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2018-01-12 / Business Briefs

Eclipse Resources Corporation announces the closing of its previously announced Utica Shale drilling joint venture

STATE COLLEGE, PA. – (BUSINESS WIRE) Eclipse Resources Corporation (NYSE:ECR) (the “Company” or “Eclipse Resources”) announced 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 Dec. 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:

— 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 of 2018. This committed funding amount reflects the company’s working interest election in the first program.

—A mutual option for an additional third well program consisting of approximately 16 wells, which would increase the committed funding. Eclipse Resources shall be the operator of all wells drilled within each well program. Eclipse Resources shall retain 50 percent 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 percent to 70 percent until such program is commenced.

— A 15-percent 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-percent 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.”

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