Lonestar Resources Announces 30% Increase in Proved Reserves to 40.2 MMBOE

Feb 25, 2016, 09:29 ET from Lonestar Resources, Ltd.

FORT WORTH, Texas, Feb. 25, 2016 /PRNewswire/ -- Lonestar Resources, Ltd. (ASX: LNR, OTCQX:LNREF) is pleased to announce its proved reserves as of December 31, 2015 were 40.2 million barrels of oil equivalent (MMBOE), an increase of 30% over year-end 2014 proved reserves of 31.0 MMBOE.  

Lonestar's proved reserves as of December 31, 2016 are comprised of 23.5 million barrels of crude oil and condensate, 7.2 million barrels of natural gas liquids, and 57.0 billion cubic feet of natural gas.  By energy content, Lonestar's proved reserves are weighted 76% to crude oil, condensate and natural gas liquids.  At year-end 2015, 95% of Lonestar's proved reserves were from the Eagle Ford Shale, while 5% were from its Conventional assets.  In 2015, Lonestar increased its Eagle Ford Shale proved reserves by 38% to 38.0 MMBOE versus 2014 levels while lower oil and gas prices and production decreased proved reserves from its Conventional assets by 37% to 2.2 MMBOE versus year-end 2014 levels.  Lonestar's proved reserves at December 31, 2015 were reduced by 6.4 MMBOE as a function of lower prices detailed below.

2015 Highlights Include:

  • Total reserve replacement was 394%. Capital spending of $94.2 million yielded an all-sources finding & development cost of $8.15 per BOE
  • Excluding negative price-related revisions of 6.4 MMBOE, reserve replacement was 668% at an all-sources finding & development cost of $5.24 per BOE
  • Eagle Ford Shale reserves increased to 38.0 MMBOE, an increase of 38% from 27.5 MMBOE at December 31, 2014
  • Proved Developed Producing (PDP) reserves increased to 13.2 MMBOE, an increase of 8% from 12.2 MMBOE at December 31, 2014, comprised of a 15% increase in the Eagle Ford Shale, offset by a 19% decrease on our Conventional assets.
  • Lonestar operated 100% of its Eagle Ford Shale proved reserves with an average 87.1% working interest.

Frank D. Bracken, III, Lonestar's Chief Executive Officer commented, "2015 saw unprecedented compression in oil and gas prices, making it an undeniably challenging year for the oil and gas industry, yet Lonestar's focused approach in the Eagle Ford Shale allowed the Company to increase proved reserves by 30%.  Notably, Lonestar increased Proved Developed Producing reserves in the Eagle Ford Shale by 15% and increased its Proved Undeveloped (PUD) reserves in the Eagle Ford Shale by 51%.  These gains were achieved almost entirely on leasehold that Lonestar acquired via farm-ins and lease acquisitions, which were then followed up by successful drilling results which allowed for the booking of proved reserves in 2015.  Notably, at December 31, 2015, Lonestar's 62 Proved Undeveloped locations had an average perforated interval of 7,400 feet, with two-thirds of its PUD locations having planned perforated intervals of 8,000 feet or more, capable of generating attractive IRR's at today's NYMEX oil and gas futures strip." 

The table below summarizes Lonestar's year-end proved reserves and PV-10 by region as determined by the Company's independent petroleum engineers, W.D. Von Gonten & Co. Petroleum Engineers, who engineer the Company's Eagle Ford Shale assets, and LaRoche Petroleum Consultants, Ltd. who engineer the Company's Conventional assets.  Based on rules of the U.S. Securities and Exchange Commission, for the year ended December 31, 2015, Lonestar's proved reserves were estimated using the 12-month average price calculated as the unweighted arithmetic average of the spot price on the first day of each month preceding the 12-month prior to the end of the reporting period. This methodology resulted in an average oil price of $50.28 per barrel and an average natural gas price of $2.59 per million British Thermal Units (MMBTU), a decrease of 47% and 40%, respectively, as compared to an average of oil price of $94.99 per barrel and an average natural gas price of $4.35 per MMBTU used to estimate Lonestar's proved reserves for the year ended December 31, 2014. 

Table 1: Proved Reserves and PV-10
(As of December 31, 2015)

 




Crude Oil

NGL's

Gas

Total

PV-10

Region



(MMBbls)

 (MMBbls)

 (Bcf)

 (MMBOE)

 (MM)

  Western Eagle Ford



16.9

6.9

52.6

32.6

$220.7

  Central Eagle Ford



1.8

0.1

0.5

1.9

$29.7

  Eastern Eagle Ford



3.1

0.2

1.3

3.5

$25.5

 Total Eagle Ford



21.8

7.2

54.4

38.0

$275.9

 Conventional



1.7

0.0

2.6

2.2

$18.4

Total



23.5

7.2

57.0

40.2

$294.3

 

At December 31, 2015, Lonestar's PV-10 was $294.3 million, and did not include the positive benefits of its crude oil hedge portfolio.  PV-10 of the Proved Developed Producing reserves was $156.7 million, comprised of $139.2 million from the Eagle Ford Shale and $17.5 million from our Conventional assets. PV-10 of Proved Non-Producing (PDNP) reserves was $1.0 million, and predominately attributable to our Conventional assets, while PV-10 of our Proved Undeveloped reserves was $136.6 million, and entirely attributable to our Eagle Ford Shale assets.

Table 2: Changes in Proved Reserves
(For the year ended December 31, 2015)

 







Crude Oil

NGL's

Gas

Total







 (MMBbls)

 (MMBbls)

 (Bcf)

 (MMBOE)

Proved Reserves - December 31, 2014



23.6

3.0

26.0

31.0

 Revisions of previous estimates



(6.6)

(0.0)

(2.0)

(7.0)

 Purchase of Minerals in place



1.5

0.3

2.3

2.2

 Extensions and iscoveries




6.5

4.2

33.5

16.3

 Production





(1.5)

(0.3)

(2.9)

(2.3)

Proved Reserves - December 31, 2015



23.5

7.2

57.0

40.2

Proved Developed Reserves - December 31, 2015



8.3

2.1

17.5

13.3

 

Bracken further commented, "During 2015, Lonestar continued its strategy of using farm-ins, acreage trades and complimentary primary lease acquisitions to gain access to high quality Eagle Ford Shale leasehold which it proved up with the drillbit, allowing for significant reserve additions at Horned Frog and Burns Ranch, which are reflected in our proved reserve growth in 2015."  Bracken added, "Lonestar's proved reserves are associated with 63.0 gross / 51.6 net producers and 62.0 gross / 55.3 net PUD locations on 17,482 net acres.  Lonestar has an additional 140 drilling locations identified on an additional 18,010 net acres, 102 of which have been identified as probable and possible by our independent petroleum engineers.  This leasehold and its associated drilling inventory represent significant potential sources of reserve growth for the foreseeable future for Lonestar, and are expected to complement Lonestar's continuing efforts to grow reserves through farm-ins and focused lease acquisitions."

Table 3: Costs Incurred In Oil & Gas Property Acquisition, Exploration and Development Activities
(For the year ended December 31, 2015)

 





Total





 ($MM)

Property Acquisition Costs        




Proved property acquisition costs


$1.4

Unproven property acquisition costs

$7.3

Total property acquisition costs



$8.7

Exploration costs



$0.0

Development costs



$85.5

Total Costs incurred



$94.2

 

Lonestar obtains reserve reports from the independent consultant it deems as the most knowledgeable in each of its areas of focus.  Accordingly, W.D. Von Gonten & Co. Petroleum Engineers was retained to conduct the independent evaluation of the Company's Eagle Ford Shale properties and LaRoche Petroleum Consultants, Ltd. was retained to conduct the independent evaluation of the Company's Conventional assets.

Lonestar Resources, Ltd.

ABN:    36 058 714 408
Phone: +61 8 6355 6888 or +1 817 921 1889
Email: info@lonestarresources.com
Web:    www.lonestarresources.com 

Important disclosures follow on subsequent pages of this release.

Footnotes:

Reserves Reporting:
Pursuant to ASX Listing Rules ("LR") the reserves information in this document:

(i) is effective as at 1 January, 2016 (LR 5.25.1)
(ii) has been estimated and is classified in accordance with SPEPRMS (Society of Petroleum Engineers Petroleum Resources Management System) (LR 5.25.2) 
(iii) is reported according to the Company's economic interest in each of the reserves and net of royalties (LR 5.25.5) 
(iv) has been estimated and prepared using the deterministic method (LR 5.25.6)
(v) has been estimated using a 6:1 BOE conversion ratio for gas to oil, pursuant to the information in the disclaimer section of this document (LR 5.25.7)
(vi) relates only to reserves that are commercially recoverable (LR 5.26.2)
(vii) represent aggregated estimates of petroleum reserves (LR 5.26.7)  

Other Reserves Information:

Lonestar operates most of its properties which are generally held by standard oil and gas lease arrangements. Detailed information on the operator and lease arrangements is disclosed in the Company announcement related to the initial acquisition of properties. The Company's working interest ownership (WI%) and netrevenue interest ownership (NRI%) in relation to each of its properties are generally included in the Company's presentations which are available on the ASX or the Company's websites. Well spacing assumptions and lateral length assumptions are generally included in the Company's presentations as is additional information on capital cost and taxation assumptions.  In accordance with ASX LR 5.43 the Company confirms that it is not aware of any new information or data that materially affects the reserves information included in previous Company announcements including as to material assumptions and technical parameters underpinning the estimates, other than as set out in this announcement.  

Qualified Petroleum Reserves and Resources Evaluators:

In accordance with ASX Listing Rules 5.41 and 5.42:

The reserve reporting provided in this document in relation to the Company's Eagle Ford Shale properties is based on and fairly represents information and supporting documentation that has been prepared by Mr. William D. Von Gonten, Jr., P.E., and Mr. Taylor D. Matthes, P.E. who are employed by W. D. Von Gonten & Co Petroleum Engineering. Mr. Von Gonten holds a Bachelor of Science degree in Petroleum Engineering from Texas A&M University and Mr. Matthes holds a Bachelor of Science degree in Petroleum Engineering from Texas A&M University. Both of these persons are Registered Texas Professional Engineers. Mr. Von Gonten has 24 years of experience as a Petroleum Engineer and Mr. Matthes has more than 5 years of experience as a Petroleum Engineer. Both of these persons are members of the Society of Petroleum Engineers. Messrs. Von Gonten and Matthes have consented to the inclusion in this document of the information and context in which it appears.

The reserve reporting provided in this document in relation to the Company's Conventional properties is based on and fairly represents information and supporting documentation that has been prepared by Mr. William M. Kazmann who is President and Senior Partner at La Roche Petroleum Consultants, Ltd. Mr. Kazmann received his Bachelor of Science and Master of Science degrees in Petroleum Engineering from the University of Texas at Austin in 1973 and 1975 respectively. He has worked in the oil and gas industry since that
time. Mr. Kazmann is a Licensed Professional Engineer in the State of Texas and is a member of the American Association of Petroleum Geologists, Society of Petroleum Engineers, Society of Independent Professional Earth Scientists (serving as National Director from 1993 to 1996 and National Treasurer in 1994 and 1995), Dallas Geological Society, and Dallas Petroleum Club (serving as Director from 2004 through 2006). Mr. Kazmann has consented to the inclusion in this document of the information and context in which it appears.

Commodity Pricing Used:

Lonestar's reserves and PV10 have been estimated using index prices determined in accordance with US SEC pricing guidelines for oil and natural gas, without giving effect to derivative transactions, and were held constant throughout the lift of the properties. The unweighted arithmetic averages of the firstdayofthemonth prices for the year ended December 31, 2015 were $50.28 per bbl for oil and $2.59 per mmbtu for natural gas and for the year ended December 31, 2014 were $94.99 bbl for oil and $4.35 per mmbtu for natural gas. These prices were adjusted by lease for quality, energy content, regional price differentials, transportation fees, marketing deductions and other factors affecting the price received at the wellhead.

Reserves Cautionary Statement:

Hydrocarbon reserves and resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates that were valid when originally calculated may alter significantly when new information or techniques become available. Additionally, by their very nature, reserve and resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional drilling and analysis, the estimates are likely to change. The may result in alterations to development and production plans which may, in turn, adversely impact the Company's operations. Reserves estimates and estimates of future earnings are, by nature, forward looking statements and subject to the same risks as other forward looking statements.

Other Definitions:

"BOE" is barrel of oil equivalent. For purposes of computing such units, a conversion rate of 6,000 cubic feet of natural gas to one barrel of oil equivalent (6:1) is used. The conversion ratio of 6:1 is based on an energy equivalency conversion method which is primarily applicable at the burner tip and does not represent value equivalence at the wellhead.

"MMBOE" is million barrels of oil equivalent.

"MBOE" is thousand barrels of oil equivalent.

"Mbbls" is thousand barrels of oil or NGL's.

"MMcf" is million cubic feet of natural gas.

"Net Revenue" is calculated net of royalties, production taxes, lease operating expenses, and capital expenditures, before Federal Income Taxes.

"PV-10" or "NPV10" is defined as the future Net Revenues of the Company's Proved or Probable Reserves, discounted at 10% per annum, before income taxes.  The estimated future net revenue values do not necessarily represent the fair market value of Lonestar's reserves.

"$" means U.S. dollars

 

SOURCE Lonestar Resources, Ltd.



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