Eclipse Resources Fourth Quarter 2015 Operational Update and Conference Participation
Eclipse Resources Corporation (NYSE:ECR) (the “Company”) today is
pleased to provide an operational update, its initial outlook on the
First Quarter 2016 guidance and capital budget and the participation of
members from the Company’s executive management team in the following
upcoming investor conferences:
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Wednesday January 6, 2016 through Thursday January 7, 2016 (Miami,
FL)- Goldman Sachs Global Energy Conference. Benjamin W. Hulburt
(Chairman, President and CEO) and Matthew R. DeNezza (Executive Vice
President and CFO) will host one-on-one meetings.
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Thursday January 13, 2016 (Boston, MA)- BMO Capital Markets Energy
Forum. Benjamin W. Hulburt (Chairman, President and CEO) and Matthew
R. DeNezza (Executive Vice President and CFO) will host one-on-one
meetings.
The Company has posted an updated corporate presentation on the Company
website at www.eclipseresources.com
which includes information contained in this release as well as
additional updated information.
Operational Update
The Company continues to closely monitor the commodity price
environment, and the Company currently plans to minimize its drilling
and completion activity until commodity prices improve. Despite its
drilling cessation, which the Company initiated in November of 2015, the
Company believes it is on pace to exceed the high end of its fourth
quarter 2015 and full year production guidance range. Based on
preliminary estimates, which are subject to change as final sales
figures are determined, the Company currently anticipates that it exited
2015 with approximately 268 MMcfe per day of net production with fourth
quarter 2015 average net production of at least 236 MMcfe per day, and
full year 2015 average net production of approximately 206 MMcfe per
day. Additionally, the Company estimates that it exited the year with
$281 million in liquidity derived from its undrawn revolving credit
facility and cash on hand of approximately $184 million.
The Company is pleased to announce that it placed all seven of its
Fuchs/Dietrich wells in the Utica Shale Dry Gas East area into sales
during the fourth quarter of 2015. These seven wells were drilled with
lateral lengths ranging from approximately 7,450 feet to 10,520 feet
(average lateral length of approximately 8,800 feet) and were completed
using what the Company currently believes to be an “optimized” frack
design. The wells have been placed into sales and were produced at the
Company’s Type Well target rate with initial casing pressures of
7,500-8,000 psi.
Given the lower current market prices for both natural gas and oil,
coupled with the uncertain outlook in the near term, the Company is
focusing its initial 2016 plan on limiting cash outlays on drilling
while allowing for greater productivity as prices rebound. To implement
this strategy, the Company has begun voluntarily reducing its aggregate
operated production to attempt to maintain net production at
approximately the same level as its 2015 average, or approximately 200
MMcfe per day, until commodity prices recover. As the Company has both
liquids/condensate rich and dry natural gas production areas currently
producing the Company plans to adjust its production mix according to
changes in the commodity prices for the near term. The Company believes
these measures are prudent given the significant decline in oil and
natural gas prices as they will enable the Company to maintain
sufficient cash flows to meet its obligations, limit use of cash on hand
for drilling expenses, avoid selling its valuable products in a
depressed price environment and return to its historic production growth
profile as commodities begin to rebound in the future.
For the first quarter 2016, the Company anticipates capital expenditures
of approximately $33 million, which will include the drilling and
completion of 1 net, extended reach well along with associated land and
non-operated activity that was commenced in the fourth quarter of 2015.
The Company will focus on managing production based upon wells that
demonstrate the best variable margin in the current commodity price
environment. The table below outlines Eclipse Resources’ first quarter
2016 guidance along with the previously announced fourth quarter and
full year 2015 guidance.
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Q4 2015
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FY 2015
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Q1 2016
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Production Mmcfe/d
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225 ‐ 235
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202 ‐ 205
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~200
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% Gas
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68% ‐ 74%
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64% ‐ 66%
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73%-80%
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% NGL
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16% ‐ 18%
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18% ‐ 20%
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15%-17%
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% Oil
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10% ‐ 14%
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15% ‐ 17%
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6%-10%
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Gas Price Differential1
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$(0.12) ‐ $(0.22)
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$(0.12) ‐ $(0.15)
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$(0.10) - $(0.20)
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FT Expense
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$(0.38) ‐ $(0.49)
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$(0.30) ‐ $(0.34)
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$(0.40) - $(0.50)
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Gas Price Differential with FT expense1
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$(0.50) ‐ $(0.71)
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$(0.42) ‐ $(0.49)
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$(0.50) - $(0.70)
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Oil Differential1
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$(11.00) ‐ $(13.00)
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$(11.25) ‐ $(12.25)
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$(11.25) - $(12.25)
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NGL % WTI
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15% ‐ 25%
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20% ‐ 24%
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20% -30%
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Operating Expenses ($/Mcfe)2
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$1.32 ‐ $1.37
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$1.28 ‐ $1.33
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$1.35 -$1.45
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Cash G&A ($mm)3
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$10 ‐ $12
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$45 ‐ $47
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$11 - $12
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CAPEX ($mm)4,5
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$330
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$33
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1.
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Excludes impact of hedges
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2.
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Excludes firm transportation, DD&A, exploration, and general and
administrative expenses
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3.
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Excludes costs associated with rig terminations
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4.
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Includes routine lease acquisition, land related expenses, and net
of projected midstream reimbursements; excludes land and producing
asset acquisitions
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5.
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Includes delay rental payments which are classified as exploration
for financial reporting purposes
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Commenting on the Company’s operations, Benjamin Hulburt, Chairman,
President and CEO said, “As natural gas prices hover around fifteen year
lows, I believe we are making the financially prudent decision regarding
our significantly decreased capital spending plan and the curtailment of
our production. Although we are not setting a capital budget for the
year at this time, we currently anticipate that our ultimate capital
plan, absent a significant increase in commodity prices, will be
constructed with the objective of ending 2016 with a cash balance and no
new debt drawn. As well, this plan will allow the Company flexibility to
adjust which wells are curtailed throughout the year based on operating
costs, volume commitments and commodity prices.”
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, future commodity prices, 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 9, 2015
(the “2014 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 2014 Annual Report and in “Item
1A. Risk Factors” of Eclipse Resources’ Quarterly Reports on Form 10-Q.
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.
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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