Montage Resources Corp (Form: 10-Q, Received: 08/08/2019 16:04:54)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36511

Montage Resources Corporation

(Exact name of registrant as specified in its charter)

Delaware	46-4812998
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

122 West John Carpenter Freeway, Suite 300 Irving, TX	75039
(Address of principal executive offices)	(Zip code)

(469) 444-1647

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, Par Value $0.01 Per Share		MR		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Number of shares of the registrant’s common stock outstanding at August 5, 2019: 35,705,270 shares

MONTAGE RESOURCES CORPORATION

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page

Cautionary Statement Regarding Forward-Looking Statements		3

PART I - Financial Information		5
Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	51

PART II - Other Information		52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 6.	Exhibits	53

Index to Exhibits		53
Signatures		55

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact included in this Quarterly Report, regarding our strategy, future operations, financial position, estimated revenues and income or losses, projected costs and capital expenditures, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report, the words “will,” “plan,” “would,” “could,” “endeavor,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “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 or were, when made, based on our current expectations and assumptions about future events and are or were, when made, 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 in “Item 1A. Risk Factors” of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2019.

Forward-looking statements may include statements about, among other things:

•

realized prices for natural gas, natural gas liquids (“NGLs”) and oil and the volatility of those prices;

•

write-downs of our natural gas and oil asset values due to declines in commodity prices;

•

our business strategy;

•

our reserves, including the impact of current commodity prices on our estimated year end reserves;

•

general economic conditions;

•

our financial strategy, liquidity and capital required for developing our properties and the timing related thereto;

•

the timing and amount of future production of natural gas, NGLs and oil;

•

our hedging strategy and results;

•

future drilling plans;

•

competition and government regulations, including those related to hydraulic fracturing;

•

the anticipated benefits under our commercial agreements;

•

marketing of natural gas, NGLs and oil;

•

leasehold and business acquisitions, including our acquisition of Blue Ridge Mountain Resources, Inc., and joint ventures;

•

leasehold terms expiring before production can be established and our costs to extend such terms;

•

the costs, terms and availability of gathering, processing, fractionation and other midstream services;

•

credit markets;

•

uncertainty regarding our future operating results, including initial production rates and liquid yields in our type curve areas; and

•

plans, objectives, expectations and intentions contained in this Quarterly Report that are not historical.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our 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, legal and environmental risks, drilling and other operating risks, regulatory changes, commodity price volatility and the significant decline of the price of natural gas, NGLs and oil from historic highs, 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 our level of indebtedness, the timing of development expenditures, and the other risks described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K, filed with the SEC on March 15, 2019.

Reserve engineering is a process of estimating underground accumulations of natural gas, NGLs and oil that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions could change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of natural gas, NGLs and oil that are ultimately recovered.

Should one or more of the risks or uncertainties described in this Quarterly Report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect new information obtained or events or circumstances that occur after the date of this Quarterly Report.

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

MONTAGE RESOURCES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

	June 30, 2019			December 31, 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	9,448		$	5,959
Accounts receivable		88,770			119,332
Assets held for sale		2,474			—
Other current assets		26,757			8,639
Total current assets		127,449			133,930

PROPERTY AND EQUIPMENT
Oil and natural gas properties, successful efforts method:
Unproved properties		532,660			482,475
Proved oil and gas properties, net		1,191,807			807,583
Other property and equipment, net		12,550			6,300
Total property and equipment, net		1,737,017			1,296,358

OTHER NONCURRENT ASSETS
Other assets		8,875			3,481
Operating lease right-of-use assets		38,187			—
Assets held for sale		8,748			—
TOTAL ASSETS	$	1,920,276		$	1,433,769

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	113,771		$	116,735
Accrued capital expenditures		43,221			12,979
Accrued liabilities		59,096			56,909
Accrued interest payable		22,351			21,661
Liabilities associated with assets held for sale		4,843			—
Operating lease liability		17,166			—
Total current liabilities		260,448			208,284

NONCURRENT LIABILITIES
Debt, net of unamortized discount and debt issuance costs		499,155			497,778
Revolving credit facility		127,500			32,500
Asset retirement obligations		26,679			7,110
Other liabilities		564			611
Operating lease liability		22,321			—
Liabilities associated with assets held for sale		6,772			—
Total liabilities		943,439			746,283
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, 35,687,207 and 20,169,063 shares issued and outstanding, respectively		382			3,043
Additional paid in capital		2,349,154			2,065,119
Treasury stock, shares at cost; 2,480,655 and 1,747,624 shares, respectively		(8,794	)		(3,357	)
Accumulated deficit		(1,363,905	)		(1,377,319	)
Total stockholders' equity		976,837			687,486
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,920,276		$	1,433,769

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

MONTAGE RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

(Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
REVENUES
Natural gas, oil and natural gas liquids sales	$	143,429		$	103,257		$	275,257		$	213,441
Brokered natural gas and marketing revenue		11,989			365			21,519			373
Other revenue		122			—			261			—
Total revenues		155,540			103,622			297,037			213,814

OPERATING EXPENSES
Lease operating		10,141			7,324			17,666			16,714
Transportation, gathering and compression		51,870			31,371			93,038			59,060
Production and ad valorem taxes		4,009			2,178			6,857			4,623
Brokered natural gas and marketing expense		11,983			430			21,443			477
Depreciation, depletion, amortization and accretion		38,597			32,922			68,494			64,233
Exploration		15,193			9,620			31,981			24,898
General and administrative		13,564			10,697			42,494			20,454
(Gain) loss on sale of assets		1			(1,553	)		2			(1,820	)
Other expense		12			—			38			—
Total operating expenses		145,370			92,989			282,013			188,639
OPERATING INCOME		10,170			10,633			15,024			25,175
OTHER INCOME (EXPENSE)
Gain (loss) on derivative instruments		29,738			(16,577	)		24,808			(20,792	)
Interest expense, net		(15,109	)		(13,092	)		(28,949	)		(26,043	)
Other income		8			—			8			—
Total other income (expense), net		14,637			(29,669	)		(4,133	)		(46,835	)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		24,807			(19,036	)		10,891			(21,660	)
Income tax benefit (expense)		—			—			—			—
INCOME (LOSS) FROM CONTINUING OPERATIONS		24,807			(19,036	)		10,891			(21,660	)
Income from discontinued operations, net of income tax		2,705			—			2,523			—
NET INCOME (LOSS)	$	27,512		$	(19,036	)	$	13,414		$	(21,660	)

EARNINGS PER SHARE OF COMMON STOCK
Basic:
Weighted average common stock outstanding		35,678			20,129			30,645			19,848
Income (loss) from continuing operations	$	0.69		$	(0.95	)	$	0.36		$	(1.09	)
Income from discontinued operations		0.08			—			0.08			—
Net income (loss)	$	0.77		$	(0.95	)	$	0.44		$	(1.09	)

Diluted:
Weighted average common stock outstanding		35,826			20,129			30,830			19,848
Income (loss) from continuing operations	$	0.69		$	(0.95	)	$	0.36		$	(1.09	)
Income from discontinued operations		0.08			—			0.08			—
Net income (loss)	$	0.77		$	(0.95	)	$	0.44		$	(1.09	)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

MONTAGE RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

	Number of Shares		Common Stock ($0.01 Par)		Additional Paid-in- Capital			Treasury Stock			Accumulated Deficit			Total
Balances, December 31, 2017		17,516,024	$	2,637	$	1,967,958		$	(2,096	)	$	(1,396,145	)	$	572,354
Stock-based compensation		—		—		1,981			—			—			1,981
Equity issuance costs		—		—		(145	)		—			—			(145	)
Shares of common stock issued in asset acquisition, net of equity issuance costs		2,521,573		378		89,642			—			—			90,020
Issuance of common stock upon vesting of equity- based compensation awards, net of shares withheld for income tax withholdings		80,477		18		(18	)		(935	)		—			(935	)
Net loss		—		—		—			—			(2,624	)		(2,624	)
Balances, March 31, 2018		20,118,074	$	3,033	$	2,059,418		$	(3,031	)	$	(1,398,769	)	$	660,651
Stock-based compensation		—		—		1,979			—			—			1,979
Equity issuance costs		—		—		(25	)		—			—			(25	)
Issuance of restricted stock		15,476		2		(2	)		—			—			—
Issuance of common stock upon vesting of equity- based compensation awards, net of shares withheld for income tax withholdings		21,452		5		(5	)		(205	)		—			(205	)
Net loss		—		—		—			—			(19,036	)		(19,036	)
Balances, June 30, 2018		20,155,002	$	3,040	$	2,061,365		$	(3,236	)	$	(1,417,805	)	$	643,364

	Number of Shares		Common Stock ($0.01 Par)			Additional Paid-in- Capital			Treasury Stock			Accumulated Deficit			Total
Balances, December 31, 2018		20,169,063	$	3,043		$	2,065,119		$	(3,357	)	$	(1,377,319	)	$	687,486
Stock-based compensation		—		—			6,001			—			—			6,001
Equity issuance costs		—		—			(30	)		—			—			(30	)
Shares of common stock issued in merger, net of equity issuance costs		15,013,520		150			275,609			—			—			275,759
Reverse split 1:15		—		(2,833	)		2,833			—			—			—
Issuance of common stock upon vesting of equity- based compensation awards, net of shares withheld for income tax withholdings		499,897		22			(5	)		(5,411	)		—			(5,394	)
Net loss		—		—			—			—			(14,098	)		(14,098	)
Balances, March 31, 2019		35,682,480	$	382		$	2,349,527		$	(8,768	)	$	(1,391,417	)	$	949,724
Stock-based compensation		—		—			552			—			—			552
Equity issuance costs		—		—			(925	)		—			—			(925	)
Issuance of common stock upon vesting of equity- based compensation awards, net of shares withheld for income tax withholdings		4,727		—			—			(26	)		—			(26	)
Net income		—		—			—			—			27,512			27,512
Balances, June 30, 2019		35,687,207	$	382		$	2,349,154		$	(8,794	)	$	(1,363,905	)	$	976,837

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

MONTAGE RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Six Months Ended June 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	13,414		$	(21,660	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation, depletion, amortization and accretion		68,708			64,233
Exploration expense		22,206			13,763
Stock-based compensation		6,553			3,960
Net cash for plugging wells		(214	)		—
(Gain) loss on derivative instruments		(24,808	)		20,792
Net cash payments on settled derivatives		(746	)		(2,347	)
Gain on sale of assets		(6	)		(1,820	)
Amortization of deferred financing costs		1,201			1,114
Amortization of debt discount		665			663
Changes in operating assets and liabilities:
Accounts receivable		52,182			(35,420	)
Other assets		(15	)		(1,397	)
Accounts payable and accrued liabilities		(56,047	)		8,956
Net cash provided by operating activities		83,093			50,837
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures for oil and gas properties		(177,334	)		(124,045	)
Capital expenditures for other property and equipment		(193	)		(768	)
Proceeds from sale of assets		16			10,348
Cash proceeds from merger		12,894			—
Change in deposits and other long-term assets		(53	)		—
Net cash used in investing activities		(164,670	)		(114,465	)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt issuance costs		(3,361	)		(56	)
Repayments of long-term debt		(182	)		(181	)
Proceeds from revolving credit facility		95,000			60,000
Equity issuance costs		(31	)		(170	)
Employee tax withholding for settlement of equity compensation awards		(6,360	)		(1,140	)
Net cash provided by financing activities		85,066			58,453
Net increase (decrease) in cash and cash equivalents		3,489			(5,175	)
Cash and cash equivalents at beginning of period		5,959			17,224
Cash and cash equivalents at end of period	$	9,448		$	12,049
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	25,884		$	24,809
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
Asset retirement obligations incurred, including changes in estimate	$	750		$	208
Additions of other property through debt financing	$	—		$	174
Additions to oil and natural gas properties - changes in accounts payable, accrued liabilities, and accrued capital expenditures	$	41,668		$	26,257
Asset acquisition through stock issuance	$	—		$	90,020
BRMR Merger consideration	$	275,759		$	—

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

MONTAGE RESOURCES CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Organization and Nature of Operations

Montage Resources Corporation (the “Company”) is an independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin of the United States, which encompasses the Utica Shale, Indian Castle/Flat Creek Shales and Marcellus Shale prospective areas.

Note 2—Basis of Presentation

The accompanying Condensed Consolidated Financial Statements are unaudited except the Condensed Consolidated Balance Sheet at December 31, 2018, which is derived from the Company’s audited financial statements, and are presented in accordance with the requirements of accounting principles generally accepted in the United States (“U.S. GAAP”) for interim reporting. They do not include all disclosures normally made and contained in annual financial statements. In management’s opinion, all adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods disclosed have been made. All such adjustments are of a normal recurring nature. These interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements, and the notes to those statements, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2019.

Operating results for interim periods may not necessarily be indicative of the results of operations for the full year ending December 31, 2019 or any other future periods.

Preparation in accordance with U.S. GAAP requires the Company to (1) adopt accounting policies within accounting rules set by the Financial Accounting Standards Board (“FASB”) and (2) make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and other disclosed amounts. Note 3—Summary of Significant Accounting Policies describes our significant accounting policies. The Company’s management believes the major estimates and assumptions impacting the Condensed Consolidated Financial Statements are the following:

•

estimates of proved reserves of oil and natural gas, which affect the calculations of depreciation, depletion, amortization and accretion and impairment of capitalized costs of oil and natural gas properties;

•

estimates of asset retirement obligations;

•

estimates of the fair value of oil and natural gas properties the Company owns, particularly properties that the Company has not yet explored, or fully explored, by drilling and completing wells;

•

impairment of undeveloped properties and other assets; and

•

depreciation and depletion of property and equipment.

Actual results may differ from estimates and assumptions of future events and these revisions could be material. Future production may vary materially from estimated oil and natural gas proved reserves. Actual future prices may vary significantly from price assumptions.

Note 3—Summary of Significant Accounting Policies

(a) Cash and Cash Equivalents

Cash and cash equivalents are comprised of cash in banks and highly liquid instruments with original maturities of three months or less, primarily consisting of bank time deposits and investments in institutional money market funds. The carrying amounts approximate fair value due to the short-term nature of these items. Cash in bank accounts at times may exceed federally insured limits.

(b) Accounts Receivable

Accounts receivable are carried at estimated net realizable value. Trade credit is generally extended on a short-term basis, and therefore, accounts receivable do not bear interest, although a finance charge may be applied to such receivables that are past due. A valuation allowance is provided for those accounts for which collection is estimated as doubtful and uncollectible accounts are written off and charged against the allowance. In estimating the allowance, management considers, among other things, how recently and how frequently payments have been received and the financial position of the counterparty. The Company did not deem any of its accounts receivables to be uncollectible as of June 30, 2019 or December 31, 2018.

The Company accrues revenue due to timing differences between the delivery of natural gas, NGLs, and crude oil and the receipt of a delivery statement. These revenues are recorded based upon volumetric data from the Company’s records and management’s estimates of the related commodity sales prices and transportation and compression fees.

Oil and Natural Gas Properties

The Company follows the successful efforts method of accounting for its oil and natural gas operations. Acquisition costs for oil and natural gas properties, costs of drilling and equipping productive wells and costs of unsuccessful development wells are capitalized and amortized on an equivalent unit-of-production basis over the life of the remaining related oil and gas reserves. The estimated future costs of dismantlement, restoration, plugging and abandonment of oil and gas properties and related disposal are capitalized when asset retirement obligations are incurred and amortized as part of depreciation, depletion, amortization and accretion expense (see “Depreciation, Depletion, Amortization and Accretion” below).

Costs incurred to acquire producing and non-producing leaseholds are capitalized. All unproved leasehold acquisition costs are initially capitalized, including the cost of leasing agents, title work and due diligence. If the Company acquires leases in a prospective area, these costs are capitalized as unproved leasehold costs. If no leases are acquired by the Company with respect to the initial costs incurred or the Company discontinues leasing in a prospective area, the costs are charged to exploration expense. Unproved leasehold costs that are determined to have proved oil and gas reserves are transferred to proved leasehold costs.

Upon the sale or retirement of a complete field of a proved property, the cost is eliminated from the property accounts, and the resultant gain or loss is reclassified to the Company’s Condensed Consolidated Statements of Operations. Upon the sale of an individual well, the proceeds are credited to accumulated depreciation and depletion within the Company’s Condensed Consolidated Balance Sheets. Upon the sale of an entire interest in an unproved property where the property had been assessed for impairment individually, a gain or loss is recognized in the Company’s Condensed Consolidated Statements of Operations. Upon the sale of an entire interest in an unproved property where the property had been assessed for impairment on a group basis, no gain or loss is recognized in the Company’s Condensed Consolidated Statements of Operations unless the proceeds exceed the original cost of the property, in which case a gain is recognized in the amount of such excess. If a partial interest in an unproved property is sold, any funds received are accounted for as a reduction of the cost in the interest retained.

A summary of property and equipment including oil and natural gas properties is as follows (in thousands):

	June 30, 2019			December 31, 2018
Oil and natural gas properties:
Unproved	$	532,660		$	482,475
Proved		2,638,933			2,188,233
Gross oil and natural gas properties		3,171,593			2,670,708
Less accumulated depreciation, depletion and amortization		(1,447,126	)		(1,380,650	)
Oil and natural gas properties, net		1,724,467			1,290,058
Other property and equipment		21,551			14,460
Less accumulated depreciation		(9,001	)		(8,160	)
Other property and equipment, net		12,550			6,300
Property and equipment, net	$	1,737,017		$	1,296,358

Exploration expenses, including geological and geophysical expenses and delay rentals for unevaluated oil and gas properties are charged to expense as incurred. Exploratory drilling costs are initially capitalized as unproved property, and not subject to depletion, but charged to expense if and when the well is determined not to have found proved oil and gas reserves.

Other Property and Equipment

Other property and equipment include land, buildings, leasehold improvements, vehicles, computer equipment and software, telecommunications equipment, and furniture and fixtures. These items are recorded at cost, or fair value if acquired through a business acquisition.

(d) Revenue Recognition

Product Revenue

The Company’s revenues are primarily derived from the sale of natural gas and oil production, as well as the sale of NGLs that are extracted from the natural gas. Sales of natural gas, NGLs, and oil are recognized when the Company satisfies a performance obligation by transferring control of a product to a customer. Payment is generally received one month after the sale has occurred.

Natural Gas

Under the Company’s natural gas sales contracts, the Company delivers natural gas to the purchaser at an agreed upon delivery point. Natural gas is transported from the wellhead to delivery points specified under sales contracts. To deliver natural gas to these points, the Company uses third parties to gather, compress, process and transport the natural gas. The Company maintains control of the natural gas during gathering, compression, processing, and transportation. The Company’s sales contracts provide that it receive a specific index price adjusted for pricing differentials. The Company transfers control of the product at the delivery point and recognizes revenue based on the contract price. The costs to gather, compress, process and transport the natural gas are recorded as transportation, gathering and compression expense.

NGLs

The Company sells NGLs directly to the NGLs purchaser. For these NGLs, the sales contracts provide that the Company deliver the product to the purchaser at an agreed upon delivery point and that the Company receives a specific index price adjusted for pricing differentials and certain downstream costs incurred by third parties. The Company transfers control of the product to the purchaser at the delivery point and recognizes revenue based on the contract price. The costs to process and transport NGLs prior to the delivery point are recorded as transportation, gathering and compression expense.

Oil

Under the Company’s oil sales contracts, the Company generally sells oil to the purchaser from storage tanks at central stabilization facilities and well pads and collects a contractually agreed upon index price, net of pricing differentials and certain costs incurred by third parties. The Company transfers control of the product from the central stabilization facilities and well pads to the purchaser and recognizes revenue based on the contract price.

Marketing Revenue

Brokered natural gas and marketing revenues are derived from activities to purchase and sell third-party natural gas and to market excess firm transportation capacity to third parties. The Company retains control of the purchased natural gas and NGLs prior to delivery to the purchaser. The Company has concluded that it is the principal in these arrangements and therefore the Company recognizes revenue on a gross basis, with costs to purchase and transport natural gas presented as brokered natural gas and marketing expense. Contracts to sell third-party natural gas are generally subject to similar terms as contracts to sell the Company’s produced natural gas and NGLs. The Company satisfies performance obligations to the purchaser by transferring control of the product at the delivery point and recognizes revenue based on the price received from the purchaser.

Disaggregation of Revenue

The following table illustrates the revenue disaggregated by type for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenues (in thousands)
Natural gas sales	$	94,364	$	54,409	$	176,189	$	112,892
NGL sales		19,393		18,702		40,641		38,446
Oil sales		29,672		30,146		58,427		62,103
Brokered natural gas and marketing revenue		11,989		365		21,519		373
Other revenue		122		—		261		—
Total revenues	$	155,540	$	103,622	$	297,037	$	213,814

Transaction Price Allocated to Remaining Performance Obligations

A significant number of the Company’s product sales are short-term in nature with a contract term of one year or less. For those contracts, the Company has utilized the practical expedient allowed in the revenue accounting standard that exempts the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligations are part of a contract that has an original expected duration of one year or less.

For any product sales that have a contract term greater than one year, the Company has also utilized the practical expedient that states that it is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these product sales contracts, each unit of product generally represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. Currently, any product sales that have a contractual term greater than one year have no long-term fixed considerations.

Contract Balances

Under the Company’s sales contracts, customers are invoiced once performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Company’s product sales contracts do not give rise to contract assets or liabilities. Accounts receivable attributable to the Company’s revenue contracts with customers was $70.0 million and $94.1 million at June 30, 2019 and December 31, 2018, respectively.

(e) Concentration of Credit Risk

The Company’s principal exposures to credit risk are through the sale of its oil and natural gas production and related products and services, joint interest owner receivables and receivables resulting from commodity derivative contracts. The inability or failure of the Company’s significant customers or counterparties to meet their obligations or their insolvency or liquidation may adversely affect the Company’s financial results. The following table summarizes the Company’s concentration of receivables, net of allowances (if any), by product or service as of June 30, 2019 and December 31, 2018 (in thousands):

	June 30, 2019		December 31, 2018
Receivables by product or service:
Sale of oil and natural gas and related products and services	$	70,005	$	94,107
Joint interest owners		15,941		24,830
Derivatives		2,824		372
Other		—		23
Total	$	88,770	$	119,332

Oil and natural gas customers include pipelines, distribution companies, producers, gas marketers and industrial users primarily located in the States of Ohio, Pennsylvania and West Virginia. As a general policy, collateral is not required for receivables, but customers’ financial condition and creditworthiness are evaluated regularly. By using derivative instruments that are not traded on an exchange to hedge exposures to changes in commodity prices, the Company exposes itself to the credit risk of counterparties. Credit risk is the potential failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty is expected to owe the Company, which creates credit risk. To minimize the credit risk in derivative instruments, the Company’s policy is to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by management as competent and competitive market-makers. Additionally, the Company uses master netting agreements to minimize credit risk exposure. The creditworthiness of the Company’s counterparties is subject to periodic review. The fair value of the Company’s unsettled commodity derivative contracts was a net asset position of $21.7 million and $5.7 million at June 30, 2019 and December 31, 2018, respectively. Other than as provided by its revolving credit facility, the Company is not required to provide credit support or collateral to any of its counterparties under the Company’s contracts, nor are such counterparties required to provide credit support to the Company. As of June 30, 2019 and December 31, 2018, the Company did not have past-due receivables from or payables to any of such counterparties.

(f) Depreciation, Depletion, Amortization and Accretion

Oil and Natural Gas Properties

Depreciation, depletion and amortization (“DD&A”) of capitalized costs of proved oil and natural gas properties is computed using the unit-of-production method on a field level basis using total estimated proved reserves. The reserve base used to calculate DD&A for leasehold acquisition costs and the cost to acquire proved properties is the sum of proved developed reserves and proved undeveloped reserves. The reserve base used to calculate DD&A for drilling, completion and well equipment costs, which include development costs and successful exploration drilling costs, includes only proved developed reserves. DD&A expense relating to proved oil and natural gas properties, including accretion expense, totaled approximately $38.0 million and $32.5 million for the three months ended June 30, 2019 and 2018, respectively, and $67.5 million and $63.3 million for the six months ended June 30, 2019 and 2018, respectively, is included in depreciation, depletion, amortization and accretion expense in the Condensed Consolidated Statements of Operations.

Other Property and Equipment

Depreciation with respect to other property and equipment is calculated using straight-line methods based on expected lives of the individual assets or groups of assets ranging from five to 40 years. Depreciation totaled approximately $0.6 million and $0.4 million for the three months ended June 30, 2019 and 2018, respectively, and $1.0 million and $0.9 million for the six months ended June 30, 2019 and 2018, respectively. This amount is included in depreciation, depletion, amortization and accretion expense in the Condensed Consolidated Statements of Operations.

(g) Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an asset’s estimated future cash flows will not be sufficient to recover its carrying amount, an impairment charge will be recorded to reduce the carrying amount for that asset to its estimated fair value if such carrying amount exceeds the fair value.

The review for impairment of the Company’s oil and gas properties is done by determining if the historical cost of proved and unproved properties less the applicable accumulated DD&A and abandonment is less than the estimated expected undiscounted future cash flows. The expected future cash flows are estimated based on the Company’s plans to continue to produce and develop proved reserves and a risk-adjusted portion of probable reserves. Expected future cash flow from the sale of production of reserves is calculated based on estimated future prices. The Company estimates prices based upon current contracts in place, adjusted for basis differentials and market-related information, including published futures prices. The estimated future level of production is based on assumptions surrounding future prices and costs, field decline rates, market demand and supply and the economic and regulatory climates. If the carrying value exceeds the expected future cash flows, an impairment loss is recognized for the difference between the estimated fair market value (as determined by discounted future cash flows) and the carrying value of the assets. There were no impairments of proved properties for the three or six months ended June 30, 2019 or the three or six months ended June 30, 2018.

When an impairment charge is recognized it represents a significant Level 3 measurement in the fair value hierarchy. The primary input used is the Company’s forecasted discount net cash flows.

The determination of oil and natural gas reserve estimates is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results.

Unproved oil and natural gas properties are periodically assessed for impairment by considering future drilling and exploration plans, results of exploration activities, commodity price outlooks, planned future sales and expiration of all or a portion of the properties. An impairment charge is recorded if conditions indicate the Company will not explore the acreage prior to expiration of the applicable leases. The Company recorded impairment charges of unproved oil and gas properties related to lease expirations of approximately $12.4 million and $7.0 million for the three months ended June 30, 2019 and 2018, respectively, and $22.0 million and $13.7 million for the six months ended June 30, 2019 and 2018, respectively. These costs are included in exploration expense in the Condensed Consolidated Statements of Operations.

(h) Income Taxes

The Company accounts for income taxes, as required, under the liability method as set out in the FASB’s Accounting Standards Codification (“ASC”) Topic 740 “Income Taxes.” Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

ASC Topic 740 further provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not (i.e. a likelihood greater than 50 percent) that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of the uncertain tax position guidance and in subsequent periods. This interpretation also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company has not recorded a reserve for any uncertain tax positions to date.

The Company applies Topic 740’s intra-period income tax allocation rules using the with and without approach, to allocate income tax expense (benefit) among continuing operations, discontinued operations, other comprehensive income (loss), and additional paid-in capital as required.

(i) Fair Value of Financial Instruments

The Company has established a hierarchy to measure its financial instruments at fair value, which requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy defines three levels of inputs that may be used to measure fair value:

Level 1—Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. The Company’s valuation models are primarily industry-standard models that consider various inputs including: (i) quoted forward prices for commodities, (ii) time value, (iii) current market and contractual prices for the underlying instruments and (iv) volatility factors, as well as other relevant economic measures.

Level 3—Unobservable inputs that reflect the entity’s own assumptions about the assumption market participants would use in the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques.

Valuation techniques that maximize the use of observable inputs are favored. Assets and liabilities are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement of assets and liabilities within the levels of the fair value hierarchy.

(j) Derivative Financial Instruments

The Company uses derivative financial instruments to reduce exposure to fluctuations in the prices of the energy commodities it sells.

Derivatives are recorded at fair value and are included on the Condensed Consolidated Balance Sheets as current and noncurrent assets and liabilities. Derivatives are classified as current or noncurrent based on the contractual expiration date. Derivatives with expiration dates within the next 12 months are classified as current. The Company netted the fair value of derivatives by counterparty in the accompanying Condensed Consolidated Balance Sheets where the right to offset exists. The Company’s derivative instruments were not designated as hedges for accounting purposes for any of the periods presented. Accordingly, the changes in fair value are recognized in the Condensed Consolidated Statements of Operations in the period of change. Gains and losses on derivatives are included in cash flows from operating activities. Premiums for options are included in cash flows from operating activities.

The valuation of the Company’s derivative financial instruments represents a Level 2 measurement in the fair value hierarchy.

(k) Asset Retirement Obligation

The Company recognizes a legal liability for its asset retirement obligations (“ARO”) in accordance with ASC Topic 410, “Asset Retirement and Environmental Obligations,” associated with the retirement of a tangible long-lived asset, in the period in which it is incurred or becomes determinable, with an associated increase in the carrying amount of the related long-lived asset. The cost of the tangible asset, including the initially recognized asset retirement cost, is depreciated over the useful life of the asset and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. The Company measures the fair value of its ARO using expected future cash outflows for abandonment discounted back to the date that the abandonment obligation was measured using an estimated credit adjusted rate.

Estimating the future ARO requires management to make estimates and judgments based on historical information regarding timing and existence of a liability, as well as what constitutes adequate restoration. Inherent in the fair value calculation are numerous assumptions and judgments including the ultimate costs, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the related asset.

The following table sets forth the changes in the Company’s ARO liability for the six months ended June 30, 2019 (in thousands):

	Six Months Ended June 30, 2019
Asset retirement obligations, beginning of period	$	7,110
Accretion		1,018
Additional liabilities incurred		229
Obligation for wells acquired		20,188
Obligation for wells drilled		244
Liabilities settled via plugging		(152	)
Less: current ARO portion (accrued liabilities)		(1,958	)
Asset retirement obligations, end of period	$	26,679

The inputs used to determine such fair value are primarily based upon costs incurred historically for similar work, as well as estimates from independent third parties for costs that would be incurred to restore leased property to the contractually stipulated condition. Additions to ARO represent a significant nonrecurring Level 3 measurement.

(l) Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

(m) Segment Reporting

The Company operates in one industry segment: the oil and natural gas exploration and production industry in the United States. All of its operations are conducted in one geographic area of the United States. All revenues are derived from customers located in the United States.

(n) Debt Issuance Costs

The expenditures related to issuing debt are capitalized and reported as a reduction of the Company’s debt balance in the accompanying balance sheets. These costs are amortized over the expected life of the related instruments using the effective interest rate method. When debt is retired before maturity or modifications significantly change the cash flows, related unamortized costs are expensed.

(o) Recent Accounting Pronouncements

Recently Adopted

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The new standard provides guidance to increase transparency and comparability among organizations and industries by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Entities are required to recognize all leases in the statement of financial position as assets and liabilities regardless of the leases’ classification. These requirements are effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, “Leases: Targeted Improvements.” The update provided an optional transition method of adoption that permitted entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under the optional transition method, comparative financial information and disclosures are not required. The update also provided transition practical expedients. The standard required disclosures of the nature, maturity and value of an entity's lease liabilities and elections made by the entity. In March 2019, the FASB issued ASU 2019-01, “Leases: Codification Improvements,” which, among other things, clarified interim disclosure requirements in the year of ASU 2016-02 adoption.

The Company adopted these standards effective January 1, 2019 using the optional transition method of adoption. The Company implemented a third-party-sponsored lease accounting information system to facilitate the accounting and financial reporting requirements, and implemented processes and controls to review new contracts and modifications to existing contracts that contain lease components for appropriate accounting treatment. See “Note 7 – Leases” for the disclosures required by the standards.

Note 4—Acquisitions

Eclipse Resources-PA, LP Acquisition

On January 18, 2018, Eclipse Resources-PA, LP, a wholly owned subsidiary of the Company, completed its acquisition of certain oil and gas leases, one producing well and other oil and gas rights and interests covering approximately 44,500 net acres located in Tioga and Potter Counties, Pennsylvania, from Travis Peak Resources, LLC for an aggregate adjusted purchase price of $90 million, which was paid entirely with approximately 2.5 million shares of the Company’s common stock (the “Flat Castle Acquisition”). The transaction was accounted for as an asset acquisition. Approximately $86 million of the purchase price was allocated to unproved oil and natural gas properties and approximately $4 million was allocated to proved oil and gas properties associated with the producing well acquired. In addition, the Company capitalized approximately $1 million of transaction costs related to the acquisition.

During the year ended December 31, 2018, the Company assigned its option to purchase all of the outstanding equity interests of Cardinal NE Holdings, LLC (“Cardinal”), a wholly owned subsidiary of Cardinal Midstream II, LLC, which owns midstream infrastructure with associated gathering rights on acreage in the Indian Castle and Flat Creek Shales, to a third party. The third party exercised its option to purchase all of the outstanding equity interests of Cardinal in July 2018.

Merger with Blue Ridge Mountain Resources

On February 28, 2019, the Company completed its business combination transaction with Blue Ridge Mountain Resources, Inc. (“BRMR”) pursuant to that certain Agreement and Plan of Merger, dated as of August 25, 2018 and amended as of January 7, 2019 (the “Merger Agreement”), by and among the Company, Everest Merger Sub Inc. (“Merger Sub”), a Delaware corporation and a wholly owned subsidiary of the Company, and BRMR. Pursuant to the Merger Agreement, Merger Sub merged with and into BRMR with BRMR continuing as the surviving corporation and a wholly owned subsidiary of the Company (the “BRMR Merger”).

As a result of the BRMR Merger, each share of common stock, par value $0.01 per share, of BRMR issued and outstanding immediately prior to the effective time of the BRMR Merger (the “Effective Time”), excluding certain Excluded Shares (as such term is defined in the Merger Agreement), was converted into the right to receive from the Company 0.29506 of a validly issued, fully-paid, and nonassessable share of common stock, par value $0.01 per share, of the Company. The exchange ratio reflects an adjustment to account for the 15-to-1 reverse stock split (See Note 13— Earnings (Loss) Per Share). Former stockholders of BRMR received cash for any fractional shares of the Company’s common stock to which they might otherwise have been entitled as a result of the BRMR Merger. In addition, upon completion of the BRMR Merger, all shares of BRMR restricted stock and all BRMR restricted stock units and performance interest awards were converted into the right to receive shares of common stock of the Company or cash, in each case as specified in the Merger Agreement.

The following table summarizes the preliminary purchase price allocation and the values of assets acquired and liabilities assumed (in thousands):

Purchase Price	February 28, 2019
Fair value of the Company's common stock issued	$	263,487
Fair value of BRMR share-based and other compensation		12,272
Total Fair Value of Consideration	$	275,759

Cash and cash equivalents		12,894
Accounts receivable		25,884
Assets held for sale - current		2,296
Other current assets		1,702
Unproved properties		84,742
Proved oil and gas properties		218,866
Other property and equipment		7,059
Other assets		2,461
Operating lease right-of-use asset		7,900
Assets held for sale - long-term		8,505
Total assets acquired	$	372,309
Accounts payable		(16,571	)
Accrued capital expenditures		(5,807	)
Accrued liabilities		(31,619	)
Operating lease liability - current		(1,977	)
Liabilities associated with assets held for sale - current		(7,683	)
Asset retirement obligations		(20,188	)
Operating lease liability - noncurrent		(5,923	)
Liabilities associated with assets held for sale - long-term		(6,782	)
Total liabilities assumed	$	(96,550	)

Net identifiable assets	$	275,759

The fair value measurements of oil and natural gas properties and asset retirement obligations are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair values of proved oil and natural gas properties and asset retirement obligations were measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation of oil and natural gas properties included estimates of: (i) recoverable reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices; and (v) a market-based weighed average cost of capital rate. The fair value of unproved properties was determined using a market approach utilizing recent transactions of a similar nature in the same basin. These inputs required significant judgements and estimates by management at the time of the valuation and are the most sensitive to possible future changes.

The following unaudited pro forma financial information represents the combined results for the Company as though the BRMR Merger had been completed on January 1, 2018. The pro forma combined financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the BRMR Merger taken place on January 1, 2018; furthermore, the financial information is not intended to be a projection of future results.

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
(in thousands, except per share data) (unaudited)	2019		2018			2019			2018
Pro forma total revenues	$	155,539	$	140,936		$	339,694		$	274,836
Pro forma net income (loss)	$	27,505	$	(30,544	)	$	(230	)	$	(40,287	)
Pro forma net income (loss) per share (basic and diluted)	$	0.77	$	(0.86	)	$	(0.01	)	$	(1.14	)

Note 5—Sale of Oil and Natural Gas Property Interests

During the three and six months ended June 30, 2018, the Company received approximately $6.0 million from a completed asset sale of approximately 1,000 acres to a third party. As a result of this sale, the Company recognized a gain of approximately $1.5 million.

During the six months ended June 30, 2018, the Company received approximately $3.8 million from a completed asset sale of approximately 400 acres to a third party. No gain or loss was recognized for this transaction, which was recorded as a reduction of oil and natural gas properties.

During the six months ended June 30, 2018, the Company received approximately $0.3 million from an additional completed asset sale of approximately 50 acres to a third party. As a result of this sale, the Company recognized a gain of approximately $0.3 million.

Note 6—Assets Held for Sale and Discontinued Operations

Assets Held for Sale

As a result of the BRMR Merger, the Company acquired certain assets that met the criteria for assets held for sale at the acquisition date, comprised of the net assets of Magnum Hunter Production, Inc. (“MHP”), a wholly-owned subsidiary of BRMR. These assets are located primarily in Kentucky and Tennessee.

The following summarizes assets and liabilities held for sale at June 30, 2019:

(in thousands)	June 30, 2019
Accounts receivable	$	1,582
Other current assets		892
Total current assets held for sale	$	2,474

Proved oil and gas properties, net	$	8,540
Other noncurrent assets		208
Total noncurrent assets held for sale	$	8,748

Accounts payable	$	2,685
Accrued liabilities		1,619
Other current liabilities		539
Total current liabilities associated with assets held for sale	$	4,843

Asset retirement obligations	$	6,191
Other liabilities		581
Total noncurrent liabilities associated with assets held for sale	$	6,772

Discontinued Operations

The Company determined that the planned divestiture of MHP met the assets held for sale criteria and the criteria for classification as discontinued operations as of June 30, 2019. The Company included the results of operations for MHP for the three and six months ended June 30, 2019 in discontinued operations as follows:

(in thousands)	For the Three Months Ended June 30, 2019			For the Six Months Ended June 30, 2019
Revenues	$	2,579		$	3,529
Depreciation, depletion, amortization and accretion		(160	)		(212	)
Other operating expenses		276			(804	)
Other income		10			10
Income from discontinued operations, net of tax		2,705			2,523
Gain on disposal of discontinued operations, net of tax		—			—
Income from discontinued operations, net of tax	$	2,705		$	2,523

The Company had maintained an accrued liability of $3.5 million related to litigation involving MHP and a third-party regarding certain royalty and overriding royalty deductions and related payments under several farm-out agreements. The litigation concluded in April 2019 and, as a result, the Company removed the accrued liability and recognized corresponding income from discontinued operations for the three and six months ended June 30, 2019.

Total operating and investing cash flows of discontinued operations for the six months ended June 30, 2019 were as follows:

(in thousands)

For the Six

Months Ended

June 30, 2019

Net cash provided by operating activities

1,521

Net cash provided by investing activities

Note 7—Leases

The Company leases drilling rigs, compressors, vehicles, office space, and other equipment under non-cancelable operating leases expiring through 2036. Certain lease agreements may include options to renew the lease, terminate the lease early, or purchase the underlying asset(s). The Company determines the lease term at the lease commencement date as the non-cancelable period of the lease, including the options to extend or terminate the lease when such an option is reasonably certain to be exercised.

As discussed in Note 3—Summary of Significant Accounting Policies, the Company adopted ASU 2016-02, ASU 2018-11 and ASU 2019-01 “Leases (Topic 842)” on January 1, 2019 using the optional transition method of adoption. The Company elected a package of practical expedients that together allows an entity to not reassess (i) whether a contract is or contains a lease, (ii) lease classification and (iii) initial direct costs. In addition, the Company elected the following practical expedients for all asset classes: (i) to not reassess certain land easements; (ii) to not apply the recognition requirements under the standard to short-term leases; and (iii) to combine and account for lease and nonlease contract components as a lease, which requires the capitalization of fixed nonlease payments on January 1, 2019 or lease effective date and recognition of variable nonlease payments as variable lease expense.

On January 1, 2019, the Company recorded a total of $10.4 million in right-of-use assets and corresponding new lease liabilities on its Condensed Consolidated Balance Sheets representing the present value of its future operating lease payments. Adoption of the standards did not require an adjustment to the opening balance of retained earnings. The discount rate used to determine present value was based on the rate of interest that the Company estimated it would have to pay to borrow (on a collateralized-basis over a similar term) an amount equal to the lease payments in a similar economic environment as of January 1, 2019. The Company is required to reassess the discount rate for any new and modified lease contracts as of the lease effective date.

The right-of-use assets and lease liabilities recognized upon adoption of ASU 2016-02 were based on the lease classifications, lease commitment amounts and terms recognized under the prior lease accounting guidance. Leases with an initial term of 12 months or less, taking into account extensions if reasonably certain to be exercised, are considered short-term leases and are not recorded on the balance sheet.

The Company incurred $5.6 million and $7.9 million in operating lease cost during the three and six months ended June 30, 2019. The operating lease right-of-use assets were reported in other noncurrent assets and the current and noncurrent portions of the operating lease liabilities were reported in current liabilities and noncurrent liabilities, respectively, on the Condensed Consolidated Balance Sheets. As of June 30, 2019, the operating right-of-use assets were $38.2 million and operating lease liabilities were $39.5 million, of which $17.2 million was classified as current. As of June 30, 2019, the weighted average remaining lease term was 3.5 years and the weighted average discount rate was 5.6%.

Supplemental cash flow information related to the Company’s operating leases is included in the table below (in thousands):

	For the Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	2,269
Investing cash flows for operating leases	$	5,658
ROU assets added in exchange for lease obligations (upon adoption)	$	10,434
ROU assets and lease obligations acquired in BRMR Merger	$	7,900
ROU assets added in exchange for lease obligations, net of terminations (since adoption)	$	27,118

The Company’s lease liabilities with enforceable contract terms that are greater than one year mature as follows (in thousands):

	Operating Leases
Remainder of 2019	$	10,907
2020		15,071
2021		6,512
2022		4,671
2023		2,772
Thereafter		4,539
Total lease payments	$	44,472
Less imputed interest		(4,985	)
Total lease liability	$	39,487

Note 8—Derivative Instruments

Commodity Derivatives

The Company is exposed to market risk from changes in energy commodity prices within its operations. The Company utilizes derivatives to manage exposure to the variability in expected future cash flows from forecasted sales of natural gas and oil. The Company currently uses a mix of over-the-counter fixed price swaps, basis swaps and put options spreads and collars to manage its exposure to commodity price fluctuations. All of the Company’s derivative instruments are used for risk management purposes and none are held for trading or speculative purposes.

The Company is exposed to credit risk in the event of non-performance by counterparties. To mitigate this risk, the Company enters into derivative contracts only with counterparties that are rated “A” or higher by S&P or Moody’s. The creditworthiness of counterparties is subject to periodic review. As of June 30, 2019, the Company’s derivative instruments were with Bank of Montreal, J Aron, Morgan Stanley, Capital One N.A., BP Energy Company, KeyBank N.A, NextEra Energy, Inc., and EDF Energy. The Company has not experienced any issues of non-performance by derivative counterparties. Below is a summary of the Company’s derivative instrument positions, as of June 30, 2019, for future production periods:

Natural Gas Derivatives:

Description	Volume (MMBtu/d)		Production Period	Weighted Average Price ($/MMBtu)
Natural Gas Swaps:
		90,000	July 2019 – December 2019	$	2.84
		15,000	July 2019 – September 2019	$	2.79
Natural Gas Collars:
Floor purchase price (put)		75,000	July 2019 – September 2019	$	2.50
Ceiling sold price (call)		75,000	July 2019 – September 2019	$	2.87
Floor purchase price (put)		65,000	October 2019 – December 2019	$	2.65
Ceiling sold price (call)		65,000	October 2019 – December 2019	$	2.96
Floor purchase price (put)		30,000	January 2020 – March 2020	$	2.72
Ceiling sold price (call)		30,000	January 2020 – March 2020	$	3.15
Floor purchase price (put)		15,000	April 2020 – June 2020	$	2.50
Ceiling sold price (call)		15,000	April 2020 – June 2020	$	2.80
Floor purchase price (put)		30,000	January 2020 – December 2020	$	2.55
Ceiling sold price (call)		30,000	January 2020 – December 2020	$	3.00
Natural Gas Three-way Collars:
Floor purchase price (put)		77,500	July 2019 – December 2019	$	2.72
Floor sold price (put)		77,500	July 2019 – December 2019	$	2.30
Ceiling sold price (call)		77,500	July 2019 – December 2019	$	3.04
Floor purchase price (put)		70,000	January 2020 – June 2020	$	2.70
Floor sold price (put)		70,000	January 2020 – June 2020	$	2.25
Ceiling sold price (call)		70,000	January 2020 – June 2020	$	2.98
Floor purchase price (put)		30,000	October 2019 – June 2020	$	2.90
Floor sold price (put)		30,000	October 2019 – June 2020	$	2.50
Ceiling sold price (call)		30,000	October 2019 – June 2020	$	3.15
Floor purchase price (put)		30,000	January 2020 – December 2020	$	2.70
Floor sold price (put)		30,000	January 2020 – December 2020	$	2.40
Ceiling sold price (call)		30,000	January 2020 – December 2020	$	3.05
Natural Gas Call/Put Options:
Call sold		40,000	July 2019 – December 2019	$	3.44
Basis Swaps:
Appalachia - Dominion		12,500	July 2019 – October 2019	$	(0.52	)
Appalachia - Dominion		12,500	April 2020 – October 2020	$	(0.52	)
Appalachia - Dominion		20,000	January 2020 – December 2020	$	(0.59	)
Appalachia - Dominion		20,000	July 2019 – March 2020	$	(0.39	)
Appalachia - Dominion		17,500	July 2019 – December 2019	$	(0.50	)

Oil Derivatives:

Description	Volume (Bbls/d)		Production Period	Weighted Average Price ($/Bbl)
Oil Swaps:
		1,500	July 2019 – December 2019	$	59.18
		1,000	January 2020 – December 2020	$	58.60
Oil Collars:
Floor purchase price (put)		1,500	July 2019 – December 2019	$	51.67
Ceiling sold price (call)		1,500	July 2019 – December 2019	$	65.92
Floor purchase price (put)		1,000	January 2020 – December 2020	$	51.50
Ceiling sold price (call)		1,000	January 2020 – December 2020	$	64.25
Floor purchase price (put)		500	July 2019 – March 2020	$	60.00
Ceiling sold price (call)		500	July 2019 – March 2020	$	67.00
Oil Three-way Collars:
Floor purchase price (put)		2,000	July 2019 – December 2019	$	50.00
Floor sold price (put)		2,000	July 2019 – December 2019	$	40.00
Ceiling sold price (call)		2,000	July 2019 – December 2019	$	60.56
Floor purchase price (put)		2,000	January 2020 – June 2020	$	62.50
Floor sold price (put)		2,000	January 2020 – June 2020	$	55.00
Ceiling sold price (call)		2,000	January 2020 – June 2020	$	74.00

NGL Derivatives:

Description

Volume

(Bbls/d)

Production Period

Weighted Average

Price ($/Bbl)

Propane Swaps:

350

July 2019 – December 2019

39.90

Fair Values and Gains (Losses)

The following table summarizes the fair value of the Company’s derivative instruments on a gross basis and on a net basis as presented in the Condensed Consolidated Balance Sheets (in thousands). None of the derivative instruments is designated as a hedge for accounting purposes.

As of June 30, 2019	Gross Amount			Netting Adjustments(a)			Net Amount Presented in Balance Sheets			Balance Sheet Location
Assets
Commodity derivatives - current	$	23,581		$	(2,338	)		21,243		Other current assets
Commodity derivatives - noncurrent		1,935			—			1,935		Other assets
Total assets	$	25,516		$	(2,338	)	$	23,178

Liabilities
Commodity derivatives - current	$	(3,487	)	$	2,338		$	(1,149	)	Accrued liabilities
Commodity derivatives - noncurrent		(357	)		—			(357	)	Other liabilities
Total liabilities	$	(3,844	)	$	2,338		$	(1,506	)

As of December 31, 2018	Gross Amount			Netting Adjustments(a)			Net Amount Presented in Balance Sheets			Balance Sheet Location
Assets
Commodity derivatives - current	$	4,960		$	(845	)	$	4,115		Other current assets
Commodity derivatives - noncurrent		1,910			—			1,910		Other assets
Total assets	$	6,870		$	(845	)	$	6,025

Liabilities
Commodity derivatives - current	$	(845	)	$	845		$	—		Accrued liabilities
Commodity derivatives - noncurrent		(326	)		—			(326	)	Other liabilities
Total liabilities	$	(1,171	)	$	845		$	(326	)

(a)	The Company has agreements in place that allow for the financial right to offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements.

The following table presents the Company’s reported gains and losses on derivative instruments and where such values are recorded in the Condensed Consolidated Statements of Operations for the periods presented (in thousands):

		Amount of Gain (Loss) Recognized in Income
Derivatives not designated as hedging instruments under ASC 815	Location of Gain (Loss) Recognized in Income	Three Months Ended June 30,					Six Months Ended June 30,
		2019		2018			2019		2018
Commodity derivatives	Gain (loss) on derivative instruments	$	29,738	$	(16,577	)	$	24,808	$	(20,792	)

Note 9—Fair Value Measurements

Fair Value Measurement on a Recurring Basis

The following table presents, by level within the fair value hierarchy, the Company’s assets and liabilities that are measured at fair value on a recurring basis. The carrying amounts reported in the Condensed Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the nature of the instrument and/or the short-term maturity of these instruments. The fair value of the Company’s derivatives is based on third-party pricing models, which utilize inputs that are readily available in the public market, such as natural gas and crude oil forward curves. These values are compared to the values given by counterparties for reasonableness. Since the Company’s derivative instruments do not include optionality, and therefore, generally have no unobservable inputs, they are classified as Level 2.

	Level 1		Level 2		Level 3		Total Fair Value
As of June 30, 2019: (in thousands)
Commodity derivative instruments	$	—	$	21,672	$	—	$	21,672
Total	$	—	$	21,672	$	—	$	21,672
As of December 31, 2018: (in thousands)
Commodity derivative instruments	$	—	$	5,699	$	—	$	5,699
Total	$	—	$	5,699	$	—	$	5,699

Nonfinancial Assets and Liabilities

Assets and liabilities acquired in business combinations are recorded at their fair value on the date of acquisition. Significant Level 3 assumptions associated with the calculation of future cash flows used in the analysis of fair value of the oil and natural gas property acquired include the Company’s estimate of future commodity prices, production costs, development expenditures, production, risk-adjusted discount rates, and other relevant data. Additionally, fair value is used to determine the inception value of the Company’s AROs. The inputs used to determine such fair value are primarily based upon costs incurred historically for similar work, as well as estimates from independent third parties for costs that would be incurred to restore leased property to the contractually stipulated condition. Additions to the Company’s ARO represent a nonrecurring Level 3 measurement. (See Note 3—Summary of Significant Accounting Policies).

The Company reviews its proved oil and natural gas properties for impairment purposes by comparing the expected undiscounted future cash flows at a producing field level to the unamortized capitalized cost of the asset. Significant assumptions associated with the calculation of future cash flows used in the impairment analysis include the estimate of future commodity prices, production costs, development expenditures, production, risk-adjusted discount rates and other relevant data. As such, the fair value of oil and natural gas properties used in estimating impairment represents a nonrecurring Level 3 measurement. (See Note 3—Summary of Significant Accounting Policies).

The estimated fair values of the Company’s financial instruments closely approximate the carrying amounts due, except for long-term debt. (See Note 10—Debt).

Note 10—Debt

8.875% Senior Unsecured Notes Due 2023

On July 6, 2015, the Company issued $550 million in aggregate principal amount of 8.875% senior unsecured notes due 2023 at an issue price of 97.903% of the principal amount of the notes, plus accrued and unpaid interest, if any, to Deutsche Bank Securities Inc. and other initial purchasers. In this private offering, the senior unsecured notes were sold for cash to qualified institutional buyers in the United States pursuant to Rule 144A of the Securities Act and to persons outside the United States in compliance with Regulation S under the Securities Act. Upon closing, the Company received proceeds of approximately $525.5 million, after deducting original issue discount, the initial purchasers’ discounts and estimated offering expenses, of which the Company used approximately $510.7 million to finance the redemption of all of its outstanding senior PIK notes. The Company used the remaining net proceeds to fund its capital expenditure plan and for general corporate purposes.

During the three and six months ended June 30, 2019, the Company amortized $0.9 million and $1.9 million, respectively, of deferred financing costs and debt discount to interest expense using the effective interest method. The Company amortized $0.9 million and $1.8 million of deferred financing costs and debt discount to interest expense using the effective interest method for the three and six months ended June 30, 2018, respectively.

The indenture governing the senior unsecured notes contains covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to: (i) incur additional indebtedness, (ii) pay dividends on capital stock or redeem, repurchase or retire the Company’s capital stock or subordinated indebtedness, (iii) transfer or sell assets, (iv) make investments, (v) create certain liens, (vi) enter into agreements that restrict dividends or other payments to the Company from its restricted subsidiaries, (vii) consolidate, merge or transfer all or substantially all of the assets of the Company and its restricted subsidiaries, taken as a whole, (viii) engage in transactions with affiliates, and (ix) create unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications set forth in the indenture. In addition, if the senior unsecured notes achieve an investment grade rating from either Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Services, and no default under the indenture has then occurred and is continuing, many of such covenants will be suspended. The indenture also contains events of default, which include, among others and subject in certain cases to grace and cure periods, nonpayment of principal or interest, failure by the Company to comply with its other obligations under the indenture, payment defaults and accelerations with respect to certain other indebtedness of the Company and its restricted subsidiaries, failure of any guarantee on the senior unsecured notes to be enforceable, and certain events of bankruptcy or insolvency. The Company was in compliance with all applicable covenants in the indenture at June 30, 2019.

Based on Level 2 market data inputs, the fair value of the senior unsecured notes at June 30, 2019 was $430.3 million.

Revolving Credit Facility

During the first quarter of 2014, the Eclipse Resources I, LP, a wholly owned subsidiary of the Company (“Eclipse I”) entered into a $500 million senior secured revolving bank credit facility (the “revolving credit facility”) that was scheduled to mature in 2018. Borrowings under the revolving credit facility are subject to borrowing base limitations based on the collateral value of the Company’s proved properties and commodity hedge positions and are subject to semiannual redeterminations (April and October).

The credit agreement governing the revolving credit facility (as amended and restated, the “Credit Agreement”) was amended and restated on January 12, 2015. The primary change effected by such amendment was to add the Company as a party to the revolving credit facility and thereby subject the Company to the representations, warranties, covenants and events of default provisions thereof. Relative to Eclipse I’s previous credit agreement, the Credit Agreement also (i) requires financial reporting regarding, and tests financial covenants with respect to, Montage Resources Corporation (f/k/a Eclipse Resources Corporation) rather than Eclipse I, (ii) increases the basket sizes under certain of the negative covenants, and (iii) includes certain other changes favorable to Eclipse I. Other terms of the Credit Agreement remain generally consistent with Eclipse I’s previous credit agreement.

On February 24, 2016, the Company amended the Credit Agreement to, among other things; adjust the quarterly minimum interest coverage ratio, which is the ratio of EBITDAX to Cash Interest Expense (as such terms are defined in the Credit Agreement), and to permit the sale of certain conventional properties. The amendment to the Credit Agreement also increased the Applicable Margin (as defined in the Credit Agreement) applicable to loans and letter of credit participation fees under the Credit Agreement by 0.5% and required the Company to, within 60 days of the effectiveness of such amendment, execute and deliver additional mortgages on the Company’s oil and gas properties that include at least 90% of its proved reserves.

On February 24, 2017, the Company entered into an additional amendment to the Credit Agreement that increased the borrowing base from $125 million to $175 million, while extending the maturity of the revolving credit facility to February 2020. In addition, this amendment modified the minimum interest coverage ratio covenant to a net leverage covenant of Consolidated Total Funded Net Debt (as defined in the Credit Agreement) to EBITDAX. On August 1, 2017, the Company entered into an additional amendment to the Credit Agreement that increased the borrowing base from $175 million to $225 million.

On February 28, 2019, the Company amended and restated the Credit Agreement to increase its revolving credit facility from $500 million to $1 billion. Further, the amended and restated Credit Agreement, among other things, increased the borrowing base from $225 million to $375 million (subject to scheduled and interim redeterminations based on the Company’s oil and natural gas reserves and other adjustments described therein) and extended the maturity date thereof to February 2024 (subject to earlier maturity in certain circumstances specified therein). The amended and restated Credit Agreement also adjusted the ratio of Consolidated Total Funded Net Debt to EBITDAX to provide that the Company will not, as of the last day of any fiscal quarter (commencing with the fiscal quarter ending March 31, 2019), permit its ratio of Consolidated Total Funded Net Debt to EBITDAX for the four previous fiscal quarters to be greater than 4.00 to 1.00.

On May 6, 2019, the borrowing base under the Credit Agreement was redetermined, which increased the borrowing base from $375 million to $400 million.

At June 30, 2019, the borrowing base was $400 million and the Company had $127.5 million in outstanding borrowings under the revolving credit facility. After giving effect to outstanding letters of credit issued by the Company totaling $29.2 million and the outstanding borrowings of $127.5 million, the Company had available borrowing capacity under the revolving credit facility of $243.3 million at June 30, 2019.

The revolving credit facility is secured by mortgages on 85% of the value of the Company’s proved reserves and guarantees from the Company’s operating subsidiaries. The revolving credit facility contains certain covenants, including restrictions on indebtedness and dividends, and requirements with respect to working capital and interest coverage ratios. Interest is payable at a variable rate based on LIBOR or the prime rate based on the Company’s election at the time of borrowing. The Company was in compliance with all applicable covenants under the revolving credit facility as of June 30, 2019. Commitment fees on the unused portion of the revolving credit facility are due quarterly at 0.375%-0.500% of the unused facility based on utilization.

Note 11—Benefit Plans

Defined Contribution Plan

The Company currently maintains a retirement plan intended to provide benefits under section 401(k) of the Internal Revenue Code, as amended (“the Code”), under which employees are allowed to contribute portions of their compensation to a tax-qualified retirement account. Under the 401(k) plan, the Company provides matching contributions equal to 100% of the first 6% of employees’ eligible compensation contributed to the plan. The Company recorded compensation expense related to matching contributions, classified under general and administrative, of $0.3 million and $0.2 million for the three months ended June 30, 2019 and 2018, respectively, and $0.5 million and $0.4 million for the six months ended June 30, 2019 and 2018, respectively.

Note 12—Stock-Based Compensation

At the Company’s 2019 Annual Meeting of Stockholders held on June 14, 2019, the Company’s stockholders approved the Company’s 2019 Long-Term Incentive Plan (the “2019 Plan”), which was previously approved by the Company’s Board of Directors. The 2019 Plan replaces the Company’s 2014 Long-Term Incentive Plan, as amended (the “Prior Plan”). Upon stockholder approval, (i) the 2019 Plan became effective and (ii) the Prior Plan terminated and no additional awards will be granted under the Prior Plan; provided that awards outstanding under the Prior Plan as of the date the 2019 Plan became effective will remain in full force and effect under the Prior Plan according to their respective terms.

The Company is authorized to grant up to 2,650,000 shares of common stock under the 2019 Plan. The 2019 Plan allows stock-based compensation awards to be granted in a variety of forms, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, dividend equivalent rights, qualified performance-based awards and other types of awards. The terms and conditions of the awards granted are established by the Compensation Committee of the Company’s Board of Directors. A total of 1,858,580 shares were available for future grants under the Plan as of June 30, 2019.

Our stock-based compensation expense was as follows for the three and six months ended June 30, 2019 and 2018 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Restricted stock units	$	235	$	974	$	3,328	$	2,137
Performance units		231		910		2,990		1,639
Restricted stock		86		95		235		184
Total expense	$	552	$	1,979	$	6,553	$	3,960

Restricted Stock Units

Restricted stock unit awards vest subject to the satisfaction of service requirements. The Company recognizes expense related to restricted stock unit awards on a straight-line basis over the requisite service period, which is three years. The grant date fair values of these awards are determined based on the closing price of the Company’s common stock on the date of the grant. As of June 30, 2019, there was $3.2 million of total unrecognized compensation cost related to outstanding restricted stock units. The weighted average period for the shares to vest is approximately two years. A summary of employee restricted stock unit awards activity during the six months ended June 30, 2019 is as follows:

	Number of shares			Weighted average grant date fair value		Aggregate intrinsic value (in thousands)
Total awarded and unvested, December 31, 2018		233,960		$	29.27	$	3,685
Granted		407,714			6.46
Vested		(204,418	)		29.31
Forfeited		(485	)		31.78
Total awarded and unvested, June 30, 2019		436,771		$	7.95	$	2,664

Performance Units

Performance unit awards vest subject to the satisfaction of a three-year service requirement and based on Total Shareholder Return (as defined in the award agreements), as compared to an industry peer group over that same period. The performance unit awards are measured at the grant date at fair value using a Monte Carlo valuation method. As of June 30, 2019, there was $2.3 million of total unrecognized compensation cost related to outstanding performance units. The weighted average period for the shares to vest is approximately two years. A summary of performance stock unit awards activity during the six months ended June 30, 2019 is as follows:

	Number of shares			Weighted average grant date fair value		Aggregate intrinsic value (in thousands)
Total awarded and unvested, December 31, 2018		346,589		$	27.68	$	716
Granted		243,600			7.25
Vested		(266,411	)		27.55
Forfeited		(16,483	)		24.47
Total awarded and unvested, June 30, 2019		307,295		$	11.76	$	—

The determination of the fair value of the performance unit awards noted above uses significant Level 3 assumptions in the fair value hierarchy including an estimate of the timing of forfeitures, the risk free rate and a volatility estimate tied to the Company’s stock price. Prior to 2018, the volatility estimate was tied to the Company’s public peer group. The following table presents the assumptions used to determine the fair value for performance stock units granted during the six months ended June 30, 2019 and 2018:

	Six Months Ended June 30,
	2019			2018
Volatility		65.10	%		89.70	%
Risk-free interest rate		1.83	%		2.37	%

Restricted Stock

On May 17, 2017, the Company issued an aggregate of 10,212 restricted shares of common stock to its three non-employee members of its Board of Directors who were not affiliated with the Company’s then controlling stockholder, which shares became fully vested on May 17, 2018.

On May 16, 2018, the Company issued an aggregate of 15,476 restricted shares of common stock to its three non-employee members of its Board of Directors who were not affiliated with the Company’s then controlling stockholder, which shares became fully vested on May 16, 2019.

Effective February 28, 2019, the Company issued an aggregate of 70,409 restricted shares of common stock to two of its officers in connection with retention bonus arrangements entered into between the Company and each of these officers. The restricted shares of common stock vest in substantially equal installments on August 28, 2019, February 28, 2020, August 28, 2020 and February 28, 2021.

Pursuant to the Company’s Non-Employee Director Compensation Policy, on June 18, 2019, the Company awarded an aggregate of 53,328 restricted shares of common stock to eight of the non-employee members of its Board of Directors, which shares are scheduled to fully vest on June 18, 2020. The other non-employee member of the Company’s Board of Directors declined to receive any compensation for his service on the Company’s Board of Directors for 2019.

Note 13—Net Income (Loss) Per Share

Net Income (Loss) Per Share

Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted EPS takes into account the dilutive effect of potential common stock that could be issued by the Company in conjunction with any stock awards that have been granted to directors and employees. In accordance with FASB ASC Topic 260, awards of non-vested shares shall be considered to be outstanding as of the grant date for purposes of computing diluted EPS even though their exercise is contingent upon vesting. During periods in which the Company incurs a net loss, diluted weighted-average shares outstanding are equal to basic weighted-average shares outstanding because the effect of all equity awards is antidilutive.

Reverse Stock Split

Effective immediately prior to the Effective Time on February 28, 2019 (See Note 4— Acquisitions), the Company effected a 15-to-1 reverse stock split of its common stock. Holders of shares of the Company’s common stock immediately prior to the Effective Time received cash for any fractional shares of the Company’s common stock to which they might otherwise have been entitled as a result of the reverse stock split. The reverse stock split lowered the par value to reflect the reduced shares with the offset to additional paid-in-capital. The table below retroactively reflects, in accordance with ASC 505 “Equity,” the reverse stock split that occurred on February 28, 2019 for the three and six months ended June 30, 2018. The following is a calculation of the basic and diluted weighted-average number of shares of common stock and EPS for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,
(in thousands, except per share data)	2019						2018
	Income		Shares		Per Share		Loss			Shares		Per Share
Basic:
Net income (loss), shares, basic	$	27,512		35,678	$	0.77	$	(19,036	)		20,129	$	(0.95	)
Weighted-average number of shares of common stock-diluted:
Restricted stock and performance unit awards		—		148				—			—
Diluted:
Net income (loss), shares, diluted	$	27,512		35,826	$	0.77	$	(19,036	)		20,129	$	(0.95	)

	Six Months Ended June 30,
(in thousands, except per share data)	2019						2018
	Income		Shares		Per Share		Loss			Shares		Per Share
Basic:
Net income (loss), shares, basic	$	13,414		30,645	$	0.44	$	(21,660	)		19,848	$	(1.09	)
Weighted-average number of shares of common stock-diluted:
Restricted stock and performance unit awards		—		185				—			—
Diluted:
Net income (loss), shares, diluted	$	13,414		30,830	$	0.44	$	(21,660	)		19,848	$	(1.09	)

Note 14—Related Party Transactions

During the three and six months ended June 30, 2018, the Company incurred approximately $0.2 million and $0.3 million, respectively, and less than $0.1 million during the six months ended June 30, 2019. During the three months ended June 30, 2019, the Company did not incur any expense. All of the aforementioned incurred expense is related to flight charter services provided by BWH Air, LLC and BWH Air II, LLC, which were owned by the Company’s former Chairman, President and Chief Executive Officer The fees were paid in accordance with a standard service contract that did not obligate the Company to any minimum terms. The Company no longer utilizes any flight charter services under this arrangement.

Travis Peak Resources, LLC, the seller from whom the Company acquired assets in the Flat Castle Acquisition, is an affiliate of EnCap Investments L.P. (“EnCap”). EnCap has representatives on the Board, and affiliates of EnCap collectively beneficially own approximately 40% of the outstanding shares of the Company’s common stock (See Note 4—Acquisitions).

Note 15—Commitments and Contingencies

(a) Legal Matters

From time to time, the Company may be a party to legal proceedings arising in the ordinary course of business. Management does not believe that a material loss is probable as a result of such proceedings.

During the three months ended June 30, 2019, the Company removed an accrued liability related to certain litigation involving MHP (See Note 6— Assets Held for Sale and Discontinued Operations).

(b) Environmental Matters

The Company is subject to numerous laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. To the extent laws are enacted or other governmental action is taken that restricts drilling or imposes environmental protection requirements that result in increased costs to the oil and natural gas industry in general, the business and prospects of the Company could be adversely affected.

As a result of the BRMR Merger, effective as of February 28, 2019, the Company assumed commitments related to certain firm transportation and gas processing, gathering and compression service agreements entered into by Triad Hunter, LLC (“Triad Hunter”), a wholly owned subsidiary of BRMR, as shown below (in thousands):

	Firm transportation⁽ⁱ⁾		Gas processing, gathering, and compression services⁽ⁱⁱ⁾		Total
Year Ending December 31:
2019	$	14,562	$	12,873	$	27,435
2020		19,416		17,133		36,549
2021		19,416		17,087		36,503
2022		19,416		17,087		36,503
2023		18,047		16,561		34,608
Thereafter		92,395		139,545		231,940
Total	$	183,252	$	220,286	$	403,538

(i)

Firm transportation - Firm transportation agreements with various pipelines to facilitate the delivery of production to market. These contracts commit the Company to transport minimum daily natural gas volumes at a negotiated rate, or pay for any deficiencies at a specified reservation fee rate. The amounts in this table represent the minimum daily volumes at the reservation fee rate. The values in the table represent the gross amounts that the Company is committed to pay and does not deduct amounts that other parties are responsible for as a result of cost sharing arrangements with working interest partners. The Company will record in its Consolidated Financial Statements the Company’s proportionate share of costs based on its working interest.

(ii)

Gas processing, gathering, and compression services - Contractual commitments for gas processing, gathering and compression service agreements represent minimum commitments under long-term gas processing agreements as well as various gas compression agreements. The values in the table represent the gross amounts that the Company is committed to pay and does not deduct amounts that other parties are responsible for as a result of cost sharing arrangements with working interest partners. The Company will record in its Consolidated Financial Statements its proportionate share of costs based on the Company’s working interest.

Note 16—Income Tax

For the year ending December 31, 2019, the Company’s annual estimated effective tax rate is forecasted to be 0%, exclusive of discrete items. The Company expects to incur book income but a tax loss in fiscal year 2019, and thus, no current federal income taxes are anticipated to be paid. The Company computes its quarterly taxes under the effective tax rate method based on applying an anticipated annual effective tax rate to the Company’s year-to-date loss. On December 22, 2017, the Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act, resulted in the reduction in the U.S. statutory rate from 35% to 21%. The Company’s interest expense deduction has the potential to be limited as a result of the enactment of the Tax Cuts and Jobs Act; however, the impact is anticipated to be minimal as a result of its full valuation allowance.

In forecasting the 2019 annual estimated effective tax rate, management believes that it should limit any tax benefit suggested by the tax effect of the forecasted book income such that no net deferred tax asset is recorded in 2019. Management reached this conclusion considering several factors such as: (i) the lack of carryback potential resulting in a tax refund, and (ii) in light of current commodity pricing uncertainty, there is insufficient external evidence to suggest that net tax attribute carryforwards are collectible beyond offsetting existing deferred tax liabilities inherent in the Company’s balance sheet.

The Company is forecasting positive pre-tax book income for the year ending December 31, 2019. Management expects that income tax expense attributable to current year operations will be offset by a release of the valuation allowance on hand at the beginning of the year. As a result, no net income tax expense or benefit is allocable to either income from continuing operations or to discontinued operations.

As a result of the BRMR Merger, BRMR’s pre-acquisition NOLs and other tax attributes will be subject to limitation in accordance with ownership change rules under Code section 382. In addition, the Company itself may also have undergone an ownership change which would similarly limit its ability to use pre-acquisition NOLs and other tax attributes. The Company is still evaluating the impact that Code section 382 will have on both the acquired BRMR tax attributes as well as the Company’s pre-acquisition tax attributes.

Note 17—Subsidiary Guarantors

Each subsidiary of the Company that guarantees the Company’s revolving credit facility is required to fully and unconditionally, jointly and severally, guarantee the Company’s 8.875% senior unsecured notes. Each such subsidiary of the Company in existence immediately prior to the BRMR Merger guaranteed the Company’s 8.875% senior unsecured notes. As a result of the BRMR Merger, and within the timeframe required by the indenture governing the Company’s 8.875% senior unsecured notes, the Company caused BRMR and each of its subsidiaries that guaranteed the Company’s revolving credit facility to guarantee the Company’s 8.875% senior unsecured notes (See Note 10—Debt). Montage Resources Corporation, standing alone, has no independent operations or (other than its equity interests in its subsidiaries) material assets. The Company’s wholly owned subsidiaries are not restricted from transferring funds to Montage Resources Corporation or other wholly owned subsidiaries. The Company’s wholly owned subsidiaries do not have any restricted net assets.

A subsidiary guarantor may be released from its obligations under the senior unsecured notes guarantee:

•

in the event of a sale or other disposition of all or substantially all of the assets of the subsidiary guarantor or a sale or other disposition of all the capital stock of the subsidiary guarantor, to any corporation or other person by way of merger, consolidation, or otherwise; or

•

if the Company designates any restricted subsidiary that is a guarantor to be an unrestricted subsidiary in accordance with the terms of the indenture governing the senior unsecured notes.

Note 18—Subsequent Events

Management has evaluated subsequent events and believes there are no events that would have a material impact on the aforementioned financial statements and related disclosures in the accompanying notes to the Condensed Consolidated Financial Statements.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018 and our Condensed Consolidated Financial Statements and related notes appearing elsewhere in this Quarterly Report. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. See “Cautionary Statement Regarding Forward-Looking Statements.” We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

Overview of Our Business

We are an independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin. On February 28, 2019, we completed a business combination (the “BRMR Merger”) with Blue Ridge Mountain Resources, Inc. (“BRMR”), and immediately thereafter, we changed our legal name from “Eclipse Resources Corporation” to “Montage Resources Corporation.” Except where the context indicates otherwise, the terms “we,” “us,” “our” or the “Company” as used herein refer, for periods prior to the completion of the BRMR Merger, to Eclipse Resources Corporation and its subsidiaries and, for periods following the completion of the BRMR Merger, to Montage Resources Corporation (“Montage”) and its subsidiaries.

As of June 30, 2019, we had assembled an acreage position approximating 240,600 net acres in Eastern Ohio, 45,300 net acres in Pennsylvania, and 49,900 net acres in West Virginia, which excludes any acreage currently pending title.

Approximately 206,200 of our net acres are located in the Utica Shale fairway, which we refer to as the Utica Core Area, and approximately 92,800 net acres of stacked pay opportunity are also prospective for the highly liquids rich area of the Marcellus Shale in Eastern Ohio and West Virginia within what we refer to as our Marcellus Area. We are the operator of approximately 98% of our net acreage within the Utica Core Area and our Marcellus Area. We intend to focus on developing our substantial inventory of horizontal drilling locations during commodity price environments that will allow us to generate attractive returns and will continue to opportunistically add to this acreage position where we can acquire acreage at attractive prices.

As of June 30, 2019, we were operating two horizontal rigs in the Utica Core Area. We had average daily production for the three months ended June 30, 2019 of approximately 535.5 MMcfe comprised of approximately 80% natural gas, 13% NGLs and 7% oil.

The net assets of our subsidiary, Magnum Hunter Production, Inc. (“MHP”), are classified as assets held for sale and liabilities associated with assets held for sale as of June 30, 2019. All operations of MHP are reflected as discontinued operations for all periods presented.

How We Evaluate Our Operations

In evaluating our current and future financial results, we focus on production and revenue growth, lease operating expense, general and administrative expense (both before and after non-cash stock compensation expense and other unusual or infrequent items) and operating margin per unit of production. In addition to these metrics, we use Adjusted EBITDAX, a non-GAAP measure, to evaluate our financial results. We define Adjusted EBITDAX as net income (loss) before interest expense or interest income; income taxes; write-down of abandoned leases; impairments; depreciation, depletion and amortization (“DD&A”); amortization of deferred financing costs; gain (loss) on derivative instruments, net cash receipts (payments) on settled derivative instruments, and premiums (paid) 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. Adjusted EBITDAX is not a measure of net income as determined by generally accepted accounting principles in United States, or “U.S. GAAP.”

In addition to the operating metrics above, as we grow our reserve base, we will assess our capital spending by calculating our operated proved developed reserves and our operated proved developed finding costs and development costs. We believe that operated proved developed finding and development costs are one of the key measurements of the performance of an oil and gas exploration and production company. We will focus on our operated properties as we control the location, spending and operations associated with drilling these properties. In determining our proved developed finding and development costs, only cash costs incurred in connection with exploration and development will be used in the calculation, while the costs of acquisitions will be excluded because our board approves each material acquisition. In evaluating our proved developed reserve additions, any reserve revisions for changes in commodity prices between years will be excluded from the assessment, but any performance related reserve revisions are included.

We also continually evaluate our rates of return on invested capital in our wells. We believe the quality of our assets combined with our technical and managerial expertise can generate attractive rates of return as we develop our acreage in the Utica Core Area and our Marcellus Area. We review changes in drilling and completion costs; lease operating costs; natural gas, NGLs and oil prices; well productivity; and other factors in order to focus our drilling on the highest rate of return areas within our acreage on a per well basis.

As a result of the closing of the BRMR Merger on February 28, 2019, BRMR’s assets and liabilities are included in the Unaudited Condensed Consolidated Balance Sheet as of June 30, 2019 and BRMR’s revenues and expenses are included in the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the period from March 1, 2019 to June 30, 2019 (See Note 4— Acquisitions).

Overview of Results for the Three and Six Months Ended June 30, 2019

During the three months ended June 30, 2019, we achieved the following financial and operating results:

•

our average daily net production for the three months ended June 30, 2019 was 535.5 MMcfe per day representing an increase of 75% over the comparable period of the prior year;

•

commenced drilling 12 gross (10.2 net) operated wells, commenced completions of 15 gross (13.0 net) operated wells and turned-to-sales 16 gross (11.4 net) operated wells;

•

recognized net income (loss) of $27.5 million for the three months ended June 30, 2019 compared to ($19.0) million for the three months ended June 30, 2018; and

•

realized Adjusted EBITDAX of $70.9 million for the three months ended June 30, 2019 compared to $51.1 million for three months ended June 30, 2018. Adjusted EBITDAX is a non-GAAP financial measure. See “—Non-GAAP Financial Measure” for more information.

During the six months ended June 30, 2019, we achieved the following financial and operating results:

•

our average daily net production for the six months ended June 30, 2019 was 471.9 MMcfe per day representing an increase of 52% over the comparable period of the prior year;

•

commenced drilling 22 gross (18.3 net) operated wells, commenced completions of 24 gross (18.9 net) operated wells and turned-to-sales 19 gross (13.5 net) operated wells;

•

recognized net income (loss) of $13.4 million for the six months ended June 30, 2019 compared to ($21.7) million for the six months ended June 30, 2018; and

•

realized Adjusted EBITDAX of $139.8 million for the six months ended June 30, 2019 compared to $114.1 million for the six months ended June 30, 2018. Adjusted EBITDAX is a non-GAAP financial measure. See “—Non-GAAP Financial Measure” for more information.

Prices for various quantities of natural gas, NGLs and oil that we produce significantly impact our revenues and cash flows. Prices for commodities, such as hydrocarbons, are inherently volatile. The following table lists the high, low and average daily and monthly settled NYMEX Henry Hub prices for natural gas and the high, low and average daily NYMEX WTI prices for oil for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
NYMEX Henry Hub High ($/MMBtu)	$	2.76	$	3.08	$	4.25	$	6.24
NYMEX Henry Hub Low ($/MMBtu)		2.27		2.74		2.27		2.49
Average Daily NYMEX Henry Hub ($/MMBtu)		2.57		2.85		2.74		2.96
Average Monthly Settled NYMEX Henry Hub ($/MMBtu)		2.64		2.80		2.89		2.90

NYMEX WTI High ($/Bbl)	$	66.24	$	77.41	$	66.24	$	77.41
NYMEX WTI Low ($/Bbl)		51.13		62.03		46.31		59.20
Average Daily NYMEX WTI ($/Bbl)		59.88		68.07		57.39		65.55

Historically, commodity prices have been extremely volatile, and we expect this volatility to continue for the foreseeable future. A decline in commodity prices could materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures. We make price assumptions that are used for planning purposes, and a significant portion of our cash outlays, including rent, salaries and noncancelable capital commitments, are largely fixed in nature. Accordingly, if commodity prices are below the expectations on which these commitments were based, our financial results are likely to be adversely and disproportionately affected because these cash outlays are not variable in the short term and cannot be quickly reduced to respond to unanticipated decreases in commodity prices.

The Company is committed to profitably developing its natural gas, NGLs and condensate reserves through an environmentally-responsible and cost-effective operational plan. The Company’s revenues, earnings, liquidity and ability to grow are substantially dependent on the prices it receives for, and the Company’s ability to develop, its reserves. Despite the continued low price commodity environment, the Company believes the long-term outlook for its business is favorable due to the Company’s resource base, low cost structure, risk management strategies, and disciplined investment of capital.

It is difficult to quantify the impact of changes in future commodity prices on our reported estimated net proved reserves with any degree of certainty because of the various components and assumptions used in the process. However, to demonstrate the sensitivity of our estimates of natural gas, NGLs and oil reserves to changes in commodity prices, we provided an analysis in our Annual Report on Form 10-K for the year ended December 31, 2018. Further, if we recalculated our reserves using the unweighted arithmetic average first-day-of-the-month price for each of the 12 months in the period ended June 30, 2019 and held all other factors constant, then our estimated net proved reserves at December 31, 2018 would have decreased by approximately 1.5% from our previously reported estimated net proved reserves at such time, including a 0.5% reduction of proved developed reserves and a 2.0% reduction of proved undeveloped reserves. The foregoing estimate is based upon an average SEC price of $3.02 per MMBtu for natural gas and $61.45 per Bbl for NGLs and oil. This calculation only isolates the potential impact of commodity prices on our estimated proved reserves and does not account for other factors impacting our estimated proved reserves, such as anticipated drilling and completion costs and our production results since December 31, 2018. There are also numerous uncertainties inherent in the estimation of proved reserves and accounting for oil and natural gas properties in subsequent periods. As such, this calculation is provided for illustrative purposes only and should not be construed as indicative of our final year-end reserve estimation process.

We consider future commodity prices when determining our development plan, but many other factors are also considered. To the extent there is a significant increase or decrease in commodity prices in the future, we will assess the impact on our development plan at that time, and we may respond to such changes by altering our capital budget or our development plan. We plan to fund our development budget with a portion of the cash on hand at June 30, 2019, cash flows from operations, borrowings under our revolving credit facility, and proceeds from asset sales.

Results of Operations

The following discussion pertains to our results of operations, including analysis of our continuing operations regarding natural gas, NGLs and oil revenues, production, average product prices and average production costs and expenses for the three months ended June 30, 2019 and 2018. The results of operations of MHP are reflected as discontinued operations for all periods presented.

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

Natural Gas, NGLs and Oil Sales, Production and Realized Price Calculations

The following table illustrates the revenue attributable to our operations for the three months ended June 30, 2019 and 2018:

	Three Months Ended June 30,
	2019		2018		Change
Revenues (in thousands)
Natural gas sales	$	94,364	$	54,409	$	39,955
NGL sales		19,393		18,702		691
Oil sales		29,672		30,146		(474	)
Brokered natural gas and marketing revenue		11,989		365		11,624
Other revenue		122		—		122
Total revenues	$	155,540	$	103,622	$	51,918

Our production grew by approximately 20.9 Bcfe for the three months ended June 30, 2019 over the same period in 2018 due to increased drilling activity and from wells acquired as part of the BRMR Merger. Our production for the three months ended June 30, 2019 and 2018 is set forth in the following table:

	Three Months Ended June 30,
	2019		2018		Change
Production:
Natural gas (MMcf)		39,119.0		19,985.4		19,133.6
NGLs (Mbbls)		1,033.3		813.6		219.7
Oil (Mbbls)		569.0		489.1		79.9
Total (MMcfe)		48,732.8		27,801.6		20,931.2

Average daily production volume:
Natural gas (Mcf/d)		429,879		219,620		210,259
NGLs (Bbls/d)		11,355		8,941		2,414
Oil (Bbls/d)		6,253		5,375		878
Total (Mcfe/d)		535,520		305,512		230,008

Our average realized price (including cash settled derivatives and firm transportation) received during the three months ended June 30, 2019 was $2.62 per Mcfe compared to $3.22 per Mcfe during the three months ended June 30, 2018. Because we record transportation costs on two separate bases, as required by U.S. GAAP, we believe computed final realized prices of production volumes should include the total impact of firm transportation expense. Our average realized price (including all cash settled settlements and firm transportation) calculation also includes all cash settlements for derivatives. Average sales price (excluding cash settled derivatives and firm transportation) does not include derivative settlements or firm transportation, which are reported in transportation, gathering and compression expense on the accompanying Condensed Consolidated Statements of Operations. Average sales price (including firm transportation and excluding cash settled derivatives) does include transportation costs where we receive net revenue proceeds from purchasers. Average realized price calculations for the three months ended June 30, 2019 and 2018 are shown below:

	Three Months Ended June 30,
	2019		2018		Change
Average realized price (excluding cash settled derivatives and firm transportation)
Natural gas ($/Mcf)	$	2.41	$	2.72	$	(0.31	)
NGLs ($/Bbl)		18.77		22.99		(4.22	)
Oil ($/Bbl)		52.14		61.65		(9.51	)
Total average prices ($/Mcfe)		2.94		3.71		(0.77	)

Average realized price (including cash settled derivatives, excluding firm transportation)
Natural gas ($/Mcf)	$	2.47	$	2.84	$	(0.37	)
NGLs ($/Bbl)		19.11		22.99		(3.88	)
Oil ($/Bbl)		51.68		51.94		(0.26	)
Total average prices ($/Mcfe)		2.99		3.62		(0.63	)

Average realized price (including firm transportation, excluding cash settled derivatives)
Natural gas ($/Mcf)	$	1.95	$	2.16	$	(0.21	)
NGLs ($/Bbl)		18.77		22.99		(4.22	)
Oil ($/Bbl)		52.14		61.65		(9.51	)
Total average prices ($/Mcfe)		2.57		3.31		(0.74	)

Average realized price (including cash settled derivatives and firm transportation)
Natural gas ($/Mcf)	$	2.01	$	2.27	$	(0.26	)
NGLs ($/Bbl)		19.11		22.99		(3.88	)
Oil ($/Bbl)		51.68		51.94		(0.26	)
Total average prices ($/Mcfe)		2.62		3.22		(0.60	)

Brokered natural gas and marketing revenue was $12.0 million for the three months ended June 30, 2019 compared to $0.4 million for the three months ended June 30, 2018. Brokered natural gas and marketing revenue includes revenue received from selling natural gas not related to production and from the release of firm transportation capacity. The increase for the three months ended June 30, 2019 was due to an increase in the amount of firm transportation that was available for brokered gas transactions or release to third parties.

Costs and Expenses

We believe some of our expense fluctuations are most accurately analyzed on a unit-of-production, or per Mcfe, basis. The following table presents these expenses for the three months ended June 30, 2019 and 2018:

	Three Months Ended June 30,
	2019		2018		Change
Operating expenses (in thousands):
Lease operating	$	10,141	$	7,324	$	2,817
Transportation, gathering and compression		51,870		31,371		20,499
Production and ad valorem taxes		4,009		2,178		1,831
Depreciation, depletion, amortization and accretion		38,597		32,922		5,675
General and administrative		13,564		10,697		2,867
Operating expenses per Mcfe:
Lease operating	$	0.21	$	0.26	$	(0.05	)
Transportation, gathering and compression		1.06		1.13		(0.07	)
Production and ad valorem taxes		0.08		0.08		—
Depreciation, depletion, amortization and accretion		0.79		1.18		(0.39	)
General and administrative		0.28		0.38		(0.10	)

Lease operating expense was $10.1 million in the three months ended June 30, 2019 compared to $7.3 million in the three months ended June 30, 2018. Lease operating expense per Mcfe was $0.21 in the three months ended June 30, 2019 compared to $0.26 in the three months ended June 30, 2018. The increase of $2.8 million was primarily attributable to an increase in the number of producing wells. The decrease of $0.05 per Mcfe was due to a decrease in non-recurring workovers and fixed costs spread across increased production for three months ended June 30, 2019 as compared to the three months ended June 30, 2018. Lease operating expenses include normally recurring expenses to operate and produce our wells, non-recurring workovers and repairs.

Transportation, gathering and compression expense was $51.9 million during the three months ended June 30, 2019 compared to $31.4 million during the three months ended June 30, 2018. Transportation, gathering and compression expense per Mcfe was $1.06 in the three months ended June 30, 2019 compared to $1.13 in the three months ended June 30, 2018. The following table details our transportation, gathering and compression expenses for the three months ended June 30, 2019 and 2018:

	Three Months Ended June 30,
	2019		2018			Change
Transportation, gathering and compression (in thousands):
Gathering, compression and fuel	$	17,344	$	9,681		$	7,663
Processing and fractionation		14,965		8,821			6,144
Liquids transportation and stabilization		1,283		1,570			(287	)
Marketing		31		(4	)		35
Firm transportation		18,247		11,303			6,944
	$	51,870	$	31,371		$	20,499
Transportation, gathering and compression per Mcfe:
Gathering, compression and fuel	$	0.35	$	0.34		$	0.01
Processing and fractionation		0.31		0.32			(0.01	)
Liquids transportation and stabilization		0.03		0.06			(0.03	)
Marketing		—		—			—
Firm transportation		0.37		0.41			(0.04	)
	$	1.06	$	1.13		$	(0.07	)

The increase of $20.5 million to transportation, gathering and compression expenses during the three months ended June 30, 2019 was primarily due to increased firm transportation capacity and increased production during the three months ended June 30, 2019. The decrease of $0.07 per Mcfe was primarily due to a higher percentage of natural gas production and fixed firm transportation costs spread across increased production during the three months ended June 30, 2019.

Production and ad valorem taxes are paid based on market prices and applicable tax rates. Production and ad valorem taxes were $4.0 million in the three months ended June 30, 2019 compared to $2.2 million in the three months ended June 30, 2018. Production and ad valorem taxes per Mcfe was $0.08 for each of the three months ended June 30, 2019 and 2018. The increase in aggregate production and ad valorem taxes was primarily due to increased well count for the three months ended June 30, 2019.

Depreciation, depletion, amortization and accretion was approximately $38.6 million in the three months ended June 30, 2019 compared to $32.9 million in the three months ended June 30, 2018. DD&A per Mcfe was $0.79 for the three months ended June 30, 2019 compared to $1.18 for the three months ended June 30, 2018. DD&A increased on an aggregate basis due to increased production in the three months ended June 30, 2019. DD&A decreased on a per Mcfe basis due to a lower depletion rate resulting from reserves increasing at a higher rate than capital costs for the three months ended June 30, 2019.

General and administrative expense was $13.6 million for the three months ended June 30, 2019 compared to $10.7 million for the three months ended June 30, 2018. General and administrative expense per Mcfe was $0.28 in the three months ended June 30, 2019 compared to $0.38 in the three months ended June 30, 2018. The increase of $2.9 million was primarily related to approximately $3.9 million of expenses related to the BRMR Merger, partially offset by $1.0 million of decreases in other G&A expenses. General and administrative expense included $0.6 million and $2.0 million of stock-based compensation expense for the three months ended June 30, 2019 and 2018, respectively. The decrease of $0.10 per Mcfe was due to fixed costs spread across increased production during the three months ended June 30, 2019.

Other Operating Expenses

Our total operating expenses also include other expenses that generally do not trend with production. The following table details our other operating expenses for the three months ended June 30, 2019 and 2018:

	Three Months Ended June 30,
	2019		2018			Change
Other operating expenses (in thousands):
Brokered natural gas and marketing expense	$	11,983	$	430		$	11,553
Exploration		15,193		9,620			5,573
(Gain) loss on sale of assets		1		(1,553	)		1,554

Brokered natural gas and marketing expense was $12.0 million for the three months ended June 30, 2019 compared to $0.4 million for the three months ended June 30, 2018. Brokered natural gas and marketing expenses relate to gas purchases that we buy and sell not relating to production and firm transportation capacity that is marketed to third parties. The increase for the three months ended June 30, 2019 was due to an increase in the amount of brokered gas transactions.

Exploration expense was $15.2 million for the three months ended June 30, 2019 compared to $9.6 million for the three months ended June 30, 2018. The following table details our exploration-related expenses for the three months ended June 30, 2019 and 2018:

	Three Months Ended June 30,
	2019		2018		Change
Exploration expenses (in thousands):
Geological and geophysical	$	258	$	168	$	90
Delay rentals		2,329		2,479		(150	)
Impairment of unproved properties		12,443		6,971		5,472
Dry hole and other		163		2		161
	$	15,193	$	9,620	$	5,573

Impairment of unproved properties was $12.4 million for the three months ended June 30, 2019 compared to $7.0 million for the three months ended June 30, 2018. The increase in impairment charges during the three months ended June 30, 2019 was the result of an increase in expected lease expirations due to a reduction in planned future drilling activity. As we continue to review our acreage positions and high grade our drilling inventory based on the current price environment, additional leasehold impairments and abandonments may be recorded.

Other Income (Expense)

Gain (loss) on derivative instruments was $29.7 million for the three months ended June 30, 2019 compared to ($16.6) million for the three months ended June 30, 2018, primarily due to changes in commodity prices during each period. Cash receipts (payments) were approximately $2.4 million and ($2.5) million for derivative instruments that settled during the three months ended June 30, 2019 and 2018, respectively.

Interest expense, net was $15.1 million for the three months ended June 30, 2019 compared to $13.1 million for three months ended June 30, 2018. Interest expense increased primarily due to our increased borrowings under our revolving credit facility during the three months ended June 30, 2019.

Income tax benefit (expense) was not recognized for the three months ended June 30, 2019 and 2018 due to the Company recording a higher valuation allowance related to its pre-tax losses and reducing the valuation allowance to the extent of pre-tax income, respectively.

Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

Natural Gas, NGLs and Oil Sales, Production and Realized Price Calculations

The following table illustrates the revenue attributable to our operations for the six months ended June 30, 2019 and 2018:

	Six Months Ended June 30,
	2019		2018		Change
Revenues (in thousands)
Natural gas sales	$	176,189	$	112,892	$	63,297
NGL sales		40,641		38,446		2,195
Oil sales		58,427		62,103		(3,676	)
Brokered natural gas and marketing revenue		21,519		373		21,146
Other revenue		261		—		261
Total revenues	$	297,037	$	213,814	$	83,223

Our production grew by approximately 29.2 Bcfe for the six months ended June 30, 2019 over the same period in 2018 due to increased drilling activity and from wells acquired as part of the BRMR Merger. Our production for the six months ended June 30, 2019 and 2018 is set forth in the following table:

	Six Months Ended June 30,
	2019		2018		Change
Production:
Natural gas (MMcf)		66,324.0		40,328.7		25,995.3
NGLs (Mbbls)		2,013.8		1,586.2		427.6
Oil (Mbbls)		1,167.0		1,054.6		112.4
Total (MMcfe)		85,408.8		56,173.5		29,235.3

Average daily production volume:
Natural gas (Mcf/d)		366,431		222,810		143,621
NGLs (Bbls/d)		11,126		8,764		2,362
Oil (Bbls/d)		6,448		5,827		621
Total (Mcfe/d)		471,867		310,351		161,516

Our average realized price (including cash settled derivatives and firm transportation) received during the six months ended June 30, 2019 was $2.82 per Mcfe compared to $3.42 per Mcfe during the six months ended June 30, 2018. Because we record transportation costs on two separate bases, as required by U.S. GAAP, we believe computed final realized prices of production volumes should include the total impact of firm transportation expense. Our average realized price (including all cash settled settlements and firm transportation) calculation also includes all cash settlements for derivatives. Average sales price (excluding cash settled derivatives and firm transportation) does not include derivative settlements or firm transportation, which are reported in transportation, gathering and compression expense on the accompanying Condensed Consolidated Statements of Operations. Average sales price (including firm transportation and excluding cash settled derivatives) does include transportation costs where we receive net revenue proceeds from purchasers. Average realized price calculations for the six months ended June 30, 2019 and 2018 are shown below:

	Six Months Ended June 30,
	2019		2018		Change
Average realized price (excluding cash settled derivatives and firm transportation)
Natural gas ($/Mcf)	$	2.66	$	2.80	$	(0.14	)
NGLs ($/Bbl)		20.18		24.24		(4.06	)
Oil ($/Bbl)		50.07		58.89		(8.82	)
Total average prices ($/Mcfe)		3.22		3.80		(0.58	)

Average realized price (including cash settled derivatives, excluding firm transportation)
Natural gas ($/Mcf)	$	2.63	$	2.94	$	(0.31	)
NGLs ($/Bbl)		20.46		23.64		(3.18	)
Oil ($/Bbl)		50.65		52.12		(1.47	)
Total average prices ($/Mcfe)		3.21		3.76		(0.55	)

Average realized price (including firm transportation, excluding cash settled derivatives)
Natural gas ($/Mcf)	$	2.15	$	2.33	$	(0.18	)
NGLs ($/Bbl)		20.18		24.24		(4.06	)
Oil ($/Bbl)		50.07		58.89		(8.82	)
Total average prices ($/Mcfe)		2.83		3.46		(0.63	)

Average realized price (including cash settled derivatives and firm transportation)
Natural gas ($/Mcf)	$	2.12	$	2.47	$	(0.35	)
NGLs ($/Bbl)		20.46		23.64		(3.18	)
Oil ($/Bbl)		50.65		52.12		(1.47	)
Total average prices ($/Mcfe)		2.82		3.42		(0.60	)

Brokered natural gas and marketing revenue was $21.5 million and $0.4 million for the six months ended June 30, 2019 and 2018, respectively. Brokered natural gas and marketing revenue includes revenue received from selling natural gas not related to production and from the release of firm transportation capacity. The increase for the six months ended June 30, 2019 was due to an increase in the amount of firm transportation that was available for brokered gas transactions or release to third parties.

Costs and Expenses

We believe some of our expenses are most accurately analyzed on a unit-of-production, or per Mcfe, basis. The following table presents these expenses for the six months ended June 30, 2019 and 2018:

	Six Months Ended June 30,
	2019		2018		Change
Operating expenses (in thousands)
Lease operating	$	17,666	$	16,714	$	952
Transportation, gathering and compression		93,038		59,060		33,978
Production and ad valorem taxes		6,857		4,623		2,234
Depreciation, depletion, amortization and accretion		68,494		64,233		4,261
General and administrative		42,494		20,454		22,040
Operating expenses per Mcfe:
Lease operating	$	0.21	$	0.30	$	(0.09	)
Transportation, gathering and compression		1.09		1.06		0.03
Production and ad valorem taxes		0.08		0.08		—
Depreciation, depletion, amortization and accretion		0.80		1.14		(0.34	)
General and administrative		0.50		0.36		0.14

Lease operating expense was $17.7 million in the six months ended June 30, 2019 compared to $16.7 million in the six months ended June 30, 2018. Lease operating expense per Mcfe was $0.21 in the six months ended June 30, 2019 compared to $0.30 in the six months ended June 30, 2018. The increase of $1.0 million was primarily attributable to an increase in the number of producing wells. The decrease of $0.09 per Mcfe was due to a decrease in non-recurring workovers and fixed costs spread across increased production for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. Lease operating expenses include normally recurring expenses to operate and produce our wells, non-recurring workovers and repairs.

Transportation, gathering and compression expense was $93.0 million during the six months ended June 30, 2019 compared to $59.1 million during the six months ended June 30, 2018. Transportation, gathering and compression expense per Mcfe was $1.09 in the six months ended June 30, 2019 compared to $1.06 in the six months ended June 30, 2018. The following table details our transportation, gathering and compression expenses for the six months ended June 30, 2019 and 2018:

	Six Months Ended June 30,
	2019		2018		Change
Transportation, gathering and compression (in thousands):
Gathering, compression and fuel	$	29,668	$	19,342	$	10,326
Processing and fractionation		26,943		17,322		9,621
Liquids transportation and stabilization		3,027		3,353		(326	)
Marketing		103		3		100
Firm transportation		33,297		19,040		14,257
	$	93,038	$	59,060	$	33,978
Transportation, gathering and compression per Mcfe:
Gathering, compression and fuel	$	0.34	$	0.35	$	(0.01	)
Processing and fractionation		0.32		0.31		0.01
Liquids transportation and stabilization		0.04		0.06		(0.02	)
Marketing		—		—		—
Firm transportation		0.39		0.34		0.05
	$	1.09	$	1.06	$	0.03

The increase of $34.0 million to transportation, gathering and compression expenses during the six months ended June 30, 2019 was due to increased production and increased firm transportation capacity. The increase of $0.03 per Mcfe during the six months ended June 30, 2019 was primarily due to increased firm transportation capacity during the period.

Production and ad valorem taxes are paid based on market prices and applicable tax rates. Production and ad valorem taxes were $6.9 million in the six months ended June 30, 2019 compared to $4.6 million in the six months ended June 30, 2018. Production and ad valorem taxes per Mcfe were $0.08 in the six months ended June 30, 2019 and 2018. The increase in aggregate production and ad valorem taxes was primarily due to increased well count for the six months ended June 30, 2019.

Depreciation, depletion, amortization and accretion was approximately $68.5 million in the six months ended June 30, 2019 compared to $64.2 million in the six months ended June 30, 2018. DD&A per Mcfe was $0.80 in the six months ended June 30, 2019 compared to $1.14 in the six months ended June 30, 2018. DD&A increased on an aggregate basis due to increased production in the six months ended June 30, 2019. DD&A decreased on a per Mcfe basis due to a lower depletion rate resulting from reserves increasing at a higher rate than capital costs for the six months ended June 30, 2019.

General and administrative expense was $42.5 million for the six months ended June 30, 2019 compared to $20.5 million for the six months ended June 30, 2018. General and administrative expense per Mcfe was $0.50 in the six months ended June 30, 2019 compared to $0.36 in the six months ended June 30, 2018. The increase of $22.0 million and $0.14 per Mcfe was primarily related to approximately $18.5 million of expenses related to the BRMR Merger incurred in the six months ended June 30, 2019. General and administrative expense included $6.6 million and $4.0 million of stock-based compensation for the six months ended June 30, 2019 and 2018, respectively.

Other Operating Expenses

Our total operating expenses also include other expenses that generally do not trend with production. The following table details our other operating expenses for the six months ended June 30, 2019 and 2018:

	Six Months Ended June 30,
	2019		2018			Change
Other operating expenses (in thousands):
Brokered natural gas and marketing expense	$	21,443	$	477		$	20,966
Exploration		31,981		24,898			7,083
(Gain) loss on sale of assets		2		(1,820	)		1,822

Brokered natural gas and marketing expense was $21.4 million for the six months ended June 30, 2019 compared to $0.5 million for the six months ended June 30, 2018. Brokered natural gas and marketing expenses relate to gas purchases that we buy and sell not relating to production and firm transportation capacity that is marketed to third parties. The increase for the six months ended June 30, 2019 was due to an increase in the amount of brokered gas transactions.

Exploration expense was $32.0 million for the six months ended June 30, 2019 compared to $24.9 million for the six months ended June 30, 2018. The following table details our exploration-related expenses for the six months ended June 30, 2019 and 2018:

	Six Months Ended June 30,
	2019		2018		Change
Exploration expenses (in thousands):
Geological and geophysical	$	464	$	833	$	(369	)
Delay rentals		9,311		10,302		(991	)
Impairment of unproved properties		22,043		13,667		8,376
Dry hole and other		163		96		67
	$	31,981	$	24,898	$	7,083

Delay rentals were $9.3 million for the six months ended June 30, 2019 compared to $10.3 million for the six months ended June 30, 2018. The decrease in delay rental expenses related to the reduction of converting future lump-sum extension payments into annual delay rentals during the six months ended June 30, 2019.

Impairment of unproved properties was $22.0 million for the six months ended June 30, 2019 compared to $13.7 million for the six months ended June 30, 2018. The increase in impairment charges during the six months ended June 30, 2019 was the result of an increase in expected lease expirations due to a reduction in planned future drilling activity. As we continue to review our acreage positions and high grade our drilling inventory based on the current price environment, additional leasehold impairments and abandonments may be recorded.

Other Income (Expense)

Gain (loss) on derivative instruments was $24.8 million for the six months ended June 30, 2019 compared to ($20.8) million for the six months ended June 30, 2018, primarily due to changes in commodity prices during each period. Cash payments were approximately $0.7 million and $2.3 million for derivative instruments that settled during the six months ended June 30, 2019 and 2018, respectively.

Interest expense, net was $28.9 million for the six months ended June 30, 2019 compared to $26.0 million for the six months ended June 30, 2018. The increase in interest expense primarily related to our increased borrowings under our revolving credit facility during the six months ended June 30, 2019.

Income tax benefit (expense) was not recognized for the six months ended June 30, 2019 and 2018 due to the Company recording a higher valuation allowance related to its pre-tax losses and reducing the valuation allowance to the extent of pre-tax income.

Cash Flows, Capital Resources and Liquidity

Cash Flows

Cash flows from operations are primarily affected by production volumes and commodity prices. Our cash flows from operations also are impacted by changes in working capital. Short-term liquidity needs are satisfied by our operating cash flow, proceeds from asset sales, borrowings under our revolving credit facility, and issuances of debt and equity securities. We sell a large portion of our production at the wellhead under floating market contracts.

Six Months Ended June 30, 2019 Compared to the Six Months Ended June 30, 2018

Net cash provided by operations in the six months ended June 30, 2019 was $83.1 million compared to $50.8 million in the six months ended June 30, 2018. The increase in cash provided by operating activities reflects working capital changes, increased operating income and timing of cash receipts and disbursements during the year-over-year comparative periods.

Net cash used in investing activities in the six months ended June 30, 2019 was $164.7 million compared to $114.5 million in the six months ended June 30, 2018.

During the six months ended June 30, 2019, we:

•

spent $177.3 million on capital expenditures for oil and natural gas properties;

•

spent $0.2 million on property and equipment; and

•

received $12.9 million from the BRMR Merger.

During the six months ended June 30, 2018, we:

•

spent $124.0 million on capital expenditures for oil and gas properties;

•

spent $0.8 million on property and equipment; and

•

received $10.3 million of proceeds relating to the sale of assets.

Net cash provided by financing activities in the six months ended June 30, 2019 was $85.1 million compared to $58.5 million in the six months ended June 30, 2018.

During the six months ended June 30, 2019, we:

•

borrowed $95 million under our revolving credit facility;

•

paid $3.3 million in debt issuance costs associated with the amended and restated Credit Agreement governing our revolving credit facility; and

•

withheld from employees’ shares totaling $6.4 million related to the settlement of equity compensation awards.

During the six months ended June 30, 2018, we:

•

borrowed $60 million under our revolving credit facility;

•

paid $0.1 million in equity issuance costs associated with the Flat Castle Acquisition; and

•

withheld from employees’ shares totaling $1.1 million related to the settlement of equity compensation awards.

Liquidity and Capital Resources

Our main sources of liquidity and capital resources are internally generated cash flow from operations, asset sales, borrowings under our revolving credit facility and access to the debt and equity capital markets. We must find new and develop existing reserves to maintain and grow our production and cash flows. We accomplish this primarily through successful drilling programs, which require substantial capital expenditures. We periodically review capital expenditures and adjust our budget based on liquidity, drilling results, leasehold acquisition opportunities, and commodity prices. We believe that our existing cash on hand, operating cash flow and available borrowings under our revolving credit facility will be adequate to meet our capital and operating requirements for 2019.

Future success in growing reserves and production will be highly dependent on capital resources available and the success of finding or acquiring additional reserves. We will continue using net cash on hand, cash flows from operations and borrowings under our revolving credit facility to satisfy near-term financial obligations and liquidity needs, and as necessary, we will seek additional sources of debt or equity to fund these requirements. Longer-term cash flows are subject to a number of variables including the level of production and prices we receive for our production as well as various economic conditions that have historically affected the natural gas and oil business. Our ability to expand our reserve base is, in part, dependent on obtaining sufficient capital through internal cash flow, bank borrowings, asset sales or the issuance of debt or equity securities. There can be no assurance that internal cash flow and other capital sources will provide sufficient funds to maintain capital expenditures that we believe are necessary to offset inherent declines in production and proven reserves.

As of June 30, 2019, we were in compliance with all of our debt covenants under the Credit Agreement governing our revolving credit facility and the indenture governing our 8.875% senior unsecured notes due 2023. Further, based on our current forecast and activity levels, we expect to remain in compliance with all such debt covenants for the next 12 months. However, if oil and natural gas prices decrease to lower levels, we are likely to generate lower operating cash flows, which would make it more difficult for us to remain in compliance with all of our debt covenants, including requirements with respect to working capital and interest coverage ratios. This could negatively impact our ability to maintain sufficient liquidity and access to capital resources.

Credit Arrangements

Long-term debt at June 30, 2019 and December 31, 2018, excluding discount, totaled $638.0 million and $543.0 million, respectively. Information related to our credit arrangements is described in “Note 10—Debt” to our Consolidated Financial Statements and is incorporated herein by reference.

Commodity Hedging Activities

Our primary market risk exposure is in the prices we receive for our natural gas, NGLs and oil production. Realized pricing is primarily driven by the spot regional market prices applicable to our U.S. natural gas, NGLs and oil production. Pricing for natural gas, NGLs and oil production has been volatile and unpredictable for several years, and we expect this volatility to continue in the future. The prices we receive for production depend on many factors outside of our control, including volatility in the differences between product prices at sales points and the applicable index price.

To mitigate the potential negative impact on our cash flow caused by changes in natural gas, NGLs and oil prices, we may enter into financial commodity derivative contracts to ensure that we receive minimum prices for a portion of our future natural gas production when management believes that favorable future prices can be secured. We typically hedge the NYMEX Henry Hub price for natural gas and the WTI price for oil.

Our hedging activities are intended to support natural gas, NGLs and oil prices at targeted levels and to manage our exposure to price fluctuations. The counterparty is required to make a payment to us for the difference between the floor price specified in the contract and the settlement price, which is based on market prices on the settlement date, if the settlement price is below the floor price. We are required to make a payment to the counterparty for the difference between the ceiling price and the settlement price if the ceiling price is below the settlement price. These contracts may include price swaps whereby we will receive a fixed price for our production and pay a variable market price to the contract counterparty, zero cost collars that set a floor and ceiling price for the hedged production, and puts that require us to pay a premium either up front or at settlement and allow us to receive a fixed price at our option if the put price is above the market price. As of June 30, 2019, we had entered into the following derivative contracts:

Natural Gas Derivatives:

Description	Volume (MMBtu/d)		Production Period	Weighted Average Price ($/MMBtu)
Natural Gas Swaps:
		90,000	July 2019 – December 2019	$	2.84
		15,000	July 2019 – September 2019	$	2.79
Natural Gas Collars:
Floor purchase price (put)		75,000	July 2019 – September 2019	$	2.50
Ceiling sold price (call)		75,000	July 2019 – September 2019	$	2.87
Floor purchase price (put)		65,000	October 2019 – December 2019	$	2.65
Ceiling sold price (call)		65,000	October 2019 – December 2019	$	2.96
Floor purchase price (put)		30,000	January 2020 – March 2020	$	2.72
Ceiling sold price (call)		30,000	January 2020 – March 2020	$	3.15
Floor purchase price (put)		15,000	April 2020 – June 2020	$	2.50
Ceiling sold price (call)		15,000	April 2020 – June 2020	$	2.80
Floor purchase price (put)		30,000	January 2020 – December 2020	$	2.55
Ceiling sold price (call)		30,000	January 2020 – December 2020	$	3.00
Natural Gas Three-way Collars:
Floor purchase price (put)		77,500	July 2019 – December 2019	$	2.72
Floor sold price (put)		77,500	July 2019 – December 2019	$	2.30
Ceiling sold price (call)		77,500	July 2019 – December 2019	$	3.04
Floor purchase price (put)		70,000	January 2020 – June 2020	$	2.70
Floor sold price (put)		70,000	January 2020 – June 2020	$	2.25
Ceiling sold price (call)		70,000	January 2020 – June 2020	$	2.98
Floor purchase price (put)		30,000	October 2019 – June 2020	$	2.90
Floor sold price (put)		30,000	October 2019 – June 2020	$	2.50
Ceiling sold price (call)		30,000	October 2019 – June 2020	$	3.15
Floor purchase price (put)		30,000	January 2020 – December 2020	$	2.70
Floor sold price (put)		30,000	January 2020 – December 2020	$	2.40
Ceiling sold price (call)		30,000	January 2020 – December 2020	$	3.05
Natural Gas Call/Put Options:
Call sold		40,000	July 2019 – December 2019	$	3.44
Basis Swaps:
Appalachia - Dominion		12,500	July 2019 – October 2019	$	(0.52	)
Appalachia - Dominion		12,500	April 2020 – October 2020	$	(0.52	)
Appalachia - Dominion		20,000	January 2020 – December 2020	$	(0.59	)
Appalachia - Dominion		20,000	July 2019 – March 2020	$	(0.39	)
Appalachia - Dominion		17,500	July 2019 – December 2019	$	(0.50	)

Oil Derivatives:

Description	Volume (Bbls/d)		Production Period	Weighted Average Price ($/Bbl)
Oil Swaps:
		1,500	July 2019 – December 2019	$	59.18
		1,000	January 2020 – December 2020	$	58.60
Oil Collars:
Floor purchase price (put)		1,500	July 2019 – December 2019	$	51.67
Ceiling sold price (call)		1,500	July 2019 – December 2019	$	65.92
Floor purchase price (put)		1,000	January 2020 – December 2020	$	51.50
Ceiling sold price (call)		1,000	January 2020 – December 2020	$	64.25
Floor purchase price (put)		500	July 2019 – March 2020	$	60.00
Ceiling sold price (call)		500	July 2019 – March 2020	$	67.00
Oil Three-way Collars:
Floor purchase price (put)		2,000	July 2019 – December 2019	$	50.00
Floor sold price (put)		2,000	July 2019 – December 2019	$	40.00
Ceiling sold price (call)		2,000	July 2019 – December 2019	$	60.56
Floor purchase price (put)		2,000	January 2020 – June 2020	$	62.50
Floor sold price (put)		2,000	January 2020 – June 2020	$	55.00
Ceiling sold price (call)		2,000	January 2020 – June 2020	$	74.00

NGL Derivatives:

Description

Volume

(Bbls/d)

Production Period

Weighted Average

Price ($/Bbl)

Propane Swaps:

350

July 2019 – December 2019

39.90

By using derivative instruments to hedge exposures to changes in commodity prices, we expose ourselves to the credit risk of our counterparties. Credit risk is the potential failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty is expected to owe us, which creates credit risk. To minimize the credit risk in derivative instruments, it is our policy to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by management as competent and competitive market makers. The creditworthiness of our counterparties is subject to periodic review. We have derivative instruments in place with Bank of Montreal, J Aron, Morgan Stanley, Capital One N.A., BP Energy Company, KeyBank N.A., NextEra Energy, Inc., Royal Bank of Canada and EDF Energy. We believe all of such institutions currently are an acceptable credit risk. As of June 30, 2019, we did not have any past due receivables from such counterparties.

A sensitivity analysis has been performed to determine the incremental effect on future earnings, related to open derivative instruments at June 30, 2019 as shown in the following table:

(in thousands)	Hypothetical 10% Increase in Future Prices			Hypothetical 10% Decrease in Future Prices
Natural Gas	$	(13,681	)	$	12,591
NGLs		(145	)		146
Oil		(8,290	)		7,858

Subsequent to June 30, 2019, we entered into the following derivative instruments to mitigate our exposure to natural gas and oil prices:

Natural Gas Derivatives:

Description	Volume (MMBtu/d)		Production Period	Weighted Average Price ($/MMBtu)
Natural Gas Swaps:
		50,000	January 2020 – June 2020	$	2.70
		50,000	January 2020 – December 2020	$	2.67
Natural Gas Call/Put Options:
Ceiling purchase price (call)		50,000	January 2020 – June 2020	$	2.95
Floor sold price (put)		50,000	January 2020 – June 2020	$	2.70
Floor sold price (put)		30,000	January 2020 – March 2020	$	2.25
Floor sold price (put)		50,000	January 2020 – December 2020	$	2.30

Oil Derivatives:

Description	Volume (Bbls/d)		Production Period	Weighted Average Price ($/Bbl)
Oil Swaps:
		500	July 2020 – December 2020	$	56.25
Oil Collars:
Floor purchase price (put)		500	July 2020 – December 2020	$	52.00
Ceiling sold price (call)		500	July 2020 – December 2020	$	60.00

Capital Requirements

Our primary needs for cash are for exploration, development and acquisition of natural gas and oil properties and repayment of principal and interest on outstanding debt. Our Board of Directors approved an initial capital budget for 2019 of between approximately $375 - $400 million, allocated approximately 90% for drilling and completions activities and approximately 10% for land activities and other capital requirements. Subsequent to June 30, 2019, the Company reduced its planned drilling activity to one gross operating rig through the remainder of 2019 and in connection therewith reduced its 2019 capital budget by approximately $30 million. The revised 2019 capital budget is expected to be substantially funded through internally generated cash flows, the Company’s current cash balance, and borrowings under the revolving credit facility. The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things, natural gas, NGLs and oil prices, actual drilling results, the availability of drilling rigs and other services and equipment, and regulatory, technological and competitive developments. A reduction in natural gas, NGLs or oil prices from current levels may result in a further decrease in our actual capital expenditures, which would negatively impact our ability to grow production and our proved reserves as well as our ability to maintain compliance with our debt covenants. Our financing needs may require us to alter or increase our capitalization substantially through the issuance of debt or equity securities, additional borrowings under our revolving credit facility or the sale of assets.

On February 28, 2019, the Company completed its previously announced business combination transaction with BRMR pursuant to that certain Agreement and Plan of Merger, dated as of August 25, 2018 and amended as of January 7, 2019 (the “Merger Agreement”), by and among the Company, Everest Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and BRMR. Pursuant to the Merger Agreement, Merger Sub merged with and into BRMR with BRMR continuing as the surviving corporation and a wholly owned subsidiary of the Company.

In addition, we may from time to time seek to pay down, retire or repurchase our outstanding debt using cash or through exchanges of other debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on available funds, prevailing market conditions, our liquidity requirements, contractual restrictions in the Credit Agreement governing our revolving credit facility and other factors.

Capitalization

As of June 30, 2019 and December 31, 2018, our total debt, excluding debt discount and issuance costs, and capitalization were as follows (in millions):

	June 30, 2019		December 31, 2018
Senior unsecured notes	$	510.5	$	510.5
Revolving credit facility		127.5		32.5
Stockholders' equity		976.8		687.5
Total capitalization	$	1,614.8	$	1,230.5

Cash Contractual Obligations

Our contractual obligations include long-term debt, operating leases, drilling commitments, firm transportation, gas processing, gathering, and compressions services and asset retirement obligations. As of June 30, 2019 and December 31, 2018, we did not have any capital leases, any significant off-balance sheet debt or other such unrecorded obligations, and we have not guaranteed any debt of any unrelated party. Our Condensed Consolidated Balance Sheet at June 30, 2019 reflects accrued interest payable of $22.4 million, compared to $21.7 million as of December 31, 2018.

Midstream Agreements

As a result of the BRMR Merger, we assumed commitments related to certain firm transportation and gas processing, gathering and compression agreements entered into by Triad Hunter, LLC (“Triad Hunter”), a wholly owned subsidiary of BRMR (See Note 15—Commitments and Contingencies). See our Annual Report on Form 10-K for further discussion of our Midstream Agreements and Other Commitments.

MarkWest Gas Processing Agreement

Triad Hunter is party to a gas processing agreement with MarkWest Liberty Midstream & Resources, L.L.C (“MarkWest”). The agreement provides for minimum volume commitments of 37,500 Mcf per day and expires in October 2023. Effective May 1, 2019, this agreement was amended to reflect an adjusted acreage dedication and reduced processing fee.

Equitrans Gas Transportation Agreement

Triad Hunter is party to a gas transportation agreement with Equitrans, L.P. Under the gas transportation agreement, which expires on October 31, 2029, Triad Hunter’s maximum daily quantities are 50,000 MMBtu per day through December 31, 2024 and are reduced to 35,000 MMBtu per day effective as of January 1, 2025.

Eureka Midstream Gas Gathering Agreement

Triad Hunter is party to a gas gathering contract with Eureka Midstream. Among other things, the gas gathering contract provides for minimum volume commitments to be determined on a system-wide basis with volume banking, with annual commitments of 210,000 MMBtu per day for 2019 through 2033. In addition, the contract includes a minimum volume commitment of 50,000 Mcf per day for a compression facility.

In March 2019, Eclipse Resources I, L.P., a wholly owned subsidiary of the Company (“Eclipse I”) became party to a rich gas gathering agreement (firm service – three well pads) with Eureka Midstream, under which Eclipse I committed to the payment of monthly reservation fees for certain maximum daily quantities of gas delivered under this agreement with respect to production from the three well pads in Monroe County, Ohio. Among other things, the rich gas gathering agreement provides for minimum volume commitments with respect to production from the three wells pads, with annual commitments in the table below:

Term	Natural Gas (Mcf/d)
July 2019 – June 2020		41,000
July 2020 – June 2021		40,000
July 2021 – June 2022		23,000
July 2022 – June 2023		16,500
July 2023 – June 2024		12,500
July 2024 – June 2025		10,400
July 2025 – June 2026		8,500
July 2026 – June 2027		7,250
July 2027 – June 2028		6,000
July 2028 – June 2029		5,250
July 2029 – June 2030		4,250
July 2030 – June 2031		3,500
July 2031 – June 2032		3,000
July 2032 – June 2033		2,500
July 2033 – June 2034		2,000

Amended MarkWest Processing Agreement

In June 2019, Eclipse I entered into an agreement with MarkWest for gas processing and fractionation. This gas processing agreement contains substantially similar terms and conditions as the legacy gas processing agreement previously entered into between Triad Hunter and MarkWest. In June 2019, Triad Hunter and Eclipse I amended their gas processing agreements with MarkWest. The amendments were effective as of May 1, 2019 and provide for reduced processing and compression charges as well as firm capacity that increases during the term of the agreements from approximately 150 MMcf to 275 MMcf per day. These gas processing agreements include a dedication of Marcellus acreage and no minimum volume commitments. The agreements expire in October 2023.

REX Transportation Agreement

Triad Hunter is party to certain transportation services agreements with Rockies Express Pipeline LLC (“REX”) for the delivery by Triad Hunter and the transportation by REX of natural gas produced by Triad Hunter. Under the agreements, Triad Hunter committed to purchase 50,000 MMBtu per day of firm transportation through 2031. In January 2018, Triad Hunter committed to purchase an additional 50,000 MMBtu per day of firm transportation capacity commencing October 1, 2018 and continuing through September 30, 2023. In April 2019, REX and Triad Hunter agreed to extend the term of the additional 50,000 MMBtu per day of capacity through September 30, 2027.

In connection with its transportation services agreements with REX, Triad Hunter is required to provide credit support, which as of March 31, 2019 consisted of a letter of credit of $20 million and a cash prepayment to REX of $1.4 million. Triad Hunter was also party to an Asset Management Agreement with BP Energy Company pursuant to which, among other things, BP Energy Company agreed to provide the $20 million letter of credit to REX on behalf of Triad Hunter. In April 2019, per the terms of the additional 50,000 MMBtu per day of capacity extension, REX and Triad Hunter agreed to reduce the currently held letter of credit to $14.4 million from the previously held $20 million. The $20 million letter of credit posted by BP Energy Company expired on April 28, 2019, and the Company issued the reduced $14.4 million letter of credit under its revolving credit facility (See Note 10—Debt). Triad Hunter still maintains a $1.4 million cash prepayment with REX.

Other

We lease acreage that is generally subject to lease expiration if operations are not commenced within a specified period, generally five years. However, based on our evaluation of prospective economics, including the cost of infrastructure to connect production, we have allowed acreage to expire and will allow additional acreage to expire in the future. To date, our expenditures to comply with environmental or safety regulations have not been a significant component of our cost structure and are not expected to

be significant in the future. However, new regulations, enforcement policies, claims for damages or other events could result in significant future costs.

Interest Rates

At June 30, 2019 and December 31, 2018, we had $510.5 million of senior unsecured notes outstanding, excluding discounts, which bore interest at a fixed cash rate of 8.875% and was due semi-annually from the date of issuance.

At June 30, 2019, we had outstanding borrowings of $127.5 million under our revolving credit facility with interest payable at a variable rate based on LIBOR or the prime rate based on our election at the time of borrowing. We had outstanding borrowings of $32.5 million under our revolving credit facility as of December 31, 2018.

Information related to our interest rates is described in “Note 10—Debt” to our Consolidated Financial Statements and is incorporated herein by reference.

Off-Balance Sheet Arrangements

We do not currently utilize any off-balance sheet arrangements with unconsolidated entities to enhance our liquidity or capital resource position, or for any other purpose. However, as is customary in the oil and gas industry, we have various contractual work commitments, which are described above under “—Cash Contractual Obligations.”

Inflation and Changes in Prices

Our revenues, the value of our assets and our ability to obtain bank loans or additional capital on attractive terms have been and will continue to be affected by changes in natural gas, NGLs and oil prices and the costs to produce our reserves. Natural gas, NGLs and oil prices are subject to significant fluctuations that are beyond our ability to control or predict. Although certain of our costs and expenses are affected by general inflation, it does not normally have a significant effect on our business. We expect our costs in fiscal 2019 to continue to be a function of supply and demand. Further strengthening of commodity prices could stimulate demand for ancillary services causing service costs to increase. In the near term, the majority of our service costs are expected to remain flat in 2019 due to previously negotiated drilling, stimulation, and rentals contracts. Along with these contracts, we have secured quality service equipment and tenured personnel to limit our exposure to increasing service costs and improve operational efficiencies.

Non-GAAP Financial Measure

“Adjusted EBITDAX” is a non-GAAP financial measure that we define as net income (loss) before interest expense or interest income; income taxes; write-down of abandoned leases; impairments; DD&A; amortization of deferred financing costs; gain (loss) on derivative instruments, net cash receipts (payments) on settled derivative instruments, and premiums (paid) 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, as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with U.S. GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with U.S. GAAP. Adjusted EBITDAX provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position. Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration expenses, and other commitments and obligations. However, our management team believes Adjusted EBITDAX is useful to an investor in evaluating our financial performance because this measure:

•

is widely used by investors in the oil and natural gas industry to measure a company’s operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;

•

helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating structure; and

•

is used by our management team for various purposes, including as a measure of operating performance, in presentations to our Board of Directors, as a basis for strategic planning and forecasting and by our lenders pursuant to covenants under the Credit Agreement governing the revolving credit facility and the indenture governing the senior unsecured notes.

There are significant limitations to using Adjusted EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDAX reported by different companies. The following table represents a reconciliation of our net income (loss) from operations to Adjusted EBITDAX for the periods presented:

	Three Months Ended June 30,						Six Months Ended June 30,
$ thousands	2019			2018				2019		2018
Net income (loss)	$	27,512		$	(19,036	)	$	13,414		$	(21,660	)
Depreciation, depletion, amortization and accretion		38,597			32,922			68,494			64,233
Exploration expense		15,193			9,620			31,981			24,898
Stock-based compensation		552			1,979			6,553			3,960
(Gain) loss on sale of assets		1			(1,553	)		2			(1,820	)
(Gain) loss on derivative instruments		(29,738	)		16,577			(24,808	)		20,792
Net cash receipts (payments) on settled derivatives		2,440			(2,488	)		(746	)		(2,347	)
Interest expense, net		15,109			13,092			28,949			26,043
Other income		(8	)		—			(8	)		—
Merger-related expenses		3,938			—			18,521			—
Income from discontinued operations		(2,705	)		—			(2,523	)		—
Adjusted EBITDAX	$	70,891		$	51,113		$	139,829		$	114,099

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. See our Annual Report on Form 10-K for further discussion of our critical accounting policies.

Recent Accounting Pronouncements

The Company’s critical accounting policies are described in “Note 3—Summary of Significant Accounting Policies” of the Consolidated Financial Statements for the year ended December 31, 2018 contained in the Company’s Annual Report on Form 10-K. Information related to recent accounting pronouncements is described in “Note 3—Summary of Significant Accounting Policies” to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. The term “market risk” refers to the risk of loss arising from adverse changes in natural gas, NGLs and oil prices and interest rates. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market-risk exposure. All of our market-risk sensitive instruments were entered into for purposes other than trading. All accounts are U.S. dollar denominated.

Commodity Price Risk

We are exposed to market risks related to the volatility of natural gas, NGLs and oil prices. Realized prices are primarily driven by worldwide prices for oil and spot market prices for North American gas production. Natural gas and oil prices have been volatile and unpredictable for many years. Natural gas prices affect us more than oil prices because approximately 82% of our December 31, 2018 proved reserves were natural gas.

For a discussion of how we use financial commodity derivative contracts to mitigate some of the potential negative impact on our cash flow caused by changes in natural gas prices, see “Note 8—Derivative Instruments.”

Interest Rate Risk

Information related to our interest rates is described in “Note 10—Debt” to our Consolidated Financial Statements and is incorporated herein by reference.

Counterparty and Customer Credit Risk

Our principal exposures to credit risk are through receivables resulting from commodity derivatives contracts, the sale of our oil and gas production which we market to energy companies, end users and refineries, and joint interest receivables.

By using derivative instruments that are not traded on an exchange to hedge exposures to changes in commodity prices, we expose ourselves to the credit risk of our counterparties. Credit risk is the potential failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty is expected to owe us, which creates credit risk. To minimize the credit risk in derivative instruments, it is our policy to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by management as competent and competitive market makers. The creditworthiness of our counterparties is subject to periodic review. As of June 30, 2019, we had economic hedges in place with eight counterparties. The fair value of our commodity derivative contracts of approximately $21.7 million at June 30, 2019 includes the following values by bank counterparty: Bank of Montreal $4.5 million; KeyBank N.A. ($0.4) million; Morgan Stanley ($1.1) million; Capital One N.A. $4.5 million; BP Energy Company $1.4 million; J Aron $8.9 million; NextEra Energy, Inc. $1.7 million; and EDF Energy $2.2 million. The estimated fair value of our commodity derivative assets has been risk adjusted using a discount rate based upon the respective published credit default swap rates (if available, or if not available, a discount rate based on the applicable Reuters bond rating) at June 30, 2019 for each of the banks. We believe that all of these institutions currently are acceptable credit risks. Other than as provided by our revolving credit facility, we are not required to provide credit support or collateral to any of our counterparties under our derivative contracts, nor are they required to provide credit support to us. As of June 30, 2019, we did not have past-due receivables from, or payables to, any of our counterparties under our derivative contracts, nor are they required to provide credit support to us.

We are also subject to credit risk due to concentration of our receivables from several significant customers for sales of natural gas. We generally do not require our customers to post collateral. The inability or failure of our significant customers to meet their obligations to us or their insolvency or liquidation may adversely affect our financial results.

Joint interest receivables arise from billing entities who own partial interest in the wells we operate. These entities participate in our wells primarily based on their ownership in leased properties on which we wish to drill. We can do very little to choose who participates in our wells.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management carried out an evaluation (as required by Rule 13a-15(b) of the Exchange Act), with the participation of the Company’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon this evaluation, the Company’s President and Chief Executive Officer and Executive Vice President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q, such that the information relating to the Company and its consolidated subsidiaries required to be disclosed by the Company in the reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including its principal executive and financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

Information regarding the Company’s legal proceedings is set forth in “Note 15—Commitments and Contingencies,” located in the Notes to the Condensed Consolidated Financial Statements included in Part I Item 1 of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Item 1A.

Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 15, 2019, which could materially affect our business, financial condition, and/or future results. The risks described in our Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or results of operations.

Item 6.

Exhibits

See the list of exhibits below in the index to exhibits to this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

MONTAGE RESOURCES CORPORATION

INDEX TO EXHIBITS

Exhibit No.		Description

2.1+		Agreement and Plan of Merger, dated as of August 25, 2018, among Eclipse Resources Corporation, Everest Merger Sub Inc., and Blue Ridge Mountain Resources, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 27, 2018).

2.2		Amendment No. 1 to Agreement and Plan of Merger, dated as of January 7, 2019, among Eclipse Resources Corporation, Everest Merger Sub Inc., and Blue Ridge Mountain Resources, Inc. (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 7, 2019).

3.1		Second Amended and Restated Certificate of Incorporation of Montage Resources Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 6, 2019).

3.2		Second Amended and Restated Bylaws of Montage Resources Corporation (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on March 6, 2019).

3.3		Certificate of Ownership and Merger, filed with the Secretary of State of the State of Delaware with an effective date of February 28, 2019 (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed with the SEC on March 6, 2019).

4.1		Amended and Restated Registration Rights Agreement, dated January 28, 2015, by and among Eclipse Resources Corporation, Eclipse Resources Holdings, L.P., CKH Partners II, L.P., The Hulburt Family II Limited Partnership, Kirkwood Capital, L.P, EnCap Energy Capital Fund VIII, L.P., EnCap Energy Capital Fund VIII Co-Investors, L.P., EnCap Energy Capital Fund IX, L.P., Eclipse Management, L.P., Buckeye Investors L.P., GSO Capital Opportunities Fund II (Luxembourg) S.à.r.l., Fir Tree Value Master Fund, L.P., Luxor Capital Partners, LP and Luxor Capital Partners Offshore Master Fund, LP (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 29, 2015).

4.2		Indenture, dated as of July 6, 2015, between Eclipse Resources Corporation, the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 8, 2015).

4.3		Registration Rights Agreement, dated as of January 18, 2018, by and among Eclipse Resources Corporation, Eclipse Resources-PA, LP, and Travis Peak Resources, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 22, 2018).

10.1†		Executive Employment Agreement, effective as of March 1, 2019, by and between Montage Resources Corporation and John K. Reinhart (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 16, 2019).

10.2†		Executive Employment Agreement, effective as of March 1, 2019, by and between Montage Resources Corporation and Michael L. Hodges (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 16, 2019).

10.3†		Executive Employment Agreement, effective as of June 25, 2019, by and between Montage Resources Corporation and Timothy J. Loos (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 28, 2019).

10.4†*		Executive Employment Agreement, effective as of March 1, 2019, by and between Montage Resources Corporation and Oleg E. Tolmachev.

10.5†*		Executive Employment Agreement, effective as of March 1, 2019, by and between Montage Resources Corporation and Matthew H. Rucker.

10.6†*		Executive Employment Agreement, effective as of March 1, 2019, by and between Montage Resources Corporation and Paul M. Johnston.

10.7†		Montage Resources Corporation 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 20, 2019).

10.8†*		Montage Resources Corporation Non-Employee Director Compensation Policy.

10.9†*		Restricted Stock Award Agreement, effective as of February 28, 2019, by and between Montage Resources Corporation and Oleg E. Tolmachev.

10.10†*		Form of Restricted Stock Award Agreement for Non-Employee Directors.

10.11†		Form of Restricted Stock Unit Award Agreement for Officers and Employees (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on June 20, 2019).

10.12†		Form of Performance Unit Award Agreement for Officers and Employees (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on June 20, 2019).

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		XBRL Taxonomy Extension Schema Document.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.

+	Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Montage Resources Corporation agrees to furnish a copy of such schedules, or any section thereof, to the SEC upon request.

†	Management contract or compensatory plan or arrangement.

*	Filed herewith.

**	These exhibits are furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

August 8, 2019		MONTAGE RESOURCES CORPORATION (Registrant)

		/s/ John K. Reinhart
		John K. Reinhart,
		President and Chief Executive Officer

		/s/ Michael L. Hodges
		Michael L. Hodges,
		Executive Vice President and Chief Financial Officer

Exhibit 10.4

EXECUTION COPY

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (this “Agreement”) is made and entered into effective as of March 1, 2019 (the “Effective Date”), by and between Montage Resources Corporation, formerly known as Eclipse Resources Corporation (the “Company”), and Oleg Tolmachev (“Executive”).

WHEREAS, the parties have determined it to be in their respective best interests to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual premises, covenants and agreements herein contained, intending to be legally bound, the parties agree as follows:

1.Employment. From and after the Effective Date, the Company will continue to employ Executive as its Executive Vice President and Chief Operating Officer, and Executive will report to the President and Chief Executive Officer of the Company. Executive will perform all services and acts necessary to fulfill the duties and responsibilities of his position and agrees to devote his full business time, attention and energies to the performance of the duties assigned hereunder, and to perform such duties diligently, faithfully and to the best of his abilities. Executive agrees to refrain from any activity that does, will or could reasonably be deemed to conflict with the best interests of the Company, unless such activity is approved in advance by the Chief Executive Officer of the Company. Executive’s principal place of employment shall be at the Company’s principal executive offices in Irving, Texas (or at such other location in the Dallas, Texas area which constitutes the Company’s principal executive offices), and Executive shall be furnished with an individual office at such location; provided, however, Executive acknowledges and agrees that he will be required to travel in the course of performing his duties hereunder.

2.Term. The Company agrees to employ Executive, and Executive agrees to be employed by the Company, for a period (the “Initial Term”) commencing on the Effective Date and ending on the third (3^rd) anniversary of the Effective Date, unless earlier terminated in accordance with Section 4. If neither party gives the other at least ninety (90) days written notice that it intends for this Agreement to terminate at the end of the Initial Term, then this Agreement will continue for successive one-year terms (each a “Renewal Term”), unless earlier terminated in accordance with Section 4, until either party gives the other party at least ninety (90) days written notice that it intends for this Agreement to terminate at the end of any then-existing Renewal Term. The term that Executive is employed hereunder will constitute the “Term”. If either Executive or the Company gives timely notice of termination pursuant to this Section 2, then Executive’s employment shall end on the last day of the then-existing Initial Term or Renewal Term, as applicable. A termination of Executive’s employment by reason of a timely notice of termination pursuant to this Section 2 shall not be considered a termination for Cause or without Cause by the Company, or a termination for Good Reason or without Good Reason by Executive.

3.Compensation and Benefits.

(a)Base Salary. Executive will receive a base salary at an annualized rate of Three Hundred Ninety Thousand Dollars ($390,000.00) (“Base Salary”), paid in accordance with the normal payroll practices of the Company in effect from time to time, but no less frequently than monthly. The Base Salary shall be reviewed periodically by the Board (or a designated committee thereof) and may be increased from time to time in its discretion but not decreased below the amount of Base Salary, as may be increased, without Executive’s written consent.

(b)Bonus. Executive will be eligible for a discretionary annual bonus (“Annual Bonus”) for each calendar year, commencing with the calendar year 2019, in which an annual cash performance bonus program is in effect, which Annual Bonus shall be subject to the terms of the applicable bonus program. Each Annual Bonus shall be payable based on the achievement of reasonable performance targets established by the Board, and for each calendar year Executive’s target Annual Bonus shall be equal to eighty-five percent (85%) of Executive’s Base Salary in effect on the last day of the applicable calendar year; provided, that the percentage of Executive’s Base Salary that applies for the purposes of determining Executive’s target Annual Bonus for a given year may be increased above eighty-five percent (85%) (but not decreased without the Executive’s written consent) by the Board (or a designated committee thereof) in its discretion. Executive’s Annual Bonus, if any, will be paid no later than March 15 of the year following the calendar year to which it relates.

(c)Long-Term Incentive Compensation. Executive may, as determined by the Board (or a designated committee thereof) in its sole discretion, periodically receive grants of stock options or other equity or non-equity related awards pursuant to the Company’s or an affiliate’s long-term incentive plan(s), subject to the terms and conditions of such plan(s) and the applicable award agreement(s) thereunder.

(d)Retirement and Welfare Benefits; D&O Insurance. During the Term, Executive or Executive’s spouse and dependents, as the case may be, will be eligible to participate in such pension and similar benefit plans (qualified, non-qualified and supplemental), profit sharing, 401(k), medical and dental, disability, group or executive life, accidental death and travel accident insurance, and similar benefit plans and programs of the Company, subject to the terms and conditions thereof, as may be in effect and made available from time to time to the Company’s senior executives. During the Term, the Company shall provide Executive with coverage under the Company’s D&O insurance policy or policies as may be in effect, to the same extent as its other senior executives. Upon the termination of Executive’s employment with the Company for any reason, the Company shall, at its sole cost and expense, maintain D&O insurance coverage for Executive for the three (3)-year period following such termination on terms that are substantially the same as for the Company’s then-current senior executives, if so provided for such senior executives; provided, however, that if the cost of such continued D&O insurance coverage will exceed 100% of the cost of such coverage immediately prior to the Termination Date (the “Pre-Termination Cost”), the Company will secure the greatest level of coverage possible at a cost that does not exceed 100% of the Pre-Termination Cost.

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(e)Perquisites. Executive will be entitled to participate in the Company’s perquisite programs, as such are made generally available to the Company’s senior executives, subject to the terms of such programs.

(f)Business Expenses. The Company will reimburse Executive for all ordinary and necessary business expenses incurred by him in connection with his employment upon timely submission by Executive of receipts and other documentation in conformance with the Company’s normal procedures. All payments for reimbursement under this Section 3(f) will be paid promptly to Executive.

(g)Paid Time Off. Executive will be entitled to paid time off (“PTO”) in accordance with the policies and practices of the Company as in effect from time to time with respect to the Company’s senior executives, including any unused PTO that will be paid upon a termination of employment. For calendar year 2019, Executive will be entitled to PTO in an amount calculated as if Executive had been employed by the Company beginning on January 1, 2019.

4.Termination. This Agreement will continue in effect until the expiration or end of the Term, and Executive’s employment hereunder may be terminated prior to the end of the Initial Term or any then-existing Renewal Term pursuant to this Section 4.

(a)Disability. If Executive incurs a Disability, the Company may terminate Executive’s employment effective on the thirtieth (30^th) day after Executive’s receipt of written notice of the Company’s intent to terminate Executive’s employment for such Disability.

(b)By the Company, with or without Cause. The Company may terminate the Executive’s employment at any time for Cause or without Cause. For purposes of this Agreement, a termination “without Cause” means Executive’s termination of employment during the Initial Term or a then-existing Renewal Term at the Company’s sole discretion for any reason other than a termination for Cause or as a result of Executive’s death or Disability.

(c)By Executive, with or without Good Reason. The Executive’s employment may be terminated during the Initial Term or a then-existing Renewal Term by Executive for Good Reason or without Good Reason; provided, however, that Executive may not terminate his employment for Good Reason unless (i) Executive has given the Company written notice of his belief that Good Reason exists within thirty (30) days of the initial existence of the condition(s) giving rise to Good Reason, which notice will specify in reasonable detail the facts and circumstances giving rise to Good Reason, (ii) the Company has not remedied such facts and circumstances giving rise to Good Reason within the thirty (30)-day period following the receipt of such notice and (iii) Executive separates from service on or before the sixtieth (60^th) day after the end of such thirty (30)-day cure period by delivering the Notice of Termination.

(d)Notice of Termination. Any termination by the Company for Cause or without Cause or because of Executive’s Disability, or by Executive for Good Reason or without Good Reason, must be communicated by Notice of Termination to the other party.

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5.Obligations of the Company upon Termination.

(a)For Cause; Without Good Reason; Expiration of Initial Term or Renewal Term. If the Company terminates Executive’s employment for Cause, Executive terminates his employment without Good Reason, or the Initial Term or a Renewal Term expires by reason of timely notice given by either party pursuant to Section 2, the Company will have no further obligations to Executive or his legal representatives, except that Executive (or his legal representatives, as the case may be) will be entitled to any (i) earned but unpaid Base Salary accrued up to the end of the Term, (ii) benefits or compensation as provided under the terms of any employee benefit and compensation agreements or plans applicable to Executive, including benefits as provided for under the provisions of the last sentence of Section 3(d) and payment for any unused PTO if required by Section 3(g), (iii) unreimbursed business expenses required to be reimbursed to Executive, (iv) if the Term expires by reason of timely notice given by either party pursuant to Section 2, any earned and accrued, but unpaid, Annual Bonus (if earned pursuant to the terms of the applicable cash performance bonus program) for any completed calendar year prior to the calendar year in which the Term expires, (v) rights Executive may have to D&O insurance, indemnification, defense and reimbursement or payment of expenses under the Company’s Certificate of Incorporation and Bylaws, any Company merger agreement or Company indemnification agreement and under applicable law, and (vi) rights of Executive under Sections 7(f) and 16 (together, the “Continuing Obligations”).

(b)Death or Disability. If Executive’s employment is terminated by reason of Executive’s death or Disability, the Company will have no further obligations to Executive or Executive’s legal representatives, except that Executive (or his legal representatives, as the case may be) will be entitled to the Continuing Obligations and (subject to the terms of Section 5(e)), the following:

(i)Severance Payment. The Company will pay Executive (or his legal representatives, as the case may be) an amount equal to one (1) times Executive’s Base Salary as of the Termination Date, which amount will be paid in a lump sum payment on the earlier to occur of: (A) the Company’s first payroll date that comes on or after the date that is sixty (60) days after the Termination Date, or (B) the fifth (5^th) business day after the expiration of such sixty (60)-day period.

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premiums due with respect to such COBRA continuation coverage shall remain the sole responsibility of Executive or Executive’s spouse or eligible dependents, as applicable, and the Company shall not assume any obligation for payment of any such premiums relating to such COBRA continuation coverage. Nothing contained herein is intended to limit or otherwise restrict any rights to continued group health plan coverage pursuant to COBRA following the period described in the preceding sentence.

(c)Termination without Cause or for Good Reason. If Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason, the Company will have no further obligations to Executive or Executive’s legal representatives, except that Executive will be entitled to the Continuing Obligations and (subject to the terms of Section 5(e)) the following:

(i)Severance Payment. If Executive’s employment terminates prior to a Change of Control or after the date that is twelve (12) months after a Change of Control, then the Company will pay Executive an amount equal to 1.75 times the sum of (A) Executive’s Base Salary as of the Termination Date, and (B) an amount equal to Executive’s target Annual Bonus for the fiscal year that includes the Termination Date, which amount will be paid in a lump sum payment on the earlier to occur of: (1) the Company’s first payroll date that comes on or after the date that is sixty (60) days after the Termination Date, or (2) the fifth (5^th) business day after the expiration of such sixty (60)-day period. If Executive’s employment terminates on the date of a Change in Control or within twelve (12) months after a Change of Control, then the Company will pay Executive an amount equal to 2.0 times the sum of (A) Executive’s Base Salary as of the Termination Date, and (B) an amount equal to Executive’s target Annual Bonus for the fiscal year that includes the Termination Date, which amount will be paid in a lump sum payment on the earlier to occur of: (1) the Company’s first payroll date that comes on or after the date that is sixty (60) days after the Termination Date, or (2) the fifth (5^th) business day after the expiration of such sixty (60)-day period.

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eligible dependents will continue to receive coverage and payment of the COBRA Reimbursement Amounts during the remainder, if any, of the COBRA Reimbursement Period, subject to his spouse’s and/or eligible dependent’s compliance with the terms of this Agreement, as applicable. Nothing contained herein is intended to limit or otherwise restrict any rights to continued group health plan coverage pursuant to COBRA following the COBRA Reimbursement Period, including, for the avoidance of doubt, the ability of Executive’s spouse and/or eligible dependents to elect to continue COBRA coverage if Executive dies or becomes incapacitated as a result of disability following termination of employment.

(iii)Pro Rata Annual Bonus. The Company will pay Executive an amount equal to the Annual Bonus for the calendar year in which occurs the Termination Date, as determined in good faith by the Board in accordance with the performance criteria established for such Annual Bonus and based on the Company’s actual performance for such calendar year, which amount will be prorated through and including the Termination Date (based on the ratio of the number of days Executive was employed by the Company during such year to the number of days in such year). This amount will be payable in a lump sum on or before the date on which annual bonuses for the calendar year are paid to executives who have continued employment with the Company (but in no event earlier than sixty (60) days after the Termination Date or later than the March 15 next following such calendar year).

(d)Equity Awards. There shall be no acceleration of the vesting of any equity or long-term incentive awards granted to Executive under any Company long-term incentive plan, unless otherwise provided under the terms of the applicable long-term incentive plan or award agreement.

(e)Release and Compliance with this Agreement. With the exception of the Continuing Obligations, the obligation of the Company to pay any portion of the amounts due pursuant to Section 5(b) and Section 5(c) is expressly conditioned on Executive’s (i) timely execution and return to the Company by the Release Expiration Date (as defined below) of a release substantially in the form attached hereto as Exhibit A (the “Release”), which form for execution will be provided by the Company to Executive (or a representative of his estate, as applicable) within seven (7) days after the Termination Date, (ii) not exercising Executive’s revocation right as set forth in the Release, and (iii) compliance with the requirements of Sections 6 and 7. The Release shall be revised by the Company to reflect whether payments and benefits are to be provided under Section 5(b) or 5(c) and shall be revised by the Company as reflected in footnote 1 of the Release to the extent the terms of such footnote are applicable, and may also be revised by the Company to reflect changes in applicable law. The “Release Expiration Date” is that date that is twenty-one (21) days following the date upon which the Company delivers the execution form of Release to Executive (or, following Executive’s death, to a representative of Executive’s estate) or, in the event that such termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967, as amended), the date that is forty-five (45) days following such delivery date. For the avoidance of doubt, in the case of a

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termination of Executive’s employment due to Executive’s death, or in the event of Executive’s death or disability after the termination of his employment, the legal representative(s) of Executive (or his estate, as applicable) may execute and revoke (or not revoke) the Release in the name of and for and on behalf of Executive, Executive’s estate and, as applicable, for themselves in accordance with and as permitted by the terms of this Section 5(e), the second sentence of Section 10 and the Release.

(f)Non-duplication of Benefits; No Mitigation. It is possible that a category of payment or benefit that is paid or provided under this Section 5 would also be paid or provided under the terms of another Company severance or change in control plan, program, or arrangement. In such case, (i) the payment or benefit under the terms of another Company severance or change in control plan, program, or arrangement will be paid or provided in full, and (ii) the Company’s obligation under this Section 5 will automatically be reduced (but not below zero) to the extent and only to the extent of the payment or benefit provided under clause (i). Executive shall not be required to mitigate damages, including by seeking other employment, in order to receive the payments and benefits under this Section 5. Nor shall any amount owed to Executive under this Section 5 be subject to reduction for amounts actually earned in subsequent employment.

6.Confidential Information.

(a)Executive acknowledges that the Company has trade, business and financial secrets and other confidential or proprietary information (collectively, the “Confidential Information”), and that Confidential Information will be provided by the Company to Executive during Executive’s employment by the Company. Confidential information includes all trade secrets and also includes, but is not limited to, all non-public information regarding the Company’s or any of its affiliates’ businesses, products, or services (including without limitation, all such information relating to corporate opportunities, strategies, business plans, product specifications, compositions, manufacturing and distribution methods and processes, research, financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or their requirements, the identity of key contacts within the customers’ organizations or within the organization of acquisition prospects, or production, marketing, and merchandising techniques, prospective names and marks), and all writings or materials of any type embodying any of such information, ideas, concepts, improvements, discoveries, inventions, and other similar forms of expression. Notwithstanding the foregoing, Confidential Information does not include any information that (i) is generally known in the oil and gas industry, (ii) was known by Executive prior to his employment with the Company or any of its predecessors or affiliates or (iii) has been published in a form generally available to the public before the date Executive proposes to disclose or use such information, provided, that, such publishing of the Confidential Information does not result from Executive directly or indirectly breaching Executive’s obligations under this Section 6(a) or any other similar provision by which Executive is bound, or from any third party breaching a provision similar to that found under this Section 6(a).

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(b)Executive acknowledges that Confidential Information has been developed or acquired by the Company through the expenditure of substantial time, effort and money and provides the Company with an advantage over competitors who do not know or use such Confidential Information. Executive acknowledges that all Confidential Information is the sole and exclusive property of the Company.

(c)During, and all times following, Executive’s employment by the Company, Executive will hold in confidence and not directly or indirectly disclose or use or copy or make lists of any Confidential Information except: (i) to the extent authorized in writing by the Chief Executive Officer of the Company; (ii) where such information is, at the time of disclosure by Executive, generally available to the public other than as a result of any direct or indirect act or omission of Executive in breach of this Agreement; or (iii) where Executive is compelled by legal process, other than to an employee of the Company or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by Executive of his duties as an employee of the Company. Executive agrees to use reasonable efforts to give the Company notice of any and all attempts to compel disclosure of any Confidential Information, in such a manner so as to provide the Company with written notice at least five (5) days before disclosure or within one (1) business day after Executive is informed that such disclosure is being or will be compelled, whichever is earlier. Such written notice must include a description of the information to be disclosed, the court, government agency, or other forum through which the disclosure is sought, and the date by which the information is to be disclosed, and must contain a copy of the subpoena, order or other process used to compel disclosure.

(d)During the Term, Executive will take those necessary precautions, consistent with the Company’s policies applicable to its senior executives for the protection of Confidential Information, to prevent disclosure of Confidential Information to any unauthorized individual or entity. At all times following the Termination Date, Executive will continue to take all necessary precautions for the protection of Confidential Information in compliance with the Company’s policies in effect for senior executives as of the Termination Date. Executive further agrees not to use, whether directly or indirectly, any Confidential Information for the benefit of any person, business, corporation, partnership or any other entity other than the Company and its affiliates, and to immediately return to the Company all Confidential Information and all copies thereof, in whatever tangible form or medium, including electronic, at the end of his employment with the Company for any reason or at the written request of the Company at any time.

(e)The parties specifically acknowledge that section 18 U.S.C. § 1833(b) provides that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, notwithstanding anything to the contrary in the foregoing, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law.

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7.Competition. Executive acknowledges that the Company agrees to provide or continue to provide Executive with Confidential Information and access to its confidential, proprietary or trade secret information. Ancillary to the rights provided to Executive as set forth in this Agreement, the Company’s provision of confidential, proprietary or trade secret information, and Executive’s agreements regarding the use of same, in order to protect the Company’s legitimate business interests, including the protection of its goodwill and Confidential Information, the Company and Executive agree to the following provisions against unfair competition, which Executive acknowledges represent a fair balance of the Company’s rights to protect its business and Executive’s right to pursue employment:

(a)Without the prior written consent of the Company, which consent may be withheld in the discretion of the Company, Executive will not, at any time during the Restriction Period (as defined below), directly or indirectly, engage in, have any equity interest in, interview for a potential employment or consulting relationship with, or manage or operate, any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in any business which competes with the Business (as defined below) of the Company within six (6) miles of (i) any oil or natural gas assets of the Company or (ii) any potential oil or natural gas assets where the Company has taken material steps to lease or purchase real property or other interests with respect to such potential assets within the twelve (12)-month period immediately prior to the Termination Date. Nothing herein prohibits Executive from being a passive owner of not more than 2.5% of the outstanding equity interest in any entity that is publicly traded, so long as Executive has no active participation in the business of such entity.

(b)Executive will not, at any time during the Restriction Period, directly or indirectly, either for Executive or for any other person or entity, (i) solicit any employee or consultant of the Company to terminate his or her employment or engagement with the Company, or (ii) solicit or service any person who was a customer, supplier, licensee, licensor or other business relation of the Company in order to induce or attempt to induce such person to cease doing business with, or reduce the amount of business conducted with, the Company, or in any way intentionally interfere with the relationship between any such customer, supplier, licensee, licensor or other business relation of the Company. Nothing herein shall apply to any general solicitation for employment that is not targeted specifically to any of the Company’s employees.

(c) The parties expressly agree that the terms of this Section 7 are reasonable in all respects. However, in the event any of the terms of this Section 7 are determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to, and may be modified by a court of competent jurisdiction to, extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

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(d)As used in this Section 7, (i) the term “Company” includes the Company and its affiliates; (ii) the term “Business” means the business of the Company and includes the acquisition, exploration, exploitation and development of oil and natural gas assets, and the acquisition of leases and other real property in connection therewith, as such business may be expanded or altered by the Company during the Term; and (iii) the term “Restriction Period” means (A) in the case of Section 7(a), (I) upon the termination of Executive’s employment by the Company without Cause, a termination by Executive of his employment for Good Reason or upon the expiration of the Initial Term or a Renewal Term as the result of the issuance of a notice of non-renewal by the Company pursuant to Section 2 the period beginning on the applicable Termination Date and ending on the date that is six (6) months following such Termination Date and (II) upon the termination of Executive’s employment by the Company for Cause, a termination by Executive of his employment without Good Reason or upon the expiration of the Initial Term or a Renewal Term as the result of the issuance of a notice of non-renewal by Executive pursuant to Section 2, the period beginning on the applicable Termination Date and ending on the date that is twelve (12) months following the Termination Date, and (B) in the case of Section 7(b), the period beginning on the Termination Date and ending on the date that is twelve (12) months following the Termination Date.

(e)Executive agrees, during the Term and following the Termination Date, to refrain from disparaging the Company, including any Company services, technologies or practices, or any Company directors, officers, agents, representatives or stockholders, either orally or in writing. Nothing in this Section 7(e) precludes Executive from making truthful statements that are reasonably necessary to comply with applicable law, regulation or legal process.

(f)Montage Resources Corporation (on behalf of itself and its subsidiaries) agrees, during the Term and following the Termination Date, to cause its (and its subsidiaries’) directors, officers and human resources representatives to refrain from disparaging Executive, including any of Executive’s services or practices, either orally or in writing. Nothing in this Section 7(f) precludes the Company or any Company directors, officers or human resources representatives from making truthful statements that are reasonably necessary to comply with applicable law, regulation or legal process.

(g)In the event Executive engages in conduct in violation of his covenants in Section 7(a) or (b), the Restriction Period applicable to such Section in respect of which such covenants were so violated will be extended for a period of time equal to the time in which Executive engaged in competitive activity prohibited by such Section.

8.Injunctive Relief. It is recognized and acknowledged by Executive that a breach of the covenants contained in Sections 6 and 7 will cause irreparable damage to Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, Executive agrees that in the event of a breach of any of the covenants contained in Section 6 or 7, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief without the need to post bond.

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9.Protected Communications. Nothing in this Agreement is intended to, or will be used in any way to, limit Executive’s rights to communicate with the Securities and Exchange Commission (the “SEC”) or any other governmental agency, as provided for, protected under or warranted by applicable law, including, but not limited to, Section 21F of the Securities Exchange Act of 1934, as amended, and SEC Rule 21F-7 (the “Protected Communications”). Nothing in this Agreement requires Executive to notify, or obtain permission from, the Company before engaging in any Protected Communications.

10.Assignment and Successors. The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or assets of the Company (by merger or otherwise), and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates. This Agreement is binding upon and inures to the benefit of the Company, Executive and their respective successors, assigns, personal and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will or operation of law.

11.Section 409A. The amounts payable pursuant to this Agreement are intended to be exempt from section 409A of the Code and related U.S. treasury regulations or official pronouncements (“Section 409A”) and will be construed in a manner that is compliant with such exemption; provided, however, if and to the extent that any compensation payable under this Agreement is determined to be subject to Section 409A, this Agreement will be construed in a manner that will comply with Section 409A, and provided further, however, that no person connected with this Agreement in any capacity, including but not limited to the Company and its affiliates, and their respective directors, officers, agents and employees, makes any representation, commitment or guarantee that any tax treatment, including but not limited to, federal, state and local income, estate and gift tax treatment, will be applicable with respect to any amounts payable or benefits provided under this Agreement. Notwithstanding any provision to the contrary in this Agreement, if Executive is deemed on the Termination Date or expiration of the Term to be a “specified employee” within the meaning of Section 409A, then any payments and benefits under this Agreement that are subject to Section 409A and paid by reason of a termination of employment will be made or provided on the later of (a) the payment date set forth in this Agreement or (b) the date that is the earliest of (i) the expiration of the six-month period measured from the Termination Date or expiration of the Term, or (ii) the date of Executive’s death (the “Delay Period”). Payments and benefits subject to the Delay Period will be paid or provided to Executive without interest for such delay. The terms “termination of employment” and “separate from service” as used throughout this Agreement refer to a “separation from service” within the meaning of Section 409A. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment.

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12.Certain Excise Taxes. Notwithstanding anything to the contrary in this Agreement, if Executive is a “disqualified individual” (as defined in Section 280G(c) of the Code), and the payments and benefits provided for in this Agreement, together with any other payments and benefits which Executive has the right to receive from the Company or any of its affiliates, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the payments and benefits provided for in this Agreement shall be either (a) reduced (but not below zero) so that the present value of such total amounts and benefits received by Executive from the Company or any of its affiliates shall be one dollar ($1.00) less than three times Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code) and so that no portion of such amounts and benefits received by Executive shall be subject to the excise tax imposed by Section 4999 of the Code or (b) paid in full, whichever produces the better net after-tax position to Executive (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable taxes). The reduction of payments and benefits hereunder, if applicable, shall be made by reducing, first, payments or benefits to be paid in cash hereunder in the order in which such payment or benefit would be paid or provided (beginning with such payment or benefit that would be made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in time) and, then, reducing any benefit to be provided in-kind hereunder in a similar order. The determination as to whether any such reduction in the amount of the payments and benefits provided hereunder is necessary shall be made by the Company in good faith. If a reduced payment or benefit is made or provided and through error or otherwise that payment or benefit, when aggregated with other payments and benefits from the Company or any of its affiliates used in determining if a “parachute payment” exists, exceeds one dollar ($1.00) less than three times Executive’s base amount, then Executive shall immediately repay such excess to the Company upon notification that an overpayment has been made. Nothing in this Section 12 shall require the Company to be responsible for, or have any liability or obligation with respect to, Executive’s excise tax liabilities under Section 4999 of the Code.

13.Clawback. Notwithstanding any other provision of this Agreement to the contrary, Executive acknowledges and agrees that any amounts payable under this Agreement shall be subject to claw-back, cancellation, recoupment, rescission, payback or other action in accordance with the terms of any policy (the “Policy”) (whether in existence as of the Effective Date or later adopted) established by the Company providing for claw-back, cancellation, recoupment, rescission, payback or other action of amounts paid to Executive. Executive agrees and consents to the Company’s application, implementation and enforcement of (a) the Policy and (b) any provision of applicable law relating to the claw-back, cancellation, recoupment, rescission or payback of Executive’s compensation, and expressly agrees that the Company may take such actions as are necessary to effectuate the Policy or applicable law without further consent or action being required by Executive. To the extent that the terms of this Agreement and the Policy conflict, then the terms of the Policy shall prevail.

14.Miscellaneous.

(a)Notices. For purposes of this Agreement, notices and all other communications provided for herein will be in writing and deemed to have been duly given (i) when received if delivered personally or by courier, or (ii) on the date receipt is acknowledged if delivered by certified mail, postage prepaid, return receipt requested, as follows:

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If to Executive, addressed to:

Oleg Tolmachev

113 Forbes Field Circle

Boalsburg, PA 16827,

or the last known
residential address reflected in the Company’s records

If to the Company, addressed to:

Montage Resources Corporation
122 W. John Carpenter Freeway, Suite 300

Irving, Texas 75039
Attention: Chief Executive Officer

or to such other address as either party may furnish to the other in writing, except that notices of changes of address are effective only upon receipt.

(b)Applicable Law. This Agreement is entered into under, and governed for all purposes by, the laws of the State of Texas, without regard to conflicts of laws principles thereof.

(c)No Waiver. No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

(d)Severability. If a court of competent jurisdiction determines that any provision of this Agreement (or part thereof) is invalid or unenforceable, then the invalidity or unenforceability of that provision (or part thereof) will not affect the validity or enforceability of any other provision of this Agreement, and all other provisions (and parts thereof) remain in full force and effect.

(e)Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same agreement.

(f)Withholding of Taxes and Other Employee Deductions. The Company or its affiliates may withhold from any benefits and payments made pursuant to this Agreement all federal, state, city, and other taxes and withholdings as may be required pursuant to any law or governmental regulation or ruling and all other customary deductions made with respect to the Company’s employees generally.

(g)Headings. The section headings have been inserted for purposes of convenience and may not be used for interpretive purposes.

(h)Gender and Plurals. Wherever the context so requires, the masculine gender includes the feminine or neuter, and the singular number includes the plural and conversely.

(i)Third Party Beneficiaries. Each affiliate of the Company will be a third party beneficiary of, and may directly enforce, Executive’s obligations under Sections 6, 7 and 8.

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(j)Survival. Termination of this Agreement will not affect any right or obligation of any party which is accrued or vested prior to such termination. Without limiting the scope of the preceding sentence, the provisions of Sections 5, 6, 7, 8, 12, 13 and 16, and those provisions necessary to interpret and apply them, will survive any termination of this Agreement.

(k)Entire Agreement. Except as provided in any signed written agreement contemporaneously or hereafter executed by the Company and Executive, this Agreement (i) constitutes the entire agreement of the parties with regard to the subject matter hereof, (ii) supersedes all prior agreements, arrangements, and understandings, written or oral, relating to the subject matter hereof, and (iii) contains all the covenants, promises, representations, warranties, and agreements between the parties with respect to employment of Executive by the Company. Without limiting the scope of the preceding sentence, all understandings and agreements preceding the date of execution of this Agreement and relating to the subject matter hereof are hereby null and void and of no further force and effect. As of the Effective Date, the Amended and Restated Executive Employment Agreement dated as of January 1, 2017 between the Company and Executive shall be void and have no legal effect and neither the Company nor Executive shall have any further liability or obligation thereunder (other than with respect to any breach thereof prior to the Effective Date).

(l)Modification; Waiver. Any modification to or waiver of this Agreement will be effective only if it is in writing and signed by the parties to this Agreement.

(m)Actions by the Board. Any and all determinations or other actions required of the Board hereunder that relate specifically to Executive’s employment or the terms and conditions of such employment will be made by the members of the Board, other than Executive if Executive is a member of the Board, and Executive will not have any right to vote or decide upon any such matter.

(n)Forum and Venue. With respect to any claims, legal proceedings or litigation arising in connection with this Agreement, the parties hereto hereby consent to the exclusive jurisdiction, forum, and venue of the state and federal courts, as applicable, located in Dallas County, Texas.

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15.Certain Definitions. In addition to the terms defined in the body of this Agreement, for purposes of this Agreement the following capitalized words have the meanings indicated below:

(a)“Board” means the Board of Directors of the Company.

(b)“Cause” means the occurrence of any of the following events, as reasonably determined by the Board: (i) Executive’s willful failure to perform his material duties for the Company; (ii) Executive’s conviction of a felony, or his guilty plea to or entry of a nolo contendere plea to a felony charge; (iii) the willful or grossly negligent engagement by Executive in conduct that is materially injurious to the Company, financially or otherwise; or (iv) Executive’s breach of (A) any material term of this Agreement or (B) any material term of the Company’s material written policies or procedures, as in effect from time to time; provided, that, with respect to (i), (iii) or (iv) above, such termination for Cause will only be effective upon a majority vote of the total number of directors on the Board after written notice to Executive and a period of not less than thirty (30) calendar days after receipt by Executive of such written notice during which time Executive will have an opportunity to appear before the Board to demonstrate that he has cured the conduct giving rise to Cause.

(c)“Change of Control” means the occurrence of any of the following events:

(i)Any one person, or more than one person acting as a group (within the meaning of section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934), acquires ownership of the Company’s common stock that, together with stock held by such person or group, constitutes more than 40 percent of the total fair market value or total voting power of the Company’s common stock. However, if any one person or more than one person acting as a group is considered to own more than 40 percent of the total fair market value or total voting power of the Company’s common stock, the acquisition of additional common stock by the same person or persons will not be a Change of Control. An increase in the percentage of common stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of common stock for purposes of this Section 15(c). This Section applies only when there is a transfer of common stock (or issuance of common stock) and common stock in the Company remains outstanding after the transaction.

(ii)A majority of the members of the Board are replaced during any twelve (12)-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.

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the Company immediately prior to such acquisition or acquisitions; provided, however, that a sale of a substantial portion of the Company’s assets in the ordinary course of business and investment of the proceeds into similar assets for use in the business of the Company will not constitute a change in the ownership of a substantial portion of the Company’s assets for purposes of this provision. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

(d)“Code” means the Internal Revenue Code of 1986, as amended.

(e)“Disability” means Executive’s inability to engage in any substantial gainful activity necessary to perform his duties hereunder by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months. Executive agrees to submit to such medical examinations as may be necessary to determine whether a Disability exists, pursuant to such reasonable requests made by the Company from time to time. Any determination as to the existence of a Disability will be made by a qualified physician selected by the Company.

(f)“Good Reason” means any of the following, but only if occurring without Executive’s written consent: (i) a diminution in Executive’s Base Salary; (ii) a material diminution or material adverse change in Executive’s position, authority, duties or other responsibilities; (iii) the relocation of Executive’s principal office to an area more than fifty (50) miles from its location immediately prior to such relocation; (iv) any material failure of the Company to comply with any material provision of this Agreement; or (v) any material breach by the Company of any written indemnification agreement between the Company and Executive. Such termination by Executive will not preclude the Company from terminating Executive’s employment prior to the Termination Date established by Executive’s Notice of Termination.

(g)“Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under that provision, and (iii) if the Termination Date is other than the date the notice is given, specifies the Termination Date (which must not be more than thirty (30) days or, in the case of a termination by Executive for Good Reason, sixty (60) days after the date on which the Notice of Termination is given; provided, however, if the termination is due to a termination by Executive without Good Reason, then the Company may designate an earlier Termination Date than the date designated in Executive’s Notice of Termination (which designated earlier Termination Date may not be earlier than fifteen (15) days after the date on which Executive’s Notice of Termination is given), which designation shall not change the nature of Executive’s termination or make such termination a termination by the Company pursuant to Section 4(b). The failure by the Company or Executive to set forth in the Notice of Termination the facts or circumstances giving rise to Cause or Good Reason, as applicable, will not waive any right of the Company or Executive under this Agreement or preclude the Company or Executive from asserting such fact or circumstance in enforcing the Company’s or Executive’s rights under this Agreement.

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(h)“Termination Date” means: (i) if Executive’s employment is terminated by death, the date of death; (ii) if Executive’s employment is terminated pursuant to Section 4(a) due to a Disability, thirty (30) days after the Notice of Termination is given; (iii) if Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason pursuant to Section 4(b) or 4(c), on the effective date of termination specified in the Notice of Termination (which effective date shall not be earlier than the date on which such notice is given); (iv) if Executive voluntarily terminates his employment with the Company without Good Reason, the date of Executive’s termination of employment; or (v) if Executive’s employment is terminated by the Company for Cause pursuant to Section 4(b), the date on which the Notice of Termination is given.

16.Executive's Assistance in Legal Matters. Upon Executive’s termination of employment with the Company for any reason, Executive shall, during normal business hours, reasonably cooperate with the Company in any internal investigation, any administrative, regulatory or judicial investigation or proceeding or any dispute with a third party as reasonably requested by the Company to the extent that such investigation, proceeding or dispute may relate to matters of which Executive has material knowledge as a result of Executive’s serving as an employee, officer or director of the Company or any subsidiary or affiliate of the Company (including Executive being available to the Company upon reasonable written notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information in his possession and turning over to the Company all relevant documents which are or may come into Executive’s possession or control, all at times and on schedules that are reasonably consistent with Executive’s other permitted activities and commitments). This obligation encompasses (and requires) Executive’s providing testimony, in court, upon deposition or by affidavit, that is truthful, accurate and complete, according to information actually known to Executive; and providing to the Company or its counsel truthful, accurate and complete information to the extent actually known to Executive in connection with the prosecution or defense of the Company or subsidiary or affiliate in such litigation or claims. Without limiting the generality of the foregoing, to the extent that the Company seeks such assistance, the Company shall, whenever possible, provide Executive with reasonable advance written notice of its need for Executive’s assistance and will attempt to coordinate with Executive the time and place at which Executive’s assistance will be provided with the goal of minimizing the impact of such assistance on any other business or personal commitment that Executive may have. In the event the Company requires Executive’s reasonable assistance or cooperation in accordance with this Section 16, the Company shall reimburse Executive for Executive’s reasonable time, the value of which shall be calculated as the product of (a) the hours spent by Executive pursuant to this Section 16 and (b) a rate which shall be calculated by dividing Executive’s final Base Salary by 2080, provided that the Company shall not reimburse Executive for any time Executive spends actually rendering any testimony. In addition, the Company shall reimburse Executive for reasonable travel expenses (including lodging and meals) upon submission of itemized receipts therefor and, to the extent that it is reasonable that Executive will perform or provide the requested services or assistance away from his usual place of business or residence, the Company shall also reimburse other reasonable out of pocket expenses actually incurred by Executive in performing or providing such services or assistance, upon submission of itemized receipts therefor.

[Signatures begin on next page.]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the Effective Date.

MONTAGE RESOURCES CORPORATION


By:		/s/ John K. Reinhart
Name:		John K. Reinhart
Title:		President and Chief Executive Officer

EXECUTIVE


By:		/s/ Oleg Tolmachev
Name:		Oleg Tolmachev

US 6161299

Exhibit a

Release

1.In consideration of the payments and benefits (and any portion thereof) to be made pursuant to Section [5(b)/5(c)] of the Executive Employment Agreement, dated as of March 1, 2019 (the “Employment Agreement”), by and between Oleg Tolmachev (“Executive”) and Montage Resources Corporation (the “Company”) (each of Executive and the Company, a “Party” and together, the “Parties”), the sufficiency of which Executive acknowledges, Executive, with the intention of binding himself and his heirs, executors, administrators and assigns, does hereby release, remise, acquit and forever discharge the Company and each of its subsidiaries and affiliates (the “Company Affiliated Group”), and each of the foregoing entities’ respective present and former officers, directors, executives, managers, members, affiliates, stockholders, agents, attorneys, employees and employee benefit plans (and the fiduciaries thereof), and the successors, predecessors and assigns of each of the foregoing (collectively, the “Company Released Parties”), of and from any and all claims, actions, causes of action, complaints, charges, demands, rights, damages, debts, sums of money, accounts, financial obligations, suits, expenses, attorneys’ fees and liabilities of whatever kind or nature in law, equity or otherwise, whether accrued, absolute, contingent, unliquidated or otherwise and whether now known or unknown, suspected or unsuspected, which Executive, individually or as a member of a class, now has, owns or holds, or has at any time heretofore had, owned or held, arising on or prior to the date hereof, against any Company Released Party that arises out of, or relates to, the Employment Agreement, Executive’s employment with the Company or any of its subsidiaries and affiliates, or any termination of such employment, or any other matter existing on or before the date the Executive signs this Release, including claims (i) for severance or vacation or paid time off benefits, unpaid wages, salary or incentive payments, (ii) for breach of contract, wrongful discharge, impairment of economic opportunity, defamation, intentional infliction of emotional harm or other tort, (iii) for any violation of applicable state or local labor and employment laws (including, without limitation, all laws concerning wrongful termination or unlawful or unfair labor and employment practices) and (iv) for employment discrimination under any applicable federal, state or local statute, provision, order or regulation, and including, without limitation, any claim under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Civil Rights Act of 1988, the Fair Labor Standards Act, the Americans with Disabilities Act (“ADA”), the Family and Medical Leave Act, the Executive Retirement Income Security Act of 1974, as amended (“ERISA”), the Age Discrimination in Employment Act (“ADEA”), the Equal Pay Act, the Uniformed Services Employment and Reemployment Rights Act and any similar or analogous state statute. Notwithstanding the foregoing, this Release will not apply and expressly excludes: (a) vested benefits under any plan maintained by the Company that provides benefits that are subject to ERISA; (b) health benefits under any policy or plan currently maintained by the Company that provides for health insurance continuation or conversion rights including, but not limited to, rights and benefits to continue health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended or similar state law; (c) any claim that cannot by law be waived or released by private agreement; (d) claims first arising after the date of this Release; (e) to the extent not paid as of the date of this Release, payments and benefits required to be made under [Section 5(b)/5(c)] of the Employment Agreement, any future payments owed pursuant to Section 16 of the Employment Agreement, or (if still unpaid as of the date Executive signs this Release) any base salary for the pay period in which the Termination Date (as defined in the Employment Agreement) occurred; (f) claims for future benefits under any directors and officers insurance policies; (g) future rights to indemnification Executive may have under the certificate of incorporation or bylaws of the Company and its affiliates or any applicable indemnification agreements with the Company and its affiliates or applicable law; and (h) the Continuing Obligations (as defined in the Employment Agreement).

Exhibit A – Page 1

US 6161299

2.Executive acknowledges and agrees that the release of claims set forth in this Release is not to be construed in any way as an admission of any liability whatsoever by any Company Released Party, any such liability being expressly denied.

3.The release of claims set forth in this Release applies to any relief no matter how called, including, without limitation, (i) wages, (ii) back pay or front pay, (iii) compensatory damages, liquidated damages, punitive damages or damages for pain or suffering, (iv) costs, (v) attorneys’ fees and expenses and (vi) any right to receive any compensation or benefit from any complaint, claim or charge with any local, state or federal court, agency or board, or in any proceeding of any kind which may be brought against the Company as a result of such a complaint, claim or charge.

4.Executive specifically acknowledges that his acceptance of the terms of the release of claims set forth in this Release is, among other things, a specific waiver of his rights, claims and causes of action under Title VII, ADEA, ADA and any state or local law or regulation in respect of discrimination of any kind; provided, however, that nothing herein will be deemed, nor does anything contained herein purport, to be a waiver of any right or claim or cause of action which by law Executive is not permitted to waive.

5.As to rights, claims and causes of action arising under the ADEA, Executive acknowledges that he has been given a period of twenty-one (21) days¹ to consider whether to execute this Release. If Executive accepts the terms hereof and executes this Release, he may thereafter, for a period of seven (7) days following (and not including) the date of execution, revoke this Release as it relates to the release of claims arising under the ADEA. If no such revocation occurs, this Release will become irrevocable in its entirety, and binding and enforceable against Executive, on the day next following the day on which the foregoing seven (7)-day period has elapsed. If such a revocation occurs, Executive will irrevocably forfeit any right to payment of the severance benefits described in Section [5(b)/5(c)] of the Employment Agreement.

6.Other than as to rights, claims and causes of action arising under the ADEA, the release of claims set forth in this Release will be immediately effective upon execution by Executive.

7.Executive acknowledges and agrees that he has not, with respect to any transaction or state of facts existing prior to the date hereof, filed any complaints, charges or lawsuits against any Company Released Party with any governmental agency, arbitrator, court or tribunal.

8.Executive acknowledges that he is hereby advised to seek, and has had the opportunity to seek, the advice and assistance of an attorney with regard to the release of claims set forth in this Release, and has been given a sufficient period within which to consider the release of claims set forth in this Release.

¹	Consideration period will be forty-five (45) days if release relates to an exit incentive or other employment termination program (as defined in the ADEA) offered to a group or class of employees.

Exhibit A – Page 2

US 6161299

9.Executive acknowledges that the release of claims set forth in this Release relates only to claims that exist as of the date of this Release.

10.Executive acknowledges that the severance benefits described in Section [5(b)/5(c)] of the Employment Agreement he will receive in connection with the release of claims set forth in this Release and his obligations under this Release are in addition to anything of value to which Executive is entitled from the Company.

11.Each provision hereof is severable from this Release, and if one or more provisions hereof are declared invalid, the remaining provisions will nevertheless remain in full force and effect. If any provision of this Release is so broad, in scope, or duration or otherwise, as to be unenforceable, such provision will be interpreted to be only so broad as is enforceable.

12.This Release and the Employment Agreement constitute the complete agreement of the Parties in respect of the subject matter hereof and will supersede all prior agreements between the Parties in respect of the subject matter hereof except to the extent set forth herein and therein.

13.The failure to enforce at any time any of the provisions of this Release or to require at any time performance by another Party of any of the provisions hereof will in no way be construed to be a waiver of such provisions or to affect the validity of this Release, or any part hereof, or the right of any Party thereafter to enforce each and every such provision in accordance with the terms of this Release.

14.This Release may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument. Signatures delivered by facsimile will be deemed effective for all purposes.

15.This Release will be binding upon any and all successors and assigns of Executive and the Company.

16.Nothing in this Release prevents Executive from filing any non-legally waivable claim (including a challenge to the validity of this Release) with the Equal Employment Opportunity Commission, National Labor Relations Board, Occupational Safety and Health Administration, Securities and Exchange Commission or other federal, state or local governmental agency or commission (collectively “Governmental Agencies”) or participating in any investigation or proceeding conducted by any Governmental Agencies or communicating or cooperating with such an agency; however, Executive understands and agrees that, to the extent permitted by law, he is waiving any and all rights to recover any monetary or personal relief from any Company Released Party as a result of such Governmental Agency proceeding or subsequent legal actions. Nothing herein waives Executive’s right to receive an award for information provided to a Governmental Agency.

17.Except for issues or matters as to which federal law is applicable, this Release will be governed by and construed and enforced in accordance with the laws of the State of Texas without resort to any principle of conflict of laws that would require application of the laws of any other jurisdiction.

[Signature Page Follows]

Exhibit A – Page 3

US 6161299

IN WITNESS WHEREOF, this Release has been signed as of ____________________, 20__.

By:
		Oleg Tolmachev

Exhibit A – Page 4

US 6161299

Exhibit 10.5

EXECUTION COPY

EXECUTIVE EMPLOYMENT AGREEMENT

WHEREAS, the parties have determined it to be in their respective best interests to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual premises, covenants and agreements herein contained, intending to be legally bound, the parties agree as follows:

1.Employment. From and after the Effective Date, the Company will continue to employ Executive as its Executive Vice President, Resource Planning and Development, and Executive will report to the Chief Executive Officer of the Company. Executive will perform all services and acts necessary to fulfill the duties and responsibilities of his position and agrees to devote his full business time, attention and energies to the performance of the duties assigned hereunder, and to perform such duties diligently, faithfully and to the best of his abilities. Executive agrees to refrain from any activity that does, will or could reasonably be deemed to conflict with the best interests of the Company, unless such activity is approved in advance by the Chief Executive Officer of the Company. Executive’s principal place of employment shall be at the Company’s principal executive offices in Irving, Texas (or at such other location in the Dallas, Texas area which constitutes the Company’s principal executive offices), and Executive shall be furnished with an individual office at such location; provided, however, Executive acknowledges and agrees that he will be required to travel in the course of performing his duties hereunder.

3.Compensation and Benefits.

(a)Base Salary. Executive will receive a base salary at an annualized rate of Three Hundred Sixty-Two Thousand Dollars ($362,000.00) (“Base Salary”), paid in accordance with the normal payroll practices of the Company in effect from time to time, but no less frequently than monthly. The Base Salary shall be reviewed periodically by the Board (or a designated committee thereof) and may be increased from time to time in its discretion but not decreased below the amount of Base Salary, as may be increased, without Executive’s written consent.

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Termination Date (the “Pre-Termination Cost”), the Company will secure the greatest level of coverage possible at a cost that does not exceed 100% of the Pre-Termination Cost.

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service on or before the sixtieth (60^th) day after the end of such thirty (30)-day cure period by delivering the Notice of Termination.

5.Obligations of the Company upon Termination.

(a)For Cause; Without Good Reason; Expiration of Initial Term or Renewal Term. If the Company terminates Executive’s employment for Cause, Executive terminates his employment without Good Reason, or the Initial Term or a Renewal Term expires by reason of timely notice given by either party pursuant to Section 2, the Company will have no further obligations to Executive or his legal representatives, except that Executive (or his legal representatives, as the case may be) will be entitled to any (i) earned but unpaid Base Salary accrued up to the end of the Term, (ii) benefits or compensation as provided under the terms of any employee benefit and compensation agreements or plans applicable to Executive, including benefits as provided for under the provisions of the last sentence of Section 3(d) and payment for any unused PTO if required by Section 3(g), (iii) unreimbursed business expenses required to be reimbursed to Executive, (iv) if the Term expires by reason of timely notice given by either party pursuant to Section 2, any earned and accrued, but unpaid, Annual Bonus (if earned pursuant to the terms of the applicable cash performance bonus program) for any completed calendar year prior to the calendar year in which the Term expires, (v) rights Executive may have to D&O insurance, indemnification, defense and reimbursement or payment of expenses under the Company’s Certificate of Incorporation and Bylaws, the Agreement and Plan of Merger among Eclipse Resources Corporation, Everest Merger Sub Inc. and Blue Ridge Mountain Resources, Inc., dated as of August 25, 2018 (the “Eclipse Merger Agreement”), including under Section 6.10(e) thereof, or any Company merger agreement or Company indemnification agreement and under applicable law, and (vi) rights of Executive under Sections 7(f) and 16 (together, the “Continuing Obligations”).

(i)Severance Payment. The Company will pay Executive (or his legal representatives, as the case may be) an amount equal to one (1) times Executive’s Base Salary as of the Termination Date, which amount will be paid in a lump sum payment on the earlier to occur of: (A) the Company’s first payroll date that comes on or after the date that is sixty (60) days after the Termination Date, or (B) the fifth (5th) business day after the expiration of such sixty (60)-day period.

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(ii)Post-Employment Health Coverage. During the portion, if any, of the 18-month period following the Termination Date that Executive elects (or, in the case of Executive’s death or Disability, Executive’s spouse or Executive’s eligible dependents timely elect) to continue coverage in accordance with the requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will promptly reimburse Executive, Executive’s spouse or Executive’s eligible dependents, as applicable, on a monthly basis for the amount paid to effect and continue such coverage (the “COBRA Reimbursement Amounts”); provided, however, that payment of the COBRA Reimbursement Amounts will cease immediately upon the date that Executive begins providing services to a subsequent employer (and any such provision of services shall be promptly reported to the Company by Executive); and provided, further, that the election of COBRA continuation coverage and the payment of any premiums due with respect to such COBRA continuation coverage shall remain the sole responsibility of Executive or Executive’s spouse or eligible dependents, as applicable, and the Company shall not assume any obligation for payment of any such premiums relating to such COBRA continuation coverage. Nothing contained herein is intended to limit or otherwise restrict any rights to continued group health plan coverage pursuant to COBRA following the period described in the preceding sentence.

(i)Severance Payment. If Executive’s employment terminates prior to a Change of Control or after the date that is twelve (12) months after a Change of Control, then the Company will pay Executive an amount equal to 1.75 times the sum of (A) Executive’s Base Salary as of the Termination Date, and (B) an amount equal to Executive’s target Annual Bonus for the fiscal year that includes the Termination Date, which amount will be paid in a lump sum payment on the earlier to occur of: (1) the Company’s first payroll date that comes on or after the date that is sixty (60) days after the Termination Date, or (2) the fifth (5th) business day after the expiration of such sixty (60)-day period. If Executive’s employment terminates on the date of a Change in Control or within twelve (12) months after a Change of Control, then the Company will pay Executive an amount equal to 2.0 times the sum of (A) Executive’s Base Salary as of the Termination Date, and (B) an amount equal to Executive’s target Annual Bonus for the fiscal year that includes the Termination Date, which amount will be paid in a lump sum payment on the earlier to occur of: (1) the Company’s first payroll date that comes on or after the date that is sixty (60) days after the Termination Date, or (2) the fifth (5th) business day after the expiration of such sixty (60)-day period.

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(ii)Post-Employment Health Coverage. During the portion, if any, of the 18-month period following the Termination Date (the “COBRA Reimbursement Period”) that Executive elects to continue coverage for Executive, Executive’s spouse and/or Executive’s eligible dependents under the Company’s group health plans under COBRA, the Company will promptly reimburse Executive on a monthly basis for the COBRA Reimbursement Amounts; provided, however, that payment of the COBRA Reimbursement Amounts will cease immediately upon the date that Executive begins providing services to a subsequent employer (and any such provision of services shall be promptly reported to the Company by Executive); and provided, further, that the election of COBRA continuation coverage and the payment of any premiums due with respect to such COBRA continuation coverage shall remain the sole responsibility of Executive, and the Company shall not assume any obligation for payment of any such premiums relating to such COBRA continuation coverage. If Executive has elected to continue coverage for his spouse and/or eligible dependents and dies while he is receiving payment of the COBRA Reimbursement Amounts, his spouse and/or eligible dependents will continue to receive coverage and payment of the COBRA Reimbursement Amounts during the remainder, if any, of the COBRA Reimbursement Period, subject to his spouse’s and/or eligible dependent’s compliance with the terms of this Agreement, as applicable. Nothing contained herein is intended to limit or otherwise restrict any rights to continued group health plan coverage pursuant to COBRA following the COBRA Reimbursement Period, including, for the avoidance of doubt, the ability of Executive’s spouse and/or eligible dependents to elect to continue COBRA coverage if Executive dies or becomes incapacitated as a result of disability following termination of employment.

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6.Confidential Information.

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their requirements, the identity of key contacts within the customers’ organizations or within the organization of acquisition prospects, or production, marketing, and merchandising techniques, prospective names and marks), and all writings or materials of any type embodying any of such information, ideas, concepts, improvements, discoveries, inventions, and other similar forms of expression. Notwithstanding the foregoing, Confidential Information does not include any information that (i) is generally known in the oil and gas industry, (ii) was known by Executive prior to his employment with Blue Ridge Mountain Resources, Inc. or any of its predecessors or affiliates or (iii) has been published in a form generally available to the public before the date Executive proposes to disclose or use such information, provided, that, such publishing of the Confidential Information does not result from Executive directly or indirectly breaching Executive’s obligations under this Section 6(a) or any other similar provision by which Executive is bound, or from any third party breaching a provision similar to that found under this Section 6(a).

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tangible form or medium, including electronic, at the end of his employment with the Company for any reason or at the written request of the Company at any time.

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herein shall apply to any general solicitation for employment that is not targeted specifically to any of the Company’s employees.

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date that is the earliest of (i) the expiration of the six-month period measured from the Termination Date or expiration of the Term, or (ii) the date of Executive’s death (the “Delay Period”). Payments and benefits subject to the Delay Period will be paid or provided to Executive without interest for such delay. The terms “termination of employment” and “separate from service” as used throughout this Agreement refer to a “separation from service” within the meaning of Section 409A. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment.

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being required by Executive. To the extent that the terms of this Agreement and the Policy conflict, then the terms of the Policy shall prevail.

14.Miscellaneous.

If to Executive, addressed to:

Matthew Rucker

4604 Pony Avenue

Carrolton, Texas 75010,

or the last known
residential address reflected in the Company’s records

If to the Company, addressed to:

Montage Resources Corporation
122 W. John Carpenter Freeway, Suite 300

Irving, Texas 75039
Attention: Chief Executive Officer

or to such other address as either party may furnish to the other in writing, except that notices of changes of address are effective only upon receipt.

(b)Applicable Law. This Agreement is entered into under, and governed for all purposes by, the laws of the State of Texas, without regard to conflicts of laws principles thereof.

(e)Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same agreement.

(f)Withholding of Taxes and Other Employee Deductions. The Company or its affiliates may withhold from any benefits and payments made pursuant to this

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Agreement all federal, state, city, and other taxes and withholdings as may be required pursuant to any law or governmental regulation or ruling and all other customary deductions made with respect to the Company’s employees generally.

(g)Headings. The section headings have been inserted for purposes of convenience and may not be used for interpretive purposes.

(h)Gender and Plurals. Wherever the context so requires, the masculine gender includes the feminine or neuter, and the singular number includes the plural and conversely.

(i)Third Party Beneficiaries. Each affiliate of the Company will be a third party beneficiary of, and may directly enforce, Executive’s obligations under Sections 6, 7 and 8.

(l)Modification; Waiver. Any modification to or waiver of this Agreement will be effective only if it is in writing and signed by the parties to this Agreement.

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15.Certain Definitions. In addition to the terms defined in the body of this Agreement, for purposes of this Agreement the following capitalized words have the meanings indicated below:

(a)“Board” means the Board of Directors of the Company.

(c)“Change of Control” means the occurrence of any of the following events:

(iii)A change in the ownership of a substantial portion of the Company’s assets, which will occur on the date that any one person, or more than one person acting as a group (within the meaning of section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group of persons) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided,

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however, that a sale of a substantial portion of the Company’s assets in the ordinary course of business and investment of the proceeds into similar assets for use in the business of the Company will not constitute a change in the ownership of a substantial portion of the Company’s assets for purposes of this provision. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

(d)“Code” means the Internal Revenue Code of 1986, as amended.

(f)“Good Reason” means any of the following, but only if occurring without Executive’s written consent: (i) a diminution in Executive’s Base Salary; (ii) a material diminution or material adverse change in Executive’s position, authority, duties or other responsibilities; (iii) the relocation of Executive’s principal office to an area more than fifty (50) miles from its location immediately prior to such relocation; (iv) any material failure of the Company to comply with any material provision of this Agreement; (v) any material breach by the Company of any written indemnification agreement between the Company and Executive; or (vi) any material breach of Section 6.10 of the Eclipse Merger Agreement. Such termination by Executive will not preclude the Company from terminating Executive’s employment prior to the Termination Date established by Executive’s Notice of Termination.

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[Signatures begin on next page.]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the Effective Date.

MONTAGE RESOURCES CORPORATION


By:		/s/ John K. Reinhart
Name:		John K. Reinhart
Title:		President and Chief Executive Officer


EXECUTIVE


By:		/s/ Matthew Rucker
Name:		Matthew Rucker

Exhibit a

Release

1.In consideration of the payments and benefits (and any portion thereof) to be made pursuant to Section [5(b)/5(c)] of the Executive Employment Agreement, dated as of March 1, 2019 (the “Employment Agreement”), by and between Matthew Rucker (“Executive”) and Montage Resources Corporation (the “Company”) (each of Executive and the Company, a “Party” and together, the “Parties”), the sufficiency of which Executive acknowledges, Executive, with the intention of binding himself and his heirs, executors, administrators and assigns, does hereby release, remise, acquit and forever discharge the Company and each of its subsidiaries and affiliates (the “Company Affiliated Group”), and each of the foregoing entities’ respective present and former officers, directors, executives, managers, members, affiliates, stockholders, agents, attorneys, employees and employee benefit plans (and the fiduciaries thereof), and the successors, predecessors and assigns of each of the foregoing (collectively, the “Company Released Parties”), of and from any and all claims, actions, causes of action, complaints, charges, demands, rights, damages, debts, sums of money, accounts, financial obligations, suits, expenses, attorneys’ fees and liabilities of whatever kind or nature in law, equity or otherwise, whether accrued, absolute, contingent, unliquidated or otherwise and whether now known or unknown, suspected or unsuspected, which Executive, individually or as a member of a class, now has, owns or holds, or has at any time heretofore had, owned or held, arising on or prior to the date hereof, against any Company Released Party that arises out of, or relates to, the Employment Agreement, Executive’s employment with the Company or any of its subsidiaries and affiliates, or any termination of such employment, or any other matter existing on or before the date the Executive signs this Release, including claims (i) for severance or vacation or paid time off benefits, unpaid wages, salary or incentive payments, (ii) for breach of contract, wrongful discharge, impairment of economic opportunity, defamation, intentional infliction of emotional harm or other tort, (iii) for any violation of applicable state or local labor and employment laws (including, without limitation, all laws concerning wrongful termination or unlawful or unfair labor and employment practices) and (iv) for employment discrimination under any applicable federal, state or local statute, provision, order or regulation, and including, without limitation, any claim under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Civil Rights Act of 1988, the Fair Labor Standards Act, the Americans with Disabilities Act (“ADA”), the Family and Medical Leave Act, the Executive Retirement Income Security Act of 1974, as amended (“ERISA”), the Age Discrimination in Employment Act (“ADEA”), the Equal Pay Act, the Uniformed Services Employment and Reemployment Rights Act and any similar or analogous state statute. Notwithstanding the foregoing, this Release will not apply and expressly excludes: (a) vested benefits under any plan maintained by the Company that provides benefits that are subject to ERISA; (b) health benefits under any policy or plan currently maintained by the Company that provides for health insurance continuation or conversion rights including, but not limited to, rights and benefits to continue health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended or similar state law; (c) any claim that cannot by law be waived or released by private agreement; (d) claims first arising after the date of this Release; (e) to the extent not paid as of the date of this Release, payments and benefits required to be made under [Section 5(b)/5(c)] of the Employment Agreement, any future payments owed pursuant to Section 16 of the Employment Agreement, or (if still unpaid as of the date Executive signs this Release) any base salary for the pay period in which the Termination Date (as defined in the Employment Agreement) occurred; (f) claims for future benefits under any directors and officers insurance policies; (g) future rights to indemnification Executive may have under the certificate of incorporation or bylaws of the Company and its affiliates or any applicable indemnification agreements with the Company and its affiliates or applicable law; and (h) the Continuing Obligations (as defined in the Employment Agreement).

Exhibit A – Page 1

6.Other than as to rights, claims and causes of action arising under the ADEA, the release of claims set forth in this Release will be immediately effective upon execution by Executive.

¹	Consideration period will be forty-five (45) days if release relates to an exit incentive or other employment termination program (as defined in the ADEA) offered to a group or class of employees.

Exhibit A – Page 2

9.Executive acknowledges that the release of claims set forth in this Release relates only to claims that exist as of the date of this Release.

15.This Release will be binding upon any and all successors and assigns of Executive and the Company.

[Signature Page Follows]

Exhibit A – Page 3

IN WITNESS WHEREOF, this Release has been signed as of ____________________, 20__.

By:
		Matthew Rucker

Exhibit A – Page 4

Exhibit 10.6

EXECUTION COPY

EXECUTIVE EMPLOYMENT AGREEMENT

WHEREAS, the parties have determined it to be in their respective best interests to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual premises, covenants and agreements herein contained, intending to be legally bound, the parties agree as follows:

1.Employment. From and after the Effective Date, the Company will continue to employ Executive as its Executive Vice President, General Counsel and Corporate Secretary, and Executive will report to the Chief Executive Officer of the Company. Executive will perform all services and acts necessary to fulfill the duties and responsibilities of his position and agrees to devote his full business time, attention and energies to the performance of the duties assigned hereunder, and to perform such duties diligently, faithfully and to the best of his abilities. Executive agrees to refrain from any activity that does, will or could reasonably be deemed to conflict with the best interests of the Company, unless such activity is approved in advance by the Chief Executive Officer of the Company. Executive’s principal place of employment shall be at the Company’s principal executive offices in Irving, Texas (or at such other location in the Dallas, Texas area which constitutes the Company’s principal executive offices), and Executive shall be furnished with an individual office at such location; provided, however, Executive acknowledges and agrees that he will be required to travel in the course of performing his duties hereunder.

3.Compensation and Benefits.

(a)Base Salary. Executive will receive a base salary at an annualized rate of Three Hundred Forty Thousand Dollars ($340,000.00) (“Base Salary”), paid in accordance with the normal payroll practices of the Company in effect from time to time, but no less frequently than monthly. The Base Salary shall be reviewed periodically by the Board (or a designated committee thereof) and may be increased from time to time in its discretion but not decreased below the amount of Base Salary, as may be increased, without Executive’s written consent.

(b)Bonus. Executive will be eligible for a discretionary annual bonus (“Annual Bonus”) for each calendar year, commencing with the calendar year 2019, in which an annual cash performance bonus program is in effect, which Annual Bonus shall be subject to the terms of the applicable bonus program. Each Annual Bonus shall be payable based on the achievement of reasonable performance targets established by the Board, and for each calendar year Executive’s target Annual Bonus shall be equal to seventy percent (70%) of Executive’s Base Salary in effect on the last day of the applicable calendar year; provided, that the percentage of Executive’s Base Salary that applies for the purposes of determining Executive’s target Annual Bonus for a given year may be increased above seventy percent (70%) (but not decreased without the Executive’s written consent) by the Board (or a designated committee thereof) in its discretion. Executive’s Annual Bonus, if any, will be paid no later than March 15 of the year following the calendar year to which it relates.

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5.Obligations of the Company upon Termination.

(a)For Cause; Without Good Reason; Expiration of Initial Term or Renewal Term. If the Company terminates Executive’s employment for Cause, Executive terminates his employment without Good Reason, or the Initial Term or a Renewal Term expires by reason of timely notice given by either party pursuant to Section 2, the Company will have no further obligations to Executive or his legal representatives, except that Executive (or his legal representatives, as the case may be) will be entitled to any (i) earned but unpaid Base Salary accrued up to the end of the Term, (ii) benefits or compensation as provided under the terms of any employee benefit and compensation agreements or plans applicable to Executive, including benefits as provided for under the provisions of the last sentence of Section 3(d) and payment for any unused PTO if required by Section 3(g), (iii) unreimbursed business expenses required to be reimbursed to Executive, (iv) if the Term expires by reason of timely notice given by either party pursuant to Section 2, any earned and accrued, but unpaid, Annual Bonus (if earned pursuant to the terms of the applicable cash performance bonus program) for any completed calendar year prior to the calendar year in which the Term expires, (v) rights Executive may have to D&O insurance, indemnification, defense and reimbursement or payment of expenses under the Company’s Certificate of Incorporation and Bylaws, the Agreement and Plan of Merger among Eclipse Resources Corporation, Everest Merger Sub Inc. and Blue Ridge Mountain Resources, Inc., dated as of August 25, 2018 (the “Eclipse Merger Agreement”), including under Section 6.10(e) thereof, or any Company merger agreement or Company indemnification agreement and under applicable law, and (vi) rights of Executive under Sections 7(f) and 16 (together, the “Continuing Obligations”).

(i)Severance Payment. The Company will pay Executive (or his legal representatives, as the case may be) an amount equal to one (1) times Executive’s Base Salary as of the Termination Date, which amount will be paid in a lump sum payment on the earlier to occur of: (A) the Company’s first payroll date that comes on or after the date that is sixty (60) days after the Termination Date, or (B) the fifth (5th) business day after the expiration of such sixty (60)-day period.

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COBRA Reimbursement Amounts will cease immediately upon the date that Executive begins providing services to a subsequent employer (and any such provision of services shall be promptly reported to the Company by Executive); and provided, further, that the election of COBRA continuation coverage and the payment of any premiums due with respect to such COBRA continuation coverage shall remain the sole responsibility of Executive or Executive’s spouse or eligible dependents, as applicable, and the Company shall not assume any obligation for payment of any such premiums relating to such COBRA continuation coverage. Nothing contained herein is intended to limit or otherwise restrict any rights to continued group health plan coverage pursuant to COBRA following the period described in the preceding sentence.

(i)Severance Payment. If Executive’s employment terminates prior to a Change of Control or after the date that is twelve (12) months after a Change of Control, then the Company will pay Executive an amount equal to 1.75 times the sum of (A) Executive’s Base Salary as of the Termination Date, and (B) an amount equal to Executive’s target Annual Bonus for the fiscal year that includes the Termination Date, which amount will be paid in a lump sum payment on the earlier to occur of: (1) the Company’s first payroll date that comes on or after the date that is sixty (60) days after the Termination Date, or (2) the fifth (5^th) business day after the expiration of such sixty (60)-day period. If Executive’s employment terminates on the date of a Change in Control or within twelve (12) months after a Change of Control, then the Company will pay Executive an amount equal to 2.0 times the sum of (A) Executive’s Base Salary as of the Termination Date, and (B) an amount equal to Executive’s target Annual Bonus for the fiscal year that includes the Termination Date, which amount will be paid in a lump sum payment on the earlier to occur of: (1) the Company’s first payroll date that comes on or after the date that is sixty (60) days after the Termination Date, or (2) the fifth (5th) business day after the expiration of such sixty (60)-day period.

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and the Company shall not assume any obligation for payment of any such premiums relating to such COBRA continuation coverage. If Executive has elected to continue coverage for his spouse and/or eligible dependents and dies while he is receiving payment of the COBRA Reimbursement Amounts, his spouse and/or eligible dependents will continue to receive coverage and payment of the COBRA Reimbursement Amounts during the remainder, if any, of the COBRA Reimbursement Period, subject to his spouse’s and/or eligible dependent’s compliance with the terms of this Agreement, as applicable. Nothing contained herein is intended to limit or otherwise restrict any rights to continued group health plan coverage pursuant to COBRA following the COBRA Reimbursement Period, including, for the avoidance of doubt, the ability of Executive’s spouse and/or eligible dependents to elect to continue COBRA coverage if Executive dies or becomes incapacitated as a result of disability following termination of employment.

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with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967, as amended), the date that is forty-five (45) days following such delivery date. For the avoidance of doubt, in the case of a termination of Executive’s employment due to Executive’s death, or in the event of Executive’s death or disability after the termination of his employment, the legal representative(s) of Executive (or his estate, as applicable) may execute and revoke (or not revoke) the Release in the name of and for and on behalf of Executive, Executive’s estate and, as applicable, for themselves in accordance with and as permitted by the terms of this Section 5(e), the second sentence of Section 10 and the Release.

6.Confidential Information.

(a)Executive acknowledges that the Company has trade, business and financial secrets and other confidential or proprietary information (collectively, the “Confidential Information”), and that Confidential Information will be provided by the Company to Executive during Executive’s employment by the Company. Confidential information includes all trade secrets and also includes, but is not limited to, all non-public information regarding the Company’s or any of its affiliates’ businesses, products, or services (including without limitation, all such information relating to corporate opportunities, strategies, business plans, product specifications, compositions, manufacturing and distribution methods and processes, research, financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or their requirements, the identity of key contacts within the customers’ organizations or within the organization of acquisition prospects, or production, marketing, and merchandising techniques, prospective names and marks), and all writings or materials of any type embodying any of such information, ideas, concepts, improvements, discoveries, inventions, and other similar forms of expression. Notwithstanding the foregoing, Confidential Information does not include any information that (i) is generally known in the oil and gas industry, (ii) was known by Executive prior to his employment with Blue Ridge Mountain Resources, Inc. or any of its predecessors or affiliates or (iii) has been published in a form generally available to the public before the date Executive proposes to disclose or use such information, provided, that, such publishing of the Confidential Information does not result from Executive directly or indirectly breaching Executive’s obligations under this Section 6(a) or any other similar provision by which Executive is bound, or from any third party breaching a provision similar to that found under this Section 6(a).

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14.Miscellaneous.

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If to Executive, addressed to:

Paul M. Johnston

4716 Myerwood Lane

Dallas, Texas 75244,

or the last known
residential address reflected in the Company’s records

If to the Company, addressed to:

Montage Resources Corporation
122 W. John Carpenter Freeway, Suite 300

Irving, Texas 75039
Attention: Chief Executive Officer

or to such other address as either party may furnish to the other in writing, except that notices of changes of address are effective only upon receipt.

(b)Applicable Law. This Agreement is entered into under, and governed for all purposes by, the laws of the State of Texas, without regard to conflicts of laws principles thereof.

(e)Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same agreement.

(g)Headings. The section headings have been inserted for purposes of convenience and may not be used for interpretive purposes.

(h)Gender and Plurals. Wherever the context so requires, the masculine gender includes the feminine or neuter, and the singular number includes the plural and conversely.

(i)Third Party Beneficiaries. Each affiliate of the Company will be a third party beneficiary of, and may directly enforce, Executive’s obligations under Sections 6, 7 and 8.

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(l)Modification; Waiver. Any modification to or waiver of this Agreement will be effective only if it is in writing and signed by the parties to this Agreement.

15.Certain Definitions. In addition to the terms defined in the body of this Agreement, for purposes of this Agreement the following capitalized words have the meanings indicated below:

(a)“Board” means the Board of Directors of the Company.

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(c)“Change of Control” means the occurrence of any of the following events:

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substantial portion of the Company’s assets for purposes of this provision. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

(d)“Code” means the Internal Revenue Code of 1986, as amended.

(f)“Good Reason” means any of the following, but only if occurring without Executive’s written consent: (i) a diminution in Executive’s Base Salary; (ii) a material diminution or material adverse change in Executive’s position, authority, duties or other responsibilities; (iii) the relocation of Executive’s principal office to an area more than fifty (50) miles from its location immediately prior to such relocation; (iv) any material failure of the Company to comply with any material provision of this Agreement; (v) any material breach by the Company of any written indemnification agreement between the Company and Executive; or (vi) any material breach of Section 6.10 of the Eclipse Merger Agreement. Such termination by Executive will not preclude the Company from terminating Executive’s employment prior to the Termination Date established by Executive’s Notice of Termination.

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[Signatures begin on next page.]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the Effective Date.

MONTAGE RESOURCES CORPORATION


By:		/s/ John K. Reinhart
Name:		John K. Reinhart
Title:		President and Chief Executive Officer


EXECUTIVE


By:		/s/ Paul M. Johnston
Name:		Paul M. Johnston

US 6161299

Exhibit a

Release

1.In consideration of the payments and benefits (and any portion thereof) to be made pursuant to Section [5(b)/5(c)] of the Executive Employment Agreement, dated as of March 1, 2019 (the “Employment Agreement”), by and between Paul M. Johnston (“Executive”) and Montage Resources Corporation (the “Company”) (each of Executive and the Company, a “Party” and together, the “Parties”), the sufficiency of which Executive acknowledges, Executive, with the intention of binding himself and his heirs, executors, administrators and assigns, does hereby release, remise, acquit and forever discharge the Company and each of its subsidiaries and affiliates (the “Company Affiliated Group”), and each of the foregoing entities’ respective present and former officers, directors, executives, managers, members, affiliates, stockholders, agents, attorneys, employees and employee benefit plans (and the fiduciaries thereof), and the successors, predecessors and assigns of each of the foregoing (collectively, the “Company Released Parties”), of and from any and all claims, actions, causes of action, complaints, charges, demands, rights, damages, debts, sums of money, accounts, financial obligations, suits, expenses, attorneys’ fees and liabilities of whatever kind or nature in law, equity or otherwise, whether accrued, absolute, contingent, unliquidated or otherwise and whether now known or unknown, suspected or unsuspected, which Executive, individually or as a member of a class, now has, owns or holds, or has at any time heretofore had, owned or held, arising on or prior to the date hereof, against any Company Released Party that arises out of, or relates to, the Employment Agreement, Executive’s employment with the Company or any of its subsidiaries and affiliates, or any termination of such employment, or any other matter existing on or before the date the Executive signs this Release, including claims (i) for severance or vacation or paid time off benefits, unpaid wages, salary or incentive payments, (ii) for breach of contract, wrongful discharge, impairment of economic opportunity, defamation, intentional infliction of emotional harm or other tort, (iii) for any violation of applicable state or local labor and employment laws (including, without limitation, all laws concerning wrongful termination or unlawful or unfair labor and employment practices) and (iv) for employment discrimination under any applicable federal, state or local statute, provision, order or regulation, and including, without limitation, any claim under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Civil Rights Act of 1988, the Fair Labor Standards Act, the Americans with Disabilities Act (“ADA”), the Family and Medical Leave Act, the Executive Retirement Income Security Act of 1974, as amended (“ERISA”), the Age Discrimination in Employment Act (“ADEA”), the Equal Pay Act, the Uniformed Services Employment and Reemployment Rights Act and any similar or analogous state statute. Notwithstanding the foregoing, this Release will not apply and expressly excludes: (a) vested benefits under any plan maintained by the Company that provides benefits that are subject to ERISA; (b) health benefits under any policy or plan currently maintained by the Company that provides for health insurance continuation or conversion rights including, but not limited to, rights and benefits to continue health care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended or similar state law; (c) any claim that cannot by law be waived or released by private agreement; (d) claims first arising after the date of this Release; (e) to the extent not paid as of the date of this Release, payments and benefits required to be made under [Section 5(b)/5(c)] of the Employment Agreement, any future payments owed pursuant to Section 16 of the Employment Agreement, or (if still unpaid as of the date Executive signs this Release) any base salary for the pay period in which the Termination Date (as defined in the Employment Agreement) occurred; (f) claims for future benefits under any directors and officers insurance policies; (g) future rights to indemnification Executive may have under the certificate of incorporation or bylaws of the Company and its affiliates or any applicable indemnification agreements with the Company and its affiliates or applicable law; and (h) the Continuing Obligations (as defined in the Employment Agreement).

Exhibit A – Page 1

6.Other than as to rights, claims and causes of action arising under the ADEA, the release of claims set forth in this Release will be immediately effective upon execution by Executive.

¹	Consideration period will be forty-five (45) days if release relates to an exit incentive or other employment termination program (as defined in the ADEA) offered to a group or class of employees.

Exhibit A – Page 2

9.Executive acknowledges that the release of claims set forth in this Release relates only to claims that exist as of the date of this Release.

15.This Release will be binding upon any and all successors and assigns of Executive and the Company.

[Signature Page Follows]

Exhibit A – Page 3

IN WITNESS WHEREOF, this Release has been signed as of ____________________, 20__.

By:
		Paul M. Johnston

Exhibit A – Page 4

Exhibit 10.8

MONTAGE RESOURCES CORPORATION NON-EMPLOYEE DIRECTOR COMPENSATION POLICY (Adopted as of April 4, 2019, effective as of February 28, 2019) I. Purpose of this Policy The purpose of this Non-Employee Director Compensation Policy (this “Policy”) is to advance the long-term interests of Montage Resources Corporation (the “Company”) by (i) motivating non-employee members of the Board of Directors of the Company (the “Board of Directors”) by means of long-term incentive compensation, (ii) aligning the interests of such non-employee directors with those of the stockholders of the Company through the ownership and performance of the common stock of the Company (“Common Stock”), and (iii) permitting the Company to attract and retain directors upon whose judgment the successful conduct of the business of the Company largely depends. Only non-employee directors of the Company are eligible to participate in this Policy. For purposes of this Policy, a non-employee director is a member of the Board of Directors that is not an employee of the Company or any of its subsidiaries. The annual retainers and equity awards described in this Policy shall be paid or granted, as applicable, automatically and without further action of the Board of Directors (or any committee thereof), to each nonemployee director of the Company who is eligible to receive such annual retainers or equity awards, unless such non-employee director declines the receipt of such annual retainers or equity awards by advance written notice to the Company. II. Annual Retainers A. Payment Amount. The Company shall pay each non-employee director of the Company an annual retainer in the amount of $75,000 as compensation for the director’s service on the Board of Directors. The Company shall also pay the non-employee director serving as the Chairman of the Audit Committee an additional annual retainer of $25,000, pay the non-employee director serving as the Chairman of the Compensation Committee an additional annual retainer of $20,000 and pay the non-employee director serving as the Chairman of the Nominating and Governance Committee an additional annual retainer of $20,000 as compensation for the directors’ services as Chairmen of these Committees. Additionally, the Company shall pay the non-employee director serving as the Chairman of the Board of Directors (the “Chairman of the Board”) an additional annual retainer of $50,000 for that director’s services in such role. B. Payment Schedule. The annual retainers described above will be paid in equal quarterly installments, in advance, on the first business day of each calendar quarter in which the service will be performed. If a non-employee director joins the Board of Directors or becomes the Chairman of a Committee or Chairman of the Board, as the case may be, at a time other than effective as of the first day of a calendar year, each annual retainer described above will be pro-rated based on days served in the applicable calendar year, with the pro-rated amount paid for the first calendar quarter in which the non-employee director provides the service (such payment to be made on the next regular quarterly payment date), and regular full quarterly payments thereafter. All annual retainers are vested as of the last day of the applicable quarter. Unless a non-employee director has elected to receive payment of his or her annual retainer(s) in shares of Common Stock pursuant to a Stock Election (as defined below), each annual retainer will be paid in cash.

For the calendar quarter ended March 31, 2019, the non-employee directors of the Company that previously served on the Board of Directors of Blue Ridge Mountain Resources, Inc. shall receive a pro-rated portion of their respective annual retainer(s) for such calendar quarter as promptly as practicable following the date of adoption of this Policy. The non-employee directors of the Company that previously served on the Board of Directors of Eclipse Resources Corporation are not eligible to receive any annual retainers under this Policy for the calendar quarter ended March 31, 2019. For the calendar quarter ending June 30, 2019, the non-employee directors of the Company shall receive their respective annual retainer(s) for such calendar quarter as promptly as practicable following the date of adoption of this Policy. C. Elections to Receive Annual Retainers in the Form of Common Stock. Each non-employee director may elect to receive shares of Common Stock in lieu of receiving cash by making an election (a “Stock Election”) not later than 45 days prior to the end of a fiscal year (the “Annual Election Deadline”). Each such Stock Election is irrevocable and is effective for the next following fiscal year. Persons who first become a non-employee director after the Annual Election Deadline for a fiscal year may make a Stock Election not later than 45 days prior to the beginning of the next following calendar quarter. Each such Stock Election is irrevocable and is effective for such next following calendar quarter and each subsequent calendar quarter during the fiscal year that includes such next following calendar quarter. In addition, each non-employee director who was a member of the Board of Directors on March 1, 2019 may make a Stock Election on the date of adoption of this Policy. Each such Stock Election is irrevocable and is effective for the period beginning April 1, 2019 and ending on and including December 31, 2019. The number of shares of Common Stock to be received by a non-employee director pursuant to a Stock Election will be determined based on The New York Stock Exchange (the “NYSE”) regular market hours closing price of the Common Stock on the date that cash would otherwise be payable (i.e., the NYSE closing price on the first business day of the applicable calendar quarter) (rounded down to the nearest whole share); provided that, in the case of a Stock Election made pursuant to the immediately preceding paragraph, the number of shares of Common Stock to be received in respect of the calendar quarter ending June 30, 2019 shall be determined based on such NYSE closing price on July 1, 2019. All shares of Common Stock issuable pursuant to a Stock Election shall be issued as promptly as practicable following the date on which the price for such shares is determined pursuant to the immediately preceding paragraph. All shares of Common Stock issued pursuant to a Stock Election will be issued under the Company’s 2014 Long-Term Incentive Plan, as amended, or a successor Company equity plan (the “LTIP”), and will not be subject to any vesting requirements. To the extent there are not sufficient shares of Common Stock available under the LTIP for issuance pursuant to Stock Election(s), the annual retainers payable under this Policy will be paid in cash regardless of the existence of a Stock Election (on a pro rata basis in the case of multiple Stock Elections, as applicable). A non-employee director may make a Stock Election only as to 100% of the cash otherwise payable to such director. III. Annual Equity Compensation Award Non-employee directors shall be granted the equity awards described below under and pursuant to the terms and conditions of the LTIP. All such awards shall be subject to the terms and conditions of the LTIP and shall be granted subject to the execution and delivery of award agreements. All applicable terms and conditions of the LTIP apply to such awards as if fully set forth herein, and all such awards granted pursuant to this Policy are subject in all respects to the terms of the LTIP.


Montage Resources Corporation	Page 2 of 4	Non-Employee Director Compensation Policy

A. Annual Equity Awards of Restricted Common Stock. Each year, as of the date of the Company’s annual meeting of stockholders (the “Annual Meeting”), the Company will automatically grant to each eligible non-employee director an award of restricted Common Stock with an aggregate value on the date of grant of $100,000, determined based on the NYSE regular market hours closing price of the Common Stock on the date of grant (rounded down to the nearest whole share) (an “Annual Equity Award”). Each Annual Equity Award shall be granted pursuant to the terms and conditions of the LTIP, and will vest, subject to continued service, on the date that is one (1) year following the date of the grant of the Annual Equity Award. A non-employee director is eligible to receive an Annual Equity Award if the director is standing for election at the Annual Meeting and is elected or re-elected as a director at such Annual Meeting. Each Annual Equity Award will be granted to the eligible non-employee directors pursuant and subject to the terms and conditions of the form of restricted stock award agreement attached hereto as Exhibit A. B. Pro-Rated Annual Equity Awards for New Non-Employee Directors. If a person first becomes a non-employee director other than at the Annual Meeting (and provided he or she was not, within the year prior to becoming a non-employee director, serving as either an employee director or an executive officer of the Company), as of the date such person is elected or appointed as an nonemployee director, the Company will automatically grant the new non-employee director an award of restricted Common Stock with an aggregate value on the date of grant of $100,000, determined based on the NYSE regular market hours closing price of the Common Stock on the date of grant (rounded down to the nearest whole share); provided, however, that such award shall be reduced pro rata for each day prior to the date of grant that has elapsed since the preceding Annual Meeting (a “New Director Equity Award”). Each New Director Equity Award shall be granted pursuant to the terms and conditions of the LTIP, and will vest, subject to continued service, on the date that is one (1) year following the date of the grant of the New Director Equity Award. Each New Director Equity Award will be granted to the new non-employee director pursuant and subject to the terms and conditions of the form of restricted stock award agreement attached hereto as Exhibit A. Notwithstanding the foregoing, and for the avoidance of doubt, the non-employee directors of the Company as of February 28, 2019 that previously served on the Board of Directors of Blue Ridge Mountain Resources, Inc. or on the Board of Directors of Eclipse Resources Corporation are not eligible to receive a New Director Equity Award; provided that the foregoing provisions of this sentence shall not affect the eligibility of such persons to receive Annual Equity Awards. C. Equity Awards Subject to Shares Available Under the LTIP. Each Annual Equity Award and New Director Equity Award is subject to the availability of shares for issuance under the LTIP. IV. Expense Reimbursement Upon presentation of documentation of such expenses reasonably satisfactory to the Company, each non-employee director shall be reimbursed for his or her reasonable out-of-pocket business expenses incurred in connection with attending meetings of the Board of Directors and its committees. Each non-employee director also shall be reimbursed for his or her reasonable out-of-pocket business expenses authorized by the Board of Directors or one of its committees that are incurred in connection with attendance at meetings with the Company’s management or in connection with other business related to service on the Board of Directors or its committees. All reimbursements pursuant hereto shall be made in accordance with the Company’s applicable expense reimbursement policies and procedures as in effect from time to time.


Montage Resources Corporation	Page 3 of 4	Non-Employee Director Compensation Policy

V. Amendments and Other Matters This Policy and the compensation to be provided hereunder may be amended, modified or terminated by the Board of Directors at any time and from time to time in its sole discretion. The terms and conditions of this Policy shall supersede any prior cash or equity compensation arrangements between the Company and any of its non-employee directors with respect to such non-employee director’s service on the Board of Directors or any committee thereof; provided that, in the case of a non-employee director who was a member of the Board of Directors on March 1, 2019, nothing herein shall affect the terms and conditions of any restricted stock award agreement between the Company and such non-employee director outstanding immediately prior to February 28, 2019, which restricted stock award agreement shall be deemed to have continued in effect on and following February 28, 2019 in accordance with its terms. No non-employee director shall have any rights hereunder, except with respect to the cash compensation, Stock Elections and equity awards provided for under this Policy. This Policy shall remain in effect until it is revised or rescinded by further action of the Board of Directors.


Montage Resources Corporation	Page 4 of 4	Non-Employee Director Compensation Policy

Exhibit 10.9

Execution Version

RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement (this “Agreement”) is made and entered into as of the date of grant set forth below (the “Date of Grant”) by and between Montage Resources Corporation, a Delaware corporation (the “Company”), and the officer of the Company named below (“Grantee”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Company’s 2014 Long-Term Incentive Plan (as amended, the “Plan”). Where the context permits, references to the Company shall include any successor to the Company.

Name of Grantee:	Oleg Tolmachev
Number of Restricted Shares:	53,438
Date of Grant:	February 28, 2019

1.Award. The Company hereby grants to Grantee the total number of restricted shares of the Company’s common stock, par value $0.01 per share (“Company Stock”), set forth above as the Number of Restricted Shares (the “Restricted Shares”), subject to all of the terms and conditions of this Agreement and the Plan. Grantee will be reflected as the owner of record of the Restricted Shares on the Company’s books. The Company will hold the share certificates for safekeeping, or otherwise retain the Restricted Shares in uncertificated book entry form, until the Restricted Shares become vested and nonforfeitable. Upon the Company’s request, Grantee must promptly deliver to the Company a stock power, endorsed in blank, with respect to the Restricted Shares. If Grantee forfeits any Restricted Shares, the stock power will be used to return the certificates for the forfeited Restricted Shares to the Company’s transfer agent for cancellation.

2.Incorporation of Plan. The Plan is hereby incorporated by reference and made a part hereof, and the Restricted Shares and this Agreement shall be subject to all of the terms and conditions of the Plan. In the event of any conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan shall govern.

3.Vesting.

(a)Subject to earlier vesting as set forth in subparagraph (b) or (c) below, the Restricted Shares shall vest in accordance with the following schedule:

Vesting Date	Number of Restricted Shares that Vest	Cumulative Percentage of Restricted Shares that Vest
August 28, 2019	13,359	25%
February 28, 2020	13,359	50%
August 28, 2020	13,360	75%
February 28, 2021	13,360	100%

(b)Upon a Change of Control, all then outstanding and unvested Restricted Shares shall immediately and fully vest.

(c)Upon Grantee’s death, all then outstanding and unvested Restricted Shares shall immediately and fully vest.

(d)If Grantee’s employment with the Company and its Subsidiaries terminates for any reason (other than by reason of Grantee’s death), then, notwithstanding anything to the contrary in this Agreement, all then outstanding and unvested Restricted Shares shall be immediately forfeited by Grantee and transferred to, and reacquired by, the Company for no consideration.

4.Delivery of Vested Restricted Shares. As soon as practicable after any Restricted Shares vest, the Company will deliver a share certificate to Grantee, or deliver shares electronically or in certificate form to Grantee’s designated broker on Grantee’s behalf. If Grantee is deceased at the time that a delivery of share certificates is to be made, the certificates will be delivered to Grantee’s executor, administrator, or personal representative.

6.Dividends. Any dividends or other distributions that are declared with respect to the shares of Company Stock underlying the Restricted Shares between the Date of Grant and the Vesting Date of the Restricted Shares shall be paid to Grantee on or as soon as practicable following the Vesting Date of such Restricted Shares, and shall not be paid to Grantee in the event that such Restricted Shares do not become so vested.

7.Authority of the Committee. The Committee shall have full authority to interpret and construe the terms of the Plan and this Agreement. The determination of the Committee as to any such matter of interpretation or construction shall be final, binding and conclusive.

8.Governing Law. This Agreement shall be construed and administered in accordance with the laws of the State of Delaware without reference to its principles of conflicts of law.

9.Binding Nature of Agreement. The terms of this Agreement shall be binding upon Grantee and upon Grantee’s heirs, executors, administrators, personal representatives, transferees, assignees and successors in interest, and upon the Company and its successors and assignees. In addition, the terms and conditions of this Agreement will apply with equal force to any additional and/or substitute securities received by Grantee in exchange for, or by virtue of Grantee’s ownership of, the Restricted Shares, whether as a result of any spin-off, stock split-up, stock dividend, stock distribution, other reclassification of the Company Stock, or other similar event, except as otherwise determined by the Committee. If the Restricted Shares are converted into or exchanged for, or stockholders of the Company receive by reason of any distribution in total or partial liquidation or pursuant to any merger of the Company or acquisition of its assets, securities of another entity, or other property (including cash), then the rights of the Company under this Agreement will inure to the benefit of the Company’s successor, and this Agreement will apply to the securities or other property received upon such conversion, exchange or distribution in the same manner and to the same extent as the Restricted Shares.

10.Assignment and Transferability. Unvested Restricted Shares may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, and any attempt to do so shall be null and void and without effect.

Restricted Stock Award Agreement	Page 2 of 6	Oleg Tolmachev
	Page 2 of 6

11.Legend on Certificates. Grantee agrees that any certificate issued for Restricted Shares (or, if applicable, any book entry statement issued for Restricted Shares) prior to the lapse of any outstanding restrictions relating thereto shall bear the following legend (in addition to any other legend or legends required under applicable federal and state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER (THE “RESTRICTIONS”) AS SET FORTH IN THE MONTAGE RESOURCES CORPORATION 2014 LONG-TERM INCENTIVE PLAN AND A RESTRICTED STOCK AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND MONTAGE RESOURCES CORPORATION, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY. ANY ATTEMPT TO DISPOSE OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT, TRANSFER, PLEDGE, EXCHANGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND WITHOUT EFFECT.

12.Securities Laws Requirements. The Company shall not be obligated to issue shares of Company Stock to Grantee free of the restrictive legend described in Section 9 hereof or of any other restrictive legend, if such transfer, in the opinion of counsel for the Company, would violate the Securities Act (or any other federal or state statutes having similar requirements as may be in effect at that time). The Company shall be under no obligation to register the Restricted Shares pursuant to the Securities Act or any other federal or state securities laws.

13.Necessary Acts. Grantee hereby agrees to perform all acts, and to execute and deliver any documents, that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and state securities or tax laws.

14.Entire Agreement. This Agreement and the Plan contain the entire agreement and understanding between the parties as to the subject matter hereof, and supersede any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof, including, but not limited to that certain letter agreement dated February 28, 2019, between Grantee and the Company.

15.Headings. Headings are used solely for the convenience of the parties and shall not be deemed to be a limitation upon or descriptive of the contents of any such Section.

16.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

17.Notices. All notices and other communications under this Agreement shall be in writing and shall be given by first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given three days after mailing to the respective parties named below:

If to the Company:

Montage Resources Corporation

Attn.: General Counsel

122 W. John Carpenter Freeway, Suite 300

Irving, Texas 75039

If to Grantee:

At the address in the Company’s records.

Either party hereto may change such party’s address for notices by notice duly given pursuant hereto.

Restricted Stock Award Agreement	Page 3 of 6	Oleg Tolmachev
	Page 3 of 6

18.Amendment. No amendment or modification hereof shall be valid unless it shall be in writing and signed by both of the parties hereto.

19.Insider Trading/Market Abuse Laws. Grantee acknowledges that Grantee may be subject to insider trading restrictions and/or market abuse laws which may affect Grantee’s ability to sell Company Stock acquired under the Plan during such times as Grantee is considered to have “inside information” regarding the Company. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Grantee acknowledges that it is Grantee’s responsibility to comply with any applicable restrictions, and Grantee is advised to speak to Grantee’s personal advisor on these matters.

20.Acceptance. Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. Grantee has read and understands the terms and provision thereof, and accepts the Restricted Shares subject to all the terms and conditions of the Plan and this Agreement.

21.Taxes.

(a)In General. Grantee acknowledges that, regardless of any action taken by the Company or, if different, Grantee’s employer (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the grant, vesting, or subsequent sale of the Restricted Shares (the “Tax-Related Items”), is and remains Grantee’s responsibility and may exceed the amount actually withheld by the Company or the Employer. Grantee further acknowledges that the Company and/or the Employer make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Shares and the receipt of any dividends.

(b)Withholding of Taxes. Prior to any relevant taxable or tax withholding event, as applicable, Grantee will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Grantee authorizes the Company, the Employer, and their respective agents, at their discretion, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by one or a combination of the following:

(i)withholding from your wages or other cash compensation paid to Grantee by the Company and/or the Employer;

(ii)withholding from proceeds of the sale of Restricted Shares either through a voluntary sale or through a mandatory sale arranged by the Company (on Grantee’s behalf pursuant to this authorization without your further consent or authorization);

(iii)withholding Restricted Shares; or

(iv)requiring Grantee to make a payment in cash by certified check or wire transfer.

Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding rates or other applicable withholding rates, including maximum applicable rates, in which case Grantee will receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent amount in Restricted Shares. If the obligation for Tax-Related Items is satisfied by withholding in Restricted Shares, Grantee is deemed for tax purposes to have been issued the full number of Restricted Shares notwithstanding that a number of the Restricted Shares are held back solely for the purpose of paying the Tax-Related Items.

Restricted Stock Award Agreement	Page 4 of 6	Oleg Tolmachev
	Page 4 of 6

(c)Tax Advice. Grantee may not rely on the Company or any of its respective officers, directors or employees for tax or legal advice regarding this Award. Grantee acknowledges that Grantee has sought tax and legal advice from Grantee’s own advisors regarding this Award or has voluntarily and knowingly foregone such consultation.

22.Consent to Electronic Delivery and Acceptance of All Plan Documents and Disclosures. By acceptance of this Award, Grantee consents to the electronic delivery of this Agreement, the Plan, account statements, Plan prospectuses required by the Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications or information related to the Award. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion. Grantee acknowledges that, upon written request, Grantee may receive from the Company a paper copy of any documents delivered electronically at no cost.

23.Award Subject to Company Clawback or Recoupment. To the extent permitted by applicable law, the Restricted Shares shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or the Committee or required by law during the term of Grantee’s employment or other service that is applicable to Grantee. In addition to any other remedies available under such policy, applicable law may require the cancellation of the Restricted Shares (whether vested or unvested) and the recoupment of any gains realized with respect to the Restricted Shares.

Restricted Stock Award Agreement	Page 5 of 6	Oleg Tolmachev
	Page 5 of 6

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized officer, and Grantee has executed this Agreement, each as of the date first above written.

MONTAGE RESOURCES CORPORATION:


By:		/s/ John Reinhart
Name:		John Reinhart
Title:		President and Chief Executive Officer

GRANTEE:

/s/ Oleg Tolmachev

Name: Oleg Tolmachev

Restricted Stock Award Agreement	Page 6 of 6	Oleg Tolmachev
	Page 6 of 6

Exhibit 10.10

RESTRICTED STOCK AWARD AGREEMENT FOR NON-EMPLOYEE DIRECTORS

This Restricted Stock Award Agreement (this “Agreement”) is made and entered into as of the date of grant set forth below (the “Date of Grant”) by and between Montage Resources Corporation, a Delaware corporation (the “Company”), and the member of the Board of Directors of the Company (the “Board”) named below (“Grantee”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Company’s 2019 Long-Term Incentive Plan (as amended, the “Plan”). Where the context permits, references to the Company shall include any successor to the Company.

Name of Grantee:
Number of Restricted Shares:
Date of Grant:

3.Vesting.

(a)The Restricted Shares shall become fully vested as of the earlier of (i) the first anniversary of the Date of Grant, (ii) the date of a Change of Control or (iii) the date of Grantee’s death (as applicable, the “Vesting Date”). As soon as practicable after the Restricted Shares vest, the Company will deliver a share certificate to Grantee, or deliver shares electronically or in certificate form to Grantee’s designated broker on Grantee’s behalf. If Grantee is deceased at the time that a delivery of share certificates is to be made, the certificates will be delivered to Grantee’s executor, administrator or personal representative.

(b)If Grantee’s service on the Board terminates for any reason (other than by reason of Grantee’s death) prior to the Vesting Date, the Restricted Shares shall be immediately forfeited by Grantee and transferred to, and reacquired by, the Company for no consideration.

4.Dividends. Any dividends or other distributions that are declared with respect to the shares of Company Stock underlying the Restricted Shares between the Grant Date and the Vesting Date of the Restricted Shares shall be paid to Grantee on or as soon as practicable following the Vesting Date of such Restricted Shares, and shall not be paid to Grantee in the event that such Restricted Shares do not become so vested.

5.Authority of the Committee. The Committee shall have full authority to interpret and construe the terms of the Plan and this Agreement. The determination of the Committee as to any such matter of interpretation or construction shall be final, binding and conclusive.

6.Governing Law. This Agreement shall be construed and administered in accordance with the laws of the State of Delaware without reference to its principles of conflicts of law.

7.Binding Nature of Agreement. The terms of this Agreement shall be binding upon Grantee and upon Grantee’s heirs, executors, administrators, personal representatives, transferees, assignees and successors in interest, and upon the Company and its successors and assignees. In addition, the terms and conditions of this Agreement will apply with equal force to any additional and/or substitute securities received by Grantee in exchange for, or by virtue of Grantee’s ownership of, the Restricted Shares, whether as a result of any spin-off, stock split-up, stock dividend, stock distribution, other reclassification of the Company Stock or other similar event, except as otherwise determined by the Committee. If the Restricted Shares are converted into or exchanged for, or stockholders of the Company receive by reason of any distribution in total or partial liquidation or pursuant to any merger of the Company or acquisition of its assets, securities of another entity, or other property (including cash), then the rights of the Company under this Agreement will inure to the benefit of the Company’s successor, and this Agreement will apply to the securities or other property received upon such conversion, exchange or distribution in the same manner and to the same extent as the Restricted Shares.

8.Assignment and Transferability. Prior to the Vesting Date, the Restricted Shares may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, and any attempt to do so shall be null and void and without effect.

9.Legend on Certificates. Grantee agrees that any certificate issued for Restricted Shares (or, if applicable, any book entry statement issued for Restricted Shares) prior to the lapse of any outstanding restrictions relating thereto shall bear the following legend (in addition to any other legend or legends required under applicable federal and state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER (THE “RESTRICTIONS”) AS SET FORTH IN THE MONTAGE RESOURCES CORPORATION 2019 LONG-TERM INCENTIVE PLAN AND A RESTRICTED STOCK AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND MONTAGE RESOURCES CORPORATION, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY. ANY ATTEMPT TO DISPOSE OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT, TRANSFER, PLEDGE, EXCHANGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND WITHOUT EFFECT.

10.Securities Laws Requirements. The Company shall not be obligated to issue shares of Company Stock to Grantee free of the restrictive legend described in Section 9 hereof or of any other restrictive legend, if such transfer, in the opinion of counsel for the Company, would violate the Securities Act (or any other federal or state statutes having similar requirements as may be in effect at that time). The Company shall be under no obligation to register the Restricted Shares pursuant to the Securities Act or any other federal or state securities laws.

11.Necessary Acts. Grantee hereby agrees to perform all acts, and to execute and deliver any documents, that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and state securities or tax laws.


Restricted Stock Award Agreement	Page 2 of 4	Dated
For Non-Employee Directors	Page 2 of 4	(Director’s name)

12.Entire Agreement. This Agreement and the Plan contain the entire agreement and understanding among the parties as to the subject matter hereof, and supersede any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof.

13.Headings. Headings are used solely for the convenience of the parties and shall not be deemed to be a limitation upon or descriptive of the contents of any such Section.

14.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

15.Notices. All notices and other communications under this Agreement shall be in writing and shall be given by first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given three days after mailing to the respective parties named below:

If to the Company:

Montage Resources Corporation

Attn.: General Counsel

122 W. John Carpenter Freeway, Suite 300

Irving, Texas 75039

If to Grantee:

At the address in the Company’s records.

Either party hereto may change such party’s address for notices by notice duly given pursuant hereto.

16.Amendment. No amendment or modification hereof shall be valid unless it shall be in writing and signed by both of the parties hereto.

17.Acceptance. Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. Grantee has read and understands the terms and provision thereof, and accepts the Restricted Shares subject to all the terms and conditions of the Plan and this Agreement.

18.Taxes.

(a)Tax Withholding. Grantee is not an employee of the Company or any Affiliate; therefore, the Company is not required to, and the Company will not, deduct from any compensation or any other payment of any kind due to Grantee the amount of any federal, state, local or foreign taxes required to be paid by Grantee as a result of the grant or vesting of the Restricted Shares in whole or in part. Grantee expressly acknowledges that Grantee is solely responsible for the payment of any such federal, state, local or foreign taxes, and Grantee may not rely on the Company for any assistance with regard to withholding or paying such taxes.

(b)Tax Election. Grantee is advised to seek independent tax advice from Grantee’s own advisors regarding the availability and advisability of making an election under Section 83(b) of the Internal Revenue Code of 1986, as amended. Any such election, if made, must be made within 30 days of the Date of Grant. Grantee expressly acknowledges that Grantee is solely responsible for filing any such Section 83(b) election with the appropriate governmental authorities, irrespective of the fact that such election is also delivered to the Company. Grantee may not rely on the Company or any of its respective officers, directors or employees for tax or legal advice regarding this Award. Grantee acknowledges that Grantee has sought tax and legal advice from Grantee’s own advisors regarding this Award or has voluntarily and knowingly foregone such consultation.


Restricted Stock Award Agreement	Page 3 of 4	Dated
For Non-Employee Directors	Page 3 of 4	(Director’s name)

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized officer, and Grantee has executed this Agreement, each as of the date first above written.

MONTAGE RESOURCES CORPORATION:


By:
Name:		John Reinhart
Title:		President and Chief Executive Officer


GRANTEE:


Name: (Director)


Restricted Stock Award Agreement	Page 4 of 4	Dated
For Non-Employee Directors	Page 4 of 4	(Director’s name)

Exhibit 31.1

CERTIFICATION

I, John K. Reinhart, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Montage Resources Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 8, 2019

/s/ John K. Reinhart

John K. Reinhart

President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Michael L. Hodges, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Montage Resources Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 8, 2019

/s/ Michael L. Hodges

Michael L. Hodges

Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this report of Montage Resources Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), John K. Reinhart, President and Chief Executive Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 8, 2019		/s/ John K. Reinhart
		John K. Reinhart
		President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this report of Montage Resources Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Michael L. Hodges, Executive Vice President and Chief Financial Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 8, 2019		/s/ Michael L. Hodges
		Michael L. Hodges
		Executive Vice President and Chief Financial Officer