Lilis Energy expanding Permian ops after $18k/acre purchase

By Luke Geiver | February 06, 2018

A change in leadership isn’t stopping San Antonio-based Lilis Energy from expanding operations in its West Texas and Southeastern New Mexico Permian basin acreage. Roughly one year from appointing new leadership, Lilis said it will spend $100 million on drilling and completion activities this year. Running two rigs, the company will drill 14 wells with laterals ranging from 1-mile to 1.5-miles.

Through a $70 million deal involving common stock and preferred stock issuance, Lilis recently acquired 3,000 acres in Lea County, New Mexico. The position in the Delaware gives Lilis another 150 net locations capable of targeting multiple benches. On a per acre basis, Lilis estimates it paid nearly $19,000/acre. Recent transactions in the area saw acres sell for $22,428; $20,122; $43,902; and $39,704.

Ron Ormand, executive chairman, said this year the company is focusing on delineating its acreage while it continues to prove out the Wolfcamp A, Wolfcamp XY and second Bone Springs formations within its position.

For the full-year, Ormand said Lilis is aiming to reach cash flow neutrality. “We are well positioned to grow the company at an accelerated rate well into the future,” he said.

At the end of January, Lilis received a new $50 million first lien loan from Riverstone Credit Partners LP. Part of the funding was used to pay down existing debt. Currently, Lilis has 1,000 barrels per day hedged through June 30. After that, the company has roughly 560 bpd hedged for the rest of the year.