Ascent Resources Utica
New Coverage: Ascent Resources Utica Bondholders Organize With Paul Weiss Amid Commodity Price Environment Uncertainty
Mon 05/04/2020 19:35 PM
A group of holders of Ascent Resources Utica’s 10% unsecured notes due 2022 and 7% unsecured notes due 2026 has organized with Paul Weiss as legal advisor as uncertainty in the commodity price environment increases refinancing risk, according to sources. The group wants to be unified in the event the natural gas-weighted producer were to proactively pursue a transaction, the sources said.
The company’s bond prices have rallied since late March amid a collapse in crude oil prices that has removed associated gas from the Permian Basin and the Bakken, helping to boost natural gas prices to nearly $2/MMBtu from $1.72/MMBtu in early March. Nymex futures prices show natural gas for December delivery at nearly $3/MMBtu.
The 2022 notes last traded in size today at 85, yielding 19.819%, up from 50 on March 18, according to TRACE. The 2026 notes most recently traded in size at 52.5 on April 29, up from 29.5 on March 20.
The company announced on Feb. 21 in tandem with its full-year 2019 earnings that its borrowing base was reaffirmed at $2 billion, with the maturity extended to 2024, and that year-end leverage decreased to less than 2.5x. As of Feb. 24, $700 million was available under its revolver, according to a presentation from the JPMorgan High Yield and Leveraged Finance Conference.
The company’s capital structure, as provided in the presentation, is shown below:
Headquartered in Oklahoma City, Ascent holds 277,000 net leasehold acres and 72,000 fee mineral acres in the Utica Shale in Ohio, according to the presentation. The company on Feb. 21 set capital expenditure guidance for 2020 of $700 million to $800 million and reported fourth-quarter adjusted EBITDAX of $341 million, up 7% year over year. Average daily production during the fourth quarter was 2,272 MMcfe/day, up 28% year over year. The quarter marked the company’s first ever to generate positive free cash flow. The company said it believes it would generate “increasing amounts of free cash flow in 2020 and beyond.”
Ascent and Paul Weiss did not immediately respond to requests for comment.
--Andrew Berlin
The company’s bond prices have rallied since late March amid a collapse in crude oil prices that has removed associated gas from the Permian Basin and the Bakken, helping to boost natural gas prices to nearly $2/MMBtu from $1.72/MMBtu in early March. Nymex futures prices show natural gas for December delivery at nearly $3/MMBtu.
The 2022 notes last traded in size today at 85, yielding 19.819%, up from 50 on March 18, according to TRACE. The 2026 notes most recently traded in size at 52.5 on April 29, up from 29.5 on March 20.
The company announced on Feb. 21 in tandem with its full-year 2019 earnings that its borrowing base was reaffirmed at $2 billion, with the maturity extended to 2024, and that year-end leverage decreased to less than 2.5x. As of Feb. 24, $700 million was available under its revolver, according to a presentation from the JPMorgan High Yield and Leveraged Finance Conference.
The company’s capital structure, as provided in the presentation, is shown below:
Headquartered in Oklahoma City, Ascent holds 277,000 net leasehold acres and 72,000 fee mineral acres in the Utica Shale in Ohio, according to the presentation. The company on Feb. 21 set capital expenditure guidance for 2020 of $700 million to $800 million and reported fourth-quarter adjusted EBITDAX of $341 million, up 7% year over year. Average daily production during the fourth quarter was 2,272 MMcfe/day, up 28% year over year. The quarter marked the company’s first ever to generate positive free cash flow. The company said it believes it would generate “increasing amounts of free cash flow in 2020 and beyond.”
Ascent and Paul Weiss did not immediately respond to requests for comment.
--Andrew Berlin
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