Earthstone Energy, Inc.
Earthstone Energy began drilling in South Texas in April of 2014 and in December of that same year entered into a strategic arrangement with Oak Valley Resources that added to their Eagle Ford assets.
During the third quarter of 2015, the Company acquired a 33% operated interest in approximately 1,650 gross acres, in southern Gonzales County, Texas, which supports 16 gross Eagle Ford locations. This acreage, along with other recent acquisitions in the area, has been de-risked by numerous offsetting Eagle Ford wells operated by EOG Resources, Inc. and Marathon Oil Corporation and is economic in the current commodity price environment. Earthsone has a total 39,875 gross leasehold acres in Fayette, Gonzales, and Karnes Counties with working interests ranging from 33% to 50%.
During 2014, the company brought 21 gross wells online in the Eagle Ford and and additional 9 gross wells in Q2 2015.
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Earthstone Eagle Ford Shale Quarterly Commentary
At year-end 2015, the Company had 12 Eagle Ford wells that were waiting on completion, including four wells at our Boggs Unit in Karnes County, Texas, which is further discussed below. The remaining eight Eagle Ford wells that were waiting on completion are located in three units in Fayette County, Texas. Two of these units are held-by-production, and the third unit has no significant leases expiring in 2016. As a result, the Company has no material, near-term obligations to complete these 12 Eagle Ford wells.
During the fourth quarter of 2015, the Company drilled its four-well Eagle Ford Boggs Unit in Karnes County, Texas (350 gross acres; 33% working interest). We currently anticipate completing these wells in the second half of 2016. One well has a lateral length of approximately 7,200 feet and will be completed with 32 stages, and three wells have lateral lengths of approximately 6,500 feet and will be completed with 30 stages. Completion costs are expected to be less than $100,000 per stage. In addition, the Company recently drilled its South Green Upper Austin Chalk well in Fayette County, Texas. The Upper Austin Chalk is naturally fractured and does not require fracture stimulation. This well is situated within a 1,475 gross acre unit in which the Company has a 47% working interest. The well was recently brought online at a rate of approximately 475 Boepd (95% oil). This producing unit will hold all mineral rights through the Eagle Ford in the unit for future development.
During the third quarter of 2015, the Company acquired a 33% operated interest in approximately 1,650 gross acres, in southern Gonzales County, Texas, which supports 16 gross Eagle Ford locations. This acreage, along with other recent acquisitions in the area, has been de-risked by numerous offsetting Eagle Ford wells operated by EOG Resources, Inc. and Marathon Oil Corporation and is economic in the current commodity price environment. Q3highlights include:
- Average daily production of 4,646 Boepd, a 3% increase compared to the second quarter of 2015 and a 100% increase compared to the third quarter of 2014
- Total revenue of $13.1 million, which excludes any effects from hedges
- Reduced LOE and G&A on a per-unit basis of 6% and 5%, respectively, compared to the second quarter of 2015
- Adjusted EBITDAX(1) of $7.5 million
- Acquired approximately 1,650 gross / 550 net operated acres in southern Gonzales County, Texas, with at least 16 gross identified Eagle Ford drilling locations.
In a Strategic Combination with Oak Valley Resources, LLC , Earthstone acquired all of Oak Valley's subsidiaries, inclusive of producing assets, undeveloped acreage, and approximately $130 million of cash, in exchange for 9,124,452 shares of Earthstone common stock. The cash contribution made by Oak Valley included recently received capital contributions of $107 million from the members of Oak Valley. In the Eagle Ford Acquisition, Earthstone and Oak Valley acquired an undivided 20% interest in a horizontal Eagle Ford development project located in Fayette and Gonzales counties, Texas, in exchange for 2,957,288 shares of Earthstone common stock to Flatonia. The effective date of the purchase was July 1, 2014 and post-effective date financial adjustments related to capital expenditures and production operations were made in cash, totaling approximately $16 million.
Earthstone is now the project operator and owns a 50% undivided interest in the project, inclusive of approximately 23,600 net acres, with interests in 55 operated wells and 5 non-operated wells. Earthstone's working interests in the project's operated producing wells range from 38% to 50%, depending on the extent of acreage that was contributed to the drilling units. November 2014 operated gross field production was approximately 7,300 BOEPD (90% oil).
EARTHSTONE ENERGY, INC. (NYSE MKT:ESTE) reported that the Company has commenced drilling operations on three wells in its West Cole North Unit (the Unit), located in Webb County, Texas. The first two wells, the WCNU #124 and the WCNU #125, have been drilled and the results of the these two wells are encouraging. The third well, the WCNU #126, is currently drilling.