Lonestar signs Eagle Ford agreement for longer laterals, HBPs

By Luke Geiver | February 27, 2020

Lonestar Resources isn’t going at the Eagle Ford shale alone this year. The independent exploration and production company has signed a joint development agreement in Gonzales County, Texas, with another producer. The agreement will cover the development of an area of mutual interest spanning nearly 15,000 acres.

Through the agreement, Lonestar will operate a minimum of 3 to 4 Eagle Ford Shale wells annually on behalf of the two companies through 2022 that are intended to hold-by-production (“HBP”) approximately 6,000 gross acres within the AMI. The agreement gives Lonestar’s partner the option to participate in each well with a 50 percent working interest or to participate via a carried working interest that ranges from approximately 9 percent to 17 percent, depending on location. The JDA, which requires lower levels of annual gross drilling activity than Lonestar has engaged in on its own since becoming active in Gonzales County in 2016, provides significant benefits for both parties.

According to Lonestar, the JDA will help both participants drill longer laterals, optimize economics and hold more acreage while drilling fewer wells. Lonestar estimates the JDA could also generate up to $92 million in new revenue.

"This venture is a win-win for both parties and is illustrative of how Lonestar continues to leverage its drilling and completion prowess into new growth opportunities without upfront capital. Further, the venture provides a clear path of development for our Cyclone/Hawkeye asset, which is the oiliest asset in the Company, and now encompasses 72 long-lateral drilling locations that offer highly attractive returns at current commodity prices,” said Frank Bracken, Lonestar CEO.