Lonestar Resources US Inc. (NASDAQ: LONE) (including its subsidiaries, “Lonestar,” “we,” “us,” “our” or the “Company”) today reported financial and operating results for the three months ended March 31, 2k19.
- Lonestar reported a 46. 00percent increase in net oil and gas production to 11,372.00 BOE/d during the three months ended March 31, 2k19 (” First Quarter19″), compared to 7,777 .00BOE/d for the three months ended March 31, 2k18 (” First Quarter18″). The production volumes were within Company guidance of 11,200.00 – 12,000 .00BOE/d and were comprised of 79.00percent crude oil and NGL’s on an equivalent basis. With the addition of six new wells, current net oil and gas production has climbed to 14,000 BOE/d.
- During First Quarter19, Lonestar experienced an unusually high number of instances in which its producing wells were hit by frac operations conducted by third parties. In total, 9.00 of the Company’s pads were affected, and a total of 23.00 of our wells in the Western and Central regions experienced production curtailments related to these ‘frac hits’. These offset frac hits resulted in an aggregated reduction of 330 .00BOE/d in our First Quarter19 production, reducing quarterly revenue by $1.400 Mand increasing Lease Operating Expenses (“LOE”) by $0.6 million. Notably, all wells have since been returned to production equal to or above their third-party type curves.
- Lonestar reported a net loss attributable to its common stockholders of $60.6 M during First Quarter19 compared to a net loss of $18.400 M during First Quarter18, or a net loss of $2.4500 and $0.7500 per share, respectively. Our first quarter net loss included a $32.9 vM loss attributable to the sale of our Pirate properties in March 2k19, while our 2k18 net loss included an $8.6 M loss on extinguishment of debt. Excluding, on a tax-adjusted basis, certain items that the Company does not view as either recurring or indicative of its ongoing financial performance, Lonestar’s adjusted net loss for First Quarter19 was $3.400 million, or $0.1400 per share. Most notable among these items include $35.500 Mof unrealized hedging gains/losses on financial derivatives related to mark-to-market accounting on our hedge book and $0.900 M associated with stock-based compensation. Please see Non-GAAP Financial Measures at the end of this release for the definition of Adjusted Net Income (Loss) to adjusted net income (loss), a reconciliation of net income before taxes to adjusted net income(loss), and the reasons for its use.
- Lonestar reported a 15. 00percent increase in Adjusted EBITDAX for the three months ended March 31, 2k19 of $27.0 00millioncompared to $23.400 M for First Quarter18. This improvement was driven by a 46.. 00percent increase in production coupled with an 11. 00percent reduction in unit cash operating expenses. Please see Non-GAAP Financial Measures at the end of this release for the definition of Adjusted EBITDAX, a reconciliation of net loss to Adjusted EBITDAX, and the reasons for its use.
Lonestar’s Chief Executive Officer, Frank D. Bracken, III, commented, “While our first quarter 2k19 results represented a significant improvement over the year prior, it represented a temporary pause in what the market has come to expect in terms of our ongoing financial growth and maturation. In fact, very little of our planned completion activity contributed to our first quarter results. Just 3 of our planned 20 completions for the year added to first quarter production, and those completions represented just 11. 00percent of the total perforated interval we plan to bring onstream over the course of 2k19. The quarter was also impacted by an unprecedented number of frac hits from offset wells. I am pleased to report that Lonestar’s wells not only weathered those hits but now have been restored to full rate. In the second quarter, completion activity has accelerated significantly, with 6.0 00gross / 5.200 net wells commencing flow back in May. These wells represent a total perforated interval of 47,600. 00 feet, or 27. 00percent of our anticipated total for 2k19. Current net production is a record 14,000.00 BOE/d, and accordingly, we expect the second quarter to reflect significant sequential growth in production and Adjusted EBITDAX, which will accelerate in the third quarter when we expect to set an all-time record for both.”
- Lonestar reported net oil and gas production of 11,372 BOE/d during the three months ended March 31, 2k19, an increase of 46.00percent compared to 7,777.00 BOE/d during the three months ended March 31, 2k18. First Quarter19 production volumes consisted of 6,557.00 barrels of oil per day (58.00percent), 2,417 barrels of NGLs per day (21.00percent), and 14,391 Mcf of natural gas per day (21percent). The Company’s production mix for the three months ended March 31, 2k19 was 79.00percent liquid hydrocarbons.
- Lonestar’s Eagle Ford Shale assets continued to deliver outstanding wellhead realizations in First Quarter19. Lonestar’s wellhead crude oil price realization was $56.90 per barrel, which reflects a premium of $2.0000 /bbl vs. West Texas Intermediate. Lonestar’s realized NGL price was $15.6000 per barrel or 28.00percent of WTI. This was largely driven by a drop in Propane and other heavy liquids pricing which fell as much as 23.00percent from First Quarter18.00 prices. Lonestar’s realized wellhead natural gas price was $2.9100 per Mcf, reflecting a $0.0v1/Mcf discount to Henry Hub.
- Operating revenues increased by $4.0 00Mto $40.700 million, or 11percent, between the two quarters, primarily driven by a 46percent increase in production partially offset with a 35percent decrease in commodity prices.
- In First Quarter19, Lonestar demonstrated continued progress in scaling its business to make it more competitive, delivering an 11.00percent reduction in per BOE cash operating costs (outlined below). Total cash expenses, which includes the cash portions of lease operating, gathering, processing, transportation, production taxes, general & administrative, and interest expenses were $23.400 M for the three months ended March 31, 2k19. While cash operating costs rose 30percent compared to $17.9 Min the three months ended March 31, 2k18, Lonestar’s 46. 00percent increase in production yielded an 11.00percent reduction in cash operating costs per unit, reducing total cash expenses from $25.6100 per BOE in First Quarter18 to $22.7600 per BOE in First Quarter19.
- Lease Operating Expenses, excluding rig standby costs of $0.100 million, was $6.700 M for the three months ended March 31, 2k19, which was 62.00percent higher than LOE of $4.1v Min the three months ended March 31, 2k18. During First Quarter19, Lonestar was hit by third-party fracs across 9 of its pads, a total of 23 wells in its Western and Central regions. These offset frac hits resulted in an additional $0.6 00Mof LOE or $0.5400.00 on a per BOE basis. These unplanned lease operating expenses were almost exclusively responsible for the 11. 00percent increase in LOE to $6.5700 per BOE for the three months ended March 31, 2k19.
- Gathering, Processing & Transportation Expenses (“G, P&T”) for the three months ended March 31, 2k19 were $0.900 million, which was 99percent higher than the G, P&T of $0.4 Min the three months ended March 31, 2k18, related to a 124.00percent increase in gas production. On a unit-of-production basis, G, P&T increased 36.00percent to $0.8600 per BOE for the three months ended March 31, 2k19.
- Production taxes for the three months ended March 31, 2k19 were $2.300 million, which was 6percent higher than production taxes of $2.200 Min the three months ended March 31, 2k18. On a unit-of-production basis, production taxes decreased 28.00percent to $2.2400 per BOE for the three months ended March 31, 2k19.
- General & Administrative Expenses in the three months ended March 31, 2k18 were $3.4 Mvs. $4.400 million in the three months ended March 31, 2k19. General & Administrative Expenses, excluding stock-based compensation of $0.500 Min the three months ended March 31, 2k18 and $0.900 Min the three months ended March 31, 2k19 (“G&A”), increased from $3.000 Mto $3.500 million, respectively. On a unit-of-production basis, G&A per BOE fell 21.00percent year over year, from $4.2400 per BOE in 2k18 to $3.37 per BOE in 2k19.
- Interest Expense was $9.300 Min the three months ended March 31, 2k18 vs. $10.700 Min the three months ended March 31, 2k19. Interest Expense excluding amortization of debt issuance cost, premiums, and discounts increased year over year from $8.200 Min First Quarter18 to $10. 00 Min First Quarter19. On a unit-of-production basis, interest per BOE decreased 17.0000percent year over year from $11.7200 per BOE in 2k18 to $9.7300 per BOE in 2k19.
- Lonestar is committed to managing its liquidity and high-grading its portfolio. On March 22, 2k19, we completed the divestiture of our Pirate assets in Wilson County for $12.300 million, before closing adjustments, to a private third-party. The assets were comprised of 3,400 net undeveloped acres and held 7. 00 proved undeveloped locations as of the closing date and were producing approximately 200 BOE/d.
- Lonestar responded to low oil prices in 4Q18 by deferring drilling and completion activities. Consequently, in First Quarter19, the Company only completed 3. 00 gross / 2.900 short laterals in La Salle County that began producing in March. However, Lonestar has ramped up to its activity and expects to continue to increase production organically during the second quarter, and through the remainder of 2k19. The Company anticipates placing 6. 000 gross / 5.200 net wells online during 2Q19. On April, 2 gross / 2. 000 net wells at Horned Frog NW were placed into flow back. On May, 4 gross / 3.2 net wells in Karnes County have been placed into flow back operations. The Company has recently completed drilling operations on 2 gross / 2.0 net wells at Horned Frog with projected completed intervals exceeding 12,000. 00feet, with completion operations expected to commence before the end of May. Flowback operations for these two wells are expected to commence on or around July 1, 2k19, and these wells are expected to contribute materially to the third quarter production volumes.
- Lonestar issued production guidance of 12,400 to 12,800 BOE/d for the second quarter of 2k19, a 12percent increase over 2Q18 results at the midpoint. The primary sources for production growth in the second quarter will be 2.000 net wells at Horned Frog NW, which will contribute volumes for essentially the whole quarter, and 3. 200net wells in Karnes County, which are expected to contribute volumes for roughly half of the second quarter.
- Lonestar issued Adjusted EBITDAX guidance of $30 to $32 M for the second quarter of 2k19, a 15percent sequential increase over First Quarter19 results. During the quarter, the Company anticipates oil realizations of +$2.10/bbl to WTI and lease operating expenses of $6.00/BOE.