November 1, 2018: Eclipse Resources Corporation Third Quarter 2018 Earnings Call
During the third quarter of 2018, the company drilled six wells with an average lateral length of
approximately 14,500 feet. On the completion side, we completed 14 wells, which includes six condensate and eight dry gas wells, with completion costs running at to slightly below our AFEs, while averaging approximately 5.1 stages per day.
While we continue to focus on innovation and enhancing our rates of return on our wells, we have not seen any meaningful service cost inflation in the
Appalachian Basin
to-date.
In fact, as we look forward, we see substantial future reductions in completion costs, which could our AFEs on the order of approximately 5% to 10% through the remainder of this year
and into 2019.
Additionally, during the third quarter, we turned to sales 13 gross, 6.8 net wells to sales, which consisted of 40 Utica dry gas wells and
8 Utica condensate wells and our first operated Flat Castle well, the Painter 2H, in Northern Pennsylvania.
Moving to the Flat Castle project in
Pennsylvania, we continue to be excited for the potential of this area, and are pleased with the strong initial production results that have been achieved. After initial cleanup, the wells production quickly achieved our target rate of
approximately 32 million cubic feet per day, which was expected to continue for an initial flat period of approximately 30 days. The wells production continued at this level after reaching the
30-day
period, which is encouraging to us, and we will be continuing to monitor this wells performance closely.
In our Southeast Ohio Utica Shale dry gas project area, our four-well Yellow Rose pad began flowing to sales during the third quarter, and reached a combined
target rate of approximately 170 million cubic feet per day, with two of these wells producing slightly over 50 million cubic feet per day, each.
We continue to remain pleased with the performance of the Marcellus wells in our stacked pay area in Eastern Monroe County, Ohio. Since coming online in
January of this year, the two Marcellus wells drilled on the David Stalder pad have continued to significantly outperform expectations, and are on track to exceed our previously issued type curve EUR for this area, further
de-risking
the acreage.
In addition, our recent round of Guernsey County condensate Utica wells have turned to sales at
or above expectations from initial gas rates and more importantly condensate yields, allowing Eclipse to remain one of the highest liquid concentrated producers in the basin with approximately 48% of our revenue derived from liquids production.
Overall, I remain thoroughly pleased with this team and their push to innovate in order to enhance the value of our asset base and our company. We have shown
our ability to continue to outperform the goals we set for ourselves and anticipate that this will continue as we move forward through the remainder of the year.
With that, Ill turn the call over to Matt.
Matthew R.
DeNezza
Chief Financial Officer & Executive Vice President, Eclipse Resources Corporation
Thanks, Ben. Over the last quarter, we continued to achieve strong results in almost every area of our business. Revenue for the third quarter was over
$130 million and our adjusted EBITDAX was approximately $67 million, both of which were records for the company.
During the third quarter, our
all-in
realized price was $3.99 per Mcfe before the impact of cash settled derivatives and firm transportation. Our natural gas price differential before transportation expense was negative $0.04 per Mcf. This
strong differential was driven by better
in-basin
pricing dynamics as well as due to our ability to sell gas into underutilized firm transportation assets owned by others at prices which were at a substantial
premium to
in-
basin benchmarks. This capacity was available on numerous pipes, including on the Rex and Rover pipelines as well as on Leach XPress.