Eclipse Resources Corporation Announces Third Quarter 2016 Financial and Operational Results

Eclipse Resources Corporation (NYSE:ECR) (the “Company” or “Eclipse
Resources”) today announced its third quarter 2016 financial and
operational results.

Third Quarter 2016 Highlights:

• Average net daily production was 221.6 MMcfe per day, exceeding the
  high end of the Company’s previously issued guidance.
• Realized an average natural gas price, before the impact of cash
  settled derivatives and firm transportation expenses, of $2.28 per
  Mcf, a $0.60 discount to the average NYMEX natural gas prices during
  the quarter.
• Realized an average oil price, before the impact of cash settled
  derivatives of $39.67 per barrel, a $5.22 per barrel discount to the
  average WTI oil price during the quarter.
• Realized an average natural gas liquids price, before the impact of
  cash settled derivatives of $13.41 per barrel, or approximately 30% of
  the average WTI oil price during the quarter.
• Per unit cash production costs (includes lease operating,
  transportation, gathering and compression, production and ad valorem
  taxes) were $1.53 per Mcfe and includes $0.39 per Mcfe of
  firm transportation expenses.
• Net loss for the third quarter of 2016 was $26.8 million; Adjusted
  EBITDAX¹ for the third quarter of 2016 was $21.7 million.
• Completed 12 wells utilizing Eclipse’s “Generation 3” completion
  design which incorporates increased proppant loading, tighter spacing
  and 100% slickwater. The Company turned 11 gross (9.6 net) wells to
  sales during the third quarter of 2016 and was very encouraged with
  the initial results of the wells as compared to the Company’s previous
  completion designs.
• The Company’s first “Super-Lateral” well continued to outperform the
  Company’s “type well” expectations, producing a cumulative amount of
  2.4 Bcfe (38% gas, 38% condensate and 24% natural gas liquids) during
  the first 185 days of production while exhibiting significantly
  shallower pressure declines than the Company anticipated. Based on the
  well’s performance to date, the Company currently estimates the well
  will outperform the Company’s “type well” reserve expectations by 28%
  to 50%.

Subsequent to the end of the Third Quarter:

• Commenced transporting natural gas as the only user on the 205,000
  MMBtu per day Utica Access Project into the Columbia Gas Transmission
  “TCO” pool.
• The Company completed its borrowing base redetermination of its
  revolving credit facility which resulted in no change to its $125
  million borrowing base. The Company remains undrawn on its revolving
  credit facility, other than for letters of credit.
• The Company added to its natural gas hedge portfolio by executing
  incremental hedges of 90,000 MMBtu per day.
  • The Company has 198,333 MMBtu per day of 2017 natural gas
    production hedged, or approximately 80% of its expected natural
    gas production, at an average floor price² of $2.86 and
    an average ceiling price of $3.28.
  • The Company has an average of 3,500 barrels per day of 2017 oil
    production hedged, or approximately 80% of its expected oil
    production, at an average floor price² of $46.00 and an
    average ceiling price of $59.81.
  • The Company has 140,000 MMBtu per day of 2018 natural gas
    production hedged at an average floor price² of $2.86
    and an average ceiling price of $3.29.

Benjamin W. Hulburt, Chairman, President and CEO, commented on the
Company’s third quarter 2016 results, “The team’s continuously
outstanding execution and innovation has allowed us to yet again exceed
the high end of our production guidance while delivering unit operating
costs below our previously estimated guidance range for the quarter.
During the third quarter, a team of Eclipse Resources and Halliburton
personnel set a Halliburton record for the number of stages completed in
a month by a single crew in the Northeast region. This record was set
and then broken by the same crew in two consecutive months.
Additionally, this week we learned we set their record for the total
amount of proppant pumped in a month by a single crew in the Northeast,
pumping over 82 million pounds of proppant in October. We have
transferred some lessons learned from our ground breaking Purple Hayes
“Super-Lateral” well which continues to exceed our type well
expectations to date. During the quarter, we completed 12 of our DUC
wells using what we refer to as our “Generation 3” completion design
that incorporates tighter spacing, increased proppant loading and 100%
slickwater. Due to record setting efficiencies in our completion
operations, we have been able to effectively neutralize well cost
inflation keeping our well costs within budget and maintaining leading
edge cost metrics.

To date, our wells turned to sales using the “Generation 3” completion
design have exhibited higher initial flowing tubing pressures as
compared to Generation 1 and 2 completions employed previously. These
wells are being produced using our managed pressure drawdown method and
have demonstrated flat production with very encouraging pressure
declines similar to what we’ve seen on our Purple-Hayes well.

We are continuing to drill on our Utica Shale dry gas acreage in eastern
Monroe County, Ohio where we are currently drilling a 7 well pad.
Additionally, we are currently completing our first “Generation 3”
completion in the dry gas window on a five well pad with average lateral
extensions of 10,891 feet in which we are successfully placing proppant
concentrations of 2,600 to 3,000 pounds per foot using 100% slickwater.
We expect to begin putting these exciting test wells to sales starting
late in the fourth quarter.

With the commencement of our Utica Access capacity in mid-October, we
can now transport up to 205,000 MMBtu per day of our gas to the “TCO”
pool. With this capacity now in place, we have seen an immediate uplift
to our realized natural gas prices and expect to realize a differential
of ($0.30) to ($0.35) per Mcf on natural gas sales during the fourth
quarter of 2016. Based on forward basis pricing, this capacity could
allow for an estimated basis uplift of approximately $1.08 per MMBtu³
for 2017 relative to selling natural gas at Dominion South Point. This
valuable natural gas firm transport capacity coupled with our recently
added ability to access capacity on the Mariner East I pipeline for a
portion of our ethane should enable us to achieve a higher overall
realized price per unit moving forward.

We have taken advantage of the recent price improvement in natural gas
markets to finish out our 2017 gas hedging program, which now covers
approximately 80% of our currently expected natural gas production of
2017, and to commence our 2018 natural gas hedging program which now
totals 140,000 MMBtu per day. We expect to continue to opportunistically
add to our 2018 hedge portfolio as prices allow, while attempting to
retain upside participation if the natural gas price increases.”

Operational Discussion

The Company’s production for the three months ended September 30, 2016
and 2015 is set forth in the following table:

The table below summarizes year to date activity as of September 30,
2016 and the number of wells expected to be turned to sales for the
remainder of 2016:

Financial Discussion

GAAP Revenues for the third quarter of 2016 totaled $54.5 million,
compared to $71.2 million for the third quarter of 2015. Adjusted
Revenues⁴, which includes the impact of cash settled
derivatives and excludes brokered natural gas and marketing revenue,
totaled $59.0 million for the third quarter of 2016 compared to $71.3
million for the third quarter of 2015. Net loss for the third quarter of
2016 was $26.8 million, or ($0.10) per share. Adjusted Net Loss⁴
for the third quarter of 2016 was $21.4 million, or ($0.08) per share.
Adjusted EBITDAX⁴ was $21.7 million for the third quarter of
2016.

Average realized price calculations are set forth in the table below:

The Company’s primary operating expenses decreased by 38% compared to
the prior year’s quarter and are shown below. Per unit cash production
costs (includes lease operating, transportation, gathering and
compression, production and ad valorem taxes) were $1.53 per Mcfe for
the third quarter 2016.

Capital Expenditures

Third quarter 2016 capital expenditures were $76.6 million. These
expenditures included $67.3 million for drilling and completions
(operated drilling and completions of $65.3 million and non-operated
drilling and completions of $2.0 million), ($0.1) million for midstream
expenditures, $9.3 million for land related expenditures, and $0.1
million for corporate related expenditures.

Financial Position and Liquidity

As of September 30, 2016, the Company’s liquidity was $272 million
consisting of $178 million in cash and cash equivalents and available
borrowing capacity under the Company’s revolving credit facility of $94
million (after giving effect to outstanding letters of credit issued by
the Company of $31 million).

Subsequent to the end of the third quarter of 2016, the Company
completed its semi-annual borrowing base redetermination process with
the lending group under its revolving credit facility. Through that
process, the lending group determined that the Company’s borrowing base
will remain at $125 million. The next borrowing base redetermination
under the revolving credit facility is scheduled to occur in the spring
of 2017 under the terms of the Company’s credit agreement.

Matthew R. DeNezza, Executive Vice President and Chief Financial
Officer, commented, “With the closing of our equity offering early in
the quarter and the recent completion of our borrowing base
redetermination, we continue to maintain a strong liquidity position
based on a sizable, quarter end cash position of $178 million and an
undrawn revolver with availability of over $90 million after giving
effect to our currently outstanding letters of credit. We believe this
liquidity position as well as our continued cash flow outperformance
will create the foundation used to generate a robust growth profile as
we move out of this year and into next.”

Commodity Derivatives

The Company engages in a number of different commodity trading program
strategies as a risk management tool to attempt to mitigate the
potential negative impact on cash flows caused by price fluctuations in
natural gas, natural gas liquids and oil prices. Below is a table that
illustrates the Company’s current hedging activities:

Oil Derivatives

NGL Derivatives

Subsequent to September 30, 2016, the Company entered into the following
derivative instruments:

Guidance

The Company issued the following fourth quarter and amended full year
2016 guidance in the table below:

Conference Call

A conference call to review the Company’s financial and operational
results for the third quarter of 2016 is scheduled for Friday, November
4, 2016 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 Third Quarter 2016 Earnings Call. A replay
of the call will be available through January 4, 2017. To access the
phone replay dial 877-660-6853 or 201-612-7415 for international
callers. The conference ID is 13647741. 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. Additionally, Eclipse Resources has updated its investor
presentation with third quarter 2016 financial and operational results.
Please see the Investor Center of the Company’s website at www.EclipseResources.com
for the presentation entitled “Company Presentation – November 2016”.

Adjusted Revenue

Adjusted Revenue is a non-GAAP financial measure. The Company defines
Adjusted Revenue as follows: total revenues plus cash settled
derivatives less brokered gas and marketing revenue. The Company
believes Adjusted Revenue provides investors with helpful information
with respect to the performance of the Company's operations and
management uses Adjusted Revenue to evaluate its ongoing operations and
for internal planning and forecasting purposes. See the table below
which reconciles Adjusted Revenue and total revenues.

Adjusted Net Loss

Adjusted net income or loss represents income or loss before income
taxes adjusted for certain non-cash items less income taxes. We believe
adjusted net income or loss is used by many investors and published
research in making investment decisions and evaluating operational
trends of the Company and its performance relative to other oil and gas
producing companies. Adjusted Net Loss is not a measure of net income as
determined by GAAP. See the table below for a reconciliation of Adjusted
Net Loss and net loss.

Adjusted EBITDAX

Adjusted EBITDAX is a supplemental non-GAAP measure that is used by the
Company to evaluate its financial results. The Company defines 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 GAAP.
See the table below for a reconciliation of Adjusted EBITDAX to net loss.

Cash General and Administrative Expenses

Cash General and Administrative Expenses is a non-GAAP financial measure
used by the Company in the Guidance Table to provide a measure of
Administrative expenses used by many investors and published research in
making investment decisions and evaluating operational trends of the
Company. See the table below for a reconciliation of Cash General and
Administrative Expenses and General and Administrative Expenses.

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 4, 2016 (the
“2015 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; general economic conditions;
financial strategy, liquidity and capital required for developing its
properties and timing related thereto; realized natural gas, NGLs 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-looking statements
are subject to all of the risks and uncertainties, most of which are
difficult to predict and many of which are beyond its 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, 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 2015 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.

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