Eclipse Resources Corporation Announces the Closing of its Previously Announced Utica Shale Drilling Joint Venture
Eclipse Resources Corporation (NYSE:ECR) (the “Company” or “Eclipse
Resources”) announced today that it has, through certain subsidiaries,
entered into definitive agreements with Sequel Energy Group LLC
(“Sequel”) (an affiliate of GSO Capital Partners LP, or “GSO”) on
December 22, 2017 to establish the previously announced drilling joint
venture on the Company’s Utica Shale acreage in Guernsey and Monroe
Counties in southeast Ohio (the “Drilling Joint Venture”).
Drilling Joint Venture Highlights:
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Committed funding from Sequel of up to $285 million to fund its
proportionate share of two drilling programs comprising 34 gross wells
in aggregate, commencing with wells currently in progress and
extending through wells expected to be commenced through the end 2018.
This committed funding amount reflects the Company’s working interest
election in the first program.
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A mutual option for an additional third well program consisting of
approximately 16 wells, which would increase the committed funding.
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Eclipse Resources shall be the operator of all wells drilled within
each well program.
-
Eclipse Resources shall retain 50% of its pre-carry working interest
in the first program and shall have the option until January 31, 2018
to adjust its pre-carry working interest in the second program and, if
applicable, the third well program to between 30% to 70% until such
program is commenced.
-
A 15% carried interest on drilling and completion capital expenditures
incurred in each well program, proportionately reduced to Eclipse
Resources retained pre-carry working interest.
-
A significant portion of Sequel’s working interest in each well
program will revert to Eclipse Resources once a certain return is
realized by Sequel in each program.
Benjamin W. Hulburt, Chairman, President and CEO, commented on the
Company’s joint venture agreement, “We believe that the drilling joint
venture agreement we have entered into with Sequel, an affiliate of GSO,
speaks to both the quality of our assets and our industry leading
operational performance. The Company has elected to retain a 50%
pre-carry working interest in the first program and anticipates making
its election into the second program, along with announcing the
Company’s 2018 Capital budget, during the first quarter of 2018. The
structure of the drilling joint venture allows us to maintain an
efficient, two rig operating program while providing flexibility to
manage capital spending to a level that is appropriate depending on the
strength of the forward commodity curves. We are extremely pleased with
the final terms and structure outlined by the agreement with Sequel and
the high degree of confidence that our partner has in our assets and
operational capabilities.”
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.
Forward-looking statements may include statements about Eclipse
Resources’ business strategy; reserves; Drilling Joint Venture with
Sequel, including the expected benefits of such transaction and its
impact on the Company’s business, operations and assets; 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; pending legal matters relating to its leases; 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 these forward-look statements are
subject to all of the 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 failure to realize the expected benefits of
the Drilling Joint Venture with Sequel and to effectively implement such
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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