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Analyst Day 2019 – Montage Resources Corp.

Montage Resources Corp. · Mar 20, 2019 · 67 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Analyst Day 2019 – Montage Resources Corp. – slide 1
    ANALYST DAY March 20, 2019 NYSE: MR
  2. Analyst Day 2019 – Montage Resources Corp. – slide 2
    INTRODUCTION & FOCUS FIVE STRATEGY John Reinhart President and Chief Executive Officer
  3. Analyst Day 2019 – Montage Resources Corp. – slide 3
    EXPERIENCED APPALACHIAN BASIN LEADERSHIP TEAM Montage Resources management team possesses significant Appalachia specific experience with an excellent track record of execution EXPERIENCE PRIOR COMPANIES (YRs) John Reinhart 25…
  4. Analyst Day 2019 – Montage Resources Corp. – slide 4
    MONTAGE STRATEGY SHIFT Small cap Appalachia Utica and Marcellus operator rebranded and focused on maximizing shareholder value Arrest corporate outspend while facilitating disciplined growth CASH FLOWS & Optimize development plan for…
  5. Analyst Day 2019 – Montage Resources Corp. – slide 5
    CYCLE TIME IMPROVEMENT Focused on accelerating cash flows by shifting to a low risk, repeatable program and optimizing capital allocation towards the wellbore with returns-based spending that possesses well mix optionality COST STRUCTURE…
  6. Analyst Day 2019 – Montage Resources Corp. – slide 6
    CORPORATE INTEGRATION Contiguous acreage allows Montage Resources to leverage operational synergies; post-merger consolidation of headquarters and integration expected to achieve 15 million in G&A savings COST STRUCTURE FINANCIAL &…
  7. Analyst Day 2019 – Montage Resources Corp. – slide 7
    DRILLING & COMPLETIONS CAPITAL SYNERGIES Development plan integration was accelerated for Day 1 execution which allows Montage Resources to take advantage of synergies and incorporate cost reductions immediately COST STRUCTURE FINANCIAL…
  8. Analyst Day 2019 – Montage Resources Corp. – slide 8
    FINANCIAL POSITIONING & FLEXIBILITY Strong balance sheet and capital discipline positions the company to opportunistically accelerate development and take advantage of strategic initiatives COST STRUCTURE FINANCIAL & ENHANCING SCALE…
  9. Analyst Day 2019 – Montage Resources Corp. – slide 9
    OPERATIONAL FLEXIBILITY Balanced firm transportation portfolio along with limited operational commitments allow the company to focus on strategy and capital execution COST STRUCTURE FINANCIAL & ENHANCING SCALE CASH FLOW & PORTFOLIO…
  10. Analyst Day 2019 – Montage Resources Corp. – slide 10
    EFFICIENT CAPITAL DEPLOYMENT Over 90% of 2019 capital is allocated to drilling and completions spend in revenue accretive inventory with highest investment returns, maintaining flexibility in well mix depending on commodity environment…
  11. Analyst Day 2019 – Montage Resources Corp. – slide 11
    PORTFOLIO OPTIMIZATION Montage Resources controls an economic core footprint that allows for development mix flexibility and scalability COST STRUCTURE FINANCIAL & ENHANCING SCALE CASH FLOW & PORTFOLIO IMPROVEMENT & OPERATIONAL W/…
  12. Analyst Day 2019 – Montage Resources Corp. – slide 12
    ACHIEVING SCALE THROUGH DISCIPLINED GROWTH Significant reserve growth provides valuation uplift and increased liquidity COST STRUCTURE FINANCIAL & ENHANCING SCALE CASH FLOW & PORTFOLIO IMPROVEMENT & OPERATIONAL W/ DISCIPLINED…
  13. Analyst Day 2019 – Montage Resources Corp. – slide 13
    APPALACHIA DIFFERENTIATORS Appalachia is the low cost operating gas basin with 13 Bcf/d of downstream transportation capacity added over the past two years which possesses outlets to diverse markets with premium differentials DOMINION…
  14. Analyst Day 2019 – Montage Resources Corp. – slide 14
    WHY MONTAGE Montage Resources is a pure play Appalachia operator located in the core Marcellus and Utica fairway, adopting a low risk development plan executed by an experienced Appalachia team positioned for disciplined growth and…
  15. Analyst Day 2019 – Montage Resources Corp. – slide 15
    RESOURCE DEVELOPMENT AND PLANNING Matthew Rucker EVP, Resource Development & Planning
  16. Analyst Day 2019 – Montage Resources Corp. – slide 16
    2019 DEVELOPMENT PLAN OVERVIEW Greater than 90% of 2019 capital is allocated to low-risk D&C activity leading to pro forma 12 month year-over- year production growth of 16% to 545 570 Mmcfe per day 2019 Development Areas Land &…
  17. Analyst Day 2019 – Montage Resources Corp. – slide 17
    2019 PLAN FOCUSES ON HIGH RETURNING AREAS Key development areas with balance of wet and dry well mix deliver attractive single well IRRs and flexibility for liquids pricing upside Spuds TILs 46% 72% CONDENSATE 59% Gross 46 11 13…
  18. Analyst Day 2019 – Montage Resources Corp. – slide 18
    OPTIMIZED DEVELOPMENT PLANNING Development plan integration accelerated for Day 1 allowing Montage to begin execution of optimization immediately IMPROVED OPTIMIZED STACKED CYCLE TIMES PLANNING PAY FOCUS Optimizing initial…
  19. Analyst Day 2019 – Montage Resources Corp. – slide 19
    2019 OPERATING EXPENDITURES Highly competitive operating cost structure provides for significant margin expansion through scale 2019 OPERATING EXPENSES1 OPEX VS APPALACHIAN PEERS1,2 Operating Cost (/Mcfe) vs Daily Production…
  20. Analyst Day 2019 – Montage Resources Corp. – slide 20
    RESERVES AND RESOURCE PORTFOLIO
  21. Analyst Day 2019 – Montage Resources Corp. – slide 21
    SUBSTANTIAL PROVED RESERVE GROWTH Montage Resources has had significant proved reserves growth on a pro forma basis with 265% increase in reserves and 600% increase in PV10 over the last two years 2018 YE Pro Forma Net Oil Net NGL Net…
  22. Analyst Day 2019 – Montage Resources Corp. – slide 22
    DIVERSE RESOURCE PORTFOLIO Attractive portfolio of diverse assets with an even split of wet and dry well inventory, providing optionality to a constantly evolving commodity price environment Utica and Marcellus Type Curve Areas Flat…
  23. Analyst Day 2019 – Montage Resources Corp. – slide 23
    DE-RISKED OHIO MARCELLUS OPPORTUNITY Successful subsurface evaluation with proven well results allows the company to transition from delineation mode to full scale development mode, leading to value enhancement on stacked pay asset…
  24. Analyst Day 2019 – Montage Resources Corp. – slide 24
    MARCELLUS VALUE ATTRACTS CAPITAL ALLOCATION Initial delineation wells are outperforming type curve expectations, de-risking Ohio Marcellus acreage position for full scale development mode MARCELLUS MARCELLUS UTICA UTICA CONDENSATE…
  25. Analyst Day 2019 – Montage Resources Corp. – slide 25
    UTICA CONDENSATE DELIVERS LOW-RISK REPEATABLE DEVELOPMENT Recent condensate wells are meeting or exceeding type curve expectation, providing low-risk development opportunities with increased liquids exposure MARCELLUS MARCELLUS UTICA…
  26. Analyst Day 2019 – Montage Resources Corp. – slide 26
    UTICA CONDENSATE TYPE CURVE EXPANSION Extension of high quality Utica Condensate window into Washington County with recent subsurface evaluation and successful well results, creating additional economic drilling locations MARCELLUS…
  27. Analyst Day 2019 – Montage Resources Corp. – slide 27
    SUCCESSFUL WELL RESULTS IN WASHINGTON CO. Step-out test into the southern portion of Utica Condensate area generates results similar to the proven northern portion of Utica Condensate area MARCELLUS MARCELLUS UTICA UTICA CONDENSATE…
  28. Analyst Day 2019 – Montage Resources Corp. – slide 28
    EXCEPTIONAL WELL PERFORMANCE IN DRY GAS NORTH Highly deliverable and repeatable Dry Gas North well results provide long term corporate production growth ability with attractive economics to allocate capital MARCELLUS MARCELLUS UTICA…
  29. Analyst Day 2019 – Montage Resources Corp. – slide 29
    UTICA DRY GAS EXPANSION INTO WEST VIRGINIA Successful delineation in West Virginia provides upside value potential with expansion of the Dry Gas North type curve area MARCELLUS MARCELLUS UTICA UTICA CONDENSATE CONDENSATE UTICA UTICA…
  30. Analyst Day 2019 – Montage Resources Corp. – slide 30
    SUCCESSFUL WEST VIRGINIA UTICA WELL RESULTS Second successful well test in West Virginia confirms performance expectations and creates opportunities for accretive value solutions MARCELLUS MARCELLUS UTICA UTICA CONDENSATE CONDENSATE…
  31. Analyst Day 2019 – Montage Resources Corp. – slide 31
    INDUSTRY WELL RESULTS FURTHER DELINEATE FLAT CASTLE Montages Flat Castle acreage sits at the center of the highest gas-in-place in the sub-basin and has been substantially delineated by strong surrounding well results drilled in lower…
  32. Analyst Day 2019 – Montage Resources Corp. – slide 32
    MONTAGE FLAT CASTLE TYPE CURVES Two type curves for the Flat Castle Project Area have been developed: a base case and an upside case that was increased 10% to reflect higher gas-in-place on Montage acreage as well as strong production…
  33. Analyst Day 2019 – Montage Resources Corp. – slide 33
    UNLOCKING FLAT CASTLE Painter 2H is exceeding the base Flat Castle Type Curve of 2.0 BCF/1,000 driven by engineered completion designs coupled with choke management techniques to enhance productivity MARCELLUS MARCELLUS UTICA UTICA…
  34. Analyst Day 2019 – Montage Resources Corp. – slide 34
    OPERATIONS OVERVIEW Oleg Tolmachev EVP & Chief Operations Officer
  35. Analyst Day 2019 – Montage Resources Corp. – slide 35
    MONTAGE OPERATIONAL EXECUTION Top performing Appalachia execution team delivering on cost reductions, lower cycle times and optimized well designs Continue to prioritize EH&S and regulatory performance EH&S Utilization of operational…
  36. Analyst Day 2019 – Montage Resources Corp. – slide 36
    EH&S FOCUSED Safety driven execution team with a proven record of delivering operational results while maintaining best-in-basin environmental and safety record DRILLING & EH&S COMPLETION FACILITIES CONSTRUCTION 2018 EH&S TRACK…
  37. Analyst Day 2019 – Montage Resources Corp. – slide 37
    DRILLING & CONSTRUCTION EFFICIENCY GAINS Operational experience drilling complex laterals applied to a low-risk development program drives down cost and cycle time DRILLING & EH&S COMPLETION FACILITIES CONSTRUCTION COST REDUCTIONS…
  38. Analyst Day 2019 – Montage Resources Corp. – slide 38
    ENGINEERING FOCUSED COMPLETIONS DESIGN Enhanced completions designs through engineering and machine learning allows for more efficient capital deployment and reserve recovery DRILLING & EH&S COMPLETION FACILITIES CONSTRUCTION…
  39. Analyst Day 2019 – Montage Resources Corp. – slide 39
    COMPLETION COST & CYCLE TIME IMPROVEMENTS Through focus on service performance, enhanced logistics and the benefits of scale, Montage is substantially reducing completion costs DRILLING & EH&S COMPLETION FACILITIES CONSTRUCTION COST…
  40. Analyst Day 2019 – Montage Resources Corp. – slide 40
    MANAGED PRESSURE PRODUCTION Managed Pressure flowback and production incorporates tools such as the Critical Flow Velocity Model (CVFM) driving enhanced well performance and cost reductions DRILLING & EH&S COMPLETION FACILITIES…
  41. Analyst Day 2019 – Montage Resources Corp. – slide 41
    FACILITIES ENHANCEMENTS Accelerate turn-to-sales timing by utilizing pre-fabricated equipment and standardized engineering design approach DRILLING & EH&S COMPLETION FACILITIES CONSTRUCTION FACILITY COST SAVINGS FACILITY BUILD…
  42. Analyst Day 2019 – Montage Resources Corp. – slide 42
    D&C CAPITAL SAVINGS Montage Resources expects to achieve 10% reduction in drilling and completion costs across the asset base in 2019 DRILLING & EH&S COMPLETION FACILITIES CONSTRUCTION COST SAVINGS PER FOOT 2019 WELL COST…
  43. Analyst Day 2019 – Montage Resources Corp. – slide 43
    MIDSTREAM AND MARKETING Michael Hodges EVP and Chief Financial Officer
  44. Analyst Day 2019 – Montage Resources Corp. – slide 44
    MIDSTREAM AND MARKETING STRATEGY Diversified marketing strategy provides flexibility and enhanced pricing dynamics Ensure continuous sale of all products via exceptional FLOW ASSURANCE relationships with service providers…
  45. Analyst Day 2019 – Montage Resources Corp. – slide 45
    MIDSTREAM AND MARKETING OVERVIEW Leveraging scale, diversified markets and low commitments to increase net back prices MONTAGE RESOURCES FOOTPRINT SCALE FACILITATES FLEXIBILITY & OPTIONALITY Synergies allow opportunity to negotiate…
  46. Analyst Day 2019 – Montage Resources Corp. – slide 46
    DEMAND DRIVERS NORTHEAST TAKEAWAY Appalachian basis differentials have narrowed as projects have come online and capacity exceeds production NORTHEAST PRODUCTION VS PIPELINE TAKEAWAY1 45 PIPELINE TAKEAWAY PRODUCTION 40 2019 EXIT NE…
  47. Analyst Day 2019 – Montage Resources Corp. – slide 47
    FIRM TRANSPORTATION Diverse firm transportation portfolio provides optionality to various markets with right-sized positions to maximize revenue 1,000,000 2019 FIRM TRANSPORTATION / MCFE 900,000 0.55 0.45 800,000 700,000…
  48. Analyst Day 2019 – Montage Resources Corp. – slide 48
    REALIZATIONS AND MARKET ACCESS 2019 STRATEGY 2019 MARKET DIVERSITY & DIFFERENTIALS1 2019 PRODUCTION AIM TO ACHIEVE PREMIUMS TO IN-BASIN REX - LEBANON 3% - 7% PRICING (0.15-0.22) / MMBtu ROVER - DAWN 5% - 9% REX ANR SHELBY…
  49. Analyst Day 2019 – Montage Resources Corp. – slide 49
    OHIO & WEST VIRGINIA MIDSTREAM SUMMARY UTICA DRY GAS (EUREKA MIDSTREAM) Existing gas gathering agreements with Eureka offering attractive terms and complementary acreage positions Firm gathering capacity with pipeline connections…
  50. Analyst Day 2019 – Montage Resources Corp. – slide 50
    PENNSYLVANIA MIDSTREAM SUMMARY Existing marketing options for Flat Castle area provide initial sales outlets FAVORABLE MARKET ACCESS FLAT CASTLE PROJECT AREA Currently selling into Dominion North Point market and achieving price…
  51. Analyst Day 2019 – Montage Resources Corp. – slide 51
    LIQUIDS MARKETING Diversification of liquids marketing portfolio allows for avoidance of potential economic hardship involved with single market outlet 2018 2019 NGL % WTI 38%1 45%2 MARKWEST MOBLEY BLUE RACER NATRIUM MARINER EAST…
  52. Analyst Day 2019 – Montage Resources Corp. – slide 52
    LIQUIDS MARKETING MARINER EAST II PROPANE / BUTANE MARKETING FAR EAST ASIA INDEX1 Mariner East II provides access to premium markets for propane and butane, and offers 30% PROPANE Montage the added benefit of diversifying its…
  53. Analyst Day 2019 – Montage Resources Corp. – slide 53
    MIDSTREAM AND MARKETING SUMMARY Strategic midstream portfolio provides diverse market optionality across all products FIRM TRANSPORT PORTFOLIO NATURAL GAS PRICE REALIZATIONS Production growth allows for continued fulfillment of…
  54. Analyst Day 2019 – Montage Resources Corp. – slide 54
    FINANCE
  55. Analyst Day 2019 – Montage Resources Corp. – slide 55
    STRONG BALANCE SHEET Strong balance sheet provides financial flexibility and allows for organic growth 400.0MM 375.0MM (13.5MM) YE 2018 PRO FORMA1 (32.5MM) 9.1MM 338.1MM 350.0MM Reduced LCs Increased BB outstanding by…
  56. Analyst Day 2019 – Montage Resources Corp. – slide 56
    REVOLVING CREDIT FACILITY UPDATE New agreement provides increased flexibility, extends maturity and improved bank group profile KEY TERMS AND CONDITIONS TRANSACTION OVERVIEW DESCRIPTION KEY TERMS Extended maturity by 4 years (was Feb…
  57. Analyst Day 2019 – Montage Resources Corp. – slide 57
    PREMIER FINANCIAL POSITIONING BALANCE SHEET AND LIQUIDITY PRO FORMA CAPITALIZATION (12/31/18) in millions Blue Ridge 25 million term loan retired at transaction close Capitalization Pro Forma Cash & Cash Equivalents2 9 Pro forma…
  58. Analyst Day 2019 – Montage Resources Corp. – slide 58
    HEDGING UPDATE Montage currently has a significant portion of its 2019 production hedged and plans to continue adding to its hedge positions at attractive prices to provide cash flow certainty and reduce commodity price risk Natural Gas…
  59. Analyst Day 2019 – Montage Resources Corp. – slide 59
    2019 FULL YEAR GUIDANCE PRODUCTION FORECASTED REALIZATIONS1 9%- 11% Natural Gas2 Oil NGL 500 12%- 15% Differential to NYMEX Differential to NYMEX % of WTI to (0.30) (7.50) High /Mcf /Bbl 50% 525 (0.20) (6.50)…
  60. Analyst Day 2019 – Montage Resources Corp. – slide 60
    PEER COMPS COMPARISON Montage Resources screens better than peer averages on operating, leverage and reserve metrics vs Appalachian Peers NET DEBT TO LQA Q4 EBITDAX1 2018 EBTIDAX MARGIN (/MCFE)1 2.05 1.95 2.00 3.5x 1.85 1.91…
  61. Analyst Day 2019 – Montage Resources Corp. – slide 61
    STOCK WELL POSITIONED FOR MULTIPLE EXPANSION Montage Resources is currently trading at depressed levels relative to its peer groups and should be immediately positioned for multiple expansion given its larger scale and strong balance…
  62. Analyst Day 2019 – Montage Resources Corp. – slide 62
    CONCLUDING REMARKS AND Q&A John Reinhart President and Chief Executive Officer
  63. Analyst Day 2019 – Montage Resources Corp. – slide 63
    MONTAGE STRATEGY SHIFT Small cap Appalachia Utica and Marcellus operator rebranded and focused on maximizing shareholder value Arrest corporate outspend while facilitating disciplined growth CASH FLOWS & Optimize development plan for…
  64. Analyst Day 2019 – Montage Resources Corp. – slide 64
    APPENDIX
  65. Analyst Day 2019 – Montage Resources Corp. – slide 65
    TYPE CURVE DETAILS 2019 Utica 2019 Utica Dry Gas 2019 Utica Dry Gas As of 3/2019 2019 Marcellus North 2019 Marcellus South 2019 Utica Rich Gas 2019 Flat Castle Condensate North South Type Curve Assumptions Inter-Lateral Spacing (ft.)…
  66. Analyst Day 2019 – Montage Resources Corp. – slide 66
    NON-GAAP RECONCILIATIONS EBITDAX Year Ended December 31, 2018 thousands ECR BRMR Pro Forma Net income (loss) from continuing operations 18,826 27,561 46,387 Depreciation, depletion and amortization 134,277 39,472 173,749…
  67. Analyst Day 2019 – Montage Resources Corp. – slide 67
    NON-GAAP RECONCILIATIONS CASH G&A Year Ending December 31, Three Months Ending Year Ending December 31, thousands 2018 March 31, 2019 2019 General and administrative expenses, estimated to be reported 29,000-38,000 29,000-38,000…

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