Lonestar Resources US, Inc. September 2016

Transcription

1 Lonestar Resources US, Inc. September 2016

2 Disclaimer and Forward Looking Statements Disclaimer This document has been prepared by Lonestar Resources Limited ( Lonestar or Company ) in connection with providing an overview to interested analysts / investors. The information in this presentation is of a general nature and does not purport to be complete. This announcement is not intended as and shall not constitute an offer, invitation, solicitation, or recommendation with respect to the purchase or sale of any securities in any jurisdiction and should not be relied upon as a representation of any matter that a potential investor should consider in evaluating Lonestar. Lonestar, nor any of its affiliates, subsidiaries, directors, agents, officers, advisers or employees, make any representation or warranty, express or implied, as to or endorsement of, the accuracy or completeness of any information, statements, representations or forecasts contained in this announcement, and they do not accept any liability or responsibility for any statement made in, or omitted from, this announcement. Lonestar accepts no obligation to correct or update anything in this announcement, except as required by law. No responsibility or liability is accepted and any and all responsibility and liability is expressly disclaimed by Lonestar and its respective affiliates, subsidiaries, directors, agents, officers, advisers and employees for any errors, misstatements, misrepresentations in or omissions from this announcement. Users of this information should make their own independent evaluation of an investment in or provision of debt facilities to Lonestar. Nothing in this announcement should be construed as financial product advice, whether personal or general, for the purposes of section 766B of the Corporations Act 2001 (Cth). This announcement does not involve or imply a recommendation or a statement of opinion in respect of whether to buy, sell or hold a financial product. This announcement does not take into account the objectives, financial situation or needs of any person, and independent personal advice should be obtained. This announcement and its contents may not be reproduced or re-distributed in any way without the express written permission of Lonestar. Lonestar has presented petroleum and natural gas production and reserve volumes in barrel of oil equivalent ( boe ) amounts. For purposes of computing such units, a conversion rate of 6,000 cubic feet of natural gas to one barrel of oil equivalent (6:1) is used. The conversion ratio of 6:1 is based on an energy equivalency conversion method which is primarily applicable at the burner tip and does not represent value equivalence at the wellhead. Readers are cautioned that boe figures may be misleading, particularly if used in isolation. Forward Looking Statements Statements in this announcement reflect management's expectations relating to, among other things, target dates, Lonestar s expected drilling program and the ability to fund development are forwardlooking statements, and can generally be identified by words such as "will", "expects", "intends", "believes", "estimates", "anticipates or similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Statements relating to reserves are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions that some or all of the reserves described can be profitably produced in the future. These statements are not historical facts but instead represent management's expectations, estimates and projections regarding future events. Although management believes the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are based on the opinions, assumptions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include risks related to: exploration, development and production; oil and gas prices, markets and marketing; acquisitions and dispositions; competition; additional funding requirements; reserve estimates being inherently uncertain; incorrect assessments of the value of acquisitions and exploration and development programs; environmental concerns; availability of, and access to, drilling equipment; reliance on key personnel; title to assets; expiration of licences and leases; credit risk; hedging activities; litigation; government policy and legislative changes; unforeseen expenses; negative operating cash flow; contractual risk; and management of growth. In addition, if any of the assumptions or estimates made by management prove to be incorrect, actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this document. Such assumptions include, but are not limited to, general economic, market and business conditions and corporate strategy. Accordingly, investors are cautioned not to place undue reliance on such statements. All of the forward-looking information in this announcement is expressly qualified by these cautionary statements. Forward-looking information contained herein is made as of the date of this document and Lonestar disclaims any obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise, except as required by law. Currency All amounts in this presentation are US$ unless otherwise stated. Lonestar s presentation currency is $US. 2

3 Share Price (US$) Volume ('000 Shares) Company Profile Current Team In Place Since 2012 Originally funded by Ecofin, UK-based capital group $25.00 Share Price History 50 Gradually built a team from Encore, Pioneer, Denbury and Petrohawk $ Went Public In 2013 $35 MM Reverse Merger w/ ASX-listed Amadeus Energy, Ltd. Conventional Assets with Free Cash Flow, $40 MM Undrawn Borrowing Base $15.00 $10.00 $5.00 Crude Oil 78% NGLs 9% Established Rapid, Yet Controlled Growth 76% CAGR in Eagle Ford Leasehold to 36,514 net acres 1 55% CAGR in Proved Reserves to 40.2 MMBOE 2 69% CAGR in EBITDAX to $84.9 MMBOE 2 $0.00 Volume Share Price Financial Profile 0 Move to United States Complete Moved domicile of listed entity from Australia to United States on July 5th, 2016 Lonestar now trading exclusively on NASDAQ:NMS under the symbol LONE Puts Lonestar on equal footing with U.S. peers while eliminating redundant G&A and potential tax leakage in the event company is sold. Ticker (NASDAQ:NMS) LONE Share Price 3 $11.35 Shares Out 8.0 Market Cap $91 MM Cash 1 $5 MM Long Term Debt 1 $315 MM Enterprise Value $401 MM 1 At June 30, At December 31, In U.S. dollars, as of September 20, 2016 Please see the reserves disclosures at the end of this presentation 3

4 ($mm) $400 $350 $300 $250 $200 $150 $100 $50 $0 Barnett EFS AMU Lonestar s Track Record of Consistent Growth Net Acreage- Eagle Ford Shale Trend 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Proved Reserves (MMBOE) Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Daily Production EBITDAX 7,000 $100 6,000 5,000 4,000 3,000 2,000 Dec-10 Dec-11 Dec-12 Today1P PV-10 $90 $80 $70 $60 $50 $40 $30 1,000 0 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 $20 $10 $0 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 1 Please see the reserves disclosures at the end of this presentation 4

5 Lonestar s Growth Strategy People Are Key To Our Business Assembled Team of Senior Personnel from Encore, Pioneer, Denbury, Petrohawk. Flat Organization Capable of Rapid Decision-Making Focused on Using Drilling/Completion/Production Expertise Across the Eagle Ford For Growth Disciplined, Diversified Approach To Building the Business Regimented, Returns-Focused Capital Strategy Built Operating Hubs in Three Regions of the Eagle Ford Established Proficiency Across the Play- Can Acquire Wherever Opportunity Emerges Impressive Cost-Effective Growth Four-Year All-Sources Reserve Replacement of 742% at a cost of $11.24 per BOE Four-Year Drillbit Reserve Replacement of 464% at a cost of $13.26 per BOE 2015 All-Sources Reserve Replacement of 668% at a cost of $5.24 per BOE 2015 Drillbit Reserve Replacement of 573% at a cost of $5.99 per BOE Built A 36,000 Acre Eagle Ford Position That Can Withstand Current Oil Prices Built via Primary Term Leases, Acquisitions, Bankruptcies, Farm-Ins Average 85% WI, 100% Operated= Control Quality and Timing of Capital Spending No HBP Drilling Requirements In 2016 Strategic Acquisition Parameters Yield Average Lateral Length of ~7,500 feet 1 IOG Joint Development Agreement Provides Growth Capital Beyond Cash Flow Promoted Capital Allows For Off-Balance Sheet Funding of Farm-Ins Allows For Resource Capture At Minimal Capital Outlay to Lonestar 1 For Proved Undeveloped Eagle Ford Shale locations as of June 30, Source: Internal Estimates 5

6 Drilling Activity Has Been Key to Continued Growth Lonestar Maintaining Capital Discipline to Preserve Liquidity $120 MM Borrowing Base, $99 MM Drawn at June 30, ,692 Bopd of Crude Oil Hedged at a weighted average $69.57 / bbl for Bal 16, Augmenting Cash Flow 1,500 Bopd of Crude Oil Hedged at a weighted average $53.79 / bbl for Cal 17 And Making Progress in Reducing Debt MM 8 ¾% Senior Unsecured Debt Reduced Net Debt from $315 MM to $290 MM In The Current Environment, Committing to Drilling Has A Premium Value LaSalle County- Farm-in From a Major Oil Company Gonzales County- Farm-in From a Major Oil Company Gonzales County- One-Year Lease Strategic Disconnect Between Growth Opportunities & Liquidity Preservation Preserve Lonestar-Owned Drilling Locations For Higher Prices Maintain Drilling Capabilities to Capture Farm-in Opportunities IOG Capital Joint Development Agreement Provides Growth Capital That Preserves Liquidity $100 MM Drillco Facility Working Interest-Level Participation, IOG Participates On A Promoted Basis for Funding Farm-ins & Other Drilling Commitments Dial-able - Lonestar Can Mix Direct Participation & JDA Participation Lonestar Backs-In For Meaningful Additional Working Interest After IRR Hurdle Wellbore Only, so Lonestar Garners 100% WI In Offset Locations Earned with JDA Wells Allows For Resource Capture At Minimal Capital Outlay to Lonestar 6

7 Experienced Management Team Executive Previous Experience Biography Frank D. Bracken, III Chief Executive Officer GOG Gerrity Oil & Gas 30 years experience in oil and gas finance Previously Managing Director at Jefferies LLC, where he led >$5 billion in oil and gas transactions Former CFO / Director of Gerrity Oil & Gas Corp, a NYSE-listed E&P Company Barry D. Schneider Chief Operating Officer 30 years oil and gas industry experience Senior level expertise in management of regional business units at large independent oil & gas companies Previously with US public companies Denbury Resources and Conoco-Phillips Jana Payne VP- Geosciences Over 25 years in all aspects of oil and gas exploration and development Geologic Manager for Petrohawk, responsible for discovery of Hawkville Field, first commercial Eagle Ford Shale well in Senior Exploitation Manager for Halcon Resources Experience in Eagle Ford, Haynesville, Bossier, Utica and Tuscaloosa Marine Shales Tom H. Olle VP Reservoir Engineering Over 36 years oil and gas industry experience Senior level expertise in reservoir management / project development across a broad array of reservoir types Previous senior roles at US public companies Encore Acquisition Corp and Burlington Resources Bryan M. Moody Chief Commercial Officer 13 years of industry experience focused on acquisitions, engineering and finance Most recently VP-Finance, Business Development & Reservoir Engineering at Eclipse Resources Previously Director of Development Planning for EXCO Resources and Director of Reservoir Reporting for SandRidge Energy High Caliber Executive Team with Deep Industry Expertise and 30 Years of Average Experience 7

8 Portfolio Focused on the Eagle Ford Total Eagle Ford Net Acres 1 36,514 Proved Locations 59 Additional Locations 138 Avg. W.I. 85% Eastern Region Net Acres 1 10,890 Proved Locations 10 Additional Locations 60 Avg. W.I. 73% Central Region Net Acres 1 12,210 Proved Locations 2 Additional Locations 74 Avg. W.I. 96% Western Region Net Acres 1 13,413 Proved Locations 46 Additional Locations 4 Avg. W.I. 88% Engineered Acreage Non-Engineered Acreage 1 as of June Proforma acreage swap with Juneau Energy, LLC 8

9 Counties With Completions Lonestar s Footprint Across The Eagle Ford Is Significant

10 FINDING & DEVELOPMENT COST ($/BOE) RECYCLE RATIO AR EQT UPL PDCE RRC COG REXX RICE AREX GST SWN SYRG LNREF REI CLR GPOR SM PQ CHK LPI XEC EGN QEP EPE PE CXO NOG JONE RSPP BBG UNT EOG TAT PXD WPX OAS WLL CPE FANG REN SN CRZO NBL MTDR ESTE ECR CRK MRO NFX DVN SGY BCEI DNR GDP EXXI APA HES HK WTI OXY APC PDCE SYRG AR CLR AREX REI UPL LNREF NOG EGN COG RRC RSPP LPI EQT OAS FANG CXO SM WLL XEC EOG EPE CPE GPOR PE DNR REXX CRZO SWN GST MTDR JONE PXD QEP UNT BBG NBL CHK SN REN BCEI SGY EXXI MRO NFX RICE PQ HK APA ESTE DVN HES CRK GDP WTI OXY WPX APC ECR ($mm) $400 $350 $300 $250 $200 $150 PV-10 $100 $50 $0 Dec-10 Dec-11 Dec-12 Today1P Barnett EFS AMU FINDING & DEVELOPMENT COST ($/BOE) RECYCLE RATIO Four Year Capital Spending Efficiency All Sources Four Year Finding & Development Cost $40 $40 $35 $35 $30 $30 $25 $25 $20 $20 $15 $15 $10 $10 $5 $5 $0 $0 All Sources Four Year Recycle Ratio Oily Gassy 6.0x 6.0x 5.0x 4.0x 3.0x 2.0x 5.0x 4.0x 3.0x 2.0x 1.0x 1.0x 0.0x 0.0x Oily 1 Cash Operating Flow per BOE / All Sources F&D Cost per BOE Note- All Finding & Development Costs and Operating Cash Flow figures are provided by Seaport Global Securities Gassy 10

11 The Value of Long Laterals in the Eagle Ford Surface & Facilities Drilling Pad Wellhead Equipment Separation Storage Compression Gathering $0.4 MM $0.4 MM Vertical + Angle Drilling Completion Casing Tubing Cementing $1.1 MM $1.5 MM Lateral Length 5,000 Completed Well Cost ($MM) $4.2 Gross Reserves (BOE) 288,000 Net Reserves (BOE) 233,000 Finding & Onstream Cost ($/BOE) $18.02 PV10 ($MM) $0.5 MM Internal Rate of Return 14% 5,000 Lateral Drilling Completion Casing Fracture Stimulation Other $2.7 MM $4.2 MM 1 Surface and faculties costs are allocated for 3 well pad 11

12 The Value of Long Laterals in the Eagle Ford Surface & Facilities Drilling Pad Wellhead Equipment Separation Storage Compression Gathering $0.4 MM $0.4 MM Vertical + Angle Drilling Completion Casing Tubing Cementing $1.1 MM $1.5 MM Lateral 5, ,800 7,800 Completed Well Cost ($MM) $4.2 MM $1.0 MM $5.2 MM Gross Reserves (BOE) 288, , ,000 Net Reserves (BOE) 233, , ,000 Finding & Onstream Cost ($/BOE) $18.02 $6.99 $13.72 PV10 ($MM) $0.5 MM $1.3 MM $2.5 MM Internal Rate of Return 14% 109% 30% 5,000 Lateral Drilling Completion Casing Fracture Stimulation Other $2.7 MM $4.2 MM +2,800 Lateral Drilling Completion Casing Fracture Stimulation Other $1.0 MM $5.2 MM 1 Surface and faculties costs are allocated for 3 well pad (Source of reserve forecast for 7,800 lateral- W.D. Von Gonten 12

13 Lateral Length (') Lonestar s Drilling Locations Are Looooooooonnng Engineered Locations by Lateral Length (perforated interval in feet) 10,000 10,000 9,000 9,000 8,000 8,000 7,000 7,000 6,000 6,000 5,000 5,000 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1, Burns Ranch Horned Frog Wildcat Beall Ranch South Gonzales Pirate Gonzo Asherton Brazos 0 13

14 Eagle Ford Shale Asset Overview

15 Geo-Engineered Completion Alliance Integrated Approach to Drilling, Completion, Stimulation & Production of Eagle Ford Laterals Technical Process Vertical Pilot Logs Used To Select Geo-target to Optimize Both Reservoir & Mechanical Properties Reservoir Properties- Porosity, Total Organic Content, Clay Volume Mechanical Properties- Young s Modulus, Poisson s Ratio, Minimum In-situ Stress Results of Analysis Determine Geosteering Target Azimuthal Gamma Ray LWD Tool to Assist in Geosteering Multi-planar Gamma ray data determines dip angle and direction in real time Lateral Thru-Bit Logs Run to TD for Detailed Rock Properties Analysis Triple Combo Log with Spectral Gamma Ray and Dipole Sonic Logs Mangrove Stimulation Design Utilize Thru-Bit Log Data For Reservoir Characterization Models Key Mechanical Properties To Optimize Stimulation Vertical and lateral rock heterogeneity Planar and Non-planar fractures Account for multi-well stress shadows to optimize zipper fracs Facilitates Design of Engineered (Non-Geometric) Completion Broadband TM Sequence Diverter Engineered fibrous pill designed to create near-wellbore isolation to augment frac efficacy across all perforations, maximizing wellbore coverage Increase efficiency through fewer pumped stages, coiled tubing plug drill outs Engineered Flowback Analysis Lonestar has been a longstanding proponent of controlled flowbacks Implement SLB solids and fluids analysis to avoid negative impact of hydraulic fractures and assess success of completion strategies Application Experience Horned Frog Beall Ranch New to Lonestar Horned Frog Beall Ranch Horned Frog Beall Ranch New to Lonestar New to Lonestar 15

16 Western Region Summary Overview Lonestar s Properties & Offset Wells Gross Leasehold 15,208 Net Leasehold 13,413 % HBP 90% Top EFS 6,000' to 9,250' Lateral Lengths 4,000' to 10,000' Assumed Spacing 500' - 700' Engineered Acreage Non-Engineered Acreage Burns Ranch Property Summary Wells Engineered Locations Average Average Property PDP PUD Other WI% Lat Length Beall Ranch % 7,367' Asherton % 5,200' Burns Ranch % 8,522' Horned Frog % 8,000' Total % 7,272' Asherton Beall Ranch Leasehold Leased HBP'd Reserves Summary Proved Reserves Oil NGL Gas Equiv. Category Gross Net Gross Net (MMBbl) (MMBbl) (Bcf) (MMBOE) PDP 4,224 4,069 4,040 3, PUD 9,290 8,506 7,817 7, Proved 13,514 12,575 11,857 11, Other Total 14,440 13,433 12,783 11,934 Horned Frog Note: Please see the Reserves disclosures at the end of this presentation. Reserves do not reflect recent announced acquisitions 16

17 Cumulative Production (BOE) Cumulative Production (BOE) Proppant Concentration (#/ft) Technology Advancements- Horned Frog Horned Frog Locator Map Horned Frog Eagle Ford Offset 30-Day IP 1,600 1,500 1,400 1,300 1,200 1,100 1, E1H A1H D1H B1H ,000 1,200 1,400 1, Day IP (BOEPD) Horned Frog Well Highlights Horned Frog Eagle Ford Offset 9 Month Cumulative Production Lonestar studied 107 offset wells drilled by 6 different operators Concluded that significant improvements could be made to: Geosteering Fracture Stimulation Choke Management Lateral Length & Economics Geosteering- Ran Pilot Hole, Advanced Log Suites, Kept 99% of Laterals in Target Zone Fracture Stimulation- Pumped 1,557 #/ft vs. 1,021 #/ft avg. in 107 offsets Choke Management- Focused on maximizing condensate recovery. Still flowing choked at 20/64. Lateral Lengths & Economics- Drilled avg. 8,233 laterals to maximize economics. Reached TD of >18,500 in 11.5 days. Estimated Completed Well million. Results- Lonestar s 9 Month cumulative production for A & B wells average 260,500 BOE, exceeding the 107-well average by 74% per foot 300, , , , ,000 50,000 0 A1H B1H Average 300, , , , ,000 50,000 0 Note- Source of information is Texas Railroad Commission. Offset well dataset includes 107 Eagle Ford Shale producers of similar depth Series2 LNR Wells 17

18 BOPD / 1,000 FT Cum. BBLS / 1,000 FT Average Total Well Cost ($MM) Perforated Lateral Length (ft) Technology Advancements- Beall Ranch Beall Ranch Locator Map Beall Ranch Eagle Ford Well Costs $6.0 $5.0 Location & Facilities Drilling Completion Lateral Length 7,000' 6,000' $4.0 5,000' 4,000' $ H 32-34H $2.0 3,000' 2,000' $1.0 1,000' 20-22H $0.0 32H-34H 26H-28H 20H-22H 0' 2Q14 2Q15 4Q15 Beall Ranch Eagle Ford Offset Cumulative to Date Beall Ranch Technical Improvements ,500 12,150 10,800 9,450 8,100 Lonestar has drilled three 3-well pads in the last 24 months, implementing increasing levels of leading edge technologies, intended to improve recoveries and mitigate interference from offset well depletion. Geo-targeting- Using petrophysical & rock properties analysis obtained from pilot hole logs to refine its geo-target to a 22-foot target in an effort to improve recoveries ,750 5,400 Thru-bit Logging- Increasingly utilized to design non-geometric, engineered frac stages PRODUCING DAYS 26H-28H Cum. 32H-34H Cum. 32H-34H Avg. 26H-28H Avg. 21H-22H AVG 21H-22H Cum. 4,050 2,700 1,350 0 Broadband Diverter- Pumping diverter mid-stage to fracture higherstress rock with a goal of improving perforation efficiency while actually expanding stage spacing. Superior Production Performance Continues- #26H-#28H wells have cum d 64,000 bbls/well through 390 days online (or 19,500 bbls / perforated foot),which is 43% better than the offsetting #32H-#34H wells. Through 150 days, newest generation wells are outperforming #26H-#28H by 14% and #32H-#34H by 62%. 18

19 Central Region Summary Overview Gross Leasehold 12,695 Net Leasehold 12,210 % HBP 44% Top EFS 6,000' to 9,500' Lateral Lengths 5,000' to 8,000' Assumed Spacing 500' - 750' Engineered Acreage Lonestar s Properties & Offset Wells Non-Engineered Acreage South Gonzales Gonzo Property Summary Wells Engineered Locations Average Average Property PDP PUD Other WI% Lat Length Pirate % 6,462' South Gonzales % 6,929' Gonzo % 6,200' Total % 6,530' Pirate Reserves Summary Leasehold Leased HBP'd Proved Reserves Oil NGL Gas Equiv. Category Gross Net Gross Net (MMBbl) (MMBbl) (Bcf) (MMBOE) PDP 2,899 2,414 2,171 1, PUD Proved 3,149 2,664 2,369 1, Other 8,517 8,517 4,475 4,475 Total 11,666 11,181 6,843 6,358 Note: Please see the Reserves disclosures at the end of this presentation 19

20 Eastern Region Summary Overview Lonestar s Properties & Offset Wells Gross Leasehold 14,934 Net Leasehold 10,890 % HBP 45% Top EFS 6,500' to 12,000' Lateral Lengths 4,000' to 8,000' Assumed Spacing 750' Engineered Acreage Non-Engineered Acreage Aguila Vado Property Summary Wells Engineered Locations Average Average Property PDP PUD Other WI% Lat Length Robertson % 6,215' N. Brazos % 6,520' C. Brazos % 7,722' S. Brazos % NM Total % 6,819' Reserves Summary Leasehold Leased HBP'd Proved Reserves Oil NGL Gas Equiv. Category Gross Net Gross Net (MMBbl) (MMBbl) (Bcf) (MMBOE) PDP 1,065 1, PUD 1,331 1,245 1, Proved 2,396 2,275 1,832 1, Other 9,740 8,604 2,239 1,905 Total 12,136 10,878 4,070 3,573 Note: Please see the Reserves disclosures at the end of this presentation 1 Includes 1,284 net acres proforma Juneau Energy acreage swap 20

21 Conventional Assets Stability & Free Cash Flow

22 Net Production (BOEPD) Conventional Assets 2.2 MMBOE- Proved Reserves 1 79% Crude Oil 5% of Lonestar s Total Proved Reserves 582 BOEPD- 2Q16 Production 65% Crude Oil & NGL s 9% of Lonestar s Total Production Long-Lived Reserves with Low Capital Requirements Reserves/Production ratio of 15 years Current Capital Plans are de minimus West Texas North Texas South Texas 1, Daily Production North Texas West Texas East Texas South Texas Other 1. Please see Reserves disclosures at the end of this presentation 22

23 Appendix

24 High Caliber Management Team (Cont d) Executive Previous Experience Biography Joe Young Manager Drilling Engineer with 13 years of experience in drilling and completions Positions of increasing responsibility at Schlumberger Drilling and completions engineer at Pioneer Natural Resources in Eagle Ford Shale and Wolfcamp Shale plays Tracy Hindman Manager Field Logistics Service Drilling Over 31 years of oil and gas service experience 16 years of turnkey drilling experience at Service Drilling, Southeast, LLC Most recently General Manager - Gulf Coast Division of Unit Drilling Texas Rod Hicks Manager Field Operations Over 33 years of oil and gas drilling, completion and operations experience Held positions of increasing responsibility at Kerr-McGee, Encore Acquisition Corp, and Quantum Resources Bill Kreimeier Manager- Completions Over 37 years of oil and gas drilling, completion and operations experience Held positions of increasing responsibility at Hunt Oil Company John K. Evans Manager- Land Over 25 years of oil and gas drilling, completion and operations experience Held positions of increasing responsibility at Hunt Oil Company High Caliber Executive Team with Deep Industry Expertise and 30 Years of Average Experience 24

25 Glossary 1P reserves means proved reserves. 2P reserves means proved plus probable reserves. bbl means barrel. boe means barrels of oil equivalent, determined using a ratio of 6 Mcf of natural gas to 1 bbl of condensate or crude oil scf means standard cubic feet. btu means British thermal units. m prefix means thousand. mm prefix means million. b prefix means billion. pd suffix means per day. NGL means Natural Gas Liquids, including condensate these products are stripped from the gas stream at 3rd party facilities remote to the field. TEV means total enterprise value LTM means last twelve months NTM means next twelve months HBP means held by production EPS means earnings per share Note: BOE may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf : 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf : 1 bbl, utilising a conversion ration of 6 Mcf : 1 bbl may be misleading if used in isolation. 25

26 Reserves Information Reserves Reporting: Pursuant to ASX Listing Rules ( LR ) the reserves information in this document: (i) is effective as at 1 January, 2015 (LR ) (ii) has been estimated and is classified in accordance with SPE-PRMS (Society of Petroleum Engineers - Petroleum Resources Management System) (LR ) (iii) is reported according to the Company s economic interest in each of the reserves and net of royalties (LR ) (iv) has been estimated and prepared using the deterministic method (LR ) (v) has been estimated using a 6:1 BOE conversion ratio for gas to oil, pursuant to the information in the disclaimer section of this document (LR ) Other Reserves Information: Lonestar operates most of its properties which are generally held by standard oil and gas lease arrangements. Detailed information on the operator and lease arrangements is disclosed in the Company announcement related to the initial acquisition of properties. The Company s working interest ownership (WI%) and net revenue interest ownership (NRI%) in relation to each of its properties are generally included in the Company s presentations which are available on the ASX or the Company s websites. Well spacing assumptions and lateral length assumptions are generally included in the Company s presentations as is additional information on capital cost and taxation assumptions. In accordance with ASX LR 5.43 the Company confirms that it is not aware of any new information or data that materially affects the reserves information included in previous Company announcements including as to material assumptions and technical parameters underpinning the estimates, other than as set out in this announcement. Qualified Petroleum Reserves and Resources Evaluators: In accordance with ASX Listing Rules 5.41 and 5.42: The reserve reporting provided in this document in relation to the Company s Eagle Ford Shale properties is based on and fairly represents information and supporting documentation that has been prepared by Mr. William D. Von Gonten, Jr., P.E., and Mr. Taylor D. Matthes, P.E. who are employed by W. D. Von Gonten & Co Petroleum Engineering. Mr. Von Gonten holds a Bachelor of Science degree in Petroleum Engineering from Texas A&M University and Mr. Matthes holds a Bachelor of Science degree in Petroleum Engineering from Texas A&M University. Both of these persons are Registered Texas Professional Engineers. Mr. Von Gonten has 24 years of experience as a Petroleum Engineer and Mr. Matthes has more than 5 years of experience as a Petroleum Engineer. Both of these persons are members of the Society of Petroleum Engineers. Messrs. Von Gonten and Matthes have consented to the inclusion in this document of the information and context in which it appears. The reserve reporting provided in this document in relation to the Company s Conventional properties is based on and fairly represents information and supporting documentation that has been prepared by Mr. William M. Kazmann who is President and Senior Partner La Roche Petroleum Consultants, Ltd. Mr. Kazmann received his Bachelor of Science and Master of Science degrees in Petroleum Engineering from the University of Texas at Austin in 1973 and 1975 respectively. He has worked in the oil and gas industry since that time. Mr. Kazmann is a Licensed Professional Engineer in the State of Texas and is a member of the American Association of Petroleum Geologists, Society of Petroleum Engineers, Society of Independent Professional Earth Scientists (serving as National Director from 1993 to 1996 and National Treasurer in 1994 and 1995), Dallas Geological Society, and Dallas Petroleum Club (serving as Director from 2004 through 2006). Mr. Kazmann has consented to the inclusion in this document of the information and context in which it appears. Reserves Cautionary Statement: Hydrocarbon reserves and resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates that were valid when originally calculated may alter significantly when new information or techniques become available. Additionally, by their very nature, reserve and resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional drilling and analysis, the estimates are likely to change. The may result in alterations to development and production plans which may, in turn, adversely impact the Company s operations. Reserves estimates and estimates of future earnings are, by nature, forward looking statements and subject to the same risks as other forward looking statements. Commodity Pricing Used: Lonestar s reserves and PV-10 have been estimated using index prices determined in accordance with US SEC pricing guidelines for oil and natural gas, without giving effect to derivative transactions, and were held constant throughout the lift of the properties. The unweighted arithmetic averages of the first-day-of-the-month prices for the year ended December 31, 2014 were $94.99 per bbl for oil and $4.35 per mmbtu for natural gas and for the year ended December 31, 2013 were $96.94 bbl for oil and $3.66 per mmbtu for natural gas. These prices were adjusted by lease for quality, energy content, regional price differentials, transportation fees, marketing deductions and other factors affecting the price received at the wellhead." 26

27 Eastern Region- Competitor Activity Source: Apache Corp. August 2015 Investor Presentation 27

28 Lonestar Is Well-Positioned In Brazos County Apache s Area A Wildcat Source: Apache Corporation August Investor Presentation and Company data 28

29 Wildcat - Offset Well Success Apache Walker 1H- 1,897 BOEPD Apache Walker 3H- 1,973 BOEPD Wildcat Area A Reserve Categories Eagle Ford producer Apache Rae 3H- 1,587 BOEPD Apache Rae 4H- 1,520 BOEPD Eagle Ford location Proved (PUD) Probable (PROB) Possible (POSS) 29