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Analyst Day 2018 – Eclipse Resources Corp.

Eclipse Resources Corp. · Jan 31, 2018 · 83 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Analyst Day 2018 – Eclipse Resources Corp. – slide 1
    2018 A NALYST D AY P RESENTATION NYSE: ECR January 2018
  2. Analyst Day 2018 – Eclipse Resources Corp. – slide 2
    2018 Analyst Day Agenda Benjamin W. Hulburt Corporate and Strategic Overview Chairman, President and CEO Multi-year production and EBITDAX growth based on capital flexibility and enhanced development, with a focus on corporate…
  3. Analyst Day 2018 – Eclipse Resources Corp. – slide 3
    2018 Analyst Day Todays Speakers Benjamin W. Hulburt : Chairman, President and Chief Executive Officer 17 years of oil and gas experience Co-founded Eclipse Resources in January 2011 and has served as Chief Executive Office,…
  4. Analyst Day 2018 – Eclipse Resources Corp. – slide 4
    C ORPORATE & S TRATEGIC O VERVIEW Benjamin Hulburt Chairman, President and Chief Executive Officer
  5. Analyst Day 2018 – Eclipse Resources Corp. – slide 5
    2018 Analyst Day Eclipse Past and Present 335 - 355 MMcfe/d 311 MMcfe/d1 229 208 MMcfe/d MMcfe/d 73 MMcfe/d 2014 2011 - 2014 2015 2016 2017 2018e Formed by senior Reduced drilling activity Initiated the Super…
  6. Analyst Day 2018 – Eclipse Resources Corp. – slide 6
    2018 Analyst Day Core Competencies Highly experienced, Appalachian focused management team Cutting-edge innovation to drive returns Best-in-class operational team provides repeatable results Operational Environmental…
  7. Analyst Day 2018 – Eclipse Resources Corp. – slide 7
    2018 Analyst Day Eclipse Profile & Business Highlights Premier Utica and Marcellus Assets 16 years of core drilling 155,725 net effective acres1 in the 1.5 Tcfe in proved reserves2 inventory with expected well returns 50%3 core…
  8. Analyst Day 2018 – Eclipse Resources Corp. – slide 8
    2018 Analyst Day Premier Utica and Marcellus Assets1 Eclipse has 375 risked, extended-reach, future lateral locations with internal rates of returns of at least 50% based on type curve assumptions2 Returns by 2018 Type Curve…
  9. Analyst Day 2018 – Eclipse Resources Corp. – slide 9
    2018 Analyst Day 2017 Accomplishments Grew production 36% year over year to 311 MMcfe/d: 77% natural gas, 14% NGLs, 9% oil1 Established Eclipse as the industry leader in drilling Super Lateral wells Operational Drilled twelve…
  10. Analyst Day 2018 – Eclipse Resources Corp. – slide 10
    2018 Analyst Day 2017 Reserves and 3-Year Average F&D Costs Eclipse continues to lower its 3-year average F&D costs and increase reserves through the drill-bit, generating substantial year over year increases in proved reserves…
  11. Analyst Day 2018 – Eclipse Resources Corp. – slide 11
    2018 Analyst Day Eclipse Utica Condensate Super Laterals Eclipses 2017 Super Laterals developed 3.3 MMBOE per well, superior to large cap, oil dominant players EUR per Well (MMBOE)1 F&D Cost (/Boe)1 ECR 2017Eclipse Super Laterals…
  12. Analyst Day 2018 – Eclipse Resources Corp. – slide 12
    2018 Analyst Day What were up to in 2018 Eclipse remains focused on increasing returns through innovation by the application of cutting-edge technologies in a new operating area Eclipse has found a low cost of entry asset where it…
  13. Analyst Day 2018 – Eclipse Resources Corp. – slide 13
    2018 Analyst Day 2018 Plan Catalysts Eclipse anticipates significant catalysts across the asset base to allow for continued value improvement Commodity mix flexibility plan to take advantage of large liquids rich Utica awaiting…
  14. Analyst Day 2018 – Eclipse Resources Corp. – slide 14
    2018 Analyst Day Acreage Value Enhanced by Super Laterals1 Eclipses Super Lateral development creates significant value where other Appalachian peers are not; extending the average developed lateral from 10,000 to 16,000 increases…
  15. Analyst Day 2018 – Eclipse Resources Corp. – slide 15
    2018 Analyst Day Expansion into New Core Utica Shale Area The strategic Flat Castle acquisition allows for Super Lateral development due to its contiguous nature, with gas in place that exceeds the core Ohio Dry Gas acreage, while…
  16. Analyst Day 2018 – Eclipse Resources Corp. – slide 16
    2018 Analyst Day 2018 Development Plan1 Eclipses capital plan of 300-320 million supports 8-14% year over year production growth on an Mcfe basis, with over 40% condensate growth Operational Highlights 2018 Capital Budget 2018…
  17. Analyst Day 2018 – Eclipse Resources Corp. – slide 17
    2018 Analyst Day Multi-Year Strategy1 Following a successful 2017 with 85% EBITDAX2 growth and 36% production growth, Eclipse remains committed to a multi-year development plan that will support an EBITDAX CAGR over the next 3 years…
  18. Analyst Day 2018 – Eclipse Resources Corp. – slide 18
    2018 Analyst Day Managements Focus on Increasing Value Eclipse management interests are aligned with shareholders with compensation tied to achieving full-cycle corporate returns in excess of the Companys WACC Corporate…
  19. Analyst Day 2018 – Eclipse Resources Corp. – slide 19
    2018 Analyst Day Enhancing Long-Term Shareholder Value Eclipses increasing economies of scale, coupled with Super Lateral development and innovative completion techniques, will continue to enhance full-cycle corporate returns,…
  20. Analyst Day 2018 – Eclipse Resources Corp. – slide 20
    C ONTINUOUSLY L EVERAGING I NNOVATIVE T ECHNOLOGIES Oleg Tolmachev - Executive Vice President and Chief Operating Officer
  21. Analyst Day 2018 – Eclipse Resources Corp. – slide 21
    2018 Analyst Day Holistic Approach to Drilling Process Eclipse has fostered a culture of safety and innovation, which continues to generate record-setting operational achievements Multifaceted engineering approach incorporating:…
  22. Analyst Day 2018 – Eclipse Resources Corp. – slide 22
    2018 Analyst Day Cutting-Edge Completions Initiatives Eclipse continues to push the boundaries in completion designs to improve returns and enhance capital efficiency Reduced drill out times and bit trips to significantly lower…
  23. Analyst Day 2018 – Eclipse Resources Corp. – slide 23
    2018 Analyst Day Advanced Reservoir Engineering Real-time sharing of data and analysis enables predictive reservoir modeling to drive proactive D&C and production optimization to maximize rates of return Design facilities for…
  24. Analyst Day 2018 – Eclipse Resources Corp. – slide 24
    2018 Analyst Day Development Optimization Model for Individual Well Design Eclipse maximizes IRR by adjusting development options for each wells specific circumstances utilizing multi-variable regression techniques…
  25. Analyst Day 2018 – Eclipse Resources Corp. – slide 25
    2018 Analyst Day Development Optimization Model Example: Spacing Eclipses focus on returns optimization allowed the Company to space out wells on a 2018 pad to save 15MM of capital and increase unit IRR by 69%1 Spacing…
  26. Analyst Day 2018 – Eclipse Resources Corp. – slide 26
    2018 Analyst Day Development Optimization Model Example: Proppant By optimizing proppant loading, Eclipse improved estimated unit returns by 12%1 Proppant Optimization Theory Example Well 0.3500 Lean Condensate Unit…
  27. Analyst Day 2018 – Eclipse Resources Corp. – slide 27
    O HIO O PERATIONAL U PDATE Oleg Tolmachev - Executive Vice President and Chief Operating Officer
  28. Analyst Day 2018 – Eclipse Resources Corp. – slide 28
    2018 Analyst Day Super Lateral Perspective Eclipses 20,000 Super Laterals would Extend from Central Park to City Hall or Minute Maid Park to the 610 Loop Central Park 610 Loop Central Park Minute Maid Park Minute…
  29. Analyst Day 2018 – Eclipse Resources Corp. – slide 29
    2018 Analyst Day Incremental Economic Impact of Super Laterals Extending well length from 13,000 to 20,000 creates 975 1,520 PV10 per foot with an incremental IRR of 130% 215% Well Level Capital Cost per Lateral Length Condensate…
  30. Analyst Day 2018 – Eclipse Resources Corp. – slide 30
    2018 Analyst Day Super Lateral Rationale Eclipses Super Lateral development decreases costs and increases rates of returns as compared to an equal amount of lateral footage developed by two shorter wells Utica Condensate Case…
  31. Analyst Day 2018 – Eclipse Resources Corp. – slide 31
    5,513 9,827 8,376 9,333 19,212 10,000 19,613 8,329 13,595 9,843 10,151 14,443 15,720 11,137 15,620 9,330 15,349 19,626 14,029 19,769 2017 : 13,600 Average 13,752 21,182 15,278 19,588 Super Lateral…
  32. Analyst Day 2018 – Eclipse Resources Corp. – slide 32
    2018 Analyst Day Marcellus Wells Commence Production Two Marcellus wells are in early flow-back stages, currently monitoring initial results Recent Activity Marcellus Initial Development Two Marcellus wells in Ohio Averaged 12…
  33. Analyst Day 2018 – Eclipse Resources Corp. – slide 33
    T YPE C URVE U PDATE Oleg Tolmachev - Executive Vice President and Chief Operating Officer
  34. Analyst Day 2018 – Eclipse Resources Corp. – slide 34
    2018 Analyst Day 2018 Utica Dry Gas Type Curve Accelerates Returns Detailed engineering analysis supports moving to a more accelerated dry gas production profile, increasing type curve returns while maintaining EUR New Production…
  35. Analyst Day 2018 – Eclipse Resources Corp. – slide 35
    2018 Analyst Day Lateral Length Efficiency and Service Cost Pressures Longer laterals mitigate the impact of the year over year well cost increases caused by service costs inflation, resulting in higher IRRs overall 2018 Type Curve…
  36. Analyst Day 2018 – Eclipse Resources Corp. – slide 36
    2018 Analyst Day Utica Condensate Well Performance Recent condensate wells are exceeding type curve expectations on oil production and yield, providing for better economics Strong Recent Well Performance Cumulative MBOE 6:11…
  37. Analyst Day 2018 – Eclipse Resources Corp. – slide 37
    2018 Analyst Day Utica Condensate Acreage IRRs Highly Levered to Oil Prices Eclipses Condensate portfolio allows the company to take advantage of increasing oil prices Condensate Area Operational Flexibility Utica Condensate Rate…
  38. Analyst Day 2018 – Eclipse Resources Corp. – slide 38
    F LAT C ASTLE A CQUISITION AND D EVELOPMENT Benjamin Hulburt Chairman, President and Chief Executive Officer
  39. Analyst Day 2018 – Eclipse Resources Corp. – slide 39
    2018 Analyst Day Similar Geological Attributes Across Sub-Basins The Flat Castle Project Area is located in a different Utica Shale sub-basin than Eclipses Ohio acreage; however, similar geology supports consistency of results…
  40. Analyst Day 2018 – Eclipse Resources Corp. – slide 40
    2018 Analyst Day Unlocking Flat Castle Eclipse has the technical capability and a full development program planned to unlock the Flat Castle Project Area potential Issue: Historically wide basin Issue: Historically underdeveloped…
  41. Analyst Day 2018 – Eclipse Resources Corp. – slide 41
    2018 Analyst Day Eclipse Advantage in Flat Castle Eclipses Super Lateral technologies generate outsized returns in an otherwise marginally economic area Untapped Potential in Flat Castle Super Lateral Length Progression Eclipse…
  42. Analyst Day 2018 – Eclipse Resources Corp. – slide 42
    2018 Analyst Day Flat Castle Gas In Place and Recovery Factors Large gas-in-place volumes in Flat Castle Project Area support the potential for reserve growth per well and further IRR gains Gas in Place Characteristics Strong…
  43. Analyst Day 2018 – Eclipse Resources Corp. – slide 43
    2018 Analyst Day Structure Contour Map Top of Trenton The vertical drilling depth for wells drilled is similar on Eclipses Flat Castle assets as compared to its Dry Gas Ohio acreage The subsea depth to the top of the Trenton…
  44. Analyst Day 2018 – Eclipse Resources Corp. – slide 44
    2018 Analyst Day Similar Reservoir Characteristics Petrophysical evaluation shows highly prospective reservoir conditions across Eclipses acreage footprint The Indian Castle and the Flat Creek sub-members of the Utica Shale are…
  45. Analyst Day 2018 – Eclipse Resources Corp. – slide 45
    2018 Analyst Day Significant Inventory Increase Strategic combination substantially increases scale and inventory Acreage Summary Net Undeveloped Shale Acreage1 High revenue interest allows for enhanced economics and rates of…
  46. Analyst Day 2018 – Eclipse Resources Corp. – slide 46
    2018 Analyst Day Delineation of Flat Castle Project Area by Key Industry Wells Eclipses Flat Castle acreage sits at the center of the highest gas in place in the Sub-Basin and has been substantially delineated by strong surrounding…
  47. Analyst Day 2018 – Eclipse Resources Corp. – slide 47
    2018 Analyst Day Eclipse Flat Castle Project Area Type Curves Eclipse has developed two type curves for the Flat Castle Project Area (i) a base case and (ii) an upside case that is increased by 12% to reflect higher gas in place on…
  48. Analyst Day 2018 – Eclipse Resources Corp. – slide 48
    2018 Analyst Day Attractive Flat Castle Project Area Type Curves1 Well costs and returns assume higher completion costs of a modern completion without an assumed increase in EUR as compared to offset wells Base Case Upside Case IRR…
  49. Analyst Day 2018 – Eclipse Resources Corp. – slide 49
    2018 Analyst Day Development Strategy Eclipse has a fully planned development program covering the Flat Castle Project Area Development Metrics 100 gross (87 net) locations with 1,200 inter-lateral well spacing to allow for higher…
  50. Analyst Day 2018 – Eclipse Resources Corp. – slide 50
    E CLIPSE M IDSTREAM & M ARKETING Matthew DeNezza EVP and Chief Financial Officer
  51. Analyst Day 2018 – Eclipse Resources Corp. – slide 51
    2018 Analyst Day Eclipse Midstream Strategy Identify and develop competitive midstream solutions creating value while improving individual well and corporate IRRs Aligned with Provide lowest cost Diversity of Reliability…
  52. Analyst Day 2018 – Eclipse Resources Corp. – slide 52
    2018 Analyst Day Utica Dry Gas Eureka Midstream Acreage Dedication Completed a comprehensive renegotiation of the Gas Gathering Agreement Effective January 1, 2018 Gathering Fee Adjustment Gathering fee was reduced by 20%…
  53. Analyst Day 2018 – Eclipse Resources Corp. – slide 53
    2018 Analyst Day Utica Condensate Midstream Summary Blue Racer/EnLink Liquids & Condensate System Overview Eclipse is responsible for building midstream infrastructure from pad sites to Centralized Stabilization Facilities (CSFs)…
  54. Analyst Day 2018 – Eclipse Resources Corp. – slide 54
    2018 Analyst Day Marcellus Condensate Midstream Summary Initial Wells Testing 2 wells in 2018 with an interim midstream solution in place to handle all products Full Development Identified potential midstream solutions and…
  55. Analyst Day 2018 – Eclipse Resources Corp. – slide 55
    2018 Analyst Day Substantial Market Availability in Central PA Eclipse has developed a gas marketing plan for Flat Castle Project Area that provides reliable sales outlets and favorable market access Favorable Market Access Flat…
  56. Analyst Day 2018 – Eclipse Resources Corp. – slide 56
    2018 Analyst Day Takeaway Projects in Northern PA Enhance Market Options Expansion Projects in Northern Pennsylvania will continue to provide further market liquidity and support development of Flat Castle TGP Triad Expansion…
  57. Analyst Day 2018 – Eclipse Resources Corp. – slide 57
    2018 Analyst Day Natural Gas Outlook1 Recent winter weather has tightened natural gas markets and is supportive of positive fundamental trends in natural gas Projected GDP growth to continue Recent winter Core natural gas to…
  58. Analyst Day 2018 – Eclipse Resources Corp. – slide 58
    2018 Analyst Day Demand Drivers LNG & Mexico Leading the Way Macro Demand Factors LNG exports are expected to increase by 0.7 to 1.0 Bcf/d averaging 3.7 Bcf/d through 2018 as favorable netbacks in Asia and the UK support additional…
  59. Analyst Day 2018 – Eclipse Resources Corp. – slide 59
    2018 Analyst Day Supply Factors1 Incremental supply growth impacted by declining core acreage positions, parent/child well impacts, and decreased well productivity per rig Supply Factors Core drilling locations continue to…
  60. Analyst Day 2018 – Eclipse Resources Corp. – slide 60
    2018 Analyst Day Marketing Strategy Diversified Diversified marketing marketing strategy provides flexibility strategy provides flexibility and and enhanced enhanced pricing dynamics pricing dynamics Flow Assurance…
  61. Analyst Day 2018 – Eclipse Resources Corp. – slide 61
    2018 Analyst Day Demand Drivers Northeast Takeaway Appalachian basis differentials narrow as projects come online and transportation capacity exceeds production and projects come online Northeast Production vs Pipeline Takeaway1…
  62. Analyst Day 2018 – Eclipse Resources Corp. – slide 62
    2018 Analyst Day Near to Medium Term Takeaway Strategy As capacity owners look to third parties to fill unused capacity, Eclipse has realized market gains Short Term Benefits of Expansions Negative Impact of Capacity Projects1…
  63. Analyst Day 2018 – Eclipse Resources Corp. – slide 63
    2018 Analyst Day Eclipse Firm Transportation Update Diverse firm gas transportation portfolio provides optionality to various markets, with right-sized positions to maximize revenue 1,200,000 As Rover enters service, Gross…
  64. Analyst Day 2018 – Eclipse Resources Corp. – slide 64
    2018 Analyst Day NGL Market Outlook Depleted storage levels, coupled with increases in domestic and global demand, have lifted NGL prices Current Market Conditions NGL Market Trends NGL complex pricing is strengthening, with…
  65. Analyst Day 2018 – Eclipse Resources Corp. – slide 65
    2018 Analyst Day Condensate Market Outlook With WTI and Brent prompt trading at their highest levels since late 2014, along with the EIA forecasting robust global demand growth, sentiment in the market is strong Current Market…
  66. Analyst Day 2018 – Eclipse Resources Corp. – slide 66
    F INANCIAL O VERVIEW Matthew DeNezza EVP and Chief Financial Officer
  67. Analyst Day 2018 – Eclipse Resources Corp. – slide 67
    2018 Analyst Day 2018 Development Plan1 Eclipses capital plan of 300-320 million supports 8-14% YoY production growth on an Mcfe basis and results in over 40% condensate growth and 16% YoY revenue growth in 2018 Operational…
  68. Analyst Day 2018 – Eclipse Resources Corp. – slide 68
    2018 Analyst Day 2018 Revenue: More Liquids Focused1 With a recently turned to sales Utica Condensate pad and another 13 gross condensate wells turning to sales in 2018, Eclipses shift in commodity mix supports an increase in…
  69. Analyst Day 2018 – Eclipse Resources Corp. – slide 69
    2018 Analyst Day Utica Shale Drilling Joint Venture Transaction Summary1 Utica Shale Drilling Joint Venture with Sequel Energy increases Eclipses return on capital at an attractive implied per acre valuation and improves well…
  70. Analyst Day 2018 – Eclipse Resources Corp. – slide 70
    2018 Analyst Day Multi-Year Strategy Sensitivity to Gas Prices1 With ample wet and dry gas inventory and financial flexibility via an optional third JV program, Eclipse is well positioned to achieve attractive growth metrics while…
  71. Analyst Day 2018 – Eclipse Resources Corp. – slide 71
    2018 Analyst Day 2018 Full Year Guidance Production Forecasted Realizations1 10% Natural Gas2 Oil NGL 12% Differential to NYMEX Differential to NYMEX % of WTI 12% 16% High (0.35) (7.25) High Low 335 355 40% /Mcf…
  72. Analyst Day 2018 – Eclipse Resources Corp. – slide 72
    2018 Analyst Day Hedging Update Eclipse continues to actively hedge expected production to provide predictable cash flows and reduce capital plan funding risk Summary of Current Hedges Natural Gas (MMBtu/d) 2018 Commodity Hedges s…
  73. Analyst Day 2018 – Eclipse Resources Corp. – slide 73
    2018 Analyst Day Trading Metric Comparison Eclipse trades at a discount relative to Appalachian and Small-Cap peers despite similar or better leverage metrics and the capital flexibility to shift production mix to a higher liquids…
  74. Analyst Day 2018 – Eclipse Resources Corp. – slide 74
    C LOSING R EMARKS AND Q&A
  75. Analyst Day 2018 – Eclipse Resources Corp. – slide 75
    2018 Analyst Day Closing Remarks and Q&A Efficient Capital Deployment Investor Aligned Compensation Structure Capital expenditures to Culture of Innovation focus on highest Executive returning areas compensation Path Forward…
  76. Analyst Day 2018 – Eclipse Resources Corp. – slide 76
    A PPENDIX
  77. Analyst Day 2018 – Eclipse Resources Corp. – slide 77
    2018 Analyst Day Q1 and 2018 Guidance Q1 2018E FY 2018E Low High Low High Avg. Daily Production (MMcfe/d) 295 305 335 355 % Natural Gas 74% 76% 73% 77% % NGL 13% 15% 12% 16% % Oil 10% 12% 10% 12% Forecasted Realizations…
  78. Analyst Day 2018 – Eclipse Resources Corp. – slide 78
    2018 Analyst Day 2018 Type Curves1 Accelerated production profile in new Utica Dry Gas Type Curve enhances returns Utica Utica Rich Utica Dry Marcellus Flat Castle Flat Castle Condensate Gas Gas Condensate Base Case Upside…
  79. Analyst Day 2018 – Eclipse Resources Corp. – slide 79
    2018 Analyst Day 2018 Ohio Type Curves and Flat Castle Type Curves Marcellus Flat Castle Base Flat Case Upside Type curves do not represent proved reserves Utica Condensate Utica Rich Gas Utica Dry Gas Condensate Case Case Type…
  80. Analyst Day 2018 – Eclipse Resources Corp. – slide 80
    2018 Analyst Day 2018 Type Curve Summary Utica Condensate Utica Rich Gas Utica Dry Gas Marcellus Condensate Flat Castle Base Case Flat Case Upside Case Gas IP Rate (Mcf/d) 7,200 30,600 44,350 9,900 40,712 45,598 Initial Cond.…
  81. Analyst Day 2018 – Eclipse Resources Corp. – slide 81
    2018 Analyst Day Premier Utica and Marcellus Assets Pro Forma for the acquisition, Eclipse has 375 risked future extended reach lateral locations, equating to 16 years of drilling inventory based on 3-year development plan…
  82. Analyst Day 2018 – Eclipse Resources Corp. – slide 82
    2018 Analyst Day Hedging Summary1 Volume Weighted Average Natural Gas Hedges Production Period (MMBtu/d) Price (/MMBtu) Natural Gas Swaps 30,000 Ja nua ry 2018 - Ma rch 2018 3.46 30,000 Apri l 2018 - Ma rch 2019 2.90 Natural…
  83. Analyst Day 2018 – Eclipse Resources Corp. – slide 83
    2018 Analyst Day Non-GAAP Reconciliations Cash G&A Guidance For the Thre e Months For the Ye ar Ending thousands Ending March 31, 2018 De ce mbe r 31, 2018 General and administrative expenses, estimated to be reported…

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