STATE COLLEGE, Pa.--(BUSINESS WIRE)--Eclipse Resources Corporation (NYSE:ECR)  is pleased to announce that the Company and Eclipse Resources-PA, LP, a wholly owned subsidiary of the Company, have entered into a definitive Purchase and Sale Agreement to acquire certain oil and gas leases, wells and other oil and gas rights and interests covering approximately 44,500 net acres located in the counties of Tioga and Potter in the Commonwealth of Pennsylvania (such transaction, the “Flat Castle Acquisition”) from Travis Peak Resources, LLC. The aggregate purchase price for the Flat Castle Acquisition is $93.7 million (subject to customary purchase price adjustments) and is payable entirely in shares of Eclipse Resources’ common stock. In addition, the Company announced today that the Company and Eclipse Resources Midstream, LP, a wholly owned subsidiary of the Company, have entered into a definitive option agreement pursuant to which Eclipse Resources Midstream. LP acquired the exclusive right to purchase all of the outstanding equity interests of Cardinal NE Holdings, LLC for an aggregate purchase price of $18.3 million in cash (such transaction, the “Cardinal Acquisition” and, together with the Flat Castle Acquisition, the “Transactions”) from Cardinal Midstream II, LLC. The Transactions were approved by a special committee of the Company’s board of directors composed entirely of independent directors and the Flat Castle Acquisition is expected to close in January 2018, subject to the satisfaction of customary closing conditions; provided that the Flat Castle Acquisition will have an effective date of September 1, 2017 and contemplates a second closing for purposes of curing any title or environmental defects with respect to the properties being acquired. In conjunction with this press release, the Company has posted a presentation with additional details regarding the Transactions to the Investor Center of its website at www.eclipseresources.com.

Transaction Highlights:

• Acquiring an approximately 44,500 highly continuous net acre position in Tioga and Potter Counties, Pennsylvania with a low entry cost of ~$1,900 per acre.1
• Acreage is largely delineated by 22 industry Utica Shale wells (including the Painter 1H well drilled by Travis Peak) with the Company’s preliminary analysis indicating gas in place exceeds the Southeast Ohio’s Utica Shale Dry Gas “Core” area.
• Expected to create a new, highly contiguous core area, the “Flat Castle” Project Area, with few unit size restrictions supporting extensive “Super-Lateral” development and the application of the Company’s innovative drilling and completion techniques which we believe will generate enhanced returns.
• Initial project area “Type Well” estimates indicate EUR’s of between 2.0 and 2.3 Bcf per 1000 feet of lateral at a cost of approximately $1,025 per lateral foot, consistent with or better than the Company’s current Southeast Ohio Utica assets.
• Will acquire one proved developed producing well with approximately 6.5 net MMcf per day of production.
• Anticipated to add approximately 87 net drilling locations (based on a 16,000 foot lateral length) while increasing the Company’s Utica dry gas acreage by approximately 85%.
• Purchase price for Flat Castle Acquisition payable 100% in Eclipse Resources’ common stock, which the Company believes will preserve ample liquidity while substantially increasing scale. The number of shares of Eclipse Resources common stock to be issued to Travis Peak will equal $93.7 million divided by the 30-day volume weighted average price per share of Eclipse Resources’ common stock ending on the second trading day immediately preceding the closing date, subject to certain customary adjustments and a collar between $2.35 and $2.60.
• Entered into an option to acquire Cardinal NE Holdings, LLC, which owns midstream infrastructure with associated gathering rights on the acreage to be acquired by the Company in the Flat Castle Acquisition. The Company expects that the proximity of this infrastructure to Dominion’s gathering system will allow Eclipse Resources to build, own and operate the gathering system as wells are drilled, which will reduce the Company’s per unit gathering costs and improve returns.

1 Net of proved producing reserves

Benjamin W. Hulburt, Chairman, President and CEO of Eclipse Resources, commented on the Company’s acquisition, “Eclipse Resources has today announced it has entered into definitive agreements to acquire a strategic Utica acreage acquisition in north, central Pennsylvania that is expected to significantly increase the Company’s inventory of highly economic drilling locations and allow the Company to continue to leverage its innovative drilling and completions techniques while remaining Appalachian basin focused. We are excited to begin operating in this project area, which we term the 'Flat Castle' Project Area, with our first well anticipated to spud during the first quarter of 2018 and the full scale development anticipated to start in the fourth quarter of 2018. We believe the additional scale from this largely contiguous acreage acquisition will be enhanced through the efficiency gains generated by our 'Super-Lateral' development as we apply our operational and technical learnings from the Ohio Dry Gas Utica to the Flat Castle Project Area. From a geological perspective, this area is similar in depth to our Ohio Dry Gas acreage and is well delineated with a meaningful number of offset results, while lying within what we believe to be the highest gas in place of the prospect area.

"We believe that the location of the Flat Castle Project Area, which is significantly west of the more currently constrained Northeastern Pennsylvania peers, will support our ability to reliably move gas out of the Flat Castle Project Area for the foreseeable future. The Company anticipates that the gas it produces in the Flat Castle Project Area will be transported through the Dominion and Tennessee gathering systems, which are exposed to improving Appalachian price differentials.

"We have been patient and extremely rigorous in our acquisition efforts to ensure we pursue opportunities for our shareholders that will enhance our inventory of highly returning, core drilling locations at attractive valuations. We believe the Flat Castle Project Area is located in one of the best underdeveloped areas of the Appalachian Basin and will nicely complement our existing asset base, with the potential returns on these wells competing with those in our core Utica Dry Gas acreage.”

About Eclipse Resources

Eclipse Resources is an independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin, including the Utica and Marcellus Shales. For more information, please visit the Company’s website at www.eclipseresources.com.