Utica Shale operator Eclipse Resources Corp. (ECR) hung in for the second quarter of 2015, posting a loss of $0.15 per share, a massive production increase and announcing the sale of a condensate stabilization facility.

“Eclipse management is doing a good job at items they can control,” said Pearce Hammond, co-head of E&P research, Simmons & Co. International. “The challenge remains the macro environment for small-cap stocks.”

The company said it closed the sale of one of its constructed condensate stabilization facilities for $37.3 million.

In an Aug. 13 conference call, company executives said the sale was a one-off contractual deal structured with EnLink Midstream Operating LP (ENLK). In September 2014, Eclipse entered into an agreement to purchase two of the company’s existing condensate stabilization facilities and construct additional facilities to support the company’s drilling program in the Utica.

“We’re not looking to monetize any of our other assets at this point,” said Matthew DeNezza, CFO. “To be honest, that was something that going into 2015 we had already baked into the expenditure guidance and to some extent had expressed to people that was going to be happening.”

Eclipse also reduced gas differentials as gas marketing efforts appear to be bearing fruit. The company also spent less on G&A, Hammond said.

Eclipse saw strong reductions in drilling costs, said Benjamin W. Hulburt, Eclipse chairman, president and CEO. In the second quarter, the company drilled its longest lateral to date—10,200 feet in 17 stages while decreasing average drilling costs per foot by 18%. Average completions cost per stage are down 36% compared to the first quarter of 2015.

However, the company’s drilling and completion (D&C) costs were higher than expected, said Gabriele Sorbara, analyst, Topeka Capital Markets. Eclipse spent $106.4 million on D&C compared to Topeka’s $75.6 million estimate.

Eclipse said it still expects its full year budget to come on target.

DeNezza said the company’s drilling will slow by operating a one-rig program, improving costs and D&C for the remainder of 2015.

“We continue to anticipate that our total capital expenditures for the year will be at or below our capital budget of $352 million,” DeNezza said.

As of June 30 the company’s liquidity was $354.8 million, including $257.6 million in cash and cash equivalents.

Eclipse shined on its production side in the second quarter of 2015. Net production averaged 198.6 million cubic feet equivalent per day (MMcfe/d), a 374% increase to average daily net production for the second quarter of 2014.

The company’s production target was kept at up to 200 MMcfe/d for fiscal year 2015, but the production mix features slightly more liquids—35%—compared with prior guidance of 32%, said David Tameron, senior analyst, Wells Fargo Securities.

Eclipse said it has 3,000 barrels per day (bbl/d) of oil hedged at a floor price of $55/bbl in 2015.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.

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