Lonestar Resources is making major inroads into the Eagle Ford with new acquisitions.
Related: Lonestar Announces Strong Q1
Lonestar announced this week that is will purchase 30,210 gross acres in the Eagle Ford Shale region of south Texas. The $116.6 million deal will include properties in Karnes, F+Gonzales DeWitt, Lavaca and Fayette Counties.
“The acquisitions announced today are transformational for Lonestar. We have scaled our business with Eagle Ford Shale properties that are located in our core area which our technical team understands extremely well. We plan to increase our Eagle Ford Shale drilling rig activity from 1 rig to 2 rigs no later than January 1, 2018, which will allow us to scale our drilling program and obtain a dedicated frac spread, which we believe will afford us greater economies of scale, cost savings, and better precision and timing of execution. In summary, we are acquiring high-quality Eagle Ford properties located in our core area that significantly increase the size and scale of our Company.”
The acquisition will make a huge impact on Lonestar's value by increasing oil and gas production by 39%. The purchase increases the company's lease holdings by 59% and its drilling locations by 70%.
Through the rest of 2017, Lonestar plans to spend $62 to $72 million on drilling and completion operations. The company already has an eye on a drilling plan 2018 that will include 18 gross / 16 net wells, costing of $85 to $95 million.
During a first quarter earnings call, Lonestar executives reported a 15% production growth during the three months ending March 31, 2017. The company also reduced Lease Operating and Gas Gathering Costs ("LOE") by 15% during the quarter, compared to $3.5 million over Q4 2016. Executives expect production to grow at an accelerated rate through the rest of 2017.