Lonestar Resources US Inc.
Q1 2021 Earnings Call Transcript

Published:

  • Operator:
    Ladies and gentlemen, thank you for standing by. Welcome to the Lonestar Resources First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Please note this conference is being recorded today, May 12, 2021. I would now like to turn the conference call over to your host, Frank Bracken, Chief Executive Officer. Frank, please go ahead.
  • Frank Bracken:
    Good morning and thank you for joining us as we review our first quarter 2021 results and get you caught up on operations. As always, I will refer you to Page 2 to review our disclaimer and forward-looking statements then ask you to turn to Page 3. Over the past year, Lonestar successfully restructured its liabilities, simplified its balance sheet and further reduced debt by utilizing free cash flow. At March 31, 2021, net debt of $239 million provides $36 million of liquidity and a debt to adjusted EBITDAX ratio of 2.1. Lonestar continues to target a debt to EBITDAX ratio of 1.5 within the next eight quarters and the combination of continued high performance of our drilling and completion program and price certainty afforded us with our hedge book leads us to be highly confident in achieving those goals.
  • Operator:
    We will take the first question from Charles Meade with Johnson Rice. Please proceed with your question.
  • Charles Meade:
    Good morning, Frank and thanks for all of this detail that you’ve you put together in the presentation.
  • Frank Bracken:
    Good morning, Charles.
  • Charles Meade:
    In particular, Pages 13 and 14, I like the ability to flip back and forth there and see what you guys have done at Horned Frog so far this year? The question for you if you were to kind of how would you characterize the opportunity set not just here at Horned Frog, but also in other parts of your portfolio? If you kind of break it up by how much of it is leasing? How much of the opportunity set is trades? And is there – are acquisitions or kind of small acquisitions, like I guess you could call leasing the type of acquisition, but maybe with acquisitions with some PDPs, is that in the mix at all?
  • Frank Bracken:
    Yes, I would say yes to all the above, Charles. We have been at both of these areas for over 5 years now. And it’s kind of funny, you talk to investors and say, well, can you keep doing it. And each year, we keep doing it. And it’s not – its hand to hand combat. These are areas that typically are largely HBPed. And we will use all means necessary to continue to grow those positions, but I would tell you that the same environment that has persisted for the past several years at Horned Frog and Cyclone and Hawkeye still exists, and maybe more advantageously for the company. So, we have we have our eyes on more leasehold in these areas. And I think – and so it can take a lot of different forms, it can take – we have bought an asset out of bankruptcy in the Hawkeye area, for example. So we have lots of tools on the Swiss Army knife. I think the thing to emphasize is that we have always been able to do these kinds of things at really minimal costs. Continuing to use that free cash for the highest return purposes is really important. And we have not tied up a lot of money nor created any really significant drilling obligations out of any of the activities that we have used to grow these positions. So, that’s an important point. But in short, yes, there is more to do out here. We have got identifiable targets. And they don’t always drop in your lap when you want them to. They take a lot of work in some patients, but we are confident that we can continue to do this kind of thing and build the position out further.
  • Charles Meade:
    Got it. And then on your – I got your comments about the second half rate being 13.4 to 13.8, do you care to kind of give any indication of where you think your year end exit rate would be?
  • Frank Bracken:
    Look, I think – I don’t think it would be too off – too far off from that range. It really depends on well timing as it relates to both getting the Alderman wells on at Horned Frog and then the 910-11 pad on. So I’d rather be a little more circumspect at this point. And suffice it to say that not only will we produce in that range for the second half of the year on average, but it will even be dependent upon when we decide to get rig back up for the 2022 program.
  • Charles Meade:
    Got it. Thanks, Frank.
  • Frank Bracken:
    Thank you, Charles.
  • Operator:
    And we have no further questions in the queue.
  • Frank Bracken:
    Alright, everybody. Well, thank you for joining. Thanks for the question and we look forward on building on the results of the first quarter and look forward to getting back together with you in the next 90 days.
  • Operator:
    Ladies and gentlemen, this concludes the Lonestar Resources first quarter 2021 financial results conference call. Thank you for joining us today. You may now disconnect your lines.

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