Eclipse Resources Corporation (NYSE:ECR) (the “Company” or
“Eclipse Resources”) today announced its third quarter 2017
financial and operational results and provided updated full year
2017 guidance. In conjunction with this release, the Company has
posted an updated investor presentation to its website at
www.eclipseresources.com.
Third Quarter 2017 Highlights:
- Placed two new Utica Condensate
“Super-Lateral” wells into sales with initial average production
rates of approximately 3,300 BOE per day per well (48% condensate,
68% liquids) on a restricted choke during the fourth quarter of
2017.
- Average net daily production was 353
MMcfe per day, in line with the Company’s previously issued
production guidance range of 350 to 355 MMcfe per day.
- Realized an average natural gas price,
before the impact of cash settled derivatives and firm
transportation expenses, of $2.47 per Mcf, a $0.53 per Mcf discount
to the average monthly NYMEX settled natural gas price during the
quarter, exceeding the Company’s previously issued natural gas
differential discount guidance of $0.60 to $0.70 per Mcf.
- Realized an average oil price, before
the impact of cash settled derivatives, of $42.08 per barrel, a
$6.10 per barrel discount to the average WTI oil price during the
quarter, exceeding the Company’s previously issued oil differential
guidance range of $6.50 to $7.00 per barrel.
- Realized an average natural gas liquids
(“NGL”) price, before the impact of cash settled derivatives, of
$20.34 per barrel, or approximately 42% of the average WTI oil
price during the quarter and exceeding the Company’s previously
issued NGL guidance range of 30% to 35% of the WTI oil price.
- Per unit cash production costs
(including lease operating, transportation, gathering and
compression, production and ad valorem taxes) were $1.18 per Mcfe,
including $0.28 per Mcfe in firm transportation expenses, which was
below the Company’s previously issued per unit cash production cost
guidance range of $1.20 to $1.25 per Mcfe.
- Net loss for the third quarter of 2017
was $(16.7) million; and Adjusted EBITDAX1 for the third quarter of
2017 was $45.9 million.
1 Non-GAAP measure. See reconciliation for details.
Benjamin W. Hulburt, Chairman, President and CEO, commented on
the Company’s third quarter 2017 results, “Eclipse Resources has
continued to build on its strong track record and has delivered
another solid quarter. We continue to challenge ourselves to
provide incremental enhancements to our drilling and completions
capabilities by embracing new technology and data applications
while striving for optimal performance throughout our processes,
from planning to implementation. As of the end of the third
quarter, we had drilled eleven “super-lateral” wells with an
average lateral length of approximately 18,000 feet, averaging just
16 days from spud to total depth (“TD”). During the third quarter,
the Company drilled 10 gross (9.7 net) wells including four
“super-laterals” with an average lateral length of over 17,500
feet. Moving into the fourth quarter, we drilled our Mercury B5H,
setting a new lateral length record, located in the Utica
Condensate area. This well was drilled with a lateral length of
approximately 20,800 feet in 13 days spud to TD with the lateral
itself drilled in only five days.
“On the completion side, we are in the process of completing our
“stacked pay” Stalder pad, which incorporates two Marcellus
Condensate wells and three Utica Dry Gas wells. We expect that this
pad will begin to turn to sales in January 2018 and anticipate that
it will provide the Company with the data needed to further
validate our condensate rich Marcellus play footprint in eastern
Ohio. Currently we have 16 wells with average lateral lengths of
14,500 (232,000 in total lateral footage) drilled but not
completed. Two of these are Marcellus Condensate wells which are
currently completing, three are Utica Dry gas wells that are
waiting on plug drill out, while one Utica Dry and 10 Utica
Condensate wells are waiting on completion. As our drilling
operations have generally been more efficient and faster than
expected, we are currently planning to mobilize a second completion
crew in the first quarter to reduce our drilled uncompleted well
inventory.
“Lastly and perhaps most excitingly, early in the fourth
quarter, we began turning to sales five wells in the Utica
Condensate portion of our acreage that included our Great Scott 3H
(19,200 foot completed lateral) and Outlaw C11H (19,600 foot
completed lateral), along with three additional laterals averaging
approximately 10,300 feet in length. The two record setting
“super-laterals” have reached an average per well 24-hour
production rate of approximately 3,300 Barrels of Oil Equivalent
(“BOE”) to date on a restricted choke, consisting of almost 50%
condensate and 68% in total liquids. We estimate that our total
cost to drill and complete these two “super-lateral” wells
(including all construction and facility costs) was approximately
$750 per foot of lateral. We are continuing to bring all five wells
up to what we believe to be a stabilized rate as the wells continue
to clean up. To date, the five wells have reached a per well
average daily rate of 163 BOE per day per 1,000 foot of lateral
consisting of approximately 67% liquids.
“Concerning our previously announced drilling joint venture
commitment agreement, I am pleased to say that we believe we have
substantially completed the binding documents associated with the
joint venture with Sequel Energy and have commenced a preclearance
process related to the accounting treatment of the transaction with
the Securities and Exchange Commission (“SEC”). We hope to close
the transaction, pending final discussions with the SEC during the
next 30 days. I believe that I speak for both Eclipse and Sequel in
saying that we are excited to begin this next step in growing our
production base to achieve ultimate scale in our model while
managing our business prudently in what continues to be a
constantly changing environment.”
Operational Discussion
The Company’s production for the three and nine months ended
September 30, 2017 and 2016 is set forth in the following
table:
Three Months Ended Nine Months
Ended September 30, September 30, 2017
2016 2017 2016
Production: Natural gas (MMcf)
26,716.4 15,372.2 66,225.8 44,358.0 NGL sales (Mbbls) 675.6 525.5
2,002.7 1,725.1 Oil sales (Mbbls) 281.3 310.0 1,083.2 910.4 Total
(MMcfe) 32,457.8 20,385.2 84,741.2 60,171.0
Average daily
production volume: Natural gas (Mcf/d) 290,396 167,089 242,585
161,891 NGL sales (Bbls/d) 7,343 5,712 7,336 6,296 Oil sales
(Bbls/d) 3,058 3,370 3,968 3,323 Total (Mcfe/d) 352,802 221,575
310,409 219,605
Market Conditions
Prices for various quantities of natural gas, NGLs and oil that
we produce significantly impact our revenues and cash flows. Prices
for commodities, such as hydrocarbons, are inherently volatile. The
following table lists average daily, high, low and average monthly
settled NYMEX Henry Hub prices for natural gas and NYMEX WTI prices
for oil for the three and nine months ended September 30, 2017
and 2016:
Three Months Ended Nine Months
Ended September 30, September 30, 2017
2016 2017 2016
NYMEX Henry Hub High ($/MMBtu) $ 3.18 $ 3.19 $ 3.71 $ 3.19 NYMEX
Henry Hub Low ($/MMBtu) 2.76 2.67 2.44 1.49 Average Daily NYMEX
Henry Hub ($/MMBtu) 2.95 2.88 3.01 2.37 Average Monthly NYMEX
Settled Henry Hub ($/MMBtu) 3.00 2.81 3.17 2.29 NYMEX WTI
High ($/Bbl) $ 52.14 $ 49.02 $ 54.48 $ 51.23 NYMEX WTI Low ($/Bbl)
44.25 39.50 42.48 26.19 Average NYMEX WTI ($/Bbl) 48.18 44.89 49.30
42.25
Financial Discussion
Revenue for the third quarter of 2017 totaled $91.5 million,
compared to $54.5 million for the third quarter of 2016. Adjusted
Revenue2, which includes the impact of cash settled derivatives and
excludes brokered natural gas and marketing revenue, totaled $93.1
million for the third quarter of 2017 compared to $59.0 million for
the third quarter of 2016. Net Income (Loss) for the third quarter
of 2017 was $(16.7) million, or $(0.06) per share compared to
$(25.9) million or $(0.10) per share for the third quarter of 2016.
Adjusted Net Income (Loss) 2 for the third quarter of 2017 was
$(5.8) million, or $(0.02) per share, compared to $(20.5) million,
or $(0.08) per share for the third quarter of 2016. Adjusted
EBITDAX2 was $45.9 million for the third quarter of 2017 compared
to $22.6 million for the third quarter of 2016.
Revenue for the nine months ended September 30, 2017 totaled
$279.6 million, compared to $151.2 million for the nine months
ended September 30, 2016. Adjusted Revenue2, which includes the
impact of cash settled derivatives and excludes brokered natural
gas and marketing revenue, totaled $272.1 million for the nine
months ended September 30, 2017 compared to $176.6 million for the
nine months ended September 30, 2016. Net Income (Loss) for the
nine months ended September 30, 2017 was $21.6 million, or $0.08
per share compared to $(144.6) million or $(0.62) per share for the
nine months ended September 30, 2016. Adjusted Net Income (Loss)2
for the nine months ended September 30, 2017 was $(3.7) million, or
$(0.01) per share, compared to $(59.7) million, or $(0.25) per
share for the nine months ended September 30, 2016. Adjusted
EBITDAX2 was $135.7 million for the nine months ended September 30,
2017 compared to $59.9 million for the nine months ended September
30, 2016.
2 Adjusted Revenue, Adjusted Net Income (Loss) and Adjusted
EBITDAX are non-GAAP financial measures. Tables reconciling
Adjusted Revenue, Adjusted Net Income (Loss) and Adjusted EBITDAX
to the most directly comparable GAAP measures can be found at the
end of the financial statements included in this press release.
Average realized price calculations for the three and nine
months ended September 30, 2017 and 2016 are set forth in the table
below:
Three Months Ended Nine Months
Ended September 30, September 30, 2017
2016 2017 2016
Average Sales Price (excluding cash
settled derivatives and firm transportation)
Natural gas ($/Mcf) $ 2.47 $ 2.28 $ 2.83 $ 1.96 NGLs ($/Bbl) 20.34
13.41 20.95 13.28 Oil ($/Bbl) 42.08 39.67 44.26 33.95 Total average
prices ($/Mcfe) 2.82 2.67 3.27 2.34
Average Sales Price (including cash
settled derivatives, excluding firm transportation)
Natural gas ($/Mcf) $ 2.55 $ 2.50 $ 2.78 $ 2.57 NGLs ($/Bbl) 19.52
13.21 19.99 13.36 Oil ($/Bbl) 42.42 43.60 44.41 43.56 Total average
prices ($/Mcfe) 2.87 2.89 3.21 2.94
Average Sales Price (including firm
transportation, excluding cash settled derivatives)
Natural gas ($/Mcf) $ 2.13 $ 1.77 $ 2.39 $ 1.49 NGLs ($/Bbl) 20.34
13.41 20.95 13.28 Oil ($/Bbl) 42.08 39.67 44.26 33.95 Total average
prices ($/Mcfe) 2.54 2.28 2.93 1.99
Average Sales Price (including cash
settled derivatives and firm transportation)
Natural gas ($/Mcf) $ 2.20 $ 2.00 $ 2.34 $ 2.10 NGLs ($/Bbl) 19.52
13.21 19.99 13.36 Oil ($/Bbl) 42.42 43.60 44.41 43.56 Total average
prices ($/Mcfe) 2.59 2.51 2.87 2.59
The Company’s operating expenses per Mcfe for the third quarter
of 2017 decreased by 19% compared to the third quarter of 2016 and
are shown in the table below. Per unit cash production costs
(includes lease operating, transportation, gathering and
compression, production and ad valorem taxes) were $1.18 per Mcfe
for the third quarter 2017 and includes $0.28 per Mcfe of firm
transportation expenses.
General and administrative expense was $11.3 million for the
three months ended September 30, 2017 compared to $8.0 million for
the three months ended September 30, 2016 and are shown in the
table below. General and administrative expense per Mcfe was $0.35
in the three months ended September 30, 2017 compared to $0.39 in
the three months ended September 30, 2016. The increase of $3.3
million during the three months ended September 30, 2017 when
compared to three months ended September 30, 2016 was primarily due
to higher salaries and benefits associated with increased headcount
for the three months ended September 30, 2017. The decrease of
$0.04 per Mcfe is due to fixed costs being spread across higher
production as of September 30, 2017 as compared to September 30,
2016. General and administrative expense includes $2.4 million and
$1.8 million of stock-based compensation expense for the three
months ended September 30, 2017 and 2016, respectively.
Three Months Ended Nine Months
Ended September 30, September 30, 2017
2016 2017 2016
Operating expenses (in thousands): Lease operating $ 5,032 $
2,186 $ 11,943 $ 7,111 Transportation, gathering and compression
30,869 26,888 92,715 78,279 Production and ad valorem taxes 2,427
1,128 6,391 5,894 Depreciation, depletion and amortization 35,588
28,225 86,929 64,287 General and administrative 11,347 8,036 32,209
29,712
Operating expenses per Mcfe: Lease operating $ 0.16 $
0.11 $ 0.14 $ 0.12 Transportation, gathering and compression 0.95
1.32 1.10 1.30 Production, severance and ad valorem taxes 0.07 0.06
0.08 0.10 Depreciation, depletion and amortization 1.10 1.38 1.03
1.07 General and administrative 0.35 0.39 0.38 0.49
Capital Expenditures
Third quarter 2017 capital expenditures were $104.5 million.
These expenditures included $88.8 million for drilling and
completions, $2.7 million for midstream expenditures, $12.4 million
for land-related expenditures, and $0.6 million for
corporate-related expenditures.
During the third quarter of 2017, the Company commenced drilling
10 gross (9.7 net) operated Utica Shale wells. In addition, the
Company commenced completions of 6 gross (6.0 net) operated wells
and turned to sales 2 gross (2.0 net) operated wells.
Financial Position and
Liquidity
As of September 30, 2017, the Company’s liquidity was
$220.2 million, consisting of $28.8 million in cash and cash
equivalents and $191.4 million in available borrowing capacity
under the Company’s revolving credit facility (after giving effect
to outstanding letters of credit issued by the Company of $33.6
million).
Matthew R. DeNezza, Executive Vice President and Chief Financial
Officer, commented, “We believe our current liquidity position
coupled with the drilling joint venture agreement will allow us the
financial flexibility to navigate the current commodity price
volatility without adding stress to our balance sheet. Assuming the
closing of our pending drilling joint venture is completed before
year-end, we would expect to receive a significant reimbursement of
the third and fourth quarter’s drilling and completion capital
expenditures, and as such, we continue to anticipate that we will
end the full year 2017 with an undrawn revolver.”
Commodity Derivatives
The Company engages in a number of different commodity trading
program strategies as a risk management tool to attempt to mitigate
the potential negative impact on cash flows caused by price
fluctuations in natural gas, NGL and oil prices. Below is a table
that illustrates the Company’s hedging activities as of
September 30, 2017:
Natural Gas Derivatives
Volume Weighted Average
Description (MMBtu/d) Production Period
Price ($/MMBtu) Natural Gas Swaps: 10,000
October 2017 – December 2017 $ 2.98 10,000 October 2017 – December
2017 $ 3.21 30,000 October 2017 – March 2018 $ 3.46
Natural Gas
Three-way Collars: Floor purchase price (put) 160,000 October
2017 – December 2017 $ 2.83 Ceiling sold price (call) 160,000
October 2017 – December 2017 $ 3.37 Floor sold price (put) 160,000
October 2017 – December 2017 $ 2.31 Floor purchase price (put)
30,000 October 2017 – March 2019 $ 3.00 Ceiling sold price (call)
30,000 October 2017 – March 2019 $ 3.40 Floor sold price (put)
20,000 October 2017 – March 2019 $ 2.40 Floor sold price (put)
10,000 October 2017 – March 2019 $ 2.20 Floor purchase price (put)
40,000 October 2017 – December 2018 $ 2.90 Ceiling sold price
(call) 40,000 October 2017 – December 2018 $ 3.38 Floor sold price
(put) 40,000 October 2017 – December 2018 $ 2.30 Floor purchase
price (put) 60,000 January 2018 – March 2018 $ 2.90 Ceiling sold
price (call) 60,000 January 2018 – March 2018 $ 3.75 Floor sold
price (put) 60,000 January 2018 – March 2018 $ 2.40 Floor purchase
price (put) 60,000 April 2018 – December 2018 $ 2.90 Ceiling sold
price (call) 60,000 April 2018 – December 2018 $ 3.25 Floor sold
price (put) 60,000 April 2018 – December 2018 $ 2.40 Floor purchase
price (put) 60,000 January 2018 – December 2018 $ 2.80 Ceiling sold
price (call) 60,000 January 2018 – December 2018 $ 3.35 Floor sold
price (put) 60,000 January 2018 – December 2018 $ 2.33
Natural
Gas Call/Put Options: Call sold 40,000 January 2018 – December
2018 $ 3.75 Call sold 10,000 January 2019 – December 2019 $ 4.75
Basis Swaps: TCO - Columbia 20,000 October 2017 – December
2017 $ (0.19 ) Appalachia - Dominion 80,000 October 2017 – November
2017 $ (1.02 ) Appalachia - Dominion 50,000 December 2017 $ (0.56 )
Appalachia - Dominion 50,000 January 2018 – March 2018 $ (0.43 )
Appalachia - Dominion 12,500 April 2019 – October 2019 $ (0.52 )
Appalachia - Dominion 12,500 April 2020 – October 2020 $ (0.52 )
Oil Derivatives
Volume Weighted Average
Description (Bbls/d) Production Period
Price ($/Bbl) Oil Three-way Collars: Floor
purchase price (put) 2,000 October 2017 – December 2017 $ 46.00
Ceiling sold price (call) 2,000 October 2017 – December 2017 $
60.00 Floor sold price (put) 2,000 October 2017 – December 2017 $
38.00
NGL Derivatives
Volume Weighted Average
Description (Gal/d) Production Period Price
($/Gal)
Propane
Swaps:
84,000 October 2017 – December 2017 $ 0.60
Guidance
The Company has reiterated the following full year 2017 guidance
in the table below:
FY 2017 Production MMcfe/d 315 - 320 % Gas 77% - 81% % NGL
11% - 15% % Oil 7% - 9% Gas Price Differential ($/Mcf)1,2 $(0.30) -
$(0.40) Oil Differential ($/Bbl)1 $(5.50) - $(6.00) NGL Prices (%
of WTI)1 40% - 45% Cash Production Costs ($/Mcfe)3 $1.35 - $1.40
Cash G&A ($mm)4 $35 - $37 CAPEX ($mm)5 ~$300
1 Excludes impact of hedges.2 Excludes the cost of firm
transportation.3 Includes lease operating, transportation,
gathering and compression, production and ad valorem taxes.4
Non-GAAP measure which excludes non-cash compensation, see
reconciliation to the most comparable GAAP measure at the end of
the financial statements included in this press release.5 Excludes
potential acquisitions and payments of approximately $18 million
for land leased in 2016 which was paid in 2017.
Conference Call
A conference call to review the Company’s financial third
quarter 2017 earnings is scheduled for Thursday, November 9, 2017,
at 10:00 a.m. (Eastern). To participate in the call, please dial
877-709-8150, or 201-689-8354 for international callers, and
reference Eclipse Resources Third Quarter Earnings Call. A replay
of the call will be available through January 9, 2017. To access
the phone replay dial 877-660-6853 or 201-612-7415 for
international callers. The conference ID is 13672214. A live
webcast of the call may be accessed through the “Investors” section
of the Company’s website at www.eclipseresources.com.
ECLIPSE RESOURCES CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share
amounts)
(Unaudited)
September 30, December 31, 2017
2016 ASSETS CURRENT ASSETS Cash and cash
equivalents $ 28,795 $ 201,229 Accounts receivable 40,553 44,423
Assets held for sale 426 468 Other current assets 6,959
4,295 Total current assets 76,733 250,415
PROPERTY
AND EQUIPMENT AT COST Oil and natural gas properties,
successful efforts method: Unproved properties 488,260 526,270
Proved oil and gas properties, net 636,023 414,482 Other property
and equipment, net 7,190 6,748 Total property and
equipment, net 1,131,473 947,500
OTHER NONCURRENT
ASSETS Other assets 2,040 729
TOTAL ASSETS
$ 1,210,246 $ 1,198,644
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES Accounts payable $ 69,914 $ 44,049 Accrued capital
expenditures 19,319 11,083 Accrued liabilities 24,981 55,044
Accrued interest payable 9,973 21,098 Liabilities held for sale
189 245 Total current liabilities 124,376 131,519
NONCURRENT LIABILITIES Debt, net of unamortized
discount and debt issuance costs 494,332 492,278 Asset retirement
obligations 5,766 4,806 Other liabilities 2,740
13,434 Total liabilities 627,214 642,037
COMMITMENTS AND
CONTINGENCIES STOCKHOLDERS' EQUITY
Preferred stock, 50,000,000 authorized, no
shares issued and outstanding
— —
Common stock, $0.01 par value,
1,000,000,000 authorized, 262,740,355 and 260,591,893 shares issued
and outstanding, respectively
2,637 2,607 Additional paid in capital 1,965,514 1,958,731
Treasury stock, shares at cost; 992,315
and 72,704 shares, respectively
(2,096 ) (61 ) Accumulated deficit (1,383,023 )
(1,404,670 ) Total stockholders' equity 583,032
556,607
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $
1,210,246 $ 1,198,644
ECLIPSE RESOURCES CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended For the Nine Months
Ended September 30, September 30, 2017
2016 2017 2016 REVENUES
Natural gas, oil and natural gas liquids sales $ 91,549 $ 54,351 $
277,174 $ 140,740 Brokered natural gas and marketing revenue
— 128 2,428 10,411 Total revenues 91,549
54,479 279,602 151,151
OPERATING EXPENSES Lease
operating 5,032 2,186 11,943 7,111 Transportation, gathering and
compression 30,869 26,888 92,715 78,279 Production and ad valorem
taxes 2,427 1,128 6,391 5,894 Brokered natural gas and marketing
expense 8 42 2,474 11,604 Depreciation, depletion and amortization
35,588 28,225 86,929 64,287 Exploration 8,937 12,083 29,514 45,183
General and administrative 11,347 8,036 32,209 29,712 Rig
termination and standby — (112 ) — 3,843 Impairment of proved oil
and gas properties — — — 17,665 Accretion of asset retirement
obligations 143 100 395 275 (Gain) loss on sale of assets
(13 ) 102 (12 ) (944 ) Total operating
expenses 94,338 78,678 262,558 262,909
OPERATING INCOME (LOSS) (2,789 )
(24,199 ) 17,044 (111,758 )
OTHER INCOME (EXPENSE) Gain (loss) on derivative instruments
(1,889 ) 10,639 41,385 (8,407 ) Interest expense, net (12,016 )
(12,393 ) (36,763 ) (38,293 ) Gain (loss) on early extinguishment
of debt — — — 14,489 Other income (expense) — 4
(19 ) (137 ) Total other income (expense), net
(13,905 ) (1,750 ) 4,603 (32,348 )
INCOME
(LOSS) BEFORE INCOME TAXES (16,694 )
(25,949 ) 21,647 (144,106 )
INCOME TAX BENEFIT (EXPENSE) — — —
(540 )
NET INCOME (LOSS) $ (16,694
) $ (25,949 ) $ 21,647
$ (144,646 ) NET INCOME (LOSS) PER
COMMON SHARE Basic
$ (0.06 ) $
(0.10 ) $ 0.08 $ (0.62
) Diluted
$ (0.06 ) $
(0.10 ) $ 0.08 $ (0.62
) WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic
262,586 258,812 262,044 234,933
Diluted
262,586 258,812 264,717 234,933
Adjusted Revenue
Adjusted revenue is a non-GAAP financial measure. The Company
defines Adjusted revenue as follows: total revenues plus net cash
receipts or payments on settled derivative instruments less
brokered natural gas and marketing revenue. The Company believes
Adjusted revenue provides investors with helpful information with
respect to the performance of the Company's operations and
management uses Adjusted revenue to evaluate its ongoing operations
and for internal planning and forecasting purposes. See the table
below, which reconciles Adjusted revenue and total revenues.
For the Three Months Ended For the Nine
Months Ended September 30, September 30, $
thousands
2017 2016 2017
2016 Total revenues $ 91,549 $ 54,479 $ 279,602 $ 151,151
Net cash receipts (payments) on derivative
instruments
1,585 4,612 (5,048 ) 35,870
Brokered natural gas and marketing
revenue
— (128 ) (2,428 ) (10,411 )
Adjusted
revenue $ 93,134 $ 58,963 $
272,126 $ 176,610
Adjusted Net Income
(Loss)
Adjusted net income (loss) represents income (loss) before
income taxes adjusted for certain non-cash items as set forth in
the table below. We believe Adjusted net income (loss) is used by
many investors and published research in making investment
decisions and evaluating operational trends of the Company and its
performance relative to other oil and gas producing companies.
Adjusted net income (loss) is not a measure of net income (loss) as
determined by GAAP. See the table below for a reconciliation of
Adjusted net income (loss) and net income (loss).
Three Months Ended Nine Months Ended
September 30, September 30, $ thousands
2017
2016 2017 2016 Income (loss)
before income taxes, as reported $ (16,694 ) $ (25,949 ) $ 21,647 $
(144,106 ) (Gain) loss on derivative instruments 1,889 (10,639 )
(41,385 ) 8,407 Net cash receipts (payments) on derivative
instruments 1,585 4,612 (5,048 ) 35,870 Rig termination and standby
— (112 ) — 3,843 Impairment of proved oil and gas properties — — —
17,665 Dry hole and other 889 325 1,831 872 Stock-based
compensation 2,428 1,764 6,857 5,464 Impairment of unproved
properties 4,125 9,360 12,375 28,080 Other (income) expense — (4 )
19 137 Gain on early extinguishment of debt — - — (14,489 ) (Gain)
loss on sale of assets (13 ) 102 (12 )
(944 ) Loss before income taxes, as adjusted (5,791 ) (20,541 )
(3,716 ) (59,201 ) Income tax benefit (expense) — —
— (540 )
Adjusted net income (loss) $
(5,791 ) $ (20,541 ) $
(3,716 ) $ (59,741 )
Net income (loss) per Common Share Basic
$
(0.06 ) $ (0.10 ) $
0.08 $ (0.62 ) Diluted
$
(0.06 ) $ (0.10 ) $
0.08 $ (0.62 ) Adjusted net
income (loss) per Common Share Basic
$ (0.02
) $ (0.08 ) $ (0.01
) $ (0.25 ) Diluted
$
(0.02 ) $ (0.08 ) $
(0.01 ) $ (0.25 )
Weighted Average Common Shares Outstanding Basic
262,586 258,812 262,044 234,933 Diluted
262,586 258,812 262,044 234,933
Adjusted EBITDAX
Adjusted EBITDAX is a supplemental non-GAAP measure that is used
by the Company to evaluate its financial results. The Company
defines Adjusted EBITDAX as net income or loss before interest
expense; income taxes; impairments; depreciation, depletion and
amortization (“DD&A”); gain (loss) on derivative instruments,
net cash receipts (payments on settled derivative instruments, and
premiums (paid) received on options that settled during the
period); non-cash compensation expense; gain or loss from sale of
interest in gas properties; exploration expenses; and other unusual
or infrequent items set forth in the table below. Adjusted EBITDAX
is not a measure of net income or loss as determined by GAAP. See
the table below for a reconciliation of Adjusted EBITDAX to net
income or net loss.
Three Months Ended Nine Months Ended
September 30, September 30, $ thousands
2017
2016 2017 2016 Net income
(loss) $ (16,694 ) $ (25,949 ) $ 21,647 $ (144,646 ) Depreciation,
depletion and amortization 35,588 28,225 86,929 64,287 Exploration
expense 8,937 12,083 29,514 45,183 Rig termination and standby —
(112 ) — 3,843 Impairment of proved oil and gas properties — — —
17,665 Stock-based compensation 2,428 1,764 6,857 5,464 Accretion
of asset retirement obligations 143 100 395 275 (Gain) loss on
derivative instruments 1,889 (10,639 ) (41,385 ) 8,407 Net cash
receipts (payments) on settled derivatives 1,585 4,612 (5,048 )
35,870 Interest expense, net 12,016 12,393 36,763 38,293 (Gain)
loss on sale of assets (13 ) 102 (12 ) (944 ) (Gain) loss on early
extinguishment of debt — — — (14,489 ) Other (income) expense — (4
) 19 137 Income tax (benefit) expense — — —
540
Adjusted EBITDAX $ 45,879 $
22,575 $ 135,679 $ 59,885
Cash General and Administrative
Expenses
Cash General and Administrative Expenses is a non-GAAP financial
measure used by the Company in the Guidance Table to provide a
measure of administrative expenses used by many investors and
published research in making investment decisions and evaluating
operational trends of the Company. See the table below for a
reconciliation of Cash General and Administrative Expenses and
General and Administrative Expenses.
Guidance For the Three Months For
the Year Ending $ thousands
Ended September 30, 2017
December 31, 2017
General and administrative expenses,
estimated to be reported
$ 11,347 $44,500-$47,500 Stock-based compensation expense
(2,428 ) (9,500-10,500) Cash general and administrative expenses $
8,919 $35,000-$37,000
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,
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 and
Exchange Commission on March 3, 2017 (the “2016 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; its proposed drilling joint
venture with Sequel; 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;
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, Eclipse Resources’ inability to successfully negotiate or
enter into definitive agreements and satisfy other conditions
precedent for its proposed joint venture drilling transaction with
Sequel, and to effectively implement that transaction, 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 2016 Annual Report and in “Item 1A. Risk Factors”
of Eclipse Resources’ Quarterly Reports on Form 10-Q.
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171108006553/en/
Eclipse Resources CorporationDouglas Kris, Investor Relations,
814-325-2059dkris@eclipseresources.com
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