Eclipse Resources signs merger deal with Blue Ridge Mountain

Oil and gas company Eclipse Resources has signed an agreement to merge with US-based natural gas explorer and producer Blue Ridge Mountain Resources to create one of the largest Utica shale-focused operators.

Under the terms of the deal, Eclipse Resources will offer 4.4259 shares of common stock to Blue Ridge stockholders for each share held by them in the company.

Approved by the board of directors of each company, the all-stock merger deal represents an enterprise value for the combined entity of around $1.4bn and an equity value of $908m.

In a related development, Blue Ridge stockholders owning around 60% of the outstanding common shares of the company have agreed to vote or provide written consents in support of the deal.

The combined business has estimated production of up to 560MMcfe a day for the fourth quarter of this year.

The transaction also comprises 227,000 net effective undeveloped core acres.

Eclipse Resources chairman, president and CEO Benjamin Hulburt said: “This transaction provides a compelling opportunity for both Eclipse Resources and Blue Ridge shareholders to benefit from the strength of the combined company.

“This combination allows both of us to consolidate premier assets that significantly increase the company’s production and cash flow, seamlessly fit into a consolidated drilling programme and provide for considerable general and administrative (G&A) synergies, all while allowing for accelerated growth without adding to the company’s debt obligations.”

The transaction offers synergies in terms of improved capital efficiency and operating margins on a per unit basis.

Eclipse Resources expects to achieve corporate G&A savings of nearly $15m per year across the combined asset base.

The merger will also offer midstream and downstream synergies through shared midstream providers and an expanded production base.

Subject to regulatory approvals and approvals of the stockholders, the transaction is anticipated to be completed in the fourth quarter of this year.

Eclipse Resources is engaged in tapping unconventional resources in the Appalachian region of the US and is currently focused on the Utica and Marcellus Shales in south-east Ohio.