Fresh off record production, Lonestar reaffirms borrowing base

By Luke Geiver | December 31, 2019

The Eagle Ford shale is still attractive to lenders. Lonestar, an independent oil and gas company active in the South Texas play, announced this month its new 2020 borrowing base.

Working with Citibank N.A., Lonestar was provided with a borrowing base of $290 million.

Frank Bracken, Lonestar’s CEO, said that given the current conditions in the credit markets and the sub-market pricing assumptions that are currently being used in borrowing base calculations across the country, the company believes “that the reaffirmation of the company’s borrowing base is an endorsement of the quality of Lonestar’s asset base and the returns delivered by our capital program.”

In late 2019, Lonestar noted a record production increase, exceeding previous production guidance by nearly 50 percent.

Production growth yielded a 30 percent improvement in the company's cash cost structure, Lonestar’s team told investors, including the fact that total cash costs have fallen from $22.76/Boe in 1Q19 to $16.09/Boe in 3Q19, giving Lonestar a more durable and competitive cost structure. “Most importantly,” the company said, “the underlying outperformance of our 2018 and 2019 completions means that we can achieve our 2020 production target of 17,000 to 18,000 Boe/d with fewer wells and less capital spending.”