Appalachian pure-play operator Eclipse Resources Corp., which has been rumored since last year to be considering an initial public offering (IPO), has filed a Form S-1 with the U.S. Securities and Exchange Commission indicating that it intends to raise $100 million on the New York Stock Exchange (NYSE) in the coming months.
The company did not specify the number of shares that it intends to issue or the price of each, nor when this year it would launch the IPO.
Investors have seemed receptive of late to many onshore producers offering stock shares. Appalachian-based operators receiving strong response have included Antero Resources Corp., which netted $1.5 billion in its launch last year (see Daily GPI, Oct. 11, 2013) and Rice Energy Inc., which raised $594.5 million (see Shale Daily, Jan. 31; Dec. 17, 2013).
Eclipse acquired Oxford Oil Co. LLC in June 2013 and nearly doubled its acreage position in Ohio (see Shale Daily, July 1, 2013). Eclipse is focused entirely on the Utica and Marcellus shale formations in only eastern Ohio, where it has a sizeable position of 227,230 net acres.
Its position is smaller than some of the Utica's leading exploration and production companies, such as Chesapeake Energy Corp. and EV Energy Partners LP, which each hold close to one million net acres in the play. But it’s position is larger than other heavyweights such as Gulfport Energy Corp., with 179,000 net acres.
Eclipse was co-founded in 2011 by CEO Benjamin Hulburt, 40, who also co-founded Rex Energy Inc. in 2007, and Executive Vice President Christopher Hulburt, 43.
According to the company's prospectus, Eclipse has amassed 96,240 acres in Noble, Guernsey, Monroe, Belmont and Harrison counties, OH, which the company refers to as its Utica core area and has identified as prime acreage, given its early results and those of other independents operating across the footprint (see Shale Daily, Nov. 19, 2013).
In addition to less prospective areas it has under lease, Eclipse also identifies an area in the southwest part of Ohio, closer to the West Virginia border, where it holds 25,740 net acres it classifies as its Marcellus project area, which it said it has spent less time developing.
The company is backed by EnCap Investments LP, which, through various funds, has committed $717 million in capital since Eclipse was established in 2011, the prospectus said. The company also expects to be "controlled" under NYSE rules, which means EnCap would retain a majority of the common stock and hold more than 50% of the board's voting power upon completion of an IPO.
Eclipse said it operates about 81% of its net acreage. From its founding in 2011 through the end of last quarter, Eclipse and its operating partners have turned in-line 24 Utica and Marcellus wells in Ohio, with 51 others in various stages of development. The company said it planned to use the proceeds from an IPO to help fund this year's $696 million capital expenditures budget and pay down its debt. The company also noted that since 2012, it has reported a net loss of $70.7 million, including an $18.4 million loss it incurred last quarter.
Eclipse plans to drill 53 operated wells this year and participate in the drilling of another 17 non-operated wells too. It is currently operating three horizontal rigs and one top-hole rig in Ohio, with plans to add three more horizontal rigs by year's end.
The company said its first Utica well, the Tippens 6HS had an initial peak production rate of 23.2 MMcf/d and went into sales in December, averaging 18.3 MMcf/d in its first 30 days of production. Eclipse said it has contracted firm gathering, processing and fractionation capacity with Blue Racer Midstream LLC and plans firm commitments of 660 MMcf/d in gathering and 360 MMcf/d in processing capacity through 2018. It noted, however, that it has not yet secured midstream commitments for its Marcellus project area.
Eclipse has joint operating agreements with Antero in Noble County, OH, and with Magnum Hunter Resources Corp. in Monroe County, OH (see Shale Daily, Jan. 3, 2013). The company also reported 109.6 Bcfe of estimated proved reserves, the majority of which is natural gas, and 48% is classified as proved undeveloped.