US-based exploration company Eclipse Resources has signed an agreement to establish a drilling joint venture (JV) with Sequel Energy Group in the Utica shale acreage in south-east Ohio.

Under the agreement, Sequel is required to provide $325m to finance its share of the JV drilling programme.

Together, the companies will take up two drilling campaigns comprising 34 gross wells.

The funding commitment from Sequel will commence with wells that are currently underway and extend through wells to commence through the end of 2018.

Eclipse Resources chairman, president and CEO Benjamin Hulburt said: “At today’s forward strip prices, Eclipse calculates that the present value of the carried interest and significant working interest reversion as outlined in the commitment agreement will equate to a meaningful valuation premium to both where we trade and where recent Utica asset transactions have taken place.”

"The funding commitment from Sequel will commence with wells that are currently underway and extend through wells to commence through the end of 2018."

“Perhaps most importantly, as we see a significant amount of commodity volatility looking into next year, the terms of this drilling joint venture will allow us to maintain, or even accelerate our current drilling pace, while scaling our company level capital expenditures based on the economic environment.”

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The companies have also agreed upon an option to explore an additional third well programme of a similar size, which will also raise the funding size.

Eclipse Resources will function as the operator of all wells under the two campaigns and can exercise the right to adjust its pre-carry working interest in the first programme between 30% and 50% until the fourth quarter of 2017 fiscal year, and pre-carry working interest in the second programme between 30% and 70%.

The company also recently enhanced its borrowing base under a revolving line of credit from $175m to $225m.

For the second quarter of this year, its average net daily production stood at 287.8 million cubic feet equivalent per day.

Eclipse Resources is focused on the acquisition and development of oil and natural gas assets in the Appalachian Basin.