Earthstone presents at EnerCom’s The Oil & Gas Conference®
During Earthstone’s breakout session, management was asked the following questions:
- Could you talk about your cash flow through the end of the year in light of the capital for the year and the capital raise?
- In the past you have raised some liquidity through non-core asset sales. Where do you stand on that today?
- Do you think there is upside for the Austin Chalk in Kearnes County in light of EOG’s success?
- What are the challenges of transforming from a non-operator to an operator?
- In the Eagle Ford, what are your thoughts about going further north and east in the trend?
You can listen to Earthstone’s presentation by clicking here.
For the company’s second quarter results, click here.
Earthstone Energy (ticker: ESTE) is an independent oil and gas exploration company headquartered in The Woodlands, Texas. The company’s primary assets are located in the Eagle Ford trend of south Texas, the Midland Basin of west Texas, and in the Williston Basin of North Dakota and Montana.
Earthstone has 30,383 net acres and 560 drilling locations across the three basins, with proved reserves of 17.9 MMBoe, 71% of which are proved developed. The largest position is the Eagle Ford where Earthstone holds 9.5 MMBoe of reserves and 18,600 net acres. Earthstone produced 3,759 Boepd in the second quarter 2016, consisting of 73% oil and natural gas liquids.
Earthstone recently acquired the Midland Basin acreage in a deal to acquire the assets of Lynden Energy in May 2016. The acquisition closed on May 18th for approximately $77.8 million. The transaction was an all-stock deal that Earthstone issued 3.7 million shares to Lyden stockholder, which represents approximately 21% of Earthstone’s outstanding common stock following the closing. The acquisition provides the Company with approximately 5,900 net acres in the Midland Basin, current net production of 1,130 Boepd, and 100 gross horizontal locations.
Following the completion of the acquisition, the company commenced a public equity offering to raise net proceeds of $44.7 million to repay indebtedness under the company’s revolving credit facility. As of the second quarter 2016 report, the company had reaffirmed the borrowing base at $75 million, and had $10 million drawn.
Earthstone currently plans to complete 12 Eagle Ford wells currently in inventory during the third and fourth quarters of 2016. These wells are in four units located in Karnes County, Texas, and Fayette County, Texas, two of which are held by production and the other two are in the primary term of leases. In addition, pending commodity prices, the company plans to drill five to six gross Eagle Ford wells in southwestern Gonzales County, Texas, beginning in the fourth quarter of 2016.
Earthstone has focused on cost reductions from the drilling of wells in the Eagle Ford. In a little less than two years, the company has reduced drilling costs over 50% from $606 per foot of lateral to $287 per foot.
Completion costs have mirrored this decline, falling approximately 40% from $162,500 per stage to $97,300 per stage over the same time frame. The company has reduced drilling costs from $4.2 million to approximately $2.0 million and completion costs have declined from $3.9 for a 24 stage frac to $4.0 million for a 42 stage frac.
