Eclipse Resources buys new Utica Shale development area for $93.7M

|About: Eclipse Resources (ECR)|By:, SA News Editor

Eclipse Resources (ECR +6.3%) is higher after agreeing to acquire ~44.5K net acres in Pennsylvania's Utica Shale from Travis Peak Resources for $93.7M in shares.

ECR says the acreage includes 22 wells, including one proved developed producing well with ~6.5M cf/day of net production, with its preliminary analysis indicating that gas in place exceeds the company's dry gas core area in southeast Ohio’s Utica Shale.

ECR is pegging the deal cost at a "cheap" $1,900/acre, implying the value for Travis Peak’s single producing well is $9.15M, yet the position offers internal rates of return of 52%-77% and increases ECR’s surface acreage by 45% or more, says Seaport Global analyst Mike Kelly, who likes the deal "as it adds more acreage and inventory than incremental shares and doesn’t stress the balance sheet."

Following the deal news, Johnson Rice analysts upgraded shares to Buy from Accumulate.

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