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Eclipse Switches to Next Generation Completions, Building on First 'Super Lateral'

Ohio pure-play Eclipse Resources Corp. plowed ahead with its next generation completion design during the third quarter, using what it learned from the Purple Hayes 1H "super lateral" well in the Utica Shale condensate window to drive improving results.

CEO Benjamin Hulburt said the average performance of the "generation three" wells is currently outperforming the company's older wells in the condensate window. Eclipse has drilled 14 wells with the new completion design, and it turned 11 of those to sales during the third quarter. It is now working on completing its first generation three well in the Utica dry gas window on a five well pad with average lateral lengths of 10,891 feet.

"We are now expanding upon the completion design we used on our super lateral well," Hulburt told analysts on Friday during a call to discuss the quarter's results. "This design combines the use of slickwater completion fluids, designer friction reducers, tighter stage spacing and significantly increased proppant loading ranging from 2,600 to 3,000 pounds per [lateral] foot."

Earlier this year, the company turned inline its Purple Hayes well, which has an 18,544 foot lateral and 124 stages (see Shale Daily, May 5). The well has produced 2.4 Bcfe to date and shown modest pressure declines, Hulburt said. When it announced the Purple Hayes, management said the company would drill longer wells going forward and apply what it learned across its acreage.

Hulburt said the company recently broke Halliburton Co.'s record for the number of stages completed in a month by a single crew in the Northeast region, finishing 238 stages in September. It also set Halliburton's Northeast record for proppant loading, pumping 82 million pounds in October.

Eclipse produced 221.6 MMcfe/d during the third quarter, beating the high-end of its 215-220 MMcfe/d guidance for the period. While third quarter production was up from 2Q2016 production of 212.1 MMcfe/d, it dropped from the 225.2 MMcfe/d the company produced in the year-ago quarter. But Eclipse revived an idled drilling program earlier this year and began to accelerate its drilling in the third quarter (see Shale Daily, Aug. 3).

The company also started shipping natural gas on the 205 MMcf/d Utica Access Project, which is designed to move volumes into Columbia Gas Transmission LLC's Appalachia Pool. Eclipse is the sole shipper on that project, and the company said it saw an uplift in realized natural gas prices. Based on forwards, the company said the new capacity could bring a basis uplift of $1.08/MMBtu next year when compared to selling gas at Dominion South Point.

Average prices for the quarter, including hedges and firm transportation, were $2.51/Mcfe, up from $2.42/Mcfe in 2Q2016 but down from the $3.25/Mcfe the company reported in the year-ago period.

Eclipse is still in the process of planning for next year, but Hulburt said the company's laterals would average 13,000 feet. Eclipse will mostly focus on its dry gas acreage. The company does have plans for two pilot wells in its condensate-rich Marcellus Shale acreage, and Hulburt said the company would complete the Utica's first refrack on a generation one well. All wells, he added, would be completed with the third generation design.

"Although our current base plan envisions one operated rig in 2017, we are doing the advanced planning, legal and title work, as well as initial pad construction in order to enable us to maintain flexibility to go to a two rig program as conditions warrant throughout the year," Hulburt said.

Revenue dropped to $54.5 million in the third quarter, down from $71.2 million a year ago. The company narrowed its net loss to $26.8 million (minus 10 cents/share) from a net loss of $81.5 million (minus 37 cents) in 3Q2015.

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