Eclipse Resources (NYSE: ECR) had its Q2 conference call last week. Excerpts from the Q&A are below.
Q: I had a couple of questions on the Marcellus side, just seems like there’s a superior IRR case here now with some of the liquid strength, the wells are outperforming your initial expectations. How dominant could that program become, I guess, as you get into 2019 if current prices hold? And then on top of that, how many existing Utica pads, do you have Marcellus locations on it, that you could drill draw that have already been constructed and then how much is that saving relative to that $9.9 million dollar well cost that you’re quoting?
Chairman, President and CEO Benjamin W. Hulburt: The biggest thing we have to accomplish now on the Marcellus is finalizing the midstream plan.
So these first two wells because of their size in relation to the Dry Gas Utica wells in the area, we are able to blend these first two wells into the dry gas pipelines that Eureka owns in the area. And that’s what’s allowing us to flow test them now. As we move forward obviously, we don’t want to just blend them in. The good thing is there are existing liquid lines running through the area that have the ability to access at least three different processing providers.
So we’re currently in the process of negotiating with each of those to obviously get the best terms we can. None of this will require any substantial buildout. So it should be a relatively simple process, but that’s the next step. In the meantime, we’re in the process of lining out the drill program on these Marcellus wells in order to get them into the queue as quickly as possible. And I would anticipate additional Marcellus well drilling in 2019.
As to the other question, at this point, I’d estimate there are three, maybe four pads existing where you could drill additional Marcellus wells. One of the pads in particular is quite large and could accommodate quite a few Marcellus wells off of it. Obviously, with having zero pad construction costs, that’s going to bring those well costs down.
Q: On the Painter well, I guess so far, I guess the completion is largely finished now. Is the well flowing back and cleaning up at this point and anything based on what you’re seeing in early days relative to what your expectations would have been at least through the drilling and completion process?
Chairman, President and CEO Benjamin W. Hulburt: I would say the drilling process on the well went a little better than we expected, although being our first well in the area, we always build in a little more fluff time. But generally, that drilling went very, very well. We drilled it a little faster than we expected to. We believe we stayed in what we believe is the optimum target zone throughout the entire lateral. As we’ve gone into completions, we’ve done a lot of work to try and design a completion design where the fractures would adequately drain the entire reservoir, which in this area is a little thicker than what we’re used to in Southeast Ohio. Obviously, hard to tell whether that’s happening or not. We think as we’re going through the completion, we’re seeing things that might indicate that, that is happening and we’re getting greater frac growth in height. However, that’s far from a conclusion at this point. We have about two to three more days of fracing on this well and then we’ll immediately proceed to drill out plugs. I think at this point, we would anticipate putting that well to sales before the end of August.
The Oil and Gas Conference®
Eclipse Resources is presenting at EnerCom’s The Oil & Gas Conference® at the Denver Downtown Westin Hotel, Denver, Colo. Aug. 19-22, 2018. EnerCom expects to have more than 80 presenting oil and gas companies and more than 2000 financial professionals attending this year’s conference.
To learn more about the conference and presenter schedule please visit the conference website here.
