Ascent Resources Utica Holdings' second quarter earnings hit by commodity values
Decreased commodity values and mark-to-market value changes on hedges pushed Ascent Resources Utica Holdings’ financial results into negative territory the second quarter of this year.
The company reported Wednesday it lost about $291 million on total revenues of about $242.9 million for the period.
In the second quarter of 2019, it posted net earnings of about $356 million on total revenues of about $791 million.
The company’s financial results for the period resulted despite the fact that it boosted its average daily total production for the period by 18.75%, year-over-year.
"As shown via our results, Ascent continues to deliver best-in-class operational results of any unconventional resource play in North America," Jeff Fisher, its CEO, stated as part of its earnings release. "The second quarter saw our overall capital efficiency reach new records as we produced 2.1 billion cubic feet (equivalent) per day on only $160 million of quarterly capital expenditures.”
From a production standpoint, Ascent certainly isn’t slowing its growth.
Average daily total production for the second quarter of 2020 was about 2.09 billion cubic feet (equivalent), compared to about 1.76 billion cubic feet (equivalent) in 2019.
The company produced a daily average of about 1.87 billion cubic feet of natural gas during the period, up from about 1.57 billion cubic feet in 2019.
Second quarter average daily natural gas liquids production also climbed year-over-year, from 18,000 barrels to 25,000.
Second quarter average daily oil production fell using the same comparison, from 14,000 barrels in 2019 to 11,000 this year.
Commodity pricing didn’t do the company any favors, however.
It reported earning about $275 million on its natural gas production during the second quarter of 2020, compared to about $360 million in 2019.
Revenue on natural gas liquids fell from about $26.2 million in the second quarter of 2019 to about $17.3 million this year.
The company earned about $65.2 million in revenues on oil sales in the second quarter of 2019, compared to about $21 million this year.
The company also had to write off about $71 million in value changes on its mark-to-market hedges for the second quarter of 2020.
Ascent reported that its second-quarter 2020 earnings before interest, taxes, depreciation, amortization and exploration and production (EBITDAX) costs was a negative $34.7 million, compared to positive EBITDAX of about $556.4 million in 2019.
However, it trimmed losses on free cash flow in the second quarter of 2020 to about $39.8 million, compared to losses of about $188 million in 2019.
The company reported Wednesday it owes lenders about $2.8 billion, including $1.2 billion drawn under its revolving credit facility, compared to $2.7 billion at the end of March.
It had $497 million of available capacity in its borrowing base on June 30, giving it a total liquidity of $506 million including $9 million of cash on hand.
Fisher stated Wednesday that Ascent remains confident it will meet its production, capital and free cash flow guidance for the year, “despite the many headwinds the country and the industry have faced."
“This was all accomplished while still continuing to prioritize the health of our employees, contractors and communities where we operate," he continued.