Earthstone Energy, Inc. Provides an Operations and Capital Expenditures Update
THE WOODLANDS, TX / ACCESSWIRE / November 2, 2015 / Earthstone Energy, Inc. (NYSE MKT: ESTE) ("Earthstone" or the "Company"), today provided an operations and capital expenditures update.
Acreage Update
During the third quarter of 2015, the Company acquired a 33% operated interest in approximately 1,650 gross acres, in southern Gonzales County, Texas, which supports 16 additional gross Eagle Ford Locations. This acreage, along with other recent acquisitions in the area, has been de-risked by numerous offsetting Eagle Ford wells operated by EOG Resources, Inc. and Marathon Oil Corporation and is economic in the current commodity price environment.
When combined with acquisitions completed in June 2015, which were previously disclosed in a press release dated July 13, 2015, the Company has acquired a total of 3,026 gross / 1,180 net acres in Karnes and southern Gonzales Counties, Texas, with working interests ranging from 33% to 50% in at least 33 identified future gross drilling locations.
The below table summarizes the Company's operated Eagle Ford and Austin Chalk position by development area.
Image: https://www.accesswire.com/uploads/EarthstoneTable1.png
Drilling and Completions Update
During the third quarter of 2015, we drilled four gross Eagle Fords
wells in northern Gonzales County—two wells in our Matthews South Unit
(850 gross acres; 50% working interest) and two wells in our Matthews
North Unit (700 gross acres; 50% working interest). Both wells in the
Matthews South Unit were put on production in October and both wells in
the Matthews North Unit are expected to come on line in early November
2015. Drilling costs to total measured depth including casing for our
two most recent wells at Matthews North averaged $2.5 million per well,
with lateral lengths available for completion of 7,610 and 8,705 feet.
Two wells in each unit will hold all unit acreage and allow for two to
three additional wells to be drilled in each unit in the future.
Completion costs for these recent wells are expected to average between
$105,000 and $108,000 per stage. The Company is targeting $100,000 per
stage for continuing operations.
As discussed in prior updates, we will intentionally produce these
wells on a managed pressure and choke basis in order to minimize initial
reservoir pressure declines, and, we believe, ultimately increase
reserve recoveries. We will produce these wells on small 10/64 and 12/64
chokes. While this approach will initially restrict production below
well capability, after about 60 days we expect production to
"cross-over" and exceed production profiles from older wells that were
initially produced on larger chokes.
The Company is currently drilling the four-well Boggs Unit in Karnes
County (350 acres; 33% working interest), with production from all four
wells expected to begin in January 2016. Lastly, one Austin Chalk well
in Fayette County was brought on line in July 2015.
Updated 2015 Capital Expenditures Budget
We are reducing our 2015 capital expenditures budget (excluding
acquisitions) from $90.0 million to $80.0 million. This decrease is
largely due to drilling and completion efficiencies achieved and
deferral of certain expenditures, offset by incremental leasing, in our
operated Eagle Ford drilling program where we expect to spud 10 gross
wells and complete 13 gross wells this year. In addition, the Company
has spent $7.5 million to acquire acreage and producing wells in Karnes
and southern Gonzales Counties. We anticipate meeting our full year
production guidance of 4,200 to 4,600 barrels of oil equivalent per day.
Image: https://www.accesswire.com/uploads/EarthstoneTable2.png
Management Comments
Frank A. Lodzinski, Chairman, President and Chief Executive Officer
of Earthstone Energy, Inc. commented, "While the price environment
remains challenging, we continue to take advantage of our clean balance
sheet and liquidity to convert existing acreage to held-by-production
("HBP") status and therefore preserve the majority of our acreage for
future development and also selectively expand our acreage and drilling
inventory. We have continued to drill and complete wells with a clear
focus to minimize capital expenditures, maintain production within
guidance, and turn acreage into HBP status. Our recent acquisitions in
southern Gonzales and Karnes Counties were purchased at attractive
prices. We are currently drilling four wells in our Boggs Unit (33%
working interest) in Karnes County. Our other new acreage is HBP or has
significant remaining leasehold term (June 2017 through April 2018) so
that near-term drilling is optional. Our managed pressure/choke approach
allows us to add production and capture acreage while deferring added
expenditures associated with artificial lift and other surface
facilities. In addition, we believe this approach will result in added
recoveries. Certain larger companies have recently announced similar
practices. We expect to end the year with a frac inventory of 12 wells.
While we intend to continue to run one rig, we may consider suspending
drilling if low commodity prices persist. In that event, we forecast
that we can spend within internally generated cash flow in 2016 and keep
production relatively flat with our fourth quarter of 2015 exit rate by
completing our frac inventory and adding artificial lift where needed.
Finally, we continue to focus on other asset and corporate opportunities
and intend to be acquisitive in the near-term, provided valuations are
reasonable and accretive to shareholders."
About Earthstone Energy, Inc.
Earthstone Energy, Inc. is a growth-oriented independent oil and gas
exploration and production company engaged in the development and
acquisition of oil and gas reserves through an active and diversified
program that includes the acquisition, drilling and development of
undeveloped leases, purchases of reserves, and exploration activities,
with its current primary assets located in the Eagle Ford trend of south
Texas and in the Williston Basin of North Dakota and Montana.
Earthstone is traded on NYSE MKT under the symbol "ESTE." The Company's
corporate headquarters is located in The Woodlands, Texas. Additional
information can be found at www.earthstoneenergy.com.
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Statements that
are not strictly historical statements constitute forward-looking
statements and may often, but not always, be identified by the use of
such words such as "expects," "believes," "intends," "anticipates,"
"plans," "estimates," "potential," "possible," or "probable" or
statements that certain actions, events or results "may," "will,"
"should," or "could" be taken, occur or be achieved. The forward-looking
statements include statements about future operations, expansion of
production and development acreage, increased cash flow, earnings and
assets and access to capital. Forward-looking statements are based on
current expectations and assumptions and analyses made by Earthstone and
its management in light of experience and perception of historical
trends, current conditions and expected future developments, as well as
other factors appropriate under the circumstances. However, whether
actual results and developments will conform to expectations is subject
to a number of material risks and uncertainties, including but not
limited to: the risks of the oil and gas industry (for example, the
recent rapid, significant decline in oil prices and operational risks in
exploring for, developing and producing crude oil and natural gas);
risks and uncertainties involving geology of oil and gas deposits; the
uncertainty of reserve estimates; the uncertainty of estimates and
projections relating to future oil and gas prices, production, costs and
expenses; potential delays or changes in plans with respect to
exploration or development projects or capital expenditures; health,
safety and environmental risks and risks related to weather; inability
of management to execute its plans to meet its goals; unavailability of gathering systems, pipelines and processing facilities; and the possibility that government policies may change. Earthstone's annual report on Form 10-K for the year ended December 31, 2014, quarterly reports on Form 10-Q, recent current reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect Earthstone's business, results of operations, and financial condition. Earthstone undertakes no obligation to revise or update publicly any forward-looking statements except as required by law.
Contact:
Neil K. Cohen
Vice President, Finance, and Treasurer
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woodlands, TX 77380
281-298-4246
SOURCE: Earthstone Energy, Inc.
