Lonestar Resources US Inc. (NASDAQ: LONE) said May 30 it agreed to acquire roughly 21,000 net Eagle Ford acres—significantly increasing its leasehold in the South Texas shale play.
The Fort Worth, Texas-based Lonestar entered definitive agreements with unaffiliated parties to acquire properties in Karnes, Gonzales, DeWitt, Lavaca and Fayette counties, Texas, for about $116.6 million in cash and stock.
The producer announced that the acquisition added proved reserves of about 25.4 million barrels of crude oil and 17.5 billion cubic feet of natural gas. The properties will increase the company’s proved reserves by 70 percent.
The assets include 115 gross (80.3) net producing wells with proved developed producing reserves of 6.3 million barrels of oil equivalent (boe). Lonestar will own an average 70% working interest in the producing wells, and operates 81 of them with a 93% working interest.
The deal will be financed primarily with the sale of $80 million in convertible preferred stock to Chambers Energy Capital, which will get a seat on Lonestar’s board of directors and rights to a second seat after a year.
In a press release, Lonestar CEO Frank D. Bracken III called the deal “transformational.”
“We are acquiring high-quality Eagle Ford properties located in our core area that significantly increase the size and scale of our company,” Bracken said. “Importantly, we have arranged to finance the acquisitions in a way that significantly reduces our leverage, increases our liquidity and affords us the ability to drive up production and reserves for the benefit of our shareholders.”
Upon closing, which is expected in late June, Lonestar’s net leasehold in the Eagle Ford will increase by 59% to 57,330 net acres from 36,069 net acres. The deal also vaults the company’s net drilling locations by 70%, to 263 from 155.
Lonestar Resources US, Inc. is a leading independent oil and gas company involved in exploration, production, and acquisition of unconventional oil and gas reserves. The company is focused on the Crude Oil Window of the Eagle Ford Shale, where it anticipates spending 95% of its capital for the next several years. Lonestar is also evaluating the resource potential of its 50,000 acre block in the Williston Basin.
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Compiled and Published by GIB KNIGHT
Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma.