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 February 1, 2015 - 2:33 PM EST
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Lonestar Resources, Ltd. Announces 70% Increase In Proved Reserves to 31.0 MMBOE

FORT WORTH, Texas, Feb. 1, 2015 /PRNewswire/ -- Lonestar Resources, Ltd. ("Lonestar", ASX: LNR, OTCQX: LNREF or the "Company") is pleased to announce the results of its independent engineering reports for the year ended December 31, 2014.  Lonestar obtains reserve reports from the independent consultant it deems as the most knowledgeable in each of its areas of focus.  Accordingly, W.D. Von Gonten & Co. was retained to conduct the independent evaluation of the Company's Eagle Ford Shale properties and LaRoche Petroleum Consultants, Ltd. was retained to conduct the independent evaluation of the Company's Conventional assets. For the year ended December 31, 2014, Lonestar's independent reserve reports and PV-10 estimates employed the commodity pricing conventions prescribed by the U.S. Securities & Exchange Commission (SEC), which employs past 12 months pricing for the projections. Use of SEC methodology allows the Company's results to be compared more directly with its U.S. peers.

Frank D. Bracken III, Lonestar's Managing Director commented, "We are pleased to announce meaningful reserve growth, based on the results generated from our independent consultants for the year ended December 31, 2014.  Proved Reserves net of royalties were 31.0 million barrels of oil equivalent (MMBOE), an increase of 70% over the 18.2 MMBOE reported at year ended December 31, 2013.   Lonestar's Proved Reserve PV-10 value of US$705.8 million represents an increase of 65% over 2013 levels, which I believe reflects the significant continued success of our Eagle Ford growth strategy and the substantial Proved Reserves value which underpins our equity value."

Lonestar's Proved Reserves include 23.6 million barrels of crude oil and condensate, 3.0 million barrels of natural gas liquids, and 26.0 billion cubic feet of natural gas.  By energy content, Lonestar's Proved Reserves are weighted 86% to liquids.  Further, Lonestar's Proved Reserve base is comprised of 89% unconventional reserves and 11% conventional, by volume. Lastly, the Company's Proved Reserves represent an excellent balance between Proved Developed (40%) and Proved Undeveloped (60%).

At December 31, 2014, Proved & Probable Reserves were 43.2 million barrels of oil equivalent, which included 34.3 million barrels of oil, 3.7 million barrels of NGL's, and 31.3 billion cubic feet of natural gas, and had an associated PV-10 value of $859.7 million. These results represent a 70% increase in Proved and Probable reserves and a 75% increase in the associated PV-10 value.

At December 31, 2014, Proved, Probable & Possible Reserves were 48.1 million barrels of oil equivalent, which included 38.5 million barrels of oil, 4.0 million barrels of NGL's, and 33.7 billion cubic feet of natural gas, and had an associated PV-10 value of $952.2 million. These results represent a 90% increase in Proved, Probable & Possible reserves and a 94% increase in the associated PV-10 value.

Importantly, Lonestar's inventory of Engineered Locations, those designated as Proved, Probable or Possible, are associated with an estimated 78% of its greater than 30,000 net acres in the Eagle Ford Shale.  Lonestar believes that industry activity may establish additional viable drilling locations at no cost to the Company. It is this unengineered acreage that may serve as the fuel for organic reserve growth in the future.

During 2014, Lonestar sold its Raccoon Bend properties in south Texas, which contributed 0.3 MMBOE and $5.2 million on of PV-10 at December 31, 2013.  These assets, which were a drag on the Company's focus in the Eagle Ford, were sold for $3.2 million, and provided additional capital for Lonestar's Eagle Ford Shale drilling program while accreting to the Company's equity value. During 2015, it is likely that Lonestar will continue to rationalize its Conventional asset base, selling assets with limited focus or that lack operational control. Sale of such assets will bolster the Company's liquidity necessary to be financially flexible and opportunistic in its pursuit of additional resource in the Eagle Ford Shale trend.

With the fact in mind that SEC commodity price methodology does not reflect the current futures prices for oil and gas, Lonestar has also calculated the Company's PV-10 using its third part engineering reports, based on a distribution of flat WTI oil price decks, with those results included in Table 1 below.  In the cases in which oil prices are assumed between $45 and $65 per barrel, the Company has forecasted that capital costs and lease operating expenses would decrease by an average of 10% from year-end levels, and has applied those reduced costs to its PV-10 calculations.

 

Table 1: PV-10 At Various Crude Oil Prices (in US$ millions)




PV-10 in $MM


West Texas Intermediate Crude Oil Price



Reduced Cost Price Environment


Static Cost Price Environment

Asset


$45


$55


$65


$75


$85


$95














Eagle Ford


$200


$330


$470


$560


$722


$890














Conventional


$22


$29


$37


$46


$53


$62














Hedges


$60


$45


$30


$14


($1)


($16)














Total


$281


$404


$537


$620


$774


$937

The footnotes and definitions are an integral part of these tables. Table 1 provides distribution of PV-10 values of the Company's Proved, Probable & Possible Reserves based on various West Texas Intermediate crude oil prices. Table 2 provides distribution among Proved, Probable & Possible Categories, by hydrocarbon type, based on SEC pricing. Table 3 provides distribution among Proved, Probable & Possible Categories, by area of operations, based on SEC pricing.

Important tables and disclosures follow on subsequent pages of this release.

 

Table 2: Proved, Probable & Possible Reserves by Geographic Region

(all dollar figures are US dollars, in thousands)














Crude Oil


NGL's


Natural Gas


Total


Future Net Revenues

Category


(Mbbls)


(Mbbls)


(MMcf)


(MBOE)


Undiscounted

PV-10

Proved Developed Producing












Eagle Ford Shale


6,971


1,212


8,360


9,576


$519,702

$294,190

Conventional


2,075


0


3,276


2,621


$126,047

$52,840

Proved Developed Producing


9,047


1,212


11,636


12,198


$645,750

$347,030













Proved Developed Non Producing











Eagle Ford Shale


73


0


0


73


$3,689

$2,040

Conventional


65


0


355


124


$5,176

$2,753

Proved Developed Non Producing

138


0


355


197


$8,865

$4,793













Proved Undeveloped












Eagle Ford Shale


13,817


1,833


13,167


17,844


$874,746

$347,408

Conventional


609


0


810


744


$31,298

$6,590

Proved Undeveloped


14,426


1,833


13,978


18,588


$906,044

$353,998













Total Proved












Eagle Ford Shale


20,861


3,044


21,528


27,493


$1,398,138

$643,638

Conventional


2,749


0


4,441


3,490


$162,522

$62,183

Total Proved


23,611


3,044


25,968


30,983


$1,560,659

$705,821













Probable Undeveloped












Eagle Ford Shale


10,679


682


5,352


12,253


$512,589

$153,842

Conventional


0


0


0


0


$0

$0

Probable Undeveloped


10,679


682


5,352


12,253


$512,589

$153,842













Proved & Probable












Eagle Ford Shale


31,541


3,726


26,880


39,746


$1,910,726

$797,479

Conventional


2,749


0


4,441


3,490


$162,522

$62,183

Proved & Probable


34,290


3,726


31,320


43,236


$2,073,248

$859,663













Possible Undeveloped












Eagle Ford Shale


4,173


302


2,377


4,871


$267,571

$92,513

Conventional


0


0


0


0


$0

$0

Possible Undeveloped


4,173


302


2,377


4,871


$267,571

$92,513













Proved, Probable & Possible












Eagle Ford Shale


35,714


4,027


29,257


44,617


$2,178,297

$889,993

Conventional


2,749


0


4,441


3,490


$162,522

$62,183

Proved, Probable & Possible


38,463


4,027


33,697


48,107


$2,340,819

$952,176

 

 

Table 3: Summary Reserves Comparison- 2014 vs. 2013

(all dollar figures are US dollars, in thousands)










December 31, 2013


December 31, 2014




Total




Total



Category



(MBOE)


PV-10


(MBOE)


PV-10

Proved Developed Producing










Western



5,088


$178,450


6,603


177,025

Central



79


$3,580


1,575


62,082

Eastern



-


$0


1,399


55,083

Eagle Ford Shale



5,167


$182,030


9,576


294,190

Conventional



2,896


$62,565


2,621


52,840

Proved Developed Producing



8,063


244,595


12,198


347,030











Proved Developed Non Producing










Western



-


$0


-


-

Central



-


$0


73


2,040

Eastern



-


$0


-


-

Eagle Ford Shale



-


$0


73


2,040

Conventional



153


$3,653


124


2,753

Proved Developed Non Producing



153


3,653


197


4,793











Proved Undeveloped










Western



8,148


$155,941


10,529


212,119

Central



1,128


$16,623


3,822


61,427

Eastern



-


$0


3,493


73,861

Eagle Ford Shale



9,276


$172,564


17,844


347,408

Conventional



731


$7,253


744


6,590

Proved Undeveloped



10,008


179,817


18,588


353,998











Total Proved










Western



13,236


$334,390


17,131


389,144

Central



1,207


$20,204


5,470


125,549

Eastern



-


$0


4,892


128,944

Eagle Ford Shale



14,443


$354,594


27,493


643,638

Conventional



3,781


$73,470


3,490


62,183

Total Proved



18,224


428,065


30,983


705,821











Probable Undeveloped










Western



636


$9,244


3,840


71,966

Central



6,515


$53,481


7,463


64,913

Eastern



-


$0


949


16,963

Eagle Ford Shale



7,151


$62,724


12,253


153,842

Conventional



-


$0


-


-

Probable Undeveloped



7,151


62,724


12,253


153,842











Proved & Probable










Western



13,872


$343,634


20,971


461,110

Central



7,722


$73,684


12,933


190,462

Eastern



-


$0


5,841


145,908

Eagle Ford Shale



21,594


$417,319


39,746


797,479

Conventional



3,781


$73,470


3,490


62,183

Proved & Probable



25,375


$490,789


43,236


859,663











Possible Undeveloped 










Western



-


$0


-


-

Central



-


$0


-


-

Eastern



-


$0


4,871


92,513

Eagle Ford Shale



-


$0


4,871


92,513

Conventional



-


$0


-


-

Possible Undeveloped



0


0


4,871


92,513











Proved, Probable & Possible










Western



13,872


$343,634


20,971


461,110

Central



7,722


$73,684


12,933


190,462

Eastern



-


$0


10,712


238,421

Eagle Ford Shale



21,594


$417,319


44,617


889,993

Conventional



3,781


$73,470


3,490


62,183

Proved, Probable & Possible



25,375


$490,789


48,107


952,176

 

Footnotes:

Reserves Reporting:
Pursuant to ASX Listing Rules ("LR") the reserves information in this document:

(i) is effective as at 1 January, 2015 (LR 5.25.1)
(ii) has been estimated and is classified in accordance with SPE-PRMS (Society of Petroleum Engineers - Petroleum Resources Management System) (LR 5.25.2) 
(iii) is reported according to the Company's economic interest in each of the reserves and net of royalties (LR 5.25.5) 
(iv) has been estimated and prepared using the deterministic method (LR 5.25.6)
(v) has been estimated using a 6:1 BOE conversion ratio for gas to oil, pursuant to the information in the disclaimer section of this document (LR 5.25.7)

Other Reserves Information:

Lonestar operates most of its properties which are generally held by standard oil and gas lease arrangements. Detailed information on the operator and lease arrangements is disclosed in the Company announcement related to the initial acquisition of properties. The Company's working interest ownership (WI%) and net-revenue interest ownership (NRI%) in relation to each of its properties are generally included in the Company's presentations which are available on the ASX or the Company's websites. Well spacing assumptions and lateral length assumptions are generally included in the Company's presentations as is additional information on capital cost and taxation assumptions.  In accordance with ASX LR 5.43 the Company confirms that it is not aware of any new information or data that materially affects the reserves information included in previous Company announcements including as to material assumptions and technical parameters underpinning the estimates, other than as set out in this announcement.  

Qualified Petroleum Reserves and Resources Evaluators:

In accordance with ASX Listing Rules 5.41 and 5.42:

The reserve reporting provided in this document in relation to the Company's Eagle Ford Shale properties is based on and fairly represents information and supporting documentation that has been prepared by Mr. William D. Von Gonten, Jr., P.E., and Mr. Taylor D. Matthes, P.E. who are employed by W. D. Von Gonten & Co Petroleum Engineering. Mr. Von Gonten holds a Bachelor of Science degree in Petroleum Engineering from Texas A&M University and Mr. Matthes holds a Bachelor of Science degree in Petroleum Engineering from Texas A&M University. Both of these persons are Registered Texas Professional Engineers. Mr. Von Gonten has 24 years of experience as a Petroleum Engineer and Mr. Matthes has more than 5 years of experience as a Petroleum Engineer. Both of these persons are members of the Society of Petroleum Engineers . Messrs. Von Gonten and Matthes have consented to the inclusion in this document of the information and context in which it appears.

The reserve reporting provided in this document in relation to the Company's Conventional properties is based on and fairly represents information and supporting documentation that has been prepared by Mr. William M. Kazmann who is President and Senior Partner La Roche Petroleum Consultants, Ltd. Mr. Kazmann received his Bachelor of Science and Master of Science degrees in Petroleum Engineering from the University of Texas at Austin in 1973 and 1975 respectively. He has worked in the oil and gas industry since that time. Mr. Kazmann is a Licensed Professional Engineer in the State of Texas and is a member of the American Association of Petroleum Geologists, Society of Petroleum Engineers, Society of Independent Professional Earth Scientists (serving as National Director from 1993 to 1996 and National Treasurer in 1994 and 1995), Dallas Geological Society, and Dallas Petroleum Club (serving as Director from 2004 through 2006). Mr. Kazmann has consented to the inclusion in this document of the information and context in which it appears.

Commodity Pricing Used:

Lonestar's reserves and PV-10 have been estimated using index prices determined in accordance with US SEC pricing guidelines for oil and natural gas, without giving effect to derivative transactions, and were held constant throughout the lift of the properties. The unweighted arithmetic averages of the first-day-of-the-month prices for the year ended December 31, 2014 were $94.99 per bbl for oil and $4.35 per mmbtu for natural gas and for the year ended December 31, 2013 were $96.94 bbl for oil and $3.66 per mmbtu for natural gas. These prices were adjusted by lease for quality, energy content, regional price differentials, transportation fees, marketing deductions and other factors affecting the price received at the wellhead.

Reserves Cautionary Statement:

Hydrocarbon reserves and resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates that were valid when originally calculated may alter significantly when new information or techniques become available. Additionally, by their very nature, reserve and resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional drilling and analysis, the estimates are likely to change. The may result in alterations to development and production plans which may, in turn, adversely impact the Company's operations. Reserves estimates and estimates of future earnings are, by nature, forward looking statements and subject to the same risks as other forward looking statements.

Other Definitions:

"BOE" is barrel of oil equivalent. For purposes of computing such units, a conversion rate of 6,000 cubic feet of natural gas to one barrel of oil equivalent (6:1) is used. The conversion ratio of 6:1 is based on an energy equivalency conversion method which is primarily applicable at the burner tip and does not represent value equivalence at the wellhead.

"MMBOE" is million barrels of oil equivalent.

"MBOE" is thousand barrels of oil equivalent.

"Mbbls" is thousand barrels of oil or NGL's.

"MMcf" is million cubic feet of natural gas.

"Net Revenue" is calculated net of royalties, production taxes, lease operating expenses, and capital expenditures, before Federal Income Taxes.

"PV-10" or "NPV10" is defined as the future Net Revenues of the Company's Proved or Probable Reserves, discounted at 10% per annum.  The estimated future net revenue values do not necessarily represent the fair market value of Lonestar's reserves.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/lonestar-resources-ltd-announces-70-increase-in-proved-reserves-to-310-mmboe-300028916.html

SOURCE Lonestar Resources, Ltd.


Source: PR Newswire (February 1, 2015 - 2:33 PM EST)

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