Lilis Energy Provides Second Quarter Operations And Corporate Update

SAN ANTONIO, Aug. 14, 2017 /PRNewswire/ -- Lilis Energy, Inc. (NYSE American: LLEX), an exploration and development company operating in the Permian Basin of West Texas, today announced a second quarter operations and corporate update.

"The initial production rates on our Delaware Basin wells continue to yield results above our expectations and are among the best in the basin. Our first three wells exceeded internal projections and we are confident that our fourth well, the Lion, is on track to repeat similar results," said Jim Linville, Lilis's Chief Executive Officer. "We are currently producing 2,674 net BOEPD ⁽³⁾ and have increased our proved reserves to 10.4 MMBOE over the past six months. In conjunction with this, we continue to expand our acreage footprint and have accumulated approximately 10,500 net acres. Additionally, we completed a new midstream contract."

Financial Update
"The Company remains well capitalized and in a strong position to take advantage of accretive acquisition opportunities within our core area of focus in Winkler, Loving and Lea counties.  Additionally, our midstream contract with Lucid Energy is expected to improve our realized production, minimize curtailment and assist in increasing operating cash flows on a go-forward basis. Over the last few months, we have undertaken significant strides to strengthen our balance sheet which will allow us to exploit and de-risk our strong acreage position, to maximize shareholder value," said Joe Daches, Lilis's Chief Financial Officer.

Statement of Operations for Six Months Ending June 30, 2017
As reported in the Company's Form 10-Q filed on August 14, 2017, Lilis's reported total revenue was approximately $8.6 million for the six months ended June 30, 2017 as compared to approximately $1.0 million for the six months ended June 30, 2016, representing an increase of approximately $7.6 million. The higher revenues were primarily driven by an increase in liquid heavy production from the Company's Delaware Basin properties.

Production costs were approximately $2.3 million for the six months ended June 30, 2017, compared to approximately $0.4 million for the six months ended June 30, 2016, an increase of approximately $1.9 million. Production costs per BOE increased to $9.90 for the six months ended June 30, 2017 from $9.19 for the six months ended June 30, 2016, an increase of $0.71 per BOE, or 8%. The increase in production costs per BOE was primarily due to costs associated with the producing wells in the Delaware Basin.

Delaware Basin Well Results:
To date, Lilis has drilled and completed four operated horizontal Wolfcamp B wells, which are the Bison #1H, the Grizzly #1H, the Hippo #1H and the Lion #1H, all with 1with IP rates exceeding initial internal projections. Lilis is currently completing its fifth operated Wolfcamp B horizontal well, the Wildhog #1H and is scheduled to complete its sixth operated Wolfcamp B horizontal well, the Prizehog #1H, in September 2017.

Highlights of Lilis's well results are as follows:

Currently on Production ⁽⁴⁾:
*BOE/D based on three stream production to account for liquids rich gas uplift.

• The Bison #1H IP30 rate of 2,144 BOE/D – 74% Liquids
• The Bison #1H IP60 rate of 1,576 BOE/D – 74% Liquids
• The Bison #1H IP90 rate of 1,429 BOE/D – 78% Liquids
  The Bison #1H was turned to sales on January 19, 2017 and had a 24-hour rate of 2,375 BOE/D (75% liquids) or 344 BOE/D per 1,000 lateral ft.
  
• The Grizzly #1H IP30 rate of 1,323 BOE/D – 63% Liquids
• The Grizzly #1H IP60 rate of 1,016 BOE/D – 63% Liquids
• The Grizzly #1H IP90 rate of 901 BOE/D – 67% Liquids
  The Grizzly #1H was turned to sales on February 9, 2017 and had a 24-hour rate of 1,666 BOE/D (65% liquids) or 406 BOE/D per 1,000 lateral ft.
  
• The Hippo #1H IP30 rate 1,506 BOE/D – 76% Liquids
• The Hippo #1H IP60 rate 1,292 BOE/D – 75% Liquids  
  The Hippo #1H was turned to sales on April 14, 2017 and had a 24-hour rate of 1,917 BOE/D (74% liquids) or 367 BOE/D per 1,000 lateral ft.
  
• The Lion #1H IP24 hour rate 1,530 BOE/D (69% Liquids) or 380 BOE/D per 1,000 lateral ft.
  The Lion #1H was turned to sales on June 26, 2017. This well's treatable lateral length was 4,025 feet. The stimulation was 150-foot plug to plug spacing with 2,200 lbs. of sand per foot.

Currently Completing:

• The Wildhog BWX State Com #1H
  Well was drilled to 17,244 ft. measured depth (MD). The 4,567-foot treated lateral was completed using 23 stages of 200-foot plug to plug spacing and 1,837 lbs. of sand per foot. The well is being prepared for flowback operations.

Currently Drilling:

• The Prizehog BWZ State Com #1H
  The well has been drilled to a total depth of 17,421 ft. MD. Production casing has been run and cemented.

Mid-Year Reserve Update ⁽⁵⁾
Lilis's proved reserves were 10.4 MMBOE at mid-year 2017. This is a 767% increase since December 31, 2016. Increased reserves are attributable to the following:

• Successful single rig program delivering 3 PDP wells and 2 DUC completions
• 15-PUD locations booked as offsets to existing PDP wells
• Optimization of legacy production
• Acquiring additional leasehold and non-consent well bore elections

Gas Gathering, Processing, and Purchase Agreement
During the months of May and June, production was impacted by pipeline take-away limitations.  The limitations were caused by operational downtime, mainly due to third party compressor issues. In response to these developments, management took immediate action to implement an improved midstream solution.

On August 10, 2017 we entered into a long-term gas gathering, processing and purchase agreement with Lucid Energy Delaware, LLC, to support Lilis's active drilling program in the Delaware Basin. Lucid will receive, gather and process Lilis's committed gas production from certain production areas located in Lea County, New Mexico and in Loving and Winkler counties, Texas. The agreement has an initial term of ten years.

Closing Note
Ronald Ormand, Executive Chairman of Lilis, said, "The Company is well positioned to continue delivering superior results with an established management and operations team. Our strategic goal remains to build shareholder value through continued execution of our developmental drilling program, delineation and de-risking of our acreage position, and selective accretive acquisitions.  Further, as we mature and grow our production base and cashflow, we intend to focus more on managing expenses, especially cash G&A. We will focus on maximizing shareholder value through the most appropriate means possible in the future."

About Lilis Energy, Inc.
Lilis Energy, Inc. is a San Antonio-based independent oil and gas exploration and production company that operates in the Permian's Delaware Basin, considered amongst the leading resource plays in North America. Lilis's total net acreage in the Permian Basin is approximately 10,500 acres. Lilis Energy's near-term E&P focus is to grow current reserves and production and pursue strategic acquisitions in its core areas. For more information, please visit www.lilisenergy.com.

Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. These risks include, but are not limited to our ability to replicate the results described in this release for future wells; the ability to finance our continued exploration, drilling operations and working capital needs, all the other uncertainties, costs and risks involved in exploration and development activities; and the other risks identified in the Company's Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission (the "SEC"). Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date hereof, and the Company does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.

(1)      Delaware Basin production curtailment of ~ 200 net BOE/D resulting in an adjusted average daily production of  ~ 2,151 net BOE/D for June 2017
(2)      Does not include ~250 net BOE/D of legacy gas shut in
(3)      As of August 7, 2017
(4)      Due to production curtailment in May and June 2017, IP90 rates do not reflect the wells full performance capabilities
(5)      These reserves do not include the DJ Basin assets divested in the first quarter of 2017.

SOURCE Lilis Energy, Inc.

Related Links

http://www.lilisenergy.com