US oil and gas companies Eclipse Resources and Blue Ridge Mountain Resources have agreed to merge in an all-stock transaction to create a major Utica-focused gas operator with an enterprise value of around $1.4bn.
Under the terms of the merger, Blue Ridge shareholders will get 4.4259 shares of Eclipse Resources for each share they hold in Blue Ridge. The deal values each of the Blue Ridge shares at $7.44.
The combination of Eclipse Resources and Blue Ridge is estimated to have a Q4 2018 production of 500-560MMcfe per day and about 227,000 net effective undeveloped core acres that offer more than 20 years of wet and dry gas inventory.
Eclipse Resources chairman, president and CEO Benjamin W. Hulburt said: “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 program and provide for considerable G&A synergies, all while allowing for accelerated growth without adding to the Company’s debt obligations.”
Eclipse Resources said that it will create a new subsidiary which will be merged into Blue Ridge. Eventually, Blue Ridge will end up as a wholly-owned subsidiary of Eclipse Resources.
Blue Ridge president and CEO John Reinhart said: “Based on pro forma estimated fourth quarter of 2018 production of 500-560 MMcfe per day, a high performing management team, strong balance sheet, high quality asset base, and expected corporate, operational, and midstream synergies, we believe the combined company will possess a substantial scale advantage and an excellent foundation for significant organic growth with attractive cash flows while maintaining the optionality for bolt-on value-accretive acquisitions within the basin.”
Post merger, existing shareholders of Eclipse Resources will own a stake of around 57.5% in the combined company while Blue Ridge shareholders will own the remaining 42.5% or so stake.
The merger, which will be subject to customary regulatory approvals, approval by Blue Ridge shareholders, and certain other customary closing conditions, is likely to be completed in the fourth quarter of 2018.