Montage Resources Reports Preliminary Q4 Production, Reserves

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   |    Tuesday,February 25,2020

Montage Resources Corp. announced its fourth quarter and full year 2019 production and capital spending as well as its year-end 2019 proved reserves.

Highlights of the release include:

• Net production for the full year 2019 averaged 547.8 MMcfe per day, within the Company's most recent guidance range of 545-552 MMcfe per day and 6% above the midpoint of the Company's initial guidance range for the year of 500 - 525 MMcfe per day
• Net production for the fourth quarter 2019 averaged 623.4 MMcfe per day, within the Company's implied fourth quarter guidance range
• Full year 2019 capital spending of approximately $361 million¹, within the Company's most recent guidance range of $345-$370 million and 7% below the midpoint of the Company's initial guidance range for the year of $375 - $400 million
• Year-End 2019 proved developed reserves increased by 33%² to 1,494 Bcfe, based upon SEC pricing, and by 34%² to 1,506 Bcfe, based upon December 31, 2019 strip pricing, over year-end 2018
• Year-End 2019 proved developed reserves PV10³ increased 5%² to approximately $1.1 billion, based upon SEC pricing, and increased 30%² to approximately $1.0 billion, based upon December 31, 2019 strip pricing, over year-end 2018
• The Company's current equity market capitalization represents an approximate 63% discount to year-end proved developed reserves PV10³ (based upon December 31, 2019 strip pricing) of $1.0 billion less debt⁴

John Reinhart, President and CEO, commented, "The past year represented a significant inflection point for the Company's operations with the progression to a business model that prioritized capital efficiency, cost reductions, balance sheet protection and a focus on cash flows. At a time when investor attention has shifted from resource capture to capital discipline and operational execution, Montage has delivered on its targets to provide disciplined production growth within the context of a significantly lower capital spend while achieving or exceeding the respective 2019 guidance metrics. Given the well productivity results, operational efficiencies and lower capital and expense cost structure, the Company was also able to maintain its net debt position over the second half of 2019 with no incremental net debt incurred from the end of the second quarter of 2019 to year-end 2019. The Company also took the opportunity with the natural gas price pullback in the fourth quarter to systematically shut-in some production in order to complete a number of production enhancement workover projects, in addition to realizing unscheduled non-recurring third-party system downtime and associated maintenance items, which impacted fourth quarter production volume. We remain steadfast in our objective of long-term shareholder value creation by employing prudent 2020 development plans and maintaining continued flexibility on the pace of 2020 development activity to drive cash flows from de-risked, repeatable investments in our high-quality asset base."

Fourth Quarter and Full Year 2019 Results

The Company reported fourth quarter 2019 average net production of 623.4 MMcfe per day and reported full year 2019 average net production of 547.8 MMcfe per day. For the fourth quarter of 2019, the Company's production mix was 78% natural gas, 13% natural gas liquids ("NGLs") and 9% oil, while the production mix for the full year 2019 was 77% natural gas, 14% NGLs and 9% oil.

Proved Reserves

The Company has recently received its annual reserve report as prepared by its independent reservoir engineering firm, Software Integrated Solutions (SIS) Division of Schlumberger Technology Corporation, which estimated the Company's proved reserves (based on SEC pricing) at December 31, 2019 to be 2.7 Tcfe, a 14%² increase compared with proved reserves at December 31, 2018. The composition by product of the year-end 2019 reserves was approximately 78% natural gas, 7% oil and 15% NGLs. This increase in reserves was driven predominately by an increase in proved developed producing reserves which increased by approximately 33%² to 1,430 Bcfe related to new wells coming into production during 2019. SEC prices for reserves were calculated as of December 31, 2019 and among other items calibrated for quality, energy content and market differentials with the average adjusted product price weighted by production over the remaining lives of the properties being $48.71 per Bbl for oil, $2.44 per Mcf for natural gas, and $22.36 per Bbl of NGLs. Utilizing SEC pricing as of December 31, 2019, the PV10³ of the Company's total proved reserves was approximately $1.5 billion. The PV10³ of the Company's proved developed reserves increased by 5%² to approximately $1.1 billion (utilizing SEC pricing as of December 31, 2019), compared with such reserves at December 31, 2018.