Hedging | Capital Markets | Midstream - Gas Gathering | Contract Awarded

Montage Adjusts Gas Gathering Contracts; Adds to Hedges

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   |    Tuesday,March 17,2020

Montage Resources Corp. has inked an amended gas gathering agreement with its midstream provider and has added to its hedge book.

Gas Gathering Agreement

The Company has recently completed the renegotiation of existing gas gathering contracts.

Consolidated Gas Gathering Agreement Highlights:

• Ensures a dedicated gatherer for the Company's valuable Marcellus Ohio development with a significantly improved fee structure relative to the prior agreements for all existing and future development

• Fee reductions amounting to gross cost savings over the life of the new contact (assuming a one rig program) of approximately $200 million

• Provides incremental flexibility to Montage by reducing the near-term minimum volume obligations below their prior levels while providing our midstream partner additional certainty on a per-unit basis for any unutilized throughput capacity

• Eliminates Montage's potential obligation for incremental capital costs for future pipeline or related facilities construction on its Marcellus Ohio and Utica Dry development

Hedge Portfolio Increased

• The Company has increased its 2020 natural gas hedges and now has approximately 64% of its projected 2020 natural gas production hedged with an average floor price of ~$2.63 per MMbtu

• The Company has increased its 2021 natural gas hedges by an average of 75,000 MMbtu per day with an average floor price of ~$2.54

John Reinhart, President and CEO, commented on the Company's gas gathering agreement, "I am extremely pleased to announce the successful outcome of this new consolidated gas gathering agreement that further enhances the Company's peer leading cash operating margins and demonstrates our ability to continue to deliver on a contractual cost structure that increases flexibility and positions the Company to improve returns as well as shareholder value. We are happy to continue our partnership with one of the premier midstream providers in the region and believe this agreement contributes value to both parties. In addition, we are continuing to act opportunistically in the current commodity price environment and tactically add additional downside protection to our cash flows by actively managing our hedge book."