Lonestar Resources US, Inc. (LONE) Misses Q1 EPS by 10c, Revenues Beat

Lonestar Resources US, Inc. (NASDAQ: LONE) reported Q1 EPS of ($0.14), $0.10 worse than the analyst estimate of ($0.04). Revenue for the quarter came in at $40.74 million versus the consensus estimate of $30.68 million.

• Lonestar reported a 46% increase in net oil and gas production to 11,372 BOE/d during the three months ended March 31, 2019 ("1Q19"), compared to 7,777 BOE/d for the three months ended March 31, 2018 ("1Q18"). The production volumes were within Company guidance of 11,200 - 12,000 BOE/d and were comprised of 79% crude oil and NGL's on an equivalent basis. With the addition of six new wells, current net oil and gas production has climbed to 14,000 BOE/d.
• During 1Q19, Lonestar experienced an unusually high number of instances in which its producing wells were hit by frac operations conducted by third parties. In total, 9 of the Company's pads were affected, and a total of 23 of our wells in the Western and Central regions experienced production curtailments related to these 'frac hits'. These offset frac hits resulted in an aggregated reduction of 330 BOE/d in our 1Q19 production, reducing quarterly revenue by $1.4 million and increasing Lease Operating Expenses ("LOE") by $0.6 million. Notably, all wells have since been returned to production equal to or above their third-party type curves.
• Lonestar reported a net loss attributable to its common stockholders of $60.6 million during 1Q19 compared to a net loss of $18.4 million during 1Q18, or a net loss of $2.45 and $0.75 per share, respectively. Our first quarter net loss included a $32.9 million loss attributable to the sale of our Pirate properties in March 2019, while our 2018 net loss included an $8.6 million loss on extinguishment of debt. Excluding, on a tax-adjusted basis, certain items that the Company does not view as either recurring or indicative of its ongoing financial performance, Lonestar's adjusted net loss for 1Q19 was $3.4 million, or $0.14 per share. Most notable among these items include: $35.5 million of unrealized hedging gains/losses on financial derivatives related to mark-to-market accounting on our hedge book and $0.9 million associated with stock-based compensation. Please see Non-GAAP Financial Measures at the end of this release for the definition of Adjusted Net Income (Loss) to adjusted net income (loss), a reconciliation of net income before taxes to adjusted net income(loss), and the reasons for its use.
• Lonestar reported a 15% increase in Adjusted EBITDAX for the three months ended March 31, 2019 of $27.0 million compared to $23.4 million for 1Q18. This improvement was driven by a 46% increase in production coupled with an 11% reduction in unit cash operating expenses. Please see Non-GAAP Financial Measures at the end of this release for the definition of Adjusted EBITDAX, a reconciliation of net loss to Adjusted EBITDAX, and the reasons for its use.

Lonestar's Chief Executive Officer, Frank D. Bracken, III, commented, "While our first quarter 2019 results represented significant improvement over the year prior, it represented a temporary pause in what the market has come to expect in terms of our ongoing financial growth and maturation. In fact, very little of our planned completion activity contributed to our first quarter results. Just 3 of our planned 20 completions for the year added to first quarter production, and those completions represented just 11% of the total perforated interval we plan to bring onstream over the course of 2019. The quarter was also impacted by an unprecedented number of frac hits from offset wells. I am pleased to report that Lonestar's wells not only weathered those hits but now have been restored to full rate. In the second quarter, completion activity has accelerated significantly, with 6.0 gross / 5.2 net wells commencing flowback in May. These wells represent total perforated interval of 47,600 feet, or 27% of our anticipated total for 2019. Current net production is a record 14,000 BOE/d, and accordingly, we expect the second quarter to reflect significant sequential growth in production and Adjusted EBITDAX, which will accelerate in the third quarter, when we expect to set an all-time record for both."

Outlook

• Lonestar responded to low oil prices in 4Q18 by deferring drilling and completion activities. Consequently, in 1Q19, the Company only completed 3 gross / 2.9 short laterals in La Salle County that began producing in March. However, Lonestar has ramped up to its activity and expects to continue to increase production organically during the second quarter, and through the remainder of 2019. The Company anticipates placing 6.0 gross / 5.2 net wells online during 2Q19. In April, 2 gross / 2.0 net wells at Horned Frog NW were placed into flowback. In May, 4 gross / 3.2 net wells in Karnes County have been placed into flowback operations. The Company has recently completed drilling operations on 2 gross / 2.0 net wells at Horned Frog with projected completed intervals exceeding 12,000 feet, with completion operations expected to commence before the end of May. Flowback operations for these two wells are expected to commence on or around July 1, 2019, and these wells are expected to contribute materially to the third quarter production volumes.
• Lonestar issued production guidance of 12,400 to 12,800 BOE/d for the second quarter of 2019, a 12% increase over 2Q18 results at the midpoint. The primary sources for production growth in the second quarter will be 2.0 net wells at Horned Frog NW, which will contribute volumes for essentially the whole quarter, and 3.2 net wells in Karnes County, which are expected to contribute volumes for roughly half of the second quarter.
• Lonestar issued Adjusted EBITDAX guidance of $30 to $32 million for the second quarter of 2019, a 15% sequential increase over 1Q19 results. During the quarter, the Company anticipates oil realizations of +$2.10/bbl to WTI and lease operating expenses of $6.00/BOE.

For earnings history and earnings-related data on Lonestar Resources US, Inc. (LONE) click here.

You May Also Be Interested In

• Tesla plans 'flying' Roadster stunt at SpaceX Texas site as early as August
• Z Squared outlines AI power strategy and Paradox Data acquisition
• Algorhythm Holdings (RIME) Tops Q2 EPS by 54c