Montage Resources Corporation (NYSE:MR) (the “Company” or
“Montage” or “Montage Resources”) today announced its third quarter
2020 operational and financial results.
Third Quarter 2020 Highlights:
- Merger with Southwestern Energy Company expected to close
following Montage Resources shareholder vote on November 12,
2020
- Average net daily production was 602.6 MMcfe per day, above the
high end of the Company’s previously issued guidance range of 580
to 600 MMcfe per day, consisting of 82% natural gas and 18%
liquids
- Average natural gas equivalent realized price was $2.30 per
Mcfe, including cash settled commodity derivatives and excluding
firm transportation expenses
- Per unit cash production costs (including lease operating,
transportation, gathering and compression, production, and ad
valorem taxes) were $1.21 per Mcfe, below the Company’s previously
issued guidance range of $1.25 to $1.35 per Mcfe
- Cash operating margin of $0.93 per Mcfe, or 40%, which was a
$0.17 per Mcfe improvement from the second quarter 2020 of $0.76
per Mcfe
- Capital spending for the quarter was $22.3 million, with
cumulative spending for the nine months ended September 30, 2020 of
$103.8 million
Operational Discussion
The Company’s net production for the three and nine months ended
September 30, 2020 and 2019 is set forth in the following
table:
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Production:
Natural gas (MMcf)
45,333.6
43,289.9
131,353.1
109,613.9
NGLs (Mbbls)
1,150.6
1,401.1
3,342.7
3,414.9
Oil (Mbbls)
533.3
916.2
1,635.1
2,083.3
Total (MMcfe)
55,437.0
57,193.7
161,219.9
142,603.1
Average daily production
volume:
Natural gas (Mcf/d)
492,757
470,542
479,391
401,516
NGLs (Bbls/d)
12,507
15,229
12,200
12,509
Oil (Bbls/d)
5,797
9,959
5,968
7,631
Total (MMcfe/d)
602.6
621.7
588.4
522.4
Financial Discussion
Revenue for the three months ended September 30, 2020 totaled
$115.4 million, compared to $163.3 million for the three months
ended September 30, 2019. Adjusted Revenue1, which includes the
impact of cash settled commodity derivatives and excludes brokered
natural gas and marketing revenue and other revenue, totaled $127.3
million for the three months ended September 30, 2020 compared to
$164.8 million for the three months ended September 30, 2019. Net
Loss for the three months ended September 30, 2020 was ($92.2)
million, or $(2.56) per share, compared to Net Income of $4.3
million, or $0.12 per share, for the three months ended September
30, 2019. Adjusted Net Income (Loss)1 for the three months ended
September 30, 2020 was $(17.3) million, or $(0.48) per share,
compared to $20.5 million, or $0.57 per share for the three months
ended September 30, 2019. Adjusted EBITDAX1 was $51.0 million for
the three months ended September 30, 2020 compared to $83.6 million
for the three months ended September 30, 2019.
1 Adjusted Revenue, Adjusted Net Income and Adjusted EBITDAX are
non-GAAP financial measures. Tables reconciling Adjusted Revenue,
Adjusted Net Income and Adjusted EBITDAX to the most directly
comparable GAAP measures can be found at the end of the financial
statements included in this press release.
Average realized price calculations for the three and nine
months ended September 30, 2020 and 2019 are set forth in the table
below:
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Average realized price (excluding cash
settled commodity derivatives and firm transportation)
Natural gas ($/Mcf)
$
1.61
$
2.03
$
1.66
$
2.41
NGLs ($/Bbl)
16.03
14.42
13.45
17.82
Oil ($/Bbl)
32.16
49.09
32.36
49.64
Total average prices ($/Mcfe)
1.96
2.68
1.96
3.00
Average realized price (including cash
settled commodity derivatives, excluding firm
transportation)
Natural gas ($/Mcf)
$
1.92
$
2.28
$
2.02
$
2.49
NGLs ($/Bbl)
16.00
14.92
13.70
18.19
Oil ($/Bbl)
40.76
49.53
40.32
50.15
Total average prices ($/Mcfe)
2.30
2.88
2.34
3.08
Average realized price (including firm
transportation, excluding cash settled commodity
derivatives)
Natural gas ($/Mcf)
$
1.18
$
1.60
$
1.20
$
1.94
NGLs ($/Bbl)
16.03
14.42
13.45
17.82
Oil ($/Bbl)
32.16
49.09
32.36
49.64
Total average prices ($/Mcfe)
1.61
2.35
1.59
2.64
Average realized price (including cash
settled commodity derivatives and firm transportation)
Natural gas ($/Mcf)
$
1.50
$
1.85
$
1.57
$
2.02
NGLs ($/Bbl)
16.00
14.92
13.70
18.19
Oil ($/Bbl)
40.76
49.53
40.32
50.15
Total average prices ($/Mcfe)
1.95
2.56
1.97
2.72
*rounded to the nearest penny
The Company’s cash production costs (which include lease
operating, transportation, gathering and compression, production
and ad valorem taxes) are shown in the table below. Per unit cash
production costs, which include $0.35 per Mcfe of firm
transportation expense, were $1.21 per Mcfe for the third quarter
of 2020, a decrease of approximately 2% compared to the third
quarter of 2019.
General and administrative expense (including one-time
merger-related expenses and severance) was $12.1 million and $14.6
million for the three months ended September 30, 2020 and 2019,
respectively, and is shown in the table below. Cash general and
administrative expense2 (excluding merger-related expenses,
severance and stock-based compensation expense) was $8.7 million
and $10.2 million for the three months ended September 30, 2020 and
2019, respectively. General and administrative expense per Mcfe
(including one-time merger-related expenses and severance) was
$0.22 in the three months ended September 30, 2020 compared to
$0.25 in the three months ended September 30, 2019. Cash general
and administrative expense2 per Mcfe (excluding merger-related
expenses, severance and stock-based compensation expense) decreased
approximately 11% to $0.16 in the three months ended September 30,
2020 compared to $0.18 in the three months ended September 30,
2019.
2 Cash general and administrative expense is a non-GAAP
financial measure. A table reconciling cash general and
administrative expense to the most directly comparable GAAP measure
can be found under “Cash General and Administrative Expense” in
this press release.
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
Operating expenses (in
thousands):
Lease operating
$
11,494
$
11,986
$
33,436
$
29,651
Transportation, gathering and
compression
51,961
57,027
157,472
150,065
Production and ad valorem taxes
3,677
1,660
10,146
8,519
Total cash production costs
$
67,132
$
70,673
$
201,054
$
188,235
Depreciation, depletion, amortization and
accretion
53,153
45,456
140,058
113,950
General and administrative1
12,144
14,580
33,594
57,074
Operating expenses per Mcfe:
Lease operating
$
0.21
$
0.21
$
0.21
$
0.21
Transportation, gathering and
compression
0.93
0.99
0.98
1.04
Production and ad valorem taxes
0.07
0.03
0.06
0.06
Total cash production costs
$
1.21
$
1.23
$
1.25
$
1.31
Depreciation, depletion, amortization and
accretion
0.96
0.79
0.87
0.80
General and administrative2
0.22
0.25
0.21
0.40
- Includes stock-based compensation, merger-related expenses and
severance of $ 3.5 million and $ 4.4 million for the three months
ended September 30, 2020 and 2019, respectively, and $ 9.0 million
and $ 29.4 million for the nine months ended September 30, 2020 and
2019, respectively
- Includes stock-based compensation, merger-related expenses and
severance of $ 0.06 per Mcfe and $ 0.07 per Mcfe for the three
months ended September 30, 2020 and 2019, respectively, and $ 0.06
per Mcfe and $ 0.20 per Mcfe for the nine months ended September
30, 2020 and 2019, respectively
Cash Margins
The Company’s cash margins are detailed in the table below:
Three Months Ended
Three Months Ended
September 30, 2020
September 30, 2019
June 30, 2020
(per Mcfe)
Average realized price (including cash
settled commodity derivatives, excluding firm transportation)
$
2.30
$
2.88
$
2.15
Total cash production costs1
1.21
1.23
1.25
Cash production margin
$
1.09
$
1.65
$
0.90
Cash production margin %
47
%
57
%
42
%
Cash production margin
$
1.09
$
1.65
$
0.90
Cash general and administrative
expenses2
0.16
0.18
0.14
Cash operating margin
$
0.93
$
1.47
$
0.76
Cash operating margin %
40
%
51
%
35
%
Cash operating margin
$
0.93
$
1.47
$
0.76
Interest expense
0.26
0.27
0.30
Corporate cash operating margin3
$
0.67
$
1.20
$
0.46
Corporate cash operating margin %
29
%
42
%
22
%
- Includes lease operating, transportation, gathering and
compression, and production and ad valorem taxes
- Cash general and administrative expense is a non-GAAP financial
measure which excludes stock-based compensation expense, merger
related expenses and severance. See reconciliation to the most
comparable GAAP measure under “Cash General and Administrative
Expense” in this press release
- Includes lease operating, transportation, gathering and
compression, production and ad valorem taxes, cash general &
administrative expense and interest expense. Cash general and
administrative expense is a non-GAAP financial measure which
excludes stock-based compensation expense, merger related expenses
and severance See reconciliation to the most comparable GAAP
measure under “Cash General and Administrative Expense” in this
press release
Capital Expenditures
Third quarter 2020 capital expenditures were $22.3 million,
including $20.2 million for drilling and completions and $2.1
million for land-related expenditures.
During the third quarter of 2020, the Company commenced drilling
2 gross (1.7 net) operated wells and turned to sales 4 gross (2.4
net) operated wells.
Financial Position and
Liquidity
As of September 30, 2020, the Company’s liquidity was $279.8
million, consisting of $4.0 million in cash and cash equivalents
and $275.8 million in available borrowing capacity under the
Company’s revolving credit facility (after giving effect to
outstanding letters of credit issued by the Company of $29.2
million and $170.0 million in outstanding borrowings).
Commodity Derivatives
The Company engages in a number of different commodity trading
program strategies as a risk management tool to attempt to mitigate
the potential negative impact on cash flows caused by price
fluctuations in natural gas, NGL and oil prices. Below is a table
that illustrates the Company’s hedging activities as of September
30, 2020:
Natural Gas Derivatives:
Description
Volume (MMBtu/d)
Production Period
Weighted Average Price
($/MMBtu)
Natural Gas Swaps:
130,000
October 2020 – December 2020
$
2.42
145,000
October 2020 – March 2021
$
2.58
50,000
January 2021 – March 2022
$
2.51
25,000
April 2021 – March 2022
$
2.47
Natural Gas Collars:
Floor purchase price (put)
25,000
January 2021 – December 2021
$
2.15
Ceiling sold price (call)
25,000
January 2021 – December 2021
$
3.03
Floor purchase price (put)
30,000
April 2021 – March 2022
$
2.40
Ceiling sold price (call)
30,000
April 2021 – March 2022
$
3.05
Floor purchase price (put)
15,000
August 2021 – December 2021
$
2.55
Ceiling sold price (call)
15,000
August 2021 – December 2021
$
3.13
Floor purchase price (put)
15,000
September 2021 – November
2021
$
2.52
Ceiling sold price (call)
15,000
September 2021 – November
2021
$
3.12
Floor purchase price (put)
5,000
August 2021
$
2.50
Ceiling sold price (call)
5,000
August 2021
$
3.05
Floor purchase price (put)
10,000
September 2021
$
2.50
Ceiling sold price (call)
10,000
September 2021
$
3.03
Natural Gas Three-way Collars:
Floor purchase price (put)
80,000
October 2020 – December 2020
$
2.60
Floor sold price (put)
80,000
October 2020 – December 2020
$
1.90
Ceiling sold price (call)
80,000
October 2020 – December 2020
$
2.94
Floor purchase price (put)
45,000
January 2021 – December 2021
$
2.55
Floor sold price (put)
45,000
January 2021 – December 2021
$
2.25
Ceiling sold price (call)
45,000
January 2021 – December 2021
$
2.81
Floor purchase price (put)
20,000
April 2021 – March 2022
$
2.62
Floor sold price (put)
20,000
April 2021 – March 2022
$
2.20
Ceiling sold price (call)
20,000
April 2021 – March 2022
$
3.10
Natural Gas Call/Put Options:
Floor sold price (put)
50,000
October 2020 – December 2020
$
2.30
Swaption sold price (call)
50,000
January 2021 – December 2021
$
2.75
Swaption sold price (call)
50,000
January 2022 – December 2022
$
3.00
Ceiling sold price (call)
50,000
January 2022 – December 2022
$
3.00
Floor sold price (put)
50,000
January 2021 – March 2022
$
2.00
Ceiling sold price (call)
80,000
January 2023 – December 2023
$
3.00
Basis Swaps:
Appalachia - Dominion
42,500
October 2020
$
(0.51
)
Appalachia - Dominion
20,000
October 2020 – December 2020
$
(0.59
)
Oil Derivatives:
Description
Volume (Bbls/d)
Production Period
Weighted Average Price
($/Bbl)
Oil Swaps:
2,500
October 2020 – December 2020
$
57.41
250
October 2020 – March 2021
$
53.20
250
January 2021 – March 2021
$
53.00
100
January 2021
$
43.60
Oil Collars:
Floor purchase price (put)
1,000
October 2020 – December 2020
$
51.00
Ceiling sold price (call)
1,000
October 2020 – December 2020
$
62.00
Floor purchase price (put)
500
January 2021 – December 2021
$
37.50
Ceiling sold price (call)
500
January 2021 – December 2021
$
45.50
Floor purchase price (put)
300
April 2021
$
40.00
Ceiling sold price (call)
300
April 2021
$
47.25
Floor purchase price (put)
200
May 2021
$
40.00
Ceiling sold price (call)
200
May 2021
$
47.55
Floor purchase price (put)
100
June 2021
$
40.00
Ceiling sold price (call)
100
June 2021
$
47.75
Oil Three-way Collars:
Floor purchase price (put)
500
January 2021 – December 2021
$
31.25
Floor sold price (put)
500
January 2021 – December 2021
$
22.50
Ceiling sold price (call)
500
January 2021 – December 2021
$
45.00
Oil Call/Put Options:
Floor sold price (put)
500
October 2020 – December 2020
$
45.00
Swaption sold price (call)
500
January 2021 – December 2021
$
42.50
NGL Derivatives:
Description
Volume (Bbls/d)
Production Period
Weighted Average Price
($/Bbl)
Propane Swaps:
2,000
October 2020 – December 2020
$
20.94
1,000
January 2021 – December 2021
$
18.87
MONTAGE RESOURCES CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands, except share and per
share amounts) (Unaudited)
September 30, 2020
December 31, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
4,013
$
12,056
Accounts receivable
63,483
77,402
Assets held for sale
1,544
1,047
Other current assets
8,984
35,509
Total current assets
78,024
126,014
PROPERTY AND EQUIPMENT
Oil and natural gas properties, successful
efforts method:
Unproved properties
478,644
508,576
Proved oil and gas properties, net
1,216,836
1,251,105
Other property and equipment, net
10,311
11,226
Total property and equipment, net
1,705,791
1,770,907
OTHER NONCURRENT ASSETS
Other assets
5,353
7,616
Operating lease right-of-use assets
30,830
36,975
Assets held for sale
3,403
9,665
TOTAL ASSETS
$
1,823,401
$
1,951,177
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES
Accounts payable
$
120,785
$
119,907
Accrued capital expenditures
11,933
43,500
Accrued liabilities
61,963
53,866
Accrued interest payable
9,921
21,308
Liabilities associated with assets held
for sale
3,711
2,815
Operating lease liability
12,773
12,666
Total current liabilities
221,086
254,062
NONCURRENT LIABILITIES
Debt, net of unamortized discount and debt
issuance costs
502,622
500,541
Revolving credit facility
170,000
130,000
Asset retirement obligations
30,336
29,877
Other liabilities
31,421
8,029
Operating lease liability
18,805
24,569
Liabilities associated with assets held
for sale
7,150
7,013
Total liabilities
981,420
954,091
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, 50,000,000 authorized, no
shares issued and outstanding
—
—
Common stock, $0.01 par value,
1,000,000,000 authorized, 36,034,837 and 35,770,934 shares issued
and outstanding, respectively
386
383
Additional paid in capital
2,355,890
2,352,309
Treasury stock, shares at cost; 2,600,672
and 2,508,485 shares, respectively
(10,511
)
(10,049
)
Accumulated deficit
(1,503,784
)
(1,345,557
)
Total stockholders’ equity
841,981
997,086
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
1,823,401
$
1,951,177
MONTAGE RESOURCES CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS) (In thousands, except per share data) (Unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2020
2019
2020
2019
REVENUES
Natural gas, oil and natural gas liquids
sales
$
108,518
$
153,021
$
315,471
$
428,278
Brokered natural gas and marketing
revenue
6,831
10,228
23,859
31,747
Other revenue
56
46
183
307
Total revenues
115,405
163,295
339,513
460,332
OPERATING EXPENSES
Lease operating
11,494
11,986
33,436
29,651
Transportation, gathering and
compression
51,961
57,027
157,472
150,065
Production and ad valorem taxes
3,677
1,660
10,146
8,519
Brokered natural gas and marketing
expense
7,345
10,574
24,349
32,017
Depreciation, depletion, amortization and
accretion
53,153
45,456
140,058
113,950
Exploration
11,767
16,621
34,112
48,602
General and administrative
12,144
14,580
33,594
57,074
Rig termination and standby
303
1,221
303
1,221
Gain on sale of assets
(62
)
(733
)
(1,419
)
(731
)
Other expense
87
2
121
40
Total operating expenses
151,869
158,394
432,172
440,408
OPERATING INCOME (LOSS)
(36,464
)
4,901
(92,659
)
19,924
OTHER INCOME (EXPENSE)
Gain (loss) on derivative instruments
(40,535
)
15,812
(11,329
)
40,620
Interest expense, net
(14,402
)
(15,192
)
(44,166
)
(44,140
)
Other income
2
—
19
8
Total other income (expense), net
(54,935
)
620
(55,476
)
(3,512
)
INCOME (LOSS) FROM CONTINUING
OPERATIONS
BEFORE INCOME TAXES
(91,399
)
5,521
(148,135
)
16,412
Income tax benefit (expense)
—
—
—
—
INCOME (LOSS) FROM CONTINUING
OPERATIONS
(91,399
)
5,521
(148,135
)
16,412
Income (loss) from discontinued
operations, net of income tax
(801
)
(1,237
)
(10,092
)
1,286
NET INCOME (LOSS)
$
(92,200
)
$
4,284
$
(158,227
)
$
17,698
EARNINGS (LOSS) PER SHARE OF COMMON
STOCK
Basic:
Weighted average common stock
outstanding
36,035
35,684
35,889
32,343
Income (loss) from continuing
operations
$
(2.54
)
$
0.15
$
(4.13
)
$
0.51
Income (loss) from discontinued
operations
(0.02
)
(0.03
)
(0.28
)
0.04
Net income (loss)
$
(2.56
)
$
0.12
$
(4.41
)
$
0.55
Diluted:
Weighted average common stock
outstanding
36,035
35,697
35,889
32,471
Income (loss) from continuing
operations
$
(2.54
)
$
0.15
$
(4.13
)
$
0.51
Income (loss) from discontinued
operations
(0.02
)
(0.03
)
(0.28
)
0.04
Net income (loss)
$
(2.56
)
$
0.12
$
(4.41
)
$
0.55
Adjusted Revenue
Adjusted revenue is a non-GAAP financial measure. The Company
defines adjusted revenue as follows: total revenues plus or minus
net cash receipts or payments on settled commodity derivative
instruments less brokered natural gas and marketing revenue and
other revenue. The Company believes adjusted revenue provides
investors with helpful information with respect to the performance
of the Company’s operations and management uses adjusted revenue to
evaluate its ongoing operations and for internal planning and
forecasting purposes. See the table below, which reconciles
adjusted revenue and total revenues for the three and nine months
ended September 30, 2020 and 2019.
Three Months Ended
September 30,
Nine Months Ended
September 30,
$ thousands
2020
2019
2020
2019
Total revenues
$
115,405
$
163,295
$
339,513
$
460,332
Net cash receipts (payments) on settled
commodity derivatives
18,806
11,818
61,829
11,072
Brokered natural gas and marketing
revenue
(6,831
)
(10,228
)
(23,859
)
(31,747
)
Other revenue
(56
)
(46
)
(183
)
(307
)
Adjusted revenue
$
127,324
$
164,839
$
377,300
$
439,350
Adjusted Net Income
(Loss)
Adjusted net income (loss) represents income (loss) from
continuing operations before income taxes adjusted for certain
non-cash items as set forth in the table below. We believe adjusted
net income (loss) is used by many investors and published research
in making investment decisions and evaluating operational trends of
the Company and its performance relative to other oil and gas
producing companies. Adjusted net income (loss) is not a measure of
net income (loss) from continuing operations as determined by GAAP.
See the table below for a reconciliation of adjusted net income
(loss) and net income (loss) from continuing operations before
income taxes for the three and nine months ended September 30, 2020
and 2019.
Three Months Ended September
30,
Nine Months Ended September
30,
$ thousands
2020
2019
2020
2019
Income (loss) from continuing operations
before income taxes, as reported
$
(91,399
)
$
5,521
$
(148,135
)
$
16,412
(Gain) loss on derivative instruments
40,535
(15,812
)
11,329
(40,620
)
Net cash receipts (payments) on settled
derivatives
18,785
11,818
61,877
11,072
Rig termination and standby
303
1,221
303
1,221
Dry hole and other
135
—
143
163
Stock-based compensation
961
1,061
3,585
7,614
Impairment of unproved properties
10,952
14,114
30,311
36,157
Gain on sale of assets
(62
)
(733
)
(1,419
)
(731
)
Merger-related expenses
2,520
3,291
2,696
21,812
Severance
—
—
2,681
—
Income (loss) before income taxes, as
adjusted
(17,270
)
20,481
(36,629
)
53,100
Adjusted net income (loss)
$
(17,270
)
$
20,481
$
(36,629
)
$
53,100
Net income (loss) per common
share
Basic
$
(2.56
)
$
0.12
$
(4.41
)
$
0.55
Diluted
$
(2.56
)
$
0.12
$
(4.41
)
$
0.55
Adjusted net income (loss) per common
share
Basic
$
(0.48
)
$
0.57
$
(1.02
)
$
1.64
Diluted
$
(0.48
)
$
0.57
$
(1.02
)
$
1.64
Weighted average common shares
outstanding
Basic
36,035
35,684
35,889
32,343
Diluted
36,035
35,697
35,889
32,471
Adjusted EBITDAX
Adjusted EBITDAX is a supplemental non-GAAP measure that is used
by the Company to evaluate its financial results. The Company
defines Adjusted EBITDAX as net income or loss before interest
expense or interest income; income taxes; write down of abandoned
leases; impairments; depreciation, depletion, amortization and
accretion; gain or loss on derivative instruments; net cash
receipts or payments on settled commodity derivative instruments,
and premiums paid or received on options that settled during the
period; non-cash compensation expense; gain or loss from sale of
interest in gas properties; exploration expenses; and other unusual
or infrequent items set forth in the table below. Adjusted EBITDAX
is not a measure of net income or loss as determined by GAAP. See
the table below for a reconciliation of Adjusted EBITDAX to net
income or net loss.
Three Months Ended September
30,
Nine Months Ended September
30,
$ thousands
2020
2019
2020
2019
Net income (loss)
$
(92,200
)
$
4,284
$
(158,227
)
$
17,698
Depreciation, depletion, amortization and
accretion
53,153
45,456
140,058
113,950
Exploration expense
11,767
16,621
34,112
48,602
Rig termination and standby
303
1,221
303
1,221
Stock-based compensation
961
1,061
3,585
7,614
Gain on sale of assets
(62
)
(733
)
(1,419
)
(731
)
(Gain) loss on derivative instruments
40,535
(15,812
)
11,329
(40,620
)
Net cash receipts on settled commodity
derivatives
18,806
11,818
61,829
11,072
Interest expense, net
14,402
15,192
44,166
44,140
Other income
(2
)
—
(19
)
(8
)
Merger-related expenses
2,520
3,291
2,696
21,812
(Income) loss from discontinued
operations(1)
801
1,237
10,092
(1,286
)
Severance
—
—
2,681
—
Adjusted EBITDAX
$
50,984
$
83,636
$
151,186
$
223,464
1 Includes a $6.8 million non-cash impairment of proved
properties held for sale for the nine months ended September 30,
2020
Cash General and Administrative
Expenses
Cash general and administrative expenses is a non-GAAP financial
measure used by the Company to provide a measure of administrative
expenses used by many investors and in published research in making
investment decisions and evaluating operational trends of the
Company. See the table below for a reconciliation of Cash General
and Administrative Expenses and General and Administrative
Expenses.
Three Months Ended September
30,
Nine Months Ended September
30,
$ thousands
2020
2019
2020
2019
General and administrative expenses,
estimated to be reported
$
12,144
$
14,580
$
33,594
$
57,074
Stock-based compensation
(961
)
(1,061
)
(3,585
)
(7,614
)
Cash general and administrative
expenses
$
11,183
$
13,519
$
30,009
$
49,460
Merger-related expenses
(2,520
)
(3,291
)
(2,696
)
(21,812
)
Severance
—
—
(2,681
)
—
Cash general and administrative expenses,
excluding merger-related expenses and severance
$
8,663
$
10,228
$
24,632
$
27,648
About Montage Resources
Montage Resources is an exploration and production company with
approximately 195,000 net effective core undeveloped acres
currently focused on the Utica and Marcellus Shales of Southeast
Ohio, West Virginia, and North Central Pennsylvania. For more
information, please visit the Company’s website at
www.montageresources.com.
Important Information for Investors and
Stockholders
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended. In connection with the potential transaction (the
“Transaction”), Southwestern filed a registration statement on Form
S-4 with the Securities and Exchange Commission (the “SEC”),
containing a preliminary prospectus of Southwestern that also
constitutes a preliminary proxy statement of Montage. Montage
mailed a definitive proxy statement/prospectus to stockholders of
Montage on or about October 8, 2020. This communication is not a
substitute for the proxy statement/prospectus or registration
statement or for any other document that Southwestern or Montage
may file with the SEC and send to Montage’s stockholders in
connection with the potential transaction. INVESTORS AND SECURITY
HOLDERS OF SOUTHWESTERN AND MONTAGE ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders are able to obtain free
copies of the proxy statement/prospectus and other documents filed
with the SEC by Southwestern or Montage through the website
maintained by the SEC at http://www.sec.gov. Copies of the
documents filed with the SEC by Southwestern are available free of
charge on Southwestern’s website at www.swn.com and copies of the
documents filed with the SEC by Montage are available free of
charge on Montage’s website at www.montageresources.com.
Southwestern and Montage and certain of their respective
directors, executive officers and certain other members of
management and employees may be deemed to be “participants” in the
solicitation of proxies from the stockholders of Montage in
connection with the proposed merger. Stockholders can find
information about Montage and its directors and executive officers
and their ownership of Montage’s common stock in its Annual Report
on Form 10-K for the fiscal year ended December 31, 2019, filed
with the SEC on March 10, 2020, and the proxy statement for its
2020 Annual Meeting of Stockholders filed with the SEC on April 28,
2020, and additional information about the ownership of Montage’s
common stock by its directors and executive officers is included in
their Forms 3, 4 and 5 filed with the SEC. Information about the
Southwestern’s directors and executive officers is available in
Southwestern’s Annual Report on Form 10-K for the fiscal year ended
2019 filed with the SEC on February 27, 2020 and its definitive
proxy statement for the 2020 annual meeting of shareholders filed
with the SEC on April 9, 2020. These documents can be obtained free
of charge from the sources indicated above. Additional information
regarding the interests of such participants in the solicitation of
proxies in respect of the potential transaction are included in the
registration statement and proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become
available.
Forward-Looking
Statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements other than statements of historical fact
included in this press release, including statements regarding
Montage Resources’ strategy, future operations, financial position,
estimated revenues and income/losses, projected costs and capital
expenditures, prospects, and plans and objectives of management are
forward-looking statements. When used in this press release, the
words “plan,” “endeavor,” “goal,” “will,” “would,” ”should,”
“could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,”
”efforts,” “continue,” “position,” “potential,” “committed,”
“target, ”project” and similar expressions are intended to identify
forward-looking statements, although not all forward-looking
statements contain such identifying words. These forward-looking
statements are based on Montage Resources’ current expectations and
assumptions about future events and are based on currently
available information as to the outcome and timing of future
events. When considering forward-looking statements, you should
keep in mind the risk factors and other cautionary statements
described under the heading “Risk Factors” in Montage Resources’
Annual Report on Form 10-K for the fiscal year ended December 31,
2019 filed with the Securities and Exchange Commission on March 10,
2020 (the “2019 Annual Report”) and in Montage Resources’ other
filings and reports with the SEC.
Forward-looking statements may include, but are not limited to,
statements about the Transaction, business strategy; reserves;
general economic conditions; financial strategy, liquidity and
capital required for developing properties and timing related
thereto; realized natural gas, NGLs and oil prices and the
volatility of those prices; write-downs of natural gas and oil
asset values due to declines in commodity prices; timing and amount
of future production of natural gas, NGLs and oil; hedging strategy
and results; future drilling plans; competition and government
regulations, including those related to hydraulic fracturing; the
anticipated benefits under commercial agreements; marketing of
natural gas, NGLs and oil; leasehold and business acquisitions and
joint ventures; leasehold terms expiring before production can be
established and costs to extend such terms the costs, terms and
availability of gathering, processing, fractionation and other
midstream services; the costs, terms and availability of downstream
transportation services; credit markets; uncertainty regarding
future operating results, including initial production rates and
liquid yields in type curve areas; and plans, objectives,
expectations and intentions contained in this press release that
are not historical, including, without limitation, the guidance set
forth herein and consummation of the proposed asset disposition
anticipated in the letter of intent.
Montage Resources cautions you that all these forward-looking
statements are subject to risks and uncertainties, most of which
are difficult to predict and many of which are beyond the Company’s
control, incident to the exploration for and development,
production, gathering and sale of natural gas, NGLs and oil. These
risks include, but are not limited to, the severity and continued
duration of the COVID-19 pandemic, related economic effects and the
resulting negative impact on the demand for natural gas, NGLs and
oil; operational challenges relating to the COVID-19 pandemic,
including logistical challenges, protecting the health and
well-being of the Company’s employees, remote work arrangements,
performance of counterparty contracts and supply chain disruptions;
legal and environmental risks; drilling and other operating risks;
regulatory changes, including U.S. federal, state and local tax
regulatory changes; commodity price volatility and declines in the
price of natural gas, NGLs, and oil; inflation; lack of
availability of drilling, production and processing equipment and
services; counterparty credit risk; the uncertainty inherent in
estimating natural gas, NGLs and oil reserves and in projecting
future rates of production, cash flow and access to capital; risks
associated with the Company’s level of indebtedness; the timing of
development expenditures; the consummation of or failure to
consummate the Transaction and the timing thereof; costs in
connection with the Transaction; the occurrence of any event,
change or other circumstances that could give rise to the
termination of the merger agreement; the possibility that
stockholders of Montage may not approve the merger agreement; and
the other risks described under the heading “Risk Factors” in the
2019 Annual Report and in Montage Resources’ other filings and
reports with the SEC.
All forward-looking statements, expressed or implied, included
in this press release are expressly qualified in their entirety by
this cautionary statement and are based on assumptions that Montage
Resources believes to be reasonable but that may not prove to be
accurate. This cautionary statement should also be considered in
connection with any subsequent written or oral forward-looking
statements that Montage Resources or persons acting on its behalf
may issue. Except as otherwise required by applicable law, Montage
Resources disclaims any duty to update any forward-looking
statements to reflect new information or events or circumstances
after the date of this press release. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201105006207/en/
Montage Resources Corporation Douglas Kris, Investor Relations
469-444-1736 dkris@mresources.com
Montage Resources (NYSE:MR)
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Montage Resources (NYSE:MR)
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