EX-99.1 2 d539367dex991.htm EX-99.1 EX-99.1

Slide 1

Lonestar Resources US, Inc. Enercom Dallas Conference February 2018 Exhibit 99.1


Slide 2

Disclaimer and Forward Looking Statements Forward Looking Statements The information in this presentation includes “forward-looking statements” that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included in this presentation, regarding our strategy, future operations, financial position, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this presentation, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Lonestar Resources US Inc.’s (“LONE” or the “Company”) current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, gathering and sale of oil and natural gas. These risks include, but are not limited to, variations in the market demand for, and prices of, crude oil, NGLs and natural gas, lack of proved reserves, estimates of crude oil, NGLs and natural gas data, the adequacy of our capital resources and liquidity including, but not limited to, access to additional borrowing, borrowing capacity under our credit facilities, general economic and business conditions, failure to realize expected value creation from property acquisitions, uncertainties about our ability to replace reserves and economically develop our reserves, risks related to the concentration of our operations, drilling results, potential financial losses or earnings reductions from our commodity price risk management programs, potential adoption of new governmental regulations, our ability to satisfy future cash obligations and environmental costs and the risk factors discussed in or referenced in our filings with the United States Securities and Exchange Commission (“SEC”), including our Registration Statement on Form 10, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this presentation. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this presentation. Our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or cost increases. Reconciliation of Non-GAAP Financial Measure EBITDAX is a financial measure that is not presented in accordance with generally accepted accounting principles in the United States (“GAAP”). Reconciliations of this non- GAAP financial measure can be found in this presentation. Industry and Market Data This presentation has been prepared by LONE and includes market data and other statistical information from third-party sources, including independent industry publications, government publications or other published independent sources. Although LONE believes these third-party sources are reliable as of their respective dates, LONE has not independently verified the accuracy or completeness of this information. Some data are also based on the LONE’s good faith estimates, which are derived from its review of internal sources as well as the third-party sources described above.


Slide 3

Experienced Management Team John H. Pinkerton Chairman of the Board 37 years experience in the oil and gas industry Founder, Chairman and Chief Executive Officer Range Resources Built Range Resources into a $10 billion Exploration & Production company Executive Previous Experience Biography Tom H. Olle VP – Reservoir Engineering Over 37 years oil and gas industry experience Senior level expertise in reservoir management / project development across a broad array of reservoir types Senior roles at US public companies Encore Acquisition Corp and Burlington Resources High Caliber Executive Team with Deep Industry Expertise and 30 Years of Average Experience Gerrity Oil & Gas Frank D. Bracken, III Chief Executive Officer 31 years experience in oil and gas finance Previously Managing Director at Jefferies LLC, where he led >$5 billion in oil and gas transactions Former CFO / Director of Gerrity Oil & Gas Corp, a NYSE-listed E&P Company GOG Jana Payne VP – Geosciences Over 25 years in all aspects of oil and gas exploration and development Geologic Manager for Petrohawk, responsible for discovery of Hawkville Field, first commercial Eagle Ford Shale well in 2008 Senior Exploitation Manager for Halcon Resources Experience in Eagle Ford, Haynesville, Bossier, Utica and Tuscaloosa Marine Shales Barry D. Schneider Chief Operating Officer 32 years oil and gas industry experience Senior level expertise in management of regional business units at large independent oil & gas companies Previously with US public companies Denbury Resources and Conoco-Phillips


Slide 4

Executive Summary Net Eagle Ford Leasehold Key Investor Considerations Proved Reserves 2017 Was A Year Of High Growth For Lonestar 82% increase in Proved Reserves 225% Increase in Proved PV-10- $648 MM 1 1,500% Reserve Replacement “All Sources” Finding & Onstream Costs of $6.07 per BOE Lonestar Made Meaningful Financial Progress in 2017 $115 MM of acquisitions funded largely with $80 MM Cvt. Pfd. & $10 MM common stock Redeemed 8 ¾% Senior Notes due April 2019 Issued new $250 MM Senior Unsecured Notes due January 2023 Borrowing Base is $160 MM, $62 MM drawn at 12/31/2017 ~$100 MM in Net Liquidity Lonestar Expanding Drilling Inventory, Pushing Technical Limits Engineered drilling inventory stands at 254 locations Average lateral length2 of ~8,000’ (and climbing) First wells completed in 2018 range from 10,400’ (Hawkeye) to 12,350’ (Horned Frog) Lonestar Is Positioned For Strong Growth in 2018 Drill 17-19 gross wells, spend $95 to $100 MM Forecasted IRR’s of 2018 program exceeds 60% Production Guidance of 10,000-10,700 BOEPD = 60% Growth EBITDAX Guidance of $100 to $110 MM = 65% Growth 1 Based on WD Von Gonten reserve report, prices based on NYMEX Strip at 1/2/2018 2 Excludes Karnes County locations, which have IRR’s of 71%


Slide 5

Company Profile 1 12/31/2017Reserves based on NYMEX Strip as of 1/2/2018 * Please see the reserves disclosures at the end of this presentation Production Proved Reserves1 PV-10 Value1 Eastern Central Western Engineered Acreage* Non-Engineered Acreage* Acquired Acreage 6,495Boe/d 76.2 MMBoe $382 MM $648MM 44.9 MMBoe 5,495 Boe/d 18% 70% 70% 2016 2017 2016 2017 2016 2017


Slide 6

Geo-Engineered Completions Continue to Improve Results Vertical Pilot Logs Used To Select Geo-target to Optimize Both Reservoir & Mechanical Properties Reservoir Properties - Porosity, Total Organic Content, Clay Volume Mechanical Properties - Young’s Modulus, Poisson’s Ratio, Minimum In-situ Stress Results of Analysis Determine Geosteering Target Integrated Approach to Drilling, Completion, Stimulation & Production of Eagle Ford Laterals Technical Process Application Experience Horned Frog (2015) Beall Ranch (2015, 2016) Cyclone (2016, 2017) Burns Ranch (2016, 2017) Beall Ranch (2015, 2016) Cyclone/Hawkeye (2016, 2017) Burns Ranch (2016, 2017) Horned Frog (2018) Beall Ranch (2016. 2017) Cyclone (2016, 2017) Burns Ranch (2017) Wildcat (2017) Azimuthal Gamma Ray LWD Tool to Assist in Geosteering Multi-planar Gamma ray data determines dip angle and direction in real time Lateral “Thru-Bit” Logs Run to TD for Detailed Rock Properties Analysis Triple Combo Log with Spectral Gamma Ray and Dipole Sonic Logs Mangrove Stimulation Design Utilize Thru-Bit Log Data For Reservoir Characterization Models Key Mechanical Properties To Optimize Stimulation Vertical and lateral rock heterogeneity Planar and Non-planar fractures Account for multi-well stress shadows to optimize zipper fracs Facilitates Design of Engineered (Non-Geometric) Completion, Usually Yielding 150’ Stages Increased Use of Diverters, Both Near-Field and Far-Field Engineered fibrous pill designed to create near-wellbore isolation to augment frac efficacy across all perforations, maximizing wellbore coverage Increase efficiency through fewer pumped stages, coiled tubing plug drill outs Engineered Flowback Lonestar has increasingly applied controlled flowbacks Implement solids and fluids analysis to avoid negative impact of hydraulic fractures and assess success of completion strategies Horned Frog (2015, 2018) Beall Ranch (2015, 2016) Cyclone/Hawkeye (2016, 2017) Burns Ranch (2016, 2017) Beall Ranch (2016) Cyclone/Hawkeye (2016, 2017, 2018) Burns Ranch (2016, 2017)


Slide 7

The Value of Extended Reach Laterals in the Eagle Ford Vertical + Angle Drilling Completion Casing Tubing Cementing $1.3 MM Surface & Facilities Drilling Pad Wellhead Equipment Separation Storage Compression Gathering $0.4 MM 5,000’ Lateral Drilling Completion Casing Fracture Stimulation Other $3.1 MM $0.4 MM $1.7 MM $4.8 MM +5,000’ Lateral Drilling Completion Casing Fracture Stimulation Other $2.3 MM $7.1 MM Total Total Extended Reach Cumulative Cost Cumulative Cost Cumulative Cost Cumulative Cost Note: NYMEX Strip as of January 2, 2018 1 Surface and faculties costs are allocated for 3 well pad (Source of reserve forecast for 10,000’ lateral- W.D. Von Gonten from our Cyclone area); 2IRR based on reserve forecast for 10,000’ lateral and average type curve from W.D. Von Gonten for our Cyclone area Lateral 5,000’ + 5,000’ 10,000’ Completed Well Cost ($MM) $4.8MM $2.3 MM $7.1 MM Gross Reserves (BOE) 281,000 354,000 632,000 Net Reserves (BOE) 227,000 294,000 521,000 Finding & Onstream Cost ($/BOE) $20.99 $8.05 $12.96 PV10 ($MM) $1.2 MM $3.8MM $6.6 MM Internal Rate of Return2 26% 175% 61%


Slide 8

Crude Oil Weighted Production Yields High Margins 3Q17 LOE / Boe Cost and % Liquids 3Q17 EBITDAX Margin Source: Company 10-Q filings based for the period ended September 30, 2017


Slide 9

Five Year Capital Investing Efficiency 5-Year Historical Finding & Development Cost Recycle Ratio1 Note: All Finding & Development Costs and Operating Cash Flow figures are provided by Seaport Global Securities in the 2016 study. ECR, SRCI, WRD & XOG excluded from peer group due to absence of 5 year data 1 Recycle Ratio calculated: Operating Cash Flow per BOE / All Sources F&D Cost per BOE


Slide 10

2018 Capital Program Areas of Focus


Slide 11

Cyclone/Hawkeye – Locator Map Cyclone #10H Cyclone #9H Cyclone #5H Cyclone #4H Cyclone #27H Cyclone #26H Harvey Johnson #1H-#6H Hawkeye #1H & #2H Type Gross Net Acreage 9,443 7,808 HBP 7,718 6,450 Developed 1,909 1,579 Undeveloped 7,533 6,229 Producing Wells 16 12 Drilling Locations 43 28 *Offset operator EUR’s are Lonestar internal estimates Leasehold Summary Legend PDP # – Oil EUR/1000’ # – Gas EUR/1000’ # – BOE EUR/1000’ # – proppant/ft PUD PROB


Slide 12

Cyclone Economic Summary W.D. Von Gonten & Co. Type Curve Economic Summary 1 1 All reserves and economic data sourced from Lonestar’s 12/31/17 reserve report, independently engineered by WD Von Gonten &Co. Prices based on NYMEX Strip at 1/2/2018


Slide 13

Karnes County – Locator Map Type Gross Net Acreage 5,037 3,914 HBP 4,259 3,274 Developed 2,773 2,107 Undeveloped 2,264 1,807 Producing Wells 12 9 Drilling Locations 35 28 *Offset operator EUR’s are Lonestar internal estimates Leasehold Summary Legend PDP # – Oil EUR/1000’ # – Gas EUR/1000’ # – BOE EUR/1000’ # – proppant/ft PUD PROB


Slide 14

Karnes County Economic Evaluation W.D. Von Gonten & Co. Type Curve Economic Summary1 1 All reserves and economic data sourced from Lonestar’s 12/31/17 reserve report, independently engineered by WD Von Gonten &Co. Prices based on NYMEX Strip at 1/2/2018


Slide 15

Horned Frog – Locator Map Type Gross Net Acreage 5,828 5,105 HBP 4,402 4,077 Developed 653 572 Undeveloped 5,175 4,533 Producing Wells 4 4 Drilling Locations 22 22 *Offset operator EUR’s are Lonestar internal estimates Leasehold Summary Legend PDP # – Oil EUR/1000’ # – Gas EUR/1000’ # – BOE EUR/1000’ # – proppant/ft PUD PROB


Slide 16

Horned Frog Economic Evaluation W.D. Von Gonten & Co. Type Curve Economic Summary1 Longer Laterals 37% $3.7 MM Historical Gas/ft 44% $4.8 MM Choke Management 51% $7.0 MM Better Geosteering ???? ???? Gen 5- Path to Improved Returns 2 Improvement IRR PV-10 1 All reserves and economic data sourced from Lonestar’s 12/31/17 reserve report, independently engineered by WD Von Gonten &Co. Prices based on NYMEX Strip at 1/2/2018


Slide 17

Debt Maturities (12/31/17)


Slide 18

Debt Maturities (Proforma New Notes - 12/31/17)


Slide 19

Debt Maturities (Proforma New Notes - 12/31/17)


Slide 20

Commodity Price Protection to Ensure Execution Since inception, Lonestar has implemented a strategy to reduce the effects of volatility of oil and natural gas prices on the Company’s results of operations by securing fixed price contracts for a portion of its expected sales volumes ~90% ~40% Oil – WTI Fixed Price Swap Natural Gas – Henry Hub Fixed Price Swap Volume Hedged Weighted Average Hedge Price $52.78 $51.21 $3.36 $3.09 $53.73 $53.02 ~91% ~66% 64% 85% ~86% ~21% $ / Mcf: % of Production Hedged $85.76 $71.02 $ / Bbl: