Lonestar Resources: Focused on Eagle Ford Shale

August 23, 2016 Elizabeth Alford

Lonestar’s production climbed in the second quarter with Eagle Ford operations leading the way.

In spite of a net loss of $12.8 million for the second quarter of 2016, Lonestar Resources registered a 13% increase in net oil and gas production to 6,573 Boe/d, compared to 5,804 Boe/d in the second quarter of 2015.

Other second quarter highlights include:

Placed two new Eagle Ford shale wells on stream during May of the quarter
Crude oil production rose 17% sequentially in the second quarter as Lonestar’s 2016 completions have all been in the crude oil window.
Net loss of $12.8 million for 2Q16 versus a net loss of $8.4 million in 2Q15
Adjusted EBITDAX was $16.0 million compared to $22.0 million for 2Q15

“The company continues to focus its technical and capital resources on the Eagle Ford shale where it generated a 17% increase in net oil and gas production over to 2Q, 2015 results to 5999 boe per day.”

— Doug Banister, CFO

In July Lonestar delisted from the Australian Stock Exchange and commenced trading on the NASDAQ Global Market under the symbol, “LONE”. This is a major step as the company moves closer to moving its parent company from Australia to the United States as a Delaware corporation.

Matador Resources Open to Leaving Eagle Ford

August 22, 2016 Elizabeth Alford

Matador Resources is weighing opportunities to sell or trade its Eagle Ford assets.

Executives for Matador Resources reported strong results for the second quarter of 2016, highlighted by ‘milestones and achievements’ including significant production growth and operational efficiencies.

Matador’s Eagle Ford Operations

During an earnings call earlier this month, CEO Joseph Foran said that the company has done virtually no drilling in the region this year and that the area is not as strategic to the company as it has been in the past. He also revealed that the company is open to opportunities to part with some or all of its Eagle Ford assets.

Foran was careful to say that they were not being aggressive in pursuit of a deal, but that if the right opportunity came along they would entertain it. He said that, ideally, they would like to trade property for acreage in the Delaware or Haynesville Basins.

“We are just saying, look, Matador is on a good roll. We are pretty excited about things, and the best time to sell an asset is when you don’t have to. But it is not a fire sale; it is not – as we do with any assets, we do a methodical thing and want to be sure that we have signaled we are open.”

— Joseph Foran, Chairman and CEO

Second Quarter Highlights:

Record average daily production: 28,000 barrels of oil equivalent (“BOE”) per day (23,800 in Q1)
Capital expenditures during the first six months of 2016 of approximately $198 million
Net loss of $105.9 million versus a net loss of $107.7 million in Q1
Lease operating expenses (“LOE”) of $5.17 per BOE, a decrease of 28% sequentially, as compared to $7.14 per BOE in the first quarter of 2016, and a decrease of 16% year-over-year, as compared to $6.18 per BOE in the second quarter of 2015.

Eagle Ford Rig Count Drops as Crude Nears $50

August 19, 2016 Elizabeth Alford

The Eagle Ford Shale rig count fell by two this week, ending with42 rigs running across our coverage area by midday Friday.

In recent Eagle Ford news, Railroad Commissioner Christi Craddick gave more details on the Texas Oilfield Relief Initiative, a new project designed to make the state’s energy regulatory body more efficient and effective.

A total of 489 oil and gas rigs were running across the United States this week, and increase from last week of 10. 83 were targeting natural gas (same more than the previous week) and 406 were targeting oil in the U.S. (10 more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.) 238 of the rigs active in the U.S. were running in Texas.

Baker Hughes reports its own Eagle Ford Rig Count that covers the 14 core counties. The rig count published on EagleFordShale.com includes a 30 county area impacted by Eagle Ford development. A full list of the counties included can be found in the table below.

Eagle Ford Oil & Gas Rigs

9 rigs in the region targeted natural gas this week with the commodity trading at $2.57/mmbtu.

The Eagle Ford rigs targeting oil dropped to 33 with WTI oil prices continuing upwards to $48.52, a $4.03 increase this week.

A total of 37 rigs are drilling horizontal wells, one is drilling directional wells and four are vertical.

For the first time, Karnes County shares the number one spot with Dimmit County, with both running eight rigs this week. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

Eagle Ford Shale News

Karnes County Couple Sues Marathon Oil

Cabot to Reduce Spending in the Eagle Ford

Texas Oilfield Relief Initiative Takes Shape

Sanchez Energy to Increase Upstream Spending

What is the Rig Count?

The Eagle Ford Shale Rig Count is an index of the total number of oil & gas drilling rigs running across a 30 county area in South Texas. The South Texas rigs referred to in this article are for ALL drilling reported by Baker Hughes and not solely wells targeting the Eagle Ford formation. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count.

Karnes County Couple Sues Marathon Oil

August 18, 2016 Elizabeth Alford

One couple from Karnes County exemplify how hard mineral owners have to fight to make sure their royalty payments are correct.

John and Kelly Foster filed suit on Wednesday in order to obtain records from Marathon Oil that details the activity from their 613 acres in production. The family’s attorney said the couple is currently not seeking damages, but that a lawsuit was the only way to obtain information about how their royalty payments were calculated.

Texas has laid a heavy burden on mineral owners to make sure energy companies pay what is owed. In 2012, the Texas Supreme Court issued a decision in Shell v Ross that requires owners to do their own exhaustive audits to find out if payments are correct. If an owner suspects a problem, they have a four year time limit to request an audit. While this seems like it should be plenty of time, it isn’t always clear what operators are doing and sometimes a problem may not be obvious until it is too late.

“Not all companies are willing to share information, and not all leases have an audit provision that allows royalty owners to see the books that show how their royalties were calculated.”

— Oil and gas attorney John McFarland

Karnes county is the most prolific space in the Eagle Ford and across Texas, currently running eight rigs in their county . The Texas Railroad Commission records show that wells on the Fosters’ land have produced nearly 600,000 barrels of oil condensate and more than 4.2 billion cubic feet of natural gas over the past five years.

Sanchez Energy to Increase Upstream Spending

August 16, 2016 Elizabeth Alford

Sanchez Energy Corp. reported excellent production returns for the second quarter of 2016 and announced plans to increase upstream capital spending to between $250 million to $300 million.

During a second quarter earnings call, Sanchez’ CEO Tony Sanchez credited their results to competitive well costs, record production and improvements in the commodity price environment.

Sanchez continues to experience great results from their Eagle Ford operations including drill costs of below $3 million for wells at both Catarina and Cotulla.

“The commodities or the company’s Eagle Ford development plan remains focused on Catarina, where in conjunction with the uptick and spending plan under our updated capital plan, the company is currently running three rigs and expects to maintain an activity set of two rigs for remainder of the year.”

— Sanchez

Second quarter highlights include:

Plans to increase its 2016 upstream capital spending by up to $50 million, to a range of between $250 million to $300 million
Total production of 5.1 million barrels of oil equivalent (“MMBoe”) during the second quarter 2016, up approximately 4% over the second quarter 2015
Average production of approximately 55,900 barrels of oil equivalent per day (“Boe/d”), which exceeded the high end of the Company’s guidance of 48,000 to 52,000 Boe/d for the second quarter 2016 by over 7%
Average drilling and completion costs between $3-3.3 million per well
Revenues of approximately $111 million (up approximately 39% over Q1)
$146 million in revenue
Adjusted EBITDA of approximately $79.6 million (up 23% over Q1)

In July, Sanchez Production Partners (SPP) initiated a transaction with Sanchez Energy to acquire 50% interest in Carnero Gathering, LLC. The company expects that the $44 million deal will increase their midstream revenue and adjusted EBITDA to approximately $7 million.