IPO Report: Eclipse Resources (ECR)

Francis Gaskins  |

Eclipse Resources ($ECR) is an independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin. It is headquartered in State College, PA,

Eleven other companies are scheduled for the week of June 16, 2014. The complete IPO calendar is available at IPOpremium.

The manager and joint managers are Citigroup, Goldman Sachs, Morgan Stanley, Barclays, BMO Capital Market, Deutsche Bank Securities, KeyBanc Capital Market, and RBC Capital Markets.  The co-managers are Jefferies, Wells Fargo Securities, Capital One Securities, Johnson Rice, Scotiabank-Howard Weil, and Simmons.

ECR scheduled a $863 million IPO with a market capitalization of $3.7 billion at a price range midpoint of $28.50 for Friday, June 20, 2014 on the NYSE.  SEC filings

ECR is an independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin.

Eclipse Resources

ECR, C, 7

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Post IPO shares: 160mm

Oil/gas

IPO Mkt

State College, PA

Trade Commission-FREE with Tradier Brokerage

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Cap (mm)

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$4,560

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@$28.5

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pro forma

pro forma

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2013

Q1' 14

Rev ($thousands)

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$20,638

$24,788

Net loss

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-$40,036

-$11,972

Net loss % of rev

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-194%

-48%

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing Q1 '14

Eclipse Resources (ECR)

$4,560

55.3

-28.5

3.7

3.7

19%

The rating on ECR is neutral plus. The Iraq situation is increasing investor interest in some oil and gas exploration and production companies.

ECR is an independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin.

ECR is focused on creating stockholder value by developing its substantial inventory of horizontal drilling locations, continuing to opportunistically add to its acreage position where ECR can acquire assets at attractive prices and leveraging its technical and managerial expertise to deliver industry-leading results.

As of March 31, 2014: $254 million.

ECR is currently operating 3 horizontal rigs, and expects to bring the total operated horizontal rig count to 6 by year end 2014.

In 2014, ECR plans to invest $577.4 million in drilling and completion capital and plan to spud or participate in 176 gross (69 net) shale wells.

Approximately 96,240 of its net acres are located in what ECR believes to be the most prolific and economic area of the Utica Shale fairway, which ECR refers to as the Utica Core Area, and approximately 25,740 of these net acres are also prospective for the highly liquid rich area of the Marcellus Shale in Eastern Ohio within what ECR refers to as Our Marcellus Project Area.

ECR is the operator of approximately 81% of its net acreage within the Utica Core Area and Our Marcellus Project Area.

ECR began assembling its acreage position in 2011 based upon a rigorous analytical evaluation of the shale properties within the Utica and Point Pleasant formations across Eastern Ohio.

ECR initially targeted and acquired approximately 27,000 net acres in the Utica Core Area in 2011 through a combination of leasing and largely contiguous acreage acquisitions.

Since entering the Utica Shale play in May 2011, through March 31, 2014, ECR, or its operating partners, had commenced drilling 75 gross wells within the Utica Core Area and the Marcellus Project Area, of which 16 were drilling, 21 were awaiting completion, 6 were in the process of being completed, 8 were awaiting midstream, and 24 had been turned to sales.

According to its agreement, during a three-year term, ECR and Antero Resources have the option to purchase an interest in any acquisitions of oil and gas interests the other completes within the area of mutual interest.

If the non-acquiring party elects to participate, ECR will own an undivided 30% interest and Antero Resources will own an undivided 70% interest in such acquired oil and gas interests.

In June 2013, ECR acquired Oxford, which held approximately 180,000 net acres in Ohio, including approximately 49,000 net acres in the Utica Core Area and approximately 1,289 gross proved producing conventional wells.

No dividends are planned.

The oil and natural gas industry is intensely competitive, and ECR competes with other companies in its industry that have greater resources than ECR does.

Many of these companies not only explore for and produce natural gas, but also carry on refining operations and market petroleum and other products on a regional, national or worldwide basis.

Eclipse Resources Holdings, L.P. 94%

EnCap Funds                6%

ECR expects to net $579 million from its IPO. Proceeds are allocated as follows:

to use $518.9 million of its net proceeds from this offering to fund its capital expenditures plan and $60 million of its net proceeds from this offering to repay borrowings under its revolving credit facility.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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