under the Credit Facility. Liquidity as of September 30, 2022 was $1.03 billion, comprised of $1.03 billion of available borrowing capacity under the revolving credit facility and $8 million of cash on hand. Our leverage ratio at the end of the quarter was 1.7x based on an LTM Adjusted EBITDAX basis, and 1.3x on an LQA Adjusted EBITDAX basis when including the full-year EBITDAX impact of the XTO acquisition.
During the third quarter of 2022, Ascent stated it spud 19 operated wells, hydraulically fractured 17 wells, and turned-in-line 13 wells with an average lateral length of approximately 12,000 feet. As of September 30, 2022, Ascent had 708 gross operated producing Utica wells.
Over the last two quarters, activity has been exceptionally busy as the firm brought online 44 new wells across the play, with 27 of the wells turning-in-line between June and August. This level of activity contributed to a substantial increase in production during the third quarter.
Fourth quarter turn-in-line activity is expected to increase as Ascent obtained an additional frac crew in October.
The activity will be more balanced than prior quarters as several liquids rich locations are set to come online. On the cost front, the team continues to experience many of the inflationary and supply chain issues impacting the industry and economy at large, but the firm said it is working through these challenges to mitigate further impacts to our program.