Eclipse completes $63M non-core Utica asset sale

Eclipse Resources Corp. (NYSE:ECR) has completed the sale of approximately 9,900 net acres in eastern Noble County and western Monroe County, Ohio for approximately $63.8 million to an undisclosed buyer. The assets sold were predominately undeveloped acres in the Utica Shale formation and included de minimis net production of approximately 1,000 Mcfe per day. Proceeds from the sale will be used to fund operations and for general corporate purposes.

Benjamin W. Hulburt, Eclipse’s chairman, president, and CEO commented on the sale in a press release, saying the “non-core acreage divestment” further enhances the company’s liquidity as the company prepares for accelerated growth in 2017. “The acreage we divested was not in our near-term drilling program, did not permit us to drill wells with lateral lengths that meet our internal planning requirements, and would have required future lease extension payments.”

In addition to completing this planned divestment, we have taken advantage of the recent favorable move in natural gas prices to continue to add to our hedging portfolio for both 2017 and 2018. With this increased hedge position coupled with the additional cash from this divestiture, we are increasingly confident in our ability to fund the addition of a second operated rig during 2017 without overburdening our balance sheet.”

In an interview with OGFJ in September, Hulburt mentioned the company was looking at a non-core acreage divestment as part of its plans to fund operations in 2017. Read the full interview here.

In a note Tuesday, Seaport Global Securities analysts say the ~$6.1K/acre at $3.0K/MMcfepd deal is “in line with previous expectations of 8K-10K net acres for ~$60MM.” While the sale had been discussed previously, the analysts believe the announcement “will be viewed positively given the impact on the company's balance sheet and 2017 outlook – pro forma for the sale, we estimate liquidity of $332.0MM (up from $268.2MM previously) with YE17 net debt/EBITDAX falling to 4.1x from 4.8x previously.”

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