Appalachian pure-play Montage Resources Corp. plans to run only one rig through the remainder of the year and in 2020 as it weathers the current low-cost commodity cycle.

“The natural gas macro environment we are currently experiencing reinforces the importance of being a low-cost producer,” said CEO John Reinhart of sagging prices in discussing the company’s third quarter results.

Montage has also tightened its guidance range for 2019 and is now targeting 545-552 MMcfe/d of production compared with a previous forecast of 535-555 MMcfe/d. At the end of the second quarter, the company cut its full-year budget by 8% at the midpoint to $345-370 million as the strip continued to worsen.

Oil and gas producers across the country are confronting weak commodity prices, with some announcing plans to cut back even further heading into the end of the year, but operators in Appalachia have been particularly hard hit as surging gas supplies have far outpaced demand.

Capital expenditures came in under expectations at $65.4 million during the third quarter. Reinhart said tighter spending was mainly the result of operational efficiencies such as company crews that are routinely drilling one- mile/day of laterals in the Utica Shale. He said efficiencies are even better in the Marcellus Shale.

Third quarter revenue was up 25% year/year to $63 million, partly as a result of liquids production, with oil providing 28% of the total. Reinhart said Montage “will continue to focus on the development of our highest returning liquids-rich locations.”

Montage produced 621.7 MMcfe/d in the third quarter, up from the 346.3 MMcfe/d in 3Q2018 before the company was formed in a merger between Eclipse Resources and Blue Ridge Mountain Resources. Volumes also increased from the 535.5 MMcfe/d that Montage produced in 2Q2019.

Average realized prices, including hedges and firm transportation costs, were down across the board, with natural gas falling 20% to $1.85/Mcf, natural gas liquids down 46% to $14.92/bbl and oil falling 6% to $49.53/bbl.

The company reported third quarter net income of $4.3 million (12 cents/share), compared with $4 million (20 cents) in the year-ago period.