Lonestar (ticker: LONE) is a pure-play Eagle Ford producer, with operations throughout the play. The company owns a total of over 57,000 acres, and holds 76.8 MMBOE of proved reserves.
The company significantly expanded this position in mid-2017 through a series of acquisitions, grabbing 21,238 net acres over five counties, with 115 gross producing wells and 31.4 MMBOE of reserves.
Geo-engineering combines multiple disciplines to plan wells
Lonestar focuses on geo-engineered completions on its properties, which integrates data from multiple sources to design a well. Vertical pilot logs are used to select exact drilling targets, allowing the company to optimize reservoir and mechanical properties. During drilling, the company makes extensive use of logging while drilling (LWD) for geosteering, allowing drillers to further refine the target.
Lonestar uses a stimulation design it calls “mangrove,” which uses the previously collected LWD data to model key parameters to optimize completions. According to Lonestar, these completions are more effective than standard “one size fits all” designs. During stimulation, Lonestar uses engineered diverters, which allows the company to use fewer stages for a given job, making it more cost effective. After a well is completed, the company uses controlled flowbacks. This means wells will not set IP records, but will produce more hydrocarbons in the long term.
Lonestar has been able to engineer much of its pre-acquisition acreage, but the new properties purchased in 2017 are now being examined. The company reports it currently has 257 engineered locations, but this value is likely to rise significantly in coming months as design work is conducted.
Debt offering and credit affirmation establish liquidity
The company recently announced it closed a $250 million debt offering and affirmed its borrowing base at $160 million. The proceeds of this debt offering will be used to fully retire Lonestar’s existing senior notes due April 2019. The credit facility means Lonestar has about $100 million in liquidity.
EnerCom Dallas conference presenter
Lonestar Resources will be presenting at the EnerCom Dallas investment conference, Feb. 21-22 at the Tower Club in downtown Dallas. Institutional investors, portfolio managers, financial analysts, CIOs and other investment community professionals who invest in the energy space should register now.
