Lonestar Resources Enters Eagle Ford JV
Lonestar Resources US Inc. and its subsidiaries have entered into a joint development agreement in Gonzales County with one of the largest producers in the Eagle Ford Shale which encompasses an area totaling about 15,000 acres. The name of the producer was not disclosed.
Lonestar will operate a minimum of three to four Eagle Ford Shale wells annually on behalf of the two companies through 2022 that are intended to hold-by-production approximately 6,000 gross acres within the area. The agreement gives Lonestar’s partner the option to participate in each well with a 50% working interest or to participate via a carried working interest that ranges from 9-17%, depending on location.
For Lonestar, the partnership increases its inventory of gross drilling locations by roughly 50% in the Hawkeye area to a total of 32 while delivering average lateral lengths of over 9,500’, with many locations exceeding 12,000’.
Lonestar's Chief Executive Officer, Frank D. Bracken, III commented, "This venture is a win-win for both parties and is illustrative of how Lonestar continues to leverage its drilling and completion prowess into new growth opportunities without upfront capital. Further, the venture provides a clear path of development for our Cyclone/Hawkeye asset, which is the oiliest asset in the company, and now encompasses 72 long-lateral drilling locations that offer highly attractive returns at current commodity prices.”
Lonestar’s proved reserves at year-end 2019 were 49.8 million barrels of oil and condensate, 24.9 million barrels of natural gas liquids and 155.9 billion cubic feet of natural gas.
The company estimates that its capital expenditures related to oil and gas activities totaled $171.8 million for the year ended December 31, 2019. Lonestar’s all-sources finding and development costs were $11.44 per BOE. Excluding the negative revisions related to price and reclassification, Lonestar’s finding and development costs were $8.77 per BOE.
"In a market in which our industry is capital constrained, 2019 was another year of capital-efficient growth for Lonestar, driven by strong results from our drilling program, which saw the majority of our new-drills exceed third party forecasts, resulting in positive reserve revisions,” Bracken said in a written statement.
“Without producing property acquisitions, our drilling program still generated organic reserve growth via a combination of 1) new wells outperforming their prior bookings resulting in upward revisions to both PDP’s and PUD’s; and 2) drilling wells on newly-leased acreage resulting in reserve additions. In doing so, we extended our track-record of low-cost reserve growth, registering exceptional all-sources finding and development costs while replacing 353% of 2019 production.”
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