When Jeff Fisher, chairman and CEO of Ascent Resources Utica Holdings, LLC says the company finished on a strong fourth quarter, he was not exaggerating. Still, the company intends to focus more on oil in the remainder of 2024 because of what’s happened to the natural gas market.
Ascent reported its fourth quarter and full-year 2023 operating and financial results showing $757 million in net income and $86 million in adjusted net income for the fourth quarter and $2.1 billion in net income for the year and $317 million in adjusted net income for the past 12 months.
Here’s how strong it was. Ascent had $17 million in net income in the third quarter, adjusted net income of $59 million and adjusted EBITDAX of $295 million.
It also had a 35% increase from year to date in its liquids production and a 12 cent per Mcfe prevmium to the NYMEX pricing on its full year pre-hedge natural gas equivalent price of $2.86 per Mcfe.
Fisher said Ascent finished the year by beating its top-end of its production guidance range while coming in on target for capital.
“The team methodically executed on our development plan, substantially grew liquids production, improved efficiencies, and simplified the balance sheet all while generating positive free cash flow for a fourth consecutive year,” he added.
The Ascent CEO said the company intends to focus more on lilquids in the remainder of 2024, “result in a modest reduction in gas production as we continued to rebalance our capital allocation.”
“We also expect to see a substantial reduction in capital intensity in 2024, which is being driven by continued efficiency gains coupled with shallower declines and a focus on optimization of our production base.”
Ascent has significant hedges in place in order to reduce exposure to the volatility in commodity prices, as well as to protect its expected operating cash flow. As of January 10, 2024, Ascent had hedged 1,410,000 mmbtu per day of natural gas production in 2024 at an average downside price of $3.55 per mmbtu, and 1,350,000 mmbtu per day in 2025 at an average downside price of $3.82 per mmbtu.
Additionally, Ascent has also hedged nearly 10,000 bbls per day of crude oil production at an average price of $75.46 per bbl in 2024, and 2,000 bbls per day in 2025 at an average price of $70.00.
“We also have significant natural gas hedges in place for 2026 and subsequent to year-end 2023 we had an opportunity to optimize a portion of that position, resulting in the Company receiving $81 million of proceeds in the first quarter of 2024,” stated the company’s announcement of earnings.
Fourth quarter 2023 net production averaged 2,095 mmcfe per day, consisting of 1,888 mmcf per day of natural gas, 10,826 bbls per day of oil and 23,707 bbls per day of natural gas liquids (“NGL”).
Full-Year 2023 Financial Results
Net production for the year ended December 31, 2023 averaged 2,135 mmcfe per day, consisting of 1,953 mmcf per day of natural gas, 10,244 bbls per day of oil and 20,230 bbls per day of NGLs.
For the year ended December 31, 2023, Ascent reported net income of $2.1 billion, Adjusted Net Income of $317 million and Adjusted EBITDAX of $1.2 billion. Ascent incurred a total of $1.0 billion of capital expenditures during the year ended December 31, 2023 consisting of $844 million of D&C costs, $138 million of land and leasehold costs, and $36 million for capitalized interest.
At the end of the fiscal year, Ascent’s total debt was $2.5 billion with $765 million of borrowings and $169 million of letters of credit issued under the credit facility.
The company stated it spud 15 operated wells and hydraulically fractured 10 others during the fourth quarter. It also turned-in-line 19 wells with an average lateral length of nearly 16,700 feet. For the full-year Ascent spud 74 operated wells, hydraulically fractured 75 wells, and turned-in-line 71 wells with an average lateral length of approximately 14,200 feet. As of December 31, 2023, Ascent had 882 gross operated producing Utica wells.
The fourth quarter drilling effort was down from the 19 wells spud in the third quarter and the 24 wells that had been fractured. But the company’s number of operated producing Utica wells incdreased from 863 in the third quarter to 882 by the end of the fourth quarter.
The Company expects its full-year 2024 total capital budget to come in between $750 million and $810 million, be fully funded with operating cash flow and be more than sufficient to hold production flat on an annual basis. A detailed summary including production, differentials, expenses and operational counts is included in the table below:
