Posted by OilVoice Press - OilVoice
Fort Worth, Texas, (PRNewswire) ‐ Lonestar Resources US Inc. (NASDAQ: LONE) (including its subsidiaries, “Lonestar,” “we,” “us,” “our” or the “Company”) today reported its financial and operating results for the three months and year ended December 31, 2017.
Lonestar reported a 59% increase in net oil and gas production to 7,272 Boe/d during the three months ended December 31, 2017 (“4Q17”), compared to 4,560 Boe/d for the three months ended December 31, 2016 (“4Q16”). The increase in production was attributable to the contribution from the drilling of new Eagle Ford Shale wells and additions to production associated with our acquisition of producing properties in June, 2017.
Lonestar issued production guidance of 7,550 to 7,650 Boe/d for the first quarter of 2018. Of note is that Lonestar estimates that March production benefitted partially from the addition of the Company's Horned Frog wells, and estimates that March 2018 production will rise to an average of 8,350 to 8,450 Boe/d and that production will exit the first quarter at rates of 9,500 to 10,000 Boe/d.
Lonestar has disclosed its Standardized Measure of $479.6 million, as of December 31, 2017, which is an increase of 229% compared to its Standardized Measure of $145.8 million, as of December 31, 2016. Lonestar recently announced the PV‐10 of its Proved reserves as per SEC guidelines, as of December 31, 2017. On this basis, the Company's proved reserves increased 82% to 73.6 million barrels of oil equivalent (“MMBOE”) while SEC PV‐10 also increased by 223% to $538.3 million. On this basis, Lonestar's proved reserves are comprised of 50.7 million barrels of crude oil, 10.9 million barrels of Natural Gas Liquids and 73.6 Billion cubic feet of natural gas. On an energy equivalent basis, Lonestar's proved reserves are 83% liquid hydrocarbons.
Lonestar recently announced the PV‐10 of its Proved reserves at NYMEX strip prices, as of December 31, 2017. On this basis, the Company's proved reserves increased 70% to 76.2 million barrels of oil equivalent (“MMBOE”) while PV‐10 also increased by 70% to $647.6 million. Lonestar's proved reserves are comprised of 52.5 million barrels of crude oil, 11.3 million barrels of Natural Gas Liquids and 74.9 Billion cubic feet of natural gas. On an energy equivalent basis, Lonestar's proved reserves are 83% liquid hydrocarbons.
In 2017, Lonestar's all‐sources reserves replacement ratio was 1,499% and its all‐sources finding & development costs (“F&D”) were $6.07 per BOE. 2017's results mark the third consecutive year during which Lonestar has maintained all‐sources finding & development costs below $12.00 per Boe. Moreover, over the past five years, Lonestar has delivered all‐sources reserve replacement of 778% and an all‐sources finding & onstream cost of $8.94 per Boe.
In December 2017, the Company agreed to issue $250.0 million of 11.250% senior unsecured notes due 2023 (the “11.250% Senior Notes”) to U.S.‐based institutional investors. The transaction closed on January 4, 2018. The net proceeds of $244.4 million were used to fully retire the Company's 8.750% Senior Notes due April, 2019, which included principal, interest and prepayment premium and totaled approximately $162 million. The remaining net proceeds were used to reduce borrowings under the Senior Secured Credit Facility. Pro forma the issuance of the 11.250% Senior Notes, as of December 31, 2017, we had approximately $100 million available on our $160.0 million Senior Secured Credit Facility.
Lonestar reported 77% decrease in net loss attributable to its common stockholders of $13.7 million, or ($0.58) per weighted average share, during the three months ended December 31, 2017 compared to a net loss of $58.9 million, or ($6.19) per weighted average share during the three months ended December 31, 2016. Excluding, on a tax‐adjusted basis, certain items that the Company does not view as either recurring or indicative of its ongoing financial performance, our adjusted net loss for 2017 was ($0.7) million, or ($0.03) per common share. Most notable among these items include: unrealized hedging losses on financial derivatives; impairment of oil and gas properties; and stock‐based compensation. Please see Non‐GAAP Financial Measures for additional information.
Lonestar reported a 64% increase in Adjusted EBITDAX for the three months ended December 31, 2017 of $20.5 million compared to $12.5 million for the three months ended December 31, 2016. This improvement was driven by a 59% increase in production and a 6% increase in the Company's oil‐equivalent price realization after the effect of hedging. Please see Non‐GAAP Financial Measures at the end of this release for the definition of Adjusted EBITDAX, a reconciliation of net income (loss) to Adjusted EBITDAX, and the reasons for its use.
Lonestar's Chief Executive Officer, Frank D. Bracken, III, stated, “Over the past two years, we have dramatically strengthened our balance sheet and have made significant technical advancements to drilling, completing and producing our Eagle Ford Shale wells. As a result, 2018 will be a breakout year for Lonestar. Our 2018 full‐year production guidance remains at 10,000 to 10,700 Boe/day, and represents approximately a 65% increase versus 2017. Our Adjusted EBITDAX guidance of $100 to $110 million represents similar growth versus 2017 results. The combination of significantly higher cash flows and our currently contemplated capital spending are expected to drive down our Debt to EBITDAX ratio to below 3.0x by year‐end 2018. Our stronger financial position has allowed us to secure dedicated drilling and pressure pumping services, which in turn will greatly enhance our ability to control the quality and timing of our operations with a goal of delivering production more quickly. The impact of our progress is already evident, as our first four wells of 2018 are outperforming our expectations. Additionally, we have drilled our first three wells in Karnes County and have scheduled to begin fracture stimulation operations in early April. We are excited about the success and momentum we are created to date in 2018, with first quarter exit rates approaching 10,000 Boe/day, providing us increased confidence that we will fully deliver on our 2018 guidance. Most importantly, we are now well‐ positioned to consistently increase shareholder value in 2018 and in the years ahead.”
Lonestar reported net oil and gas production of 7,272 Boe/d during the three months ended December 31, 2017, compared to 4,560 Boe/d during the three months ended December 31, 2016. Production volumes during the three months ended December 2017 consisted of 5,217 barrels of oil per day (72%), 1,062 barrels of NGLs per day (14%), and 5,957 Mcf of natural gas per day (14%). The Company's production mix for the three months ended 2017 was 86% liquid hydrocarbons. Lonestar's net oil and gas production was hampered by: 1) delays in arrival and timely execution on its Hawkeye wells, which are now performing above expectations; and 2) a series of offset fracs, which temporarily reduced volumes from 16 wells. Lonestar estimates that these frac hits reduced 4Q17 production by an average of 173 Boe/d. Lonestar is pleased to report that in aggregate these 16 wells are now producing at higher rates than before they were hit.
Lonestar's non‐tax cash operating cost structure saw significant sequential improvement in the year ended December 31, 2017, which was achieved through stringent cost control, operational efficiencies and expanding production volumes:
General & Administrative Expenses (“G&A”) remained relatively flat year over year, increasing from $2.8 million in the three months ended December 31, 2106 to $2.9 million in the three months ended December 31, 2017. On a unit‐of‐production basis, G&A per Boe was reduced 50% year over year, from $6.72 per Boe in 2016 to $3.51 per Boe in 2017. For 2018, the Company expects G&A to be between $2.80 and $3.00 per Boe.
Interest Expense was reduced year over year from $5.9 million in the three months ended December 31, 2016 to $5.3 million in 2017. This was primarily a result of the repurchase of $68.2 million of 8.750% Senior Notes in the second half of 2016. On a unit‐of‐production basis, interest per Boe was reduced 46% year over year from $14.01 per Boe in 2016 to $7.95 per Boe in 2017. For 2018, the Company expects interest expense to be between $8.15 and $8.75 per Boe. Lonestar has commenced a more active drilling and completion program in 2018, and all four wells are producing at rates that exceed our forecasts. The Company has already brought online 4 gross / 3.8 net wells. In January, our first two wells on our Hawkeye property in Gonzales County tested at average rates of 1,115 Boe/d a three‐stream basis. Last week, we placed our second two wells online at our Horned Frog property in La Salle County and are already showing promising results, registering average test rates of 1,939 Boe/d. Additionally, Lonestar has drilled its first 3 wells in Karnes County, and they are scheduled to commence fracture stimulation with our newly‐dedicated frac spread in early April.
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