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
OVERVIEW
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
Corporate
- 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.
Operational
- 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.
Operations Review
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.
