Lonestar Resources, Ltd. Releases Quarterly Report For December 2015
FORT WORTH, Texas
, Jan. 31, 2016 /PRNewswire/ -- Lonestar Resources, Ltd.
(ASX:LNR, OTCQX: LNREF) is pleased to provide an update on its financial and operational results for the three months ended December 31, 2015 (4Q15).
Fourth Quarter Highlights
- Lonestar Resources set a new production record, reporting a 31% increase in net oil and gas production to 7,639 BOEPD in 4Q15, vs. 5,816 BOEPD in 4Q14. Lonestar's 4Q15 sales volumes also represented a 15% sequential increase over 3Q15 production levels. In the fourth quarter, 72% of the Company's production was crude oil and NGL's. Production was higher than the top end of its guidance thanks to excellent performance of its Horned Frog wells, and achieved despite deferring two well completions.
- The Company's Eagle Ford Shale properties registered a 38% increase in net oil and gas production over 4Q14 results, to 7,039 BOEPD, and 18% growth sequentially.
- EBITDAX was $19.4 million for 4Q15 vs. $27.3 million for 4Q14, as increased production volumes and incremental revenues from crude oil hedges helped offset a 42% decrease in West Texas Intermediate oil prices. EBITDAX dropped just 10% against 3Q15 results as production growth significantly offset a $4.25 per barrel drop in WTI1.
- Lonestar reported a net loss of $4.9 million for 4Q15 vs. a net Income of $25.4 million in 4Q14. This is before an expected impairment charge, which the Company expects to be included in its audited full-year results.
- At December 31, 2015, $87 million was outstanding on the facility on its $180 million Senior Secured facility, currently leaving $93 million undrawn and available.
- Lonestar is making progress towards its corporate objective of moving the Company's domicile and public equity listing to
the United States
. On December 24, 2015 Lonestar submitted its Scheme of Arrangement with the Australian Securities & Investment Commission ("ASIC") to commence a process intended to move Lonestar's domicile to the United States. On December 31, 2015, Lonestar filed its Form 10 with the U.S. Securities & Exchange Commission ("SEC") with the intention of registering its equity securities in the
Lastly, on January 8, 2016, Lonestar filed an application for listing on the NASDAQ: NMS and reserved the ticker "LONE" for trading in
the United States
, which when effective, will coincide with a delisting from the Australian Stock Exchange.
1 Please see the Notes & Disclosures in the Complete Quarterly Report
Management's Discussion and Analysis
Lonestar Resources, Ltd. is pleased to announce its operational and unaudited financial results for the quarter ended December 31, 2015.
Lonestar Resources, Ltd. ("Lonestar" or the "Company") is listed on the Australian Securities Exchange (ASX) and the OTCQX in
the United States
, and is headquartered in
Fort Worth, Texas
. Lonestar Resources
is focused on the acquisition, development and production of unconventional resources in
the United States
. While optimizing cash flows from its Conventional assets, Lonestar is focusing its attention and capital to continuing its growth strategy in the Eagle Ford Shale. Lonestar currently operates 100% of over 35,000 net acres in the Eagle Ford, and continues to expand its leasehold. Lonestar believes it is capitalized to fund the development of its existing Eagle Ford Shale drilling inventory through internal means. Lonestar is also engaged in an early-stage project in the Bakken Petroleum System, where it has assembled a 52,559 acre leasehold (34,163 net acres) and tested light oil from the Bakken, Three Forks and Lower Lodgepole formations.
Lonestar continues to make strides towards its core goal of expanding its resource base during the current downturn in commodity prices. Lonestar's preference is to use its flexible drilling schedule and its $100 million Joint Development Agreement ("JDA") with IOG Capital, LLC to gain access to additional leasehold and reserves in proven areas via farm-in, supplemented by primary term leases. This strategy allows Lonestar to grow its asset base without straining its liquidity, as the Company continues to endeavor to retain unused borrowing base.
In partnership with Schlumberger, Lonestar's last 7 operated wells have employed significant new technologies intended to improve geo-targeting within the Eagle Ford Shale formation while using advanced thru-bit logging to total depth coupled with fracture stimulation modeling to assist in setting non-geometric perforations to optimize completion efficiencies. These efforts, implemented at the Company's Horned Frog and Beall Ranch properties, are achieving significant productivity gains over offset wells not using these technologies. These results are detailed in the Operations Review on page 3 of this report. Seeking to build on this success, Lonestar has entered into an expanded technical partnership with Schlumberger which will employ an even larger suite of technologies and services intended to drive further improvements in well performance.
In the current commodity price environment, Lonestar has adopted a highly flexible capital spending plan for 2016 with a principal focus on maintaining current debt levels and maximizing liquidity while continuing to avail the Company to new leasehold opportunities. Lonestar currently plans to drill and complete a total of 6 to 7 net wells (9 to 10 gross wells) at today's NYMEX strip prices, with a focus on
, LaSalle and
Counties. This budget should result in no change in the Company's net debt position over the course of 2016 and yield production which Lonestar estimates would range from flat to an increase of up to 10% over 2015 results. Importantly, Lonestar has no commitment wells in 2016, and may utilize funds from its $100 million
JDA with IOG Capital
to gain access to new farm-in opportunities while maintaining its capital budget. As market conditions change, Lonestar remains flexible in its ability to modify its spending in alignment that is in the best interests of its shareholders.
- Lonestar set another production record in the fourth quarter of 2015, registering sequential production growth of 15% over 3Q15 levels. The Company's net production for the fourth quarter of 2015 also represented a 31% increase over 4Q14 levels, rising to 7,639 BOEPD. Lonestar's Eagle Ford Shale drilling program continues to be the driver for the Company's record-setting production. Fourth quarter 2015 volumes were comprised of 4,011 barrels of oil per day, 1,472 barrels of NGL's per day, and 12,937Mcf of natural gas per day. The Company's 4Q15 results capped off an impressive year- as full-year 2015 production averaged 6,407 BOEPD, an increase of 43% over 2014 results.
- During the fourth quarter of 2015, Lonestar achieved considerable improvement in its lease operating expenses. Total Company lease operating expenses were $7.35 per BOE on unit of production basis, a reduction of 6% sequentially from third quarter 2015 results and a reduction of 22% from the second quarter of 2015, when LOE per BOE averaged $9.43 per BOE. In a commodity price environment where margins are paramount, Lonestar is achieving unit-cost reductions through a combination of increased sales volumes, industry-wide reductions in energy service costs, and a focused internal effort to optimize the Company's chemicals program. Lonestar believes that continued cost reduction efforts should further reduce LOE per BOE in the first quarter of 2016.
- Crude oil hedging continues to be an important element of Lonestar's strategy, providing visibility to cash flow streams and associated liquidity in the current crude oil price environment. Currently, the Company has West Texas Intermediate (WTI) swaps covering 2,276 barrels of oil per day for calendar 2016 at an average strike price of $77.15 per barrel. For 2017, The Company has three-way collars covering 1,000 bopd, which provide an effective floor of $55.25 per barrel with WTI prices between $40.00 per barrel and $60.00 per barrel but also gives upside to $80.25 per barrel. At December 31, 2015, the mark-to-market value of Lonestar's hedge portfolio was $32.6 million, and at January 31, 2016, the mark-to-market value of the portfolio is estimated at $32.8 million.
EAGLE FORD SHALE TREND- WESTERN REGION
- In central
, no new wells were completed during the quarter. However, production rates from the 4 producing wells continued to outperform the third-party engineering projections. The
leasehold is Held by Production, and Lonestar does not plan drilling activity here in 2016.
- Beall Ranch- In
, Lonestar continues to benefit from refined geo-steering targets and engineered completions. Through 196 days of production, Lonestar's #26H-#28H have cumulatively produced an average per well of 44,810 barrels of oil from an average 2,990-foot perforated intervals, or 14,003 bbls per 1,000 feet. These results are 42% better than the directly offsetting #32H-#34H wells, which were treated with a similar amount of proppant. Building on this success, Lonestar began drilling the Beall Ranch #20H-22H wells during the fourth quarter of 2015. As of this report, Lonestar has drilled and cased the Beall Ranch #22H & #23H. The #22H was drilled to a total depth of 13,450 feet in 11 days while the #21H was drilled to a total depth of 14,600 feet in 10 days. The #20H is currently being drilled with a projected total depth of 15,900 feet. Lonestar has a 97.7% working interest in these wells which will have an average perforated interval of 6,150 feet and an average AFE of $4.4 million.
- Burns Ranch Area- In northern
La Salle County
, Lonestar successfully executed a primary term lease on an additional 440 gross/220 net acres on the Burns Ranch. Since its initial entry into the area as part of its acquisition of properties from Clayton Williams Energy, Inc., Lonestar has increased its leasehold position in the Greater Burns Ranch Area from 1,280 gross / 800 net acres in January, 2013 to its current position of 3,857 gross / 3,125 net acres at December 31, 2015. Importantly, this acreage is configured in a manner that allows Lonestar to drill 8,000-foot laterals, which it believes are necessary to achieve attractive internal rates of return in the current price environment. Lonestar is pleased with the results of its initial 8,000' laterals it drilled on the Burns Ranch in 2015, and has permitted 3 additional wells on this property in 2016.
- Horned Frog- In
La Salle County
, Lonestar drilled and completed the Horned Frog A #1H & B #1H with an average perforated interval of 8,233 feet. After registering impressive Max-30 day production rates of 1,438 BOEPD and 1,315 BOEPD, respectively, the Horned Frog A#1H and B#1H continue to perform well. The Horned Frog A#1H has produced a total of 142,896 BOE in its first 4 months of production and the Horned Frog B#1H has produced a total of 134,307 BOE in the same period. To date, these wells rank as the top two performers among 107 offset wells. Further, these wells have outperformed the 107 well average by 85% on a per-foot basis. In the fourth quarter of 2015, Lonestar drilled and completed the Horned Frog D#1H & E #1H to an average total measured depth of 18,300 feet. The Horned Frog D #1H tested 369 bopd and 4,447 Mcfgpd, or 1,395 BOEPD on a processed three-stream basis on a 21/64" choke and averaged 1,242 BOEPD over its Max-30. The Horned Frog E #1H, which had a perforated interval of 5,553 feet, tested 344 bopd and 3,815 Mcfgpd, or 1,218 BOEPD on a processed three-stream basis on a 20/64" choke, and averaged 1,050 BOEPD. The D and E wells produced a higher percentage of oil when compared to the A and B wells, and may ultimately yield better returns. Lonestar utilized the IOG Capital Joint Venture. Accordingly, Lonestar is paying 10% of the well costs and will have an initial 15.0% working interest in these wells. Upon achievement of a specified IRR, Lonestar's working interest would increase to 57.5%.
EAGLE FORD SHALE TREND- CENTRAL REGION
- Pirate Area- In southwest
, Lonestar has drilled the Pirate #M1H and Pirate #N1H wells and cased them to an average measured depth of approximately 16,100 feet. Lonestar has a 100% working interest and an average 76.4% net revenue interest in these two wells. These wells are being held in inventory awaiting fracture stimulation. Lonestar will continue to weigh allocating capital to completion of these wells versus other projects in the Company which compete for capital.
Southern Gonzales County
, Lonestar's Harvey Johnson #1H-#6H continue to perform well, with production from the six wells averaging 1,582 gross / 593 net BOEPD in the fourth quarter of 2015. Lonestar's success at Harvey Johnson in accessing Eagle Ford Shale acreage which has been Held By Production by Austin Chalk wells has prompted additional efforts to expand the Company's drilling inventory. In the current oil price environment, Austin Chalk wells are increasingly uneconomic and incapable of holding Eagle Ford Shale rights, and Lonestar is seeking to take advantage of this trend by accessing additional acreage either via farm-in or low-cost lease acquisition. To date, Lonestar has leased a total of 1,130 net acres which will accommodate 10 gross laterals with average lateral lengths of 7,200 feet and has top-leased an additional 1,726 net acres associated with marginally economic Austin Chalk units. If executed, Lonestar's total leasehold of 2,856 net acres would accommodate a total of 31 gross laterals with an average lateral length of 7,000 feet. Lonestar estimates that remaining potential leasehold expenditures are less than $1.9 million.
EAGLE FORD SHALE TREND- EASTERN REGION
- Brazos & Robertson Counties - In
Central Brazos County
, Lonestar has permitted two 8,000-foot laterals with the Texas Railroad Commission and is currently finalizing its operations permits with the City of College Station. Lonestar anticipates approval of these permits within the next 30 days. The Company is encouraged by the results of offset drilling by a leading operator, who recently announced impressive 30-day production rates on four wells immediately offsetting Lonestar's leasehold, which have ranged from 1,587 to 1,973 BOE per day.
FOR THE COMPLETE QUARTERLY REPORT PLEASE GO TO WWW.LONESTARRESOURCES.COM UNDER THE INVESTOR RELATIONS DROPDOWN
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SOURCE Lonestar Resources, Ltd.
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