KLR Group Starts Eclipse Resources (ECR) at Buy
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KLR Group initiates coverage on Eclipse Resources (NYSE: ECR) with a Buy rating and a price target of $3.75.
Analyst Daniel Prather commented, "We are initiating on ECR with a Buy rating and $3.75 per share target price. Eclipse has ~101,000 net acres prospective in the Ohio Utica comprising ~48,500 dry gas acres, ~33,000 condensate acres and ~19,500 rich gas acres. The company’s acreage is primarily in northeast Noble, southwest Monroe, southwest Belmont, southeastern Guernsey and central Harrison Counties.
Next year, the company plans to conduct a one-rig program and drill 20-24 net wells (~13,000’ laterals) primarily in the dry gas window. Eclipse is considering adding a second rig by mid-year. In early ’17, the company plans to drill two Marcellus pilots (~9,000’ laterals) in southeastern Monroe County.
Our 4Q/16 production expectation of ~252 Mmcfepd is ~1% above guidance (245-250 Mmcfepd). Our ’17 production growth expectation approximates company guidance (30%+).
Our economic model contemplates the company increases Utica activity from a one-rig program in late ’16 to a two-rig program by mid-’17."
Shares of Eclipse Resources closed at $2.93 yesterday.
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