Eclipse Resources Corporation (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:
- 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.
- 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 atwww.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.
| Q4 2015 | FY 2015 | Q1 2016 | ||||||||||
| Production Mmcfe/d | 225 ‐ 235 | 202 ‐ 205 | ~200 | |||||||||
| % Gas | 68% ‐ 74% | 64% ‐ 66% | 73%-80% | |||||||||
| % NGL | 16% ‐ 18% | 18% ‐ 20% | 15%-17% | |||||||||
| % Oil | 10% ‐ 14% | 15% ‐ 17% | 6%-10% | |||||||||
| Gas Price Differential1 | $(0.12) ‐ $(0.22) | $(0.12) ‐ $(0.15) | $(0.10) – $(0.20) | |||||||||
|
FT Expense |
$(0.38) ‐ $(0.49) |
$(0.30) ‐ $(0.34) |
$(0.40) – $(0.50) | |||||||||
|
Gas Price Differential with FT expense1 |
$(0.50) ‐ $(0.71) | $(0.42) ‐ $(0.49) | $(0.50) – $(0.70) | |||||||||
| Oil Differential1 | $(11.00) ‐ $(13.00) | $(11.25) ‐ $(12.25) | $(11.25) – $(12.25) | |||||||||
| NGL % WTI | 15% ‐ 25% | 20% ‐ 24% | 20% -30% | |||||||||
| Operating Expenses ($/Mcfe)2 | $1.32 ‐ $1.37 | $1.28 ‐ $1.33 | $1.35 -$1.45 | |||||||||
| Cash G&A ($mm)3 | $10 ‐ $12 | $45 ‐ $47 | $11 – $12 | |||||||||
| CAPEX ($mm)4,5 | $330 | $33 |
| 1. | Excludes impact of hedges | ||||
| 2. | Excludes firm transportation, DD&A, exploration, and general and administrative expenses | ||||
| 3. | Excludes costs associated with rig terminations | ||||
| 4. |
Includes routine lease acquisition, land related expenses, and net of projected midstream reimbursements; excludes land and producing asset acquisitions |
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| 5. | Includes delay rental payments which are classified as exploration for financial reporting purposes | ||||
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 atwww.eclipseresources.com.
