Lonestar Resources, Ltd Releases Quarterly Report For September 2014
FORT WORTH, Texas, Oct. 30, 2014 /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 September 30, 2014 (3Q14).
Third Quarter Highlights
- Lonestar reported a 56% increase in net oil and gas production to 4,669 BOEPD in 3Q14, vs. 2,997 BOEPD in 3Q13, 81% of which was crude oil and NGL's. Lonestar's 3Q14 production also represented a 29% sequential increase over 2Q14 production levels.
- Net Revenues From Ordinary Activities increased 50% to US$32.0 million for 3Q14, vs. 3Q13 revenues of $21.2 million.
- EBITDAX increased 55% to $23.4 million for 3Q14 vs. $15.0 million for 3Q13, and rose 40% sequentially over 2Q14 levels.
- Net income was $19.1 million for 3Q14, or $0.03 per share vs. net income of $1.6 million reported for 3Q13.
- Lonestar spent $44.5 million during the quarter, associated with the drilling and completion of 7 Eagle Ford Shale wells, and included $2.2 million of lease acquisition costs.
- Lonestar continues to make progress in improving all phases of its business. Since the end of the quarter.
- Lonestar recorded oil and gas production of 5,600 BOEPD in the month of October, 2014, representing a record for the Company, and an increase of 20% over production reported today for the third quarter of 2014.
- After review of its year-to-date drilling, completion and production results, Lonestar's lead bank has recommended an increase in the Company's borrowing base from $108.8 million to $150.0 million. The increase is subject to final approvals.
- Based on current rates of production and its capital plans, Lonestar sees a 2014 exit rate of 6,500 to 7,000 BOEPD, and sees 2014 EBITDAX of $92 to $97 million, based on the recent fall in NYMEX crude oil prices.
- Lonestar's current drilling budget of $135 to $150 million in 2015 is expected to increase 2015 production by 30-55% and 2015 EBITDAX by 30-60%, compared to 2014 at current prices.
Management's Discussion and Analysis
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. Alongside optimizing cash flows from its Conventional assets, Lonestar is focusing its attention and capital to continuing its growth strategy in the crude oil window of the Eagle Ford Shale. Lonestar currently operates virtually 100% of its 30,306 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 though 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.
THIRD QUARTER 2014 HIGHLIGHTS
- Lonestar recorded oil and gas production of 5,600 BOEPD in the month of October, 2014, representing a record for the Company, and an increase of 20% over sales reported today for the third quarter of 2014. The primary driver of this continued growth is the positive benefit of a full-month's production from Lonestar's first 2 producers in the Eastern Eagle Ford. Based on current rates of production and the Company's plans to place an additional 6.0 gross / 4.1 net Eagle Ford Shale wells onstream before year-end, Lonestar sees a 2014 exit rate of 6,500 to 7,000 BOEPD.
- As part of its semi-annual borrowing base review, which includes review of its year-to-date drilling, completion and production results, Lonestar's bank group, led by Wells Fargo, has recommended a 38% increase in the borrowing base on its Senior Secured Credit Facility from $108.8 million to $150.0 million. The increase is subject to final approvals from each member bank. At September 30, 2014, Lonestar's Long-Term Debt consisted of $220.0 million of 8 ¾% Senior Unsecured Notes and $22.0 million drawn on its Senior Secured Credit Facility, implying liquidity of $128 million at the end of the third quarter.
- Lonestar's net production for the third quarter of 2014 averaged 4,669 BOE per day, and was comprised of 3,288 barrels of oil per day, 489 barrels of NGL's per day, and 5,350 Mcf of natural gas per day. 3Q14 production was 56% higher 3Q13 levels. Third quarter production was comprised of 81% crude oil and natural gas liquids, and 19% natural gas.
- In the third quarter of 2014, Lonestar generated Discretionary Cash Flow of $18.5 million, a 58% increase over second quarter Discretionary Cash Flow of $11.7 million.
- Lonestar is generating significant improvement in total unit cash operating expenses in the Eagle Ford Shale, which it believes will insulate the Company from lower crude oil prices. Total cash unit operating expenses were reduced sequentially by 27%, from $40.16 per BOE in 2Q14 to $29.17 per BOE in 3Q14. Based on higher expected production volumes in 4Q14, Lonestar projects total unit expenses to continue to decline to a range of $27.69 and $27.44 per BOE.
- Lease Operating Expenses reduced 19% sequentially. In the second quarter of 2014, Lonestar's Eagle Ford Shale assets recorded LOE of $4.3 million, or $10.41 per BOE. Benefitting from cost control measures in its Western Region and the addition of low-cost producers in its Eastern Region, 3Q14 LOE was $4.7 million, or $8.44 per BOE. Lonestar sees fourth quarter LOE being reduced to a range between $8.35 and $8.10 per BOE.
- Production Taxes fell 13% sequentially. Owing to a combination of lower crude oil prices and lower percentage tax rates on a higher mix of crude oil, Production taxes fell from $5.19 per BOE in 2Q14 to $4.52 per BOE in 3Q14. Lonestar sees fourth quarter 2014 Production Taxes ranging between $4.59 and $4.34 per BOE.
- General & Administrative Expenses decreased 19% sequentially. Lonestar's General & Administrative Expense was $2.2 million, or $5.09 per BOE in 3Q14, which represents a 19% decrease compared to 2Q14 levels of $6.32 per BOE. Lonestar sees 4Q14 G&A per BOE ranging between $4.08 and $3.83 per BOE.
- Interest Expenses decreased 39% sequentially. Lonestar's Interest Expense was $4.7 million in 3Q14, or $11.12 per BOE, which represents a 39% decrease compared to 2Q14 levels of $18.24 per BOE. Lonestar sees 4Q14 G&A per BOE ranging between $10.68 and $10.43 per BOE.
- Lonestar significantly increased its crude oil hedge positions for 2015. Currently, the Company has swaps covering approximately 2,500 barrels per day for 2015 at an average strike price of approximately $88.00 per barrel. Based on the consensus of analysts' published estimates, Lonestar's hedges cover 50% of the consensus of analyst's published estimates for Lonestar's 2015 crude oil production volumes.
EAGLE FORD SHALE TREND- WESTERN REGION
- Asherton- In central Dimmit County, no new wells were completed during the quarter. However, the Company has made significant progress in reestablishing producing rates on its 4 wells after fracture stimulation operations on its #9HS and #10HN wells knocked its 2 legacy producers offline. In the third quarter of 2014 production averaged 716 gross / 530 net BOEPD, compared to 747 gross / 553 net in the second quarter of 2014. Additionally, Lonestar has made considerable progress in stabilizing operating costs at Asherton. In 3Q14, Lease Operating Expenses were $0.3 million, or $6.39 per BOE, flat with the second quarter.
- Beall Ranch- In Dimmit and La Salle Counties, no new wells were completed during the quarter. However, the Company has made significant progress with respect to ameliorating producing rates on all 18 wells after fracture stimulation operations on its #32H, #33H and #34H wells knocked several legacy producers offline. In the third quarter of 2014, production averaged 3,212 gross / 2,354 net BOEPD, compared to 2,213 gross / 1,622 net BOEPD in the second quarter of 2014. Additionally, Lonestar has made considerable progress in reducing operating costs at Beall Ranch, achieving a 40% reduction in unit costs. In 3Q14, Lease Operating Expenses were $1.4 million, or $6.25 per BOE, compared to $1.5 million, or $10.50 per BOE in 2Q14.
- Burns Ranch Area- In La Salle County, Lonestar completed 3 wells on its Meiners lease, in which it holds an 85.0% WI and a 63.7% NRI. Lonestar drilled and completed the Meiners #1H with a perforated interval of 4,525'. The well was turned to the tanks at a cost of $5.1 million and placed into flowback in mid-September. Test rates for the #1H were 391 bopd and 567 Mcfgpd on a 18/64" choke, equating to a processed three-stream rate of 521 BOEPD. The #1H has now been online for 45 days and has registered a 30 day max IP of 314 bopd and 431 Mcfgpd, equating to a processed three-stream rate of 413 BOEPD while on an 18/64" choke. Lonestar drilled and completed the Meiners #2H with a perforated interval of 4,475'. The well was turned to the tanks at a cost of $6.7 million and placed into flowback in early October. Additional well costs were associated with a fishing job on the Meiners #2H, which was the result of stuck coiled tubing. Test rates for the #2H were 268 bopd and 363 Mcfgpd on a 16/64" choke, equating to a processed three-stream rate of 351 BOEPD. The #2H has now been online for 26 days and has yet to register a 30 day max IP. Lonestar drilled and completed the Meiners #3H with a perforated interval of 4,475'. The well was turned to the tanks at a cost of $5.1 million and placed into flowback in mid-September. Test rates for the #3H were 344 bopd and 332 Mcfgpd on a 18/64" choke, equating to a processed three-stream rate of 420 BOEPD. The #3H has now been online for 45 days and registered a 30 day max IP of 228 bopd and 292 Mcfgpd, equating to a processed three-stream rate of 295 BOEPD while on an 18/64" choke.
EAGLE FORD SHALE TREND- CENTRAL REGION
- Pirate Area- In southwest Wilson County, Lonestar is pleased to report more comprehensive results on its Pirate #K1H and Pirate #L1H wells, the first wells completed on leasehold acquired from Clayton Williams. The Pirate #K1H registered a 30 day max IP of 209 bopd and 95 Mcfgpd, equating to a processed three-stream rate of 231 BOEPD. The Pirate #L1H, which benefitted from real-time improvements in fracture stimulation design after difficulties encountered in the #K1H, has now been online for 105 days and has registered a 30 day max IP of 361 bopd and 165 Mcfgpd, equating to a processed three-stream rate of 405 BOEPD. These wells are both on pump, and producing at rates in excess of pump capacity. The Pirate #K1H continues to produce at its Max-30 rate after 105 days online. The Pirate #L1H is producing at 338 BOEPD after 105 days online, with only 25% of its frac load recovered.
- Southern Gonzales County- During the third quarter, Lonestar has drilled and completed 3 wells in Southern Gonzales County. The Harvey Johnson #1H, #2H & #3H have an average lateral length of 6,371 feet at an average TVD of 9,710 feet. Fracture stimulation of these wells is scheduled for November 4, 2014 with flowback to commence late November. Lonestar has a 50.0% Working Interest and a 37.5% NRI in these wells.
EAGLE FORD SHALE TREND- EASTERN REGION
- Brazos County - In western Brazos County, Lonestar drilled and completed the Ranger #A-4H with a perforated interval of 5,619'. The well was turned to the tanks at a cost of $7.4 million and placed into flowback in late September. Test rates for the A #4H were 674 bopd and 413 Mcfgpd on a 17/64" choke, equating to a processed three-stream rate of 778 BOEPD. The A #4H has now been online for 36 days and has registered a 30 day max IP of 567 bopd and 313 Mcfgpd, equating to a processed three-stream rate of 639 BOEPD while on an 18/64" choke. Lonestar drilled and completed the Ranger #B-1H with a perforated interval of 5,406'. The well was turned to the tanks at a cost of $6.3 million and placed into flowback in early late September. Test rates for the B #1H were 600 bopd and 387 Mcfgpd on a 17/64" choke, equating to a processed three-stream rate of 698 BOEPD. The B #1H has now been online for 36 days and has registered a 30 day max IP of 494 Bopd and 280 Mcfgpd, equating to a processed three-stream rate of 558 BOEPD.
- •Completions In Progress- In Southern Robertson County, Lonestar has drilled and completed the Dunn #A-1H with a perforated interval of 5,720 feet. Lonestar also drilled and completed the Dunn #A-2H with a perforated interval of 5,995 feet. These wells are estimated to be inline with pre-drill AFE. Flowback of these wells commenced October 29, 2014, and initial rates are encouraging. Lonestar holds a 82.4% WI / 62.0% NRI in the Dunn wells. In Northern Brazos County, Lonestar drilled and completed the Scasta #3H with a perforated interval of 4,537 feet. Flowback on the Scasta #3H commenced today. Lonestar holds a 100.0% WI / 79.4% NRI in the Scasta #3H.
BAKKEN-THREE FORKS TREND
- Poplar West, Montana- Based on its geological analysis, core evaluation, and production testing, the Poplar West project area is prospective for the entire unconventional resource "Bakken Petroleum System," which includes the Basal Lodgepole, Upper Bakken Shale, Middle Bakken, Lower Bakken Shale and the Third and Fourth Benches of the Three Forks formations. Further, Poplar West is highly prospective for the Amsden, Charles, Heath, Mission Canyon and Nisku formations. After processing and interpreting its 105 square miles of 3-D seismic data covering the Poplar West project area. Lonestar and its partners have identified 39 Charles prospects (conventional) and 41 Nisku prospects (conventional) and a total of 340 drilling locations in the Non-conventional Bakken Petroleum System. In May, 2014, Lonestar submitted the application for the establishment of the Stone Turtle Indian Exploratory unit to the Bureau of Land Management (BLM) and Bureau of Indian Affairs (BIA), covering 52,559 gross acres and expects to receive approval imminently. As currently contemplated, formation of the unit would establish a 5-year primary term on all leasehold in the unit, in exchange for drilling activity. Lonestar believes it has strong support for future development from all governmental regulatory agencies including the BIA, BLM and the Fort Peck Tribe. Lonestar and its partners have commenced a process to farm-out a portion of their interest in Poplar West with a goal of completing an agreement by year-end 2014.
FOR THE COMPLETE QUARTERLY REPORT PLEASE GO TO WWW.LONESTARRESOURCES.COM UNDER THE INVESTOR RELATIONS DROPDOWN
SOURCE Lonestar Resources, Ltd.
Source: PR Newswire
(October 30, 2014 - 6:04 PM EDT)
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