Lonestar Resources, Ltd. (OTCQX:LNREF, ASX:LNR) is pleased to announce the closing of a $100 million Joint Development Agreement (“JDA”) with IOG Capital, L.P. The Agreement provides incremental non-recourse capital for Lonestar to drill wells in its focus area of the Eagle Ford Shale play.
Lonestar’s agreement with IOG Capital makes available a maximum of $100 million in funds to be used in drilling incremental Eagle Ford Shale wells. The Joint Development Agreement, which calls for IOG to participate as a non-operated working interest owner, states that the funds can be deployed towards the drilling and completion of Eagle Ford Shale wells which meet the collective return criteria of Lonestar and IOG. The JDA calls for IOG to contribute up to 90% of the initial capital for wells drilled in the program, with Lonestar contributing the remainder of well costs. After IOG achieves a specified return, Lonestar’s working interest would increase to 90%.
Lonestar’s Chief Executive Officer and Managing Director, Frank D. Bracken, III, commented, “Our deal with IOG Capital is tailor-made for Lonestar’s strategy in the current market- it makes sense to pursue additional growth opportunities in the current market, but do so in a manner that is consistent with Lonestar’s philosophy of maintaining balance sheet flexibility. First and foremost, this Agreement will allow Lonestar to more aggressively pursue additional farm-in opportunities without materially augmenting our capital budget. Farm-ins have been a principal source of leasehold and reserve growth for Lonestar in 2015, and we see that trend continuing.”
Bracken added, “The Joint Development Agreement will also allow Lonestar to spread its drilling capital over a larger number of wells, which should have positive benefits in terms of scale, as well as enlarge the number and size of acquisitions the Company can prosecute, which makes sense for a company our size.”
About IOG Capital, L.P.
IOG Capital, L.P. is an energy-focused private investment firm partnered with Fortress Investments and Metalmark Capital, with over $700 million in deployable capital. Founded in 2014 by former Chesapeake Energy Corporation (CHK) Chief Financial Officer, Marc Rowland, the firm seeks to provide funding solutions to development oriented oil and gas projects located onshore in the United States through joint ventures and non-operated asset level investment.
Lonestar Announces Expanded Senior Secured Credit Facility And Enhanced Liquidity
Lonestar Resources, Ltd. (OTCQX:LNREF, ASX:LNR) is pleased to announce the closing of a new $500 million Senior Secured Credit Facility, which replaces its previous $400 million facility.
Lonestar’s new facility was arranged by Citibank, N.A., and importantly, features an expanded borrowing base of $180 million, an increase of $30 million associated with the $150 million borrowing base under its previous facility. There are several additional upgraded features related to the new facility which include:
- Improved Liquidity- At June 30, 2015, Lonestar had $76 million drawn on its facility, yielding $74 million of liquidity. Proforma its new facility, liquidity is $104 million, an improvement of 41 percent.
- Reduction in Interest Rate Grid- Under its new facility, the spread over LIBOR interest rates is 25 basis points better than under its previous facility. At current levels, Lonestar’s interest rate has been reduced from 2.73% to 2.48%.
- Extension in Maturity Date- Lonestar’s new credit facility matures on October 16, 2018, representing a 7 month of extension versus its prior facility.
- Expanded Bank Group- ABN Amro, Texas Capital Bank and Bank of Texas each expanded their commitments under the new facility. Additionally, Lonestar added considerable firepower to the long-term capacity of the facility by adding three new banks: Comerica, BBVA Compass, and Barclays.
Lonestar’s Chief Executive Officer and Managing Director, Frank D. Bracken, III, commented, “We are extremely pleased with our expanded facility. It provides immediate benefits of increased capital availability at a lower interest cost. The facility also affords Lonestar an enhanced ability to hedge while leaving that decision completely at the discretion of the Company. Longer term, the facility’s maturity is extended by 20% and the increased number of large lenders in our group gives Lonestar the capability to substantially expand borrowing base among current lenders, which should streamline future expansions in the credit facility.”