RE:RE:RE:New coverage on Lonestar !!It would be nice for them to come out with more recent news.
Just read again Q2...five wells came online just at the end of the quarter, which will boost Q3 but had no impact on Q2 numbers. They also have two more wells that were planned to come online in August.
Here is what they say about the disruptions:
"Lonestar’s 2Q14 net production actually declined 5% from 1Q14 levels due to production disruptions related to fracture stimulation activities
in the Western Region, which prevented much higher reported rates from occurring in 2Q14. These disruptions occurred at Asherton and
Beall Ranch, and combined to negatively affect 2Q14 by an average of 421 BOEPD for the second quarter as a whole. These disruptions,
which are commented on in detail in the Operations Review below, have now all been satisfactorily resolved and Lonestar currently
believes there is no impact to long‐term recoverable reserves."
In Asherton:
"Unfortunately, the two legacy producers at Asherton, the
#2HN and #6HS, went offline when frac operations from the #9HS and #10HN were conducted, after loading up with frac fluids, and to a
lesser extent, sand. In total, these 2 legacy producers were offline for 39 of the 91 days during the second quarter, impairing production
by an average of 259 gross / 213 net BOEPD during the quarter. Cleanout efforts on these 2 legacy wells have been successful, and these
2 wells are together contributing 323 gross / 239 net BOEPD currently, which is in‐line with rates the 2 wells were registering in January,
2014. Oil production rates on the 2 legacy wells have fully recovered, while natural gas production rates continue to climb steadily as
load water rates diminish."
At Beall Ranch: "Similar to the experience the Company had at Asherton, even after standard shut‐in to build pressure in
anticipation of ensuing frac jobs, several of the wells that offset Lonestar’s recent frac operations on its #32H, #33H, #34H wells were
taken offline due to the impact of these frac jobs. The wells most directly impacted by these fracs were the #8H and #9H, which directly
offset the newly fracked wells to the east. However, all 5 of the Company’s wells drilled on its D Pad were negatively impacted by the
new frac jobs. In total, Lonestar estimates that deferred production from these wells negatively impacted its 2Q14 results by an average
of 284 BOEPD gross / 208 net BOEPD. Post‐event evaluation has led Lonestar to conclude that the D pad wells were uniquely impacted
because they were the only wells at Beall Ranch in which resin‐coated sand was not employed. Historically, Lonestar had seen no frac
sand production on its older generation wells, nor had it seen any production interference between wells, and therefore elected to
eliminate tailing in with resin‐coated sand on more recent wells. In response to recent experience at Asherton and Beall Ranch, Lonestar
was able to resume the practice of pumping resin‐coated sand on its newly fracked wells and anticipates that this step will prevent
production impairment in future frac jobs from offset wells drilled in the future. Of high importance is that Lonestar believes that all of
the impacted wells have been returned to production without any long‐term impact to productivity or reserves recovery."
So IMHO, as the carnage has unfolded upon small E&P producers since late June, those with less visibility/liquidity (e.g. Lonestar), as of yet not free cash flow positive (e.g. Lonestar), and with operational problems, real or perceived (e.g. Lonestar) are the stocks that everybody has been selling off...in particular if they had enjoyed a nice run-up and could sell at a profit....
At these levels, we are down to the pre-SA article that put Lonestar on the map for US investors, i.e. most investors will not show any profit by selling now. That could help...obviously, the next move will be a function of oil prices and operational updates. If one wants to believe the firm's Q2 report, Q3 will be a very nice quarter on the production front. As the quarter ends only this week, it might take a while to get the info...some folks are good at checking the Texas Rail Commission website to uncover production rates of wells, never was able to master that unfortunately. If anyone can check how Lonestar is doing, it would be much appreciated.
In all, I am sitting tight. If they have truly fixed their operational problems of Q2, then they are good to grow again...do your own D&D and share it on this board, thanks!