Blue Ridge Merges with Eclipse, Renamed to Montage Resources

Yesterday was an eventful day for the former Blue Ridge Mountain Resources (nee Magnum Hunter Resources) and Eclipse Resources. We’ve been telling you since last August that the two companies are merging, with Blue Ridge Mountain essentially buying out Eclipse. The deal is done as of yesterday and there is A LOT of news to share–including a name change for the newly combined entity.
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Blue Ridge Mountain Resources Shareholders Approve Eclipse Merger

Last August Eclipse Resources announced it had sold itself to Blue Ridge Mountain Resources, the renamed remnant of Magnum Hunter Resources (see Eclipse Resources Merging with Former Magnum Hunter). Although Eclipse shareholders have approved the deal, not until today was there official approval by the shareholders of Blue Ridge Mountain Resources.
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ODNR Releases Ohio Utica O&G Production for 3Q18 – Top 25 Wells

The Ohio Dept. of Natural Resources (ODNR) issued third quarter 2018 production numbers for Utica shale oil and gas production yesterday. And what a report it is! Natural gas production was up an amazing 31% over the same period last year (after being up 42% in 2Q18). Utica natgas production broke another record, hitting a new all-time high of 605 billion cubic feet (Bcf) in 3Q18. But perhaps the biggest story was Utica oil production. In 1Q18 Utica oil production was down 3.6%. In 2Q18 Utica oil production was up 11%. But in 3Q18, Utica oil production soared, going up 32%.
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Eclipse Resources 3Q18: Production Down, Stock Price Soars

Eclipse stock price soars – click for larger version

Eclipse Resources CEO Ben Hulburt yesterday gave what will be his last quarterly update at the helm of his company. Eclipse is being bought out by and merged with Blue Ridge Mountain Resources, the renamed remnant of Magnum Hunter Resources, by the end of this year (see Eclipse Resources Merging with Former Magnum Hunter). Hulburt, along with pretty much all of Eclipse’s top brass, is leaving the company post-merger. All except for Oleg Tolmachev, the guy who figures out how to drill those record-breaking, super long onshore laterals. As for 3Q18, the company hit a new high in revenues of $130 million, making a $4 million profit (swinging into the black). That bit of good news sent Eclipse’s stock price soaring 11%.
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Eclipse Resources Stock Hits New 1-Yr Low – $1.17/Share

We typically don’t report on the ups and downs of the stock price for Marcellus/Utica companies, primarily because the per-share price goes up, then it goes, down, then it goes up again…You get the picture. However, today we’re reporting on the share price for Eclipse Resources (as of last Friday) because it hit a new one-year low of $1.17 per share, before closing at $1.28/share. Bumping around the bottom of the barrel. Why pick on Eclipse about their stock price? Because they’re in the middle of getting bought out and merged into Blue Ridge Mountain Resources, the former Magnum Hunter Resources (see Eclipse Resources Merging with Former Magnum Hunter). And because it’s a shame the stock price is that low, given that Eclipse has had a stellar record of drilling long laterals–currently the record-holder for longest onshore laterals in the world! (All drilled in the Ohio Utica Shale.) We hate to see a star performer like Eclipse under-perform financially. It doesn’t seem to balance on the scales of cosmic justice. What now seems obvious, in retrospect, is that Eclipse has been in a financial pickle for some time–hence their sale to Blue Ridge Mountain…
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Eclipse’s Top Brass Not Sticking Around After Blue Ridge Merger

MDN brought you the big news yesterday that Eclipse Resources is merging with Blue Ridge Mountain Resources (see Eclipse Resources Merging with Former Magnum Hunter). We noted that nowhere in the announcement and paperwork we read that Eclipse co-founder and CEO Ben Hulburt would be staying with the newly merged company. We now have confirmation that Hulburt is leaving when the deal closes. We also have confirmation that pretty much all of Eclipse’s top brass is leaving–except for Oleg Tolmachev, who will become the senior vice president and COO of the newly merged company. In addition to Hulburt’s departure, Eclipse executive VP/general counsel Christopher Hulburt is leaving, and executive VP/CFO Matthew DeNezza will also exit stage right. All three are being paid more than $1 million (Ben Hulburt more than $3 million) to leave…
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Eclipse Resources Merging with Former Magnum Hunter

Blue Ridge/Eclipse combined acreage location – click for larger version

Some big news breaking from yesterday: After months of teasing by Eclipse Resources that it’s working on selling itself–it finally has. The buyer is Blue Ridge Mountain Resources, the renamed remnant of Magnum Hunter Resources. Magnum Hunter filed for bankruptcy in December 2015, emerging from bankruptcy in May 2016 minus CEO Gary Evans (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). Looking to shed the image of the past, the company renamed itself as Blue Ridge in January 2017 (see Magnum Hunter Changes Its Name, Leaves the Bankrupt Past Behind). Blue Ridge, headquartered in Texas, has 99,000 acres of leases (mostly undeveloped) in the Marcellus and Utica Shale plays. Eclipse, on the other hand, is headquartered in State College, PA and has 128,000 acres–focused 100% on the Marcellus/Utica. Eclipse is renown for having drilled the world’s longest onshore lateral wells. Why do we say Blue Ridge is buying Eclipse when the announcement talks about a merger and on paper Blue Ridge will become a subsidiary of Eclipse? Because Eclipse is doing a 15 to 1 reverse stock split (combining shares to boost the per share value) and Eclipse CEO Ben Hulburt is nowhere to be found in the management structure of the newly combined company. Blue Ridge President and CEO John Reinhart will become President and CEO of the newly combined company. Eclipse’s top engineer Oleg Tolmachev–the guy who figures out how to drill those super-long laterals–will become Executive Vice President and COO of the combined company. No word yet on which name (or new name) they will use for the newly merged company…
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Eclipse 2Q18: Drilled More Long Wells, Progress on Sale/Merger

Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA, is one of the smaller but (in our opinion) more important drillers in our region. Eclipse has drilled the reigning record-holders for longest on-shore lateral wells drilled…in the world (almost 20,000 feet long!). Last week Eclipse issued their second quarter update. Among the items discussed: The company lost $19 million vs. making $11.5 million in 2Q17. They produced an average of 305.5 million cubic feet equivalent per day (MMcfe/d), up a tad from 2Q17’s 287.8 MMcfe/d. Production was 72% natural gas and 28% liquids. They drilled 6 wells with an average lateral length of approximately 15,900 feet. So far the company has drilled 17 “super lateral” wells with an average lateral length of over 18,300 feet–which is why they are an important driller. The company, as we previously reported, is going through a “strategic review process” in which they are looking to combine with, or sell out to, another company (see Eclipse Resources Board Considering Either Merger or Acquisition). Ben Hulburt, CEO, had this to say about progress with the buyout/merger process: “As you all know, we announced that our Board of Directors has initiated a process to evaluate and consider a full range of strategic, operational and financial alternatives to maximize shareholder value. And while we’re pleased to say that substantial progress continues to be made, as we’ve previously stated, there is no definitive timetable for completion of this evaluation nor can there be any assurances that any initiatives will be announced or completed in the future.” In other words, there’s something coming, but we can’t talk about it, so stay tuned…
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News from DUG East: Record-Breaking Wells, Long Laterals & More

One of two major Marcellus/Utica events that happens each year in Pittsburgh, Hart Energy’s DUG East Conference, was held this week. (The other is Shale Insight, held in the fall.) We’ve covered a variety of news coming out of the DUG East event. Unfortunately we could not be there in person this year. By all accounts, a lot of great information was shared. We spotted two articles from different sources that do a good job of rounding up highlights from this week’s DUG. Hart’s own Exploration & Production magazine chronicles news from Eclipse Resources, whose CEO (Ben Hulburt) says the company expects to break more lateral records this year. Dennis Degner from Range Resources also talked about long laterals, and strategy. Degner said Range balances other factors like pipeline takeaway capacity and service costs. Also appearing on the stage were smaller/private M-U operators, like Northeast Natural Energy, who also shared some great insights. Below is a good roundup of the news coming from DUG this week, from a couple of sources…
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Rumor: EnCap Working on Plan to Merge Eclipse & Penn Energy

Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA, announced in March the company is looking for another company to buy, or (more likely) for another company to buy them (see Eclipse Resources Board Considering Either Merger or Acquisition). We have some new news to report, about a potential sale of Eclipse. Or more properly, a potential merger. EnCap Investments is a private equity/investment firm headquartered in Houston. EnCap owns a majority of Eclipse’s common stock. Put another way, Eclipse is considered a “portfolio company” of EnCap–because he who owns the most stock controls the company. EnCap has a number of portfolio companies–other energy companies in which they invest. One of them is PennEnergy Resources, an active driller in the southwest PA Marcellus (see Top 10 Drillers in SWPA, by Number of Permits Issued). According to sources who have spoken to the Pittsburgh Business Times, EnCap is actively pursuing a combination/merger between Eclipse and Penn Energy…
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Eclipse 1Q18: No Comment on Process to Buy or Be Bought

Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA, issued its first quarter 2018 update last week. Eclipse has drilled the longest onshore natural gas wells in the world–in the Ohio Utica. Impressive company. In March the company announced it is looking for someone to buy, or (more likely) for someone else to buy them (see Eclipse Resources Board Considering Either Merger or Acquisition). Eclipse CEO Ben Hulburt began the quarterly analyst phone call last week by anticipating questions about the buy/be bought process. He shut down any questioning before it began by saying: “I hope you can understand, because of the nature of this process, we will not be able to address any questions relating to it or discuss it further during today’s call.” So what did Ben discuss? The company drilled 8 wells in 1Q18. They completed (fracked) the company’s first PA Utica well. And he took time to toot the company’s own horn (deservedly so). Eclipse drilled 8 of Ohio’s 10 most productive Utica oil wells in 4Q17. The company has a talent for drilling very long, and very productive wells…
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BLM Blocks Eclipse from Completing Utica Well in Wayne Natl Forest

Melissa Hamsher, Eclipse Resources

Something pretty cool took place yesterday in Washington, D.C. MDN friend Melissa Hamsher, vice president for Health, Safety, Environmental and Regulatory with Eclipse Resources (headquartered in State College, PA), testified before the U.S. House of Representatives’ Resources Committee. Melissa has been a speaker on several panels MDN editor Jim Willis has moderated over the years at the annual Oil & Gas Awards Industry Summit in Pittsburgh. The uncool thing is what Melissa was in D.C. to testify about, which is that the Bureau of Land Management (BLM), after auctioning off parcels in the Wayne National Forest (WNF), is now stopping Eclipse from drilling under those parcels. Eclipse had already bundled some of the BLM parcels they won at auction with neighboring private land, setting up a drill pad on private (not public) land when the BLM stepped in and stopped Eclipse’s first under-construction Utica well in WNF, claiming the BLM needs to conduct a “new environmental analysis” before drilling can continue. At every turn BLM, while pretending to act in good faith by conducting auctions of WNF land, has acted in bad faith to block Eclipse’s progress after winning those auctions. Melissa shined a bright light on the sleazy tactics used by BLM at a Congressional hearing exploring the “unfair weaponization of the National Environmental Policy Act”…
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Eclipse Resources Board Considering Either Merger or Acquisition

Eclipse Resources, a Marcellus/Utica pure play driller headquartered in State College, PA, has just done it again. The company has drilled another massively long onshore lateral–19,335 feet long–in the Ohio Utica. It’s not the longest onshore lateral in the world (currently the Eclipse Outlaw well, at 19,600 feet), but this one comes close. Although drilling a new super lateral is big news, there was other news that (for us) is even bigger: Eclipse issued a statement yesterday that says, in part, the company “has initiated a process to evaluate and consider a full range of potential strategic, operational and financial alternatives to maximize shareholder value.” Eclipse hired investment firm Jefferies LLC and international law firm Norton Rose Fulbright to help with the process. Both firms specialize in mergers and acquisitions (M&A). The statement also says, “There is no assurance that the review by the Board will result in a transaction or other strategic alternative,” which we interpret to mean Eclipse is looking either to buy another company (like EQT did with Rice Energy), or sell itself to another company (like Rice Energy did to EQT). That’s our take on this seemingly innocuous announcement. Big news indeed!…
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Eclipse Resources Drilled 2 Marcellus Condensate Wells in OH in ’17

Earlier this week Eclipse Resources, an Ohio Utica-focused driller based in State College, PA, released its fourth quarter and full year 2017 update. Eclipse is one of our personal favorites, known for drilling “super laterals”–wells nearly four miles long. They’ve drilled the three longest onshore horizontal wells in the world–all in Ohio! So what did the Eclipse report reveal? A lot…
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