Lonestar Resources Forms JV With Large Eagle Ford Shale Producer

Lonestar Resources US Inc. formed a joint venture (JV) partnership with one of the largest producers in the Eagle Ford Shale to develop acreage in Gonzales County, Texas.

In a recent news release, the Fort Worth, Texas-based company said it had entered into a joint development agreement with the undisclosed company for an area of mutual interest (AMI) encompassing about 15,000 acres in Lonestar’s Cyclone/Hawkeye area.

Lonestar CEO Frank D. Bracken III said the venture provides a clear path of development for the Cyclone/Hawkeye asset, which he called Lonestar’s the oiliest asset in the company.

“This venture is a win-win for both parties and is illustrative of how Lonestar continues to leverage its drilling and completion prowess into new growth opportunities without upfront capital,” Bracken said in a statement.

Lonestar is a pure-play Eagle Ford operator with more than 57,000 net acres in the crude oil window of the South Texas shale play. The company’s position is located in 11 counties, which are divided into three distinct regions: Western Eagle Ford, Central Eagle Ford and Eastern Eagle Ford.

RELATED:

Eagle Ford Producer Lonestar Achieves Record Growth In 2019

The JV agreement requires lower levels of annual gross drilling activity than Lonestar has engaged in on its own since becoming active in Gonzales County in 2016 while also consolidating each company’s respective positions into a single development plan, according to the release.

Per the agreement, Lonestar will operate a minimum of three to four Eagle Ford Shale wells annually on behalf of the two companies through 2022, intended to HBP roughly 6,000 gross acres within the AMI. Lonestar’s partner has the option to participate in each well with a 50% working interest or to participate via a carried working interest that ranges from approximately 9%-17%, depending on location.

The JV will also increase Lonestar’s inventory of gross drilling locations by roughly 50% in the Hawkeye area while also maximizing lateral lengths, the release said. The locations are expected to deliver average lateral lengths of over 9,500 ft, with many locations exceeding 12,000 ft.

Lonestar inventory will now include 72 long-lateral drilling locations that Bracken said offer “highly attractive returns at current commodity prices.”

For 2020, Lonestar is targeting production of between 17,000 and 18,300 boe/d, which the company expects to meet with less spending. The company set its capex for the year at between $90 million to $115 million. Additionally, the company anticipates generating $5 million to $20 million of free cash flow in 2020.