Lonestar Resources acquires Eagle Ford acreage for $117 million

By Patrick C. Miller | May 30, 2017

Lonestar Resources US Inc. of Fort Worth, Texas, has entered into agreements to purchase oil and gas properties in the Eagle Ford shale play for approximately $117 million.

The agreement with unaffiliated parties consists of $105 million in cash and 2.6 million Lonestar Class A common shares. The company expects to close the acquisitions in late June.

The properties are located in Karnes, Gonzales, DeWitt, Lavaca and Fayette counties in Texas and have proven reserves of approximately 25.4 million barrels of crude, 3.1 million barrels of natural gas liquids and 17.5 billion cubic feet of natural gas—31.4 million barrels of oil equivalent (BOE) as estimated by Lonestar. 

Frank Bracken, Lonestar CEO, called the new acquisition “transformational” because it significantly increases the size and scale of the company.

“We have scaled our business with Eagle Ford shale properties that are located in our core area which our technical team understands extremely well,” he said. “Despite increasing our asset base by over fifty percent on most metrics, we expect to add little to no overhead to integrate these assets.”

Bracken added that the acquisitions are fully financed in a manner that significantly reduces Lonestar’s leverage metrics. 

“We plan to increase our Eagle Ford shale drilling rig activity from one rig to two rigs no later than January 1, 2018, which will allow us to scale our drilling program and obtain a dedicated frack spread, which we believe will afford us greater economies of scale, cost savings and better precision and timing of execution,” he said. 

Lonestar will own an average 70 percent working interest in the producing wells, operating 81 of them with a 93 percent working interest.  Based on information provided by the sellers, the company estimates the production for the three months ending March 31 this year was 2,052 BOE per day—89 percent of which is crude oil and NGL.

After finalizing the agreement, Lonestar reaffirms its spending plan of $62 to $72 million on drilling and completion operations in 2017. The acquisitions provide the company with the visibility to set an initial drilling plan for 2018 of 18 gross or 16 net wells, with an estimated cost of $85 to $95 million.