Oil & Gas Conference® presenters Lonestar, Resolute, Carrizo, Black Stone, Denbury report a busy quarter

Lonestar Resources

During its second quarter, Lonestar Resources (ticker: LONE) indicated that its production had risen by 7% above Q1 volumes. The company averaged Q2 production of 5,635 BOEPD—over its 5,266 BOEPD in Q1.

In mid-June, Lonestar closed on an approximately $110.6 million acquisition of 21,238 net acres in the Eagle Ford. The acquisition nearly doubled the company’s footprint in the Eagle Ford, jumping to 57,330 net acres.

The company announced a Q3, 2017 production guidance of between 7,600 and 8,100 BOEPD. The expected growth in production—which would be between 35% and 440% of its Q2 production—will be sourced from the new Eagle Ford acreage.

Frank Bracken, CEO of Lonestar, said in the company’s earnings call that Lonestar intends to “drill and complete [its] inventory of extended reach laterals,” which would allow the company to, “… generate production in excess of 10,000 BOEPD…in 2018.”

During Q2, Lonestar put 1.0 gross (0.5 net) wells on stream and 2.0 gross (2.0 net) wells online in its Cyclone pad. The company anticipates that, during Q3, it will add another 2.0 gross (2.0 net) wells in the Cyclone pad. Bracken mentioned in the earnings call that the 2017 drilling program was designed to hold its leases by production.

Resolute Energy

Denver based Resolute Energy Corp. (ticker: REN) indicated that its second quarter production averaged 24,355 BOEPD. Of its production, 78% was liquid and 63% was oil. The company increased its production by over 100% since the second quarter—at which time it averaged 12,490 BOEPD.

During the second quarter, the company experienced a net income of $10.7 million.

In its second quarter, Resolute spud seven wells and completed ten wells. Of those ten, four were mid-length laterals, and two were long laterals. The remaining four Q2 completed wells were DUCs. Going into the third quarter, Resolute had four wells waiting on completion, and another three wells being drilled. Resolute had a 22 well drilling plan for 2017, which it suspects it will finish in early Q4.

Because the company expects to finish its 2017 drilling program ahead of schedule, it will have the option to keep its two rigs contracted and spud up to another five wells during the remainder of 2017.

In its Bronco acquisition in the Delaware—which it closed on in May—Resolute has completed five of six DUCs. Two of the wells have indicated 24-hour initial production rates of 3,013 and 2,764 BOEPD. The company also indicated that—in the process of shifting its oil gathering from truck-based transport to pipeline transport—it had the majority of its Mustang and Appaloosa oil production being gathered via pipeline by the end of July.

Rick Betz, CEO of Resolute, said in the company’s Q2 earnings call that he expects that Resolute, “will shift predominantly to three well pads while studying the possibility of moving to four well pads,” with the intent of minimizing the instances of completing new wells next to older, depleted wells. He said that other operators have “used terms such as drilling the cube or mowing the grass,” to describe similar activities.

Black Stone Minerals

Black Stone Minerals (ticker: BSM) averaged 37.3 MBOEPD, which was a 5% increase over the average production from its previous quarter. The company’s production was made up of 76% natural gas. Approximately 57% of the company’s production is attributable to mineral and royalty interests.  The company reported an income of $54.2 million.

During its second quarter, the company focused its acquisitions on the Haynesville/Bossier play in East Texas, where it invested $18.1 million in cash and $45.7 million in equity. Through the first half of the year, the company invested more than $125 million in acquisitions.

As of the first half of 2017, BSM had participated in a non-operating working interest owner in its mineral acreage, where it spent $10.4 million in the second quarter. The company anticipates that it will invest a total of between $40 million and $50 million in its working interest participation program in 2017. The majority of that program is focused in the Haynesville shale and Shelby Trough in east Texas.

The expected investment was revised downward from an initial guidance range of $50 to $60 million.

Carrizo Oil & Gas

Carrizo Oil & Gas (ticker: CRZO) announced net income of $56.3 million for its second quarter of 2017—an enormous rebound from a net loss of $262.1 million in Q2, 2016. Carrizo averaged 51,019 BOEPD of production during Q2. The company’s Q2 production was an increase of 23% over its Q2 production in 2016. It attributed the growth in production to its Eagle Ford shale and Delaware basin developments.

The company also attributed some of the production growth to additional production out of its late-2016 Sanchez acquisition and an increase in production out of its Marcellus acreage. President and CEO Chip Johnson mentioned in the Q2 earnings call that Carrizo has “plans to divest [its] non-Texas assets,” in order to focus on its core Texas acreage.

Carrizo’s drilling and completions capital expenditures for Q2, 2017 totaled $148.4 million—with over 85% of that value attributed to the company’s Eagle Ford shale. The remainder of the company’s CapEx was weighted more towards the company’s Delaware basin and Niobrara assets. The company also had $34.4 million in expenditures in land and seismic expenditures in the Permian and Eagle Ford.

The company drilled 23 gross (21.2 net) wells and completed 26 gross (21.6 net) wells during Q2 in the Eagle Ford. Moving into Q3, Carrizo had 28 gross (26.6 net) wells in progress or waiting on completion in the Eagle Ford. The company planned to move one of its three operational rigs from the Eagle Ford to the Delaware basin, where it anticipates that it will drill 93 gross (80 net) and complete 93 gross (84 net) wells during 2017.

Carrizo intends to close the acquisition of properties in the Delaware basin from ExL Petroleum Management by mid-August. The acquisition is for approximately 16,500 net acres. The company has updated its drilling and completion plan in the new Delaware acreage and, as a reflection of that, has revised its 2017 drilling and completion guidance down to between $590 and $610 million.

The same changes have caused Carrizo to decrease its 2017 production guidance down to between 34,600 and 34,800 BPD from an initial guidance of between 35,700 and 36,000 BPD.

Denbury Resources

Denbury Resources (ticker: DNR) announced in its Q2 earnings update net income of $14 million. The company reduced its capital allocation from $300 million to $250 million—while still projecting to meet the midpoint of its 2017 production guidance.

The company averaged 59,774 BOEPD in Q2—97% of which was oil. The company’s tertiary properties accounted for 61% of its overall production. In conducting its tertiary recovery operations, Denbury used approximately 608 Mmcf per day of CO2 during Q2, 2017—an increase of 33% from Q2, 2016. The CO2 use grew approximately 6% from Q1, 2017—spurred by CO2 demand for the Hastings redevelopment.

During the quarter, the company initiated its Hastings redevelopment project and closed its Salt Creek acquisition. After the Salt Creek acquisition, Denbury has raised its 2017 production guidance to between 60,000 and 62,000 BOEPD.

Moving into the second half of 2017, Denbury anticipated the completion of phase 5 of its Bell Creek development, and the expansion of its recycling facility at Oyster Bayou.

Lonestar Resources, Resolute Energy, Black Stone Minerals, Carrizo Oil & Gas, and Denbury Resources are presenting at EnerCom’s The Oil & Gas Conference® 22

LONE, REN, BSM, CRZO, and DNR will be presenting companies at the upcoming EnerCom conference in Denver, Colorado—The Oil & Gas Conference® 22.

The conference is EnerCom’s 22nd Denver-based oil and gas focused investor conference, bringing together publicly traded E&Ps and oilfield service and technology companies with institutional investors.  The conference will be at the Denver Downtown Westin Hotel, August 13-17, 2017. To register for The Oil & Gas Conference® 22 please visit the conference website.

5 EnerCom Presenters Report Q2


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