Eclipse Resources Corporation (NYSE:ECR) (the “Company” or
“Eclipse Resources”) today is pleased to announce that the Company
and Eclipse Resources-PA, LP, a wholly owned subsidiary of the
Company, have entered into a definitive Purchase and Sale Agreement
to acquire certain oil and gas leases, wells and other oil and gas
rights and interests covering approximately 44,500 net acres
located in the counties of Tioga and Potter in the Commonwealth of
Pennsylvania (such transaction, the “Flat Castle Acquisition”) from
Travis Peak Resources, LLC (“Travis Peak”). The aggregate purchase
price for the Flat Castle Acquisition is $93.7 million (subject to
customary purchase price adjustments) and is payable entirely in
shares of Eclipse Resources’ common stock. In addition, the Company
announced today that the Company and Eclipse Resources Midstream,
LP, a wholly owned subsidiary of the Company, have entered into a
definitive option agreement pursuant to which Eclipse Resources
Midstream. LP acquired the exclusive right to purchase all of the
outstanding equity interests of Cardinal NE Holdings, LLC for an
aggregate purchase price of $18.3 million in cash (such
transaction, the “Cardinal Acquisition” and, together with the Flat
Castle Acquisition, the “Transactions”) from Cardinal Midstream II,
LLC. The Transactions were approved by a special committee of the
Company’s board of directors composed entirely of independent
directors and the Flat Castle Acquisition is expected to close in
January 2018, subject to the satisfaction of customary closing
conditions; provided that the Flat Castle Acquisition will have an
effective date of September 1, 2017 and contemplates a second
closing for purposes of curing any title or environmental defects
with respect to the properties being acquired. In conjunction with
this press release, the Company has posted a presentation with
additional details regarding the Transactions to the Investor
Center of its website at www.eclipseresources.com.
Transaction Highlights:
- Acquiring an approximately 44,500
highly continuous net acre position in Tioga and Potter Counties,
Pennsylvania with a low entry cost of ~$1,900 per acre.1
- Acreage is largely delineated by 22
industry Utica Shale wells (including the Painter 1H well drilled
by Travis Peak) with the Company’s preliminary analysis indicating
gas in place exceeds the Southeast Ohio’s Utica Shale Dry Gas
“Core” area.
- Expected to create a new, highly
contiguous core area, the “Flat Castle” Project Area, with few unit
size restrictions supporting extensive “Super-Lateral” development
and the application of the Company’s innovative drilling and
completion techniques which we believe will generate enhanced
returns.
- Initial project area “Type Well”
estimates indicate EUR’s of between 2.0 and 2.3 Bcf per 1000 feet
of lateral at a cost of approximately $1,025 per lateral foot,
consistent with or better than the Company’s current Southeast Ohio
Utica assets.
- Will acquire one proved developed
producing well with approximately 6.5 net MMcf per day of
production.
- Anticipated to add approximately 87 net
drilling locations (based on a 16,000 foot lateral length) while
increasing the Company’s Utica dry gas acreage by approximately
85%.
- Purchase price for Flat Castle
Acquisition payable 100% in Eclipse Resources’ common stock, which
the Company believes will preserve ample liquidity while
substantially increasing scale. The number of shares of Eclipse
Resources common stock to be issued to Travis Peak will equal $93.7
million divided by the 30-day volume weighted average price per
share of Eclipse Resources’ common stock ending on the second
trading day immediately preceding the closing date, subject to
certain customary adjustments and a collar between $2.35 and
$2.60.
- Entered into an option to acquire
Cardinal NE Holdings, LLC, which owns midstream infrastructure with
associated gathering rights on the acreage to be acquired by the
Company in the Flat Castle Acquisition. The Company expects that
the proximity of this infrastructure to Dominion’s gathering system
will allow Eclipse Resources to build, own and operate the
gathering system as wells are drilled, which will reduce the
Company’s per unit gathering costs and improve returns.
1 Net of proved producing reserves
Benjamin W. Hulburt, Chairman, President and CEO of Eclipse
Resources, commented on the Company’s acquisition, “Eclipse
Resources has today announced it has entered into definitive
agreements to acquire a strategic Utica acreage acquisition in
north, central Pennsylvania that is expected to significantly
increase the Company’s inventory of highly economic drilling
locations and allow the Company to continue to leverage its
innovative drilling and completions techniques while remaining
Appalachian basin focused. We are excited to begin operating in
this project area, which we term the 'Flat Castle' Project Area,
with our first well anticipated to spud during the first quarter of
2018 and the full scale development anticipated to start in the
fourth quarter of 2018. We believe the additional scale from this
largely contiguous acreage acquisition will be enhanced through the
efficiency gains generated by our 'Super-Lateral' development as we
apply our operational and technical learnings from the Ohio Dry Gas
Utica to the Flat Castle Project Area. From a geological
perspective, this area is similar in depth to our Ohio Dry Gas
acreage and is well delineated with a meaningful number of offset
results, while lying within what we believe to be the highest gas
in place of the prospect area.
"We believe that the location of the Flat Castle Project Area,
which is significantly west of the more currently constrained
Northeastern Pennsylvania peers, will support our ability to
reliably move gas out of the Flat Castle Project Area for the
foreseeable future. The Company anticipates that the gas it
produces in the Flat Castle Project Area will be transported
through the Dominion and Tennessee gathering systems, which are
exposed to improving Appalachian price differentials.
"We have been patient and extremely rigorous in our acquisition
efforts to ensure we pursue opportunities for our shareholders that
will enhance our inventory of highly returning, core drilling
locations at attractive valuations. We believe the Flat Castle
Project Area is located in one of the best underdeveloped areas of
the Appalachian Basin and will nicely complement our existing asset
base, with the potential returns on these wells competing with
those in our core Utica Dry Gas acreage.”
Conference Call
A conference call to review the Company’s acquisition is
scheduled for Monday, December 11, 2017 at 10:00 a.m. Eastern Time.
To participate in the call, please dial 877-709-8150 or
201-689-8354 for international callers and reference Eclipse
Resources Acreage Acquisition Call. A replay of the call will be
available through January 31, 2018. To access the phone replay dial
877-660-6853 or 201-612-7415 for international callers. The
conference ID is 13674587. A live webcast of the call may be
accessed through the Investor Center on the Company’s website at
www.eclipseresources.com. The webcast will be archived for replay
on the Company’s website for six months.
About Eclipse Resources
Eclipse Resources is an independent exploration and production
company engaged in the acquisition and development of oil and
natural gas properties in the Appalachian Basin, including the
Utica and Marcellus Shales. For more information, please visit the
Company’s website at www.eclipseresources.com.
Forward-Looking
Statements
This press release 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 press release, regarding Eclipse Resources’ strategy,
future operations, financial position, estimated revenues and
income/losses, projected costs and capital expenditures, prospects,
plans and objectives of management are forward-looking statements.
When used in this press release, the words “plan,” “endeavor,”
“will,” “would,” “could,” “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 based on Eclipse Resources’ current
expectations and assumptions about future events and are 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 under the heading “Risk Factors” in Eclipse
Resources’ Annual Report on Form 10-K filed with the Securities
Exchange Commission on March 3, 2017 (the “2016 Annual
Report”), and in “Item 1A. Risk Factors” of Eclipse Resources’
Quarterly Reports on Form 10-Q.
With respect to the proposed Transactions described herein,
forward-looking statements may include, but are not limited to,
statements regarding the expected timing of the completion of the
Transactions; the ability to complete the Transactions considering
the various closing conditions; the benefits of such Transactions
and their impact on the Company’s business, operations and assets;
and any statements of assumptions underlying any of the foregoing.
In addition, forward-looking statements may include statements
about Eclipse Resources’ business strategy; reserves; our proposed
drilling joint venture with Sequel; general economic conditions;
financial strategy, liquidity and capital required for developing
its properties and timing related thereto; realized natural gas,
natural gas liquids and oil prices; timing and amount of future
production of natural gas, NGLs and oil; its hedging strategy and
results; future drilling plans; competition and government
regulations, including those related to hydraulic fracturing; the
anticipated benefits under its commercial agreements; marketing of
natural gas, NGLs and oil; leasehold and business acquisitions; the
costs, terms and availability of gathering, processing,
fractionation and other midstream services; general economic
conditions; credit markets; uncertainty regarding its future
operating results, including initial production rates and liquid
yields in its type curve areas; and plans, objectives, expectations
and intentions contained in this press release that are not
historical.
Eclipse Resources cautions you that the forward-look statements
pertaining to the proposed Transactions described herein are
subject to risks and uncertainties related to the benefits from, or
completion of, the proposed Transactions, including, without
limitation, failure to satisfy any of the conditions precedent to
the proposed Transactions, adverse effects on the market price of
the Company’s common stock and on the Company’s operating results
because of a failure to complete the proposed Transactions, failure
to realize the expected benefits of the proposed Transactions,
negative effects of announcement or consummation of the proposed
Transactions on the market price of the Company’s common stock, and
significant transaction costs, unknown liabilities and/or
unanticipated expenses such as litigation expenses. In addition, if
and when the proposed Transactions are consummated, there will be
risks and uncertainties related to the Company’s ability to
successfully integrate the acquired assets. In addition, all
forward-looking statements are subject to risks and uncertainties,
most of which are difficult to predict and many of which are beyond
the Company’s 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 recent significant
decline of the price of natural gas, NGLs, and oil, inflation, lack
of availability of drilling, production and processing equipment
and services, our inability to successfully negotiate or enter into
definitive agreements and satisfy other conditions precedent for
our proposed joint venture drilling transaction with Sequel Energy
Group LLC, and to effectively implement that transaction,
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, the timing of
development expenditures, and the other risks described under the
heading “Risk Factors” in the 2016 Annual Report and in “Item 1A.
Risk Factors” of Eclipse Resources’ Quarterly Reports on Form
10-Q.
All forward-looking statements, expressed or implied, included
in this press release 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 Eclipse Resources or persons acting
on the Company’s behalf may issue. Except as otherwise required by
applicable law, Eclipse Resources disclaims any duty to update any
forward-looking statements to reflect events or circumstances after
the date of this press release.
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version on businesswire.com: http://www.businesswire.com/news/home/20171211005289/en/
Eclipse Resources CorporationDouglas Kris, 814-325-2059Investor
Relationsdkris@eclipseresources.com
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