Eclipse Resources Corp. will idle its one-rig drilling program through 1Q2016 as it looks to its inventory of drilled but uncompleted (DUC) wells to maintain production growth while waiting out the pricing downturn.

The State College, PA-based exploration and production (E&P) company announced its plans to halt drilling activities during a third quarter earnings call with investors Thursday.

“As we look towards the 2016 plan and where commodities currently are, given our inventory of wells that we’ve already paid to drill and still need to complete, it didn’t seem to make a lot of sense to us to go ahead and continue to add to that inventory of DUC wells, when we can go complete wells essentially at half the capital cost of what it costs to drill and complete a new well from scratch,” CEO Benjamin Hulburt said.

Hulburt said the company has 20 net DUC wells currently in its inventory. Eclipse will focus on bringing seven wells from its Fuchs/Dietrich pad online through the rest of 2015 and into 1Q2016, he said.

Despite idling its drilling program, Eclipse is well-positioned to continue realizing production growth into 2016, Hulburt said, though he cautioned that commodity prices will dictate the company’s capital spending.

“For us, achieving a 40-50% production growth, operationally, is really relatively easy, so it’s really a matter of how much capital do we want to spend given this environment, and what’s the best long-term decision for the company, rather than short-term production growth?” Hulburt said.

Eclipse also reported Thursday on preliminary results from a test of tighter lateral downspacing on its Sawyer pad in Monroe County, OH.

COO Thomas Liberatore said the pad is producing at 26 MMcf/d with a pressure drawdown of about 150 psi/week. Through 130 days, the pad has produced 3.7 Bcf cumulatively, he said. However, early data suggests the 700-foot lateral spacing may be a little too tight.

“Initial test results indicate that sub-700-foot inter-lateral spacing with a high concentration of gel frack and a large proppant may be too close,” Liberatore said. “However, under a current aggressive choke management plan, we are seeing flat production for over 70 days with minimal communication under this managed choke approach.”

Hulburt said that based on the initial results it “looks to me like you’ve got [estimated ultimate recovery] degradation of 10-15%. So, somewhere your answer is between 700-1,000 feet. I think Tom would agree at this point, we don’t see any reason that you’d go less than 700 feet, and on initial results I think we’d go a little wider than 700 feet.”

Given the transportation bottlenecks for Northeast producers, Utica-focused Eclipse was able to realize relatively favorable pricing for its 3Q2015 natural gas production.

For the quarter, the company realized an average price of $2.56/Mcf for its natural gas after firm transportation but before the benefit of hedging, which bumped the average price up to $3.20/Mcf.

CFO Matt DeNezza pointed to the Eclipse’s use of firm transportation on Rockies Express (REX) and other pipelines, saying the company’s realized prices in 3Q2015 were a result of being able “to flow into these different markets very specific to where your assets really are and where the interconnects exist. We’ve had the benefit of having an interconnect into REX that gave us the advantage.”

Hulburt said the location of the company’s core assets in Eastern Ohio is favorable from a marketing standpoint, especially going forward.

“The location is certainly part of it. Where a lot of our gas comes out in the Northeastern part of Monroe County…you really have the intersection of almost all of the largest pipelines in the basin, including most of the new projects that are underway,” Hulburt said. “I think optionality for where you place your gas on a daily basis is one of the best advantages you can have.”

The pricing environment for Northeast natural gas liquids (NGLs) continues to be less-than-favorable, DeNezza said. For 3Q2015, Eclipse realized an average price, including transportation, of $4.16/bbl, down from $44.09/bbl in the year-ago period.

DeNezza said the company is looking ahead to the operational date for the Mariner East 2 pipeline as a potential outlet that could bring some upward price pressures.

In the near-term, the company continues to hone its drilling techniques on its deeper dry-gas wells, but when oil prices and NGLs rebound, Eclipse will be ready to tap into the value of its liquids-rich acreage, Hulburt said.

“We are beginning to see the results of what we believe is optimized fracking using 100% slickwater combined with very restricted choke management, and when you combine that with what we’re able to do now, where today we’re [drilling] a well that has almost 25,000 feet of total depth, if you move to the liquids area where we’re not drilling right now but we will eventually, and you’re 4,000 feet shallower, you can do the math and figure out what kind of laterals we may be able to drill in that area,” Hulburt said.

“And if you assume that the recovery of a longer lateral there doesn’t diminish much as you go longer and longer, and apply what we think the cost-per-foot can be given the very long lateral, it’s a product area that although right now we’re not drilling, I don’t really want to divest, because I think the economics will be very attractive as oil goes back to $60/bbl, which in my opinion is going to happen in the next 12 months. We don’t need $80/bbl oil to make that area work.”

Eclipse produced 13.4 Bcf of natural gas for the quarter, up from 6.2 Bcf in 3Q2014. The company produced 663,200 bbl of NGLs and 554,600 bbl of oil in 3Q2015, compared to 116,400 bbl and 166,900 bbl, respectively, in the year-ago period.

The company reported a net loss of $81.47 million (minus 37 cents/share) for the quarter, compared to a $19.05 million loss (minus 12 cents/share) in the year-ago period.