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Earthstone Energy enters Midland Basin by acquiring Lynden Energy

Earthstone’s most significant assets are located in the Eagle Ford trend of south Texas, while Lynden Energy Corp’s significant assets are located in the Midland Basin

Earthstone

Earthstone Energy, Inc. is acquiring Lynden Energy Corp. in an all-stock transaction, the parties announced Thursday.

At closing, Earthstone will issue approximately 3.7 million shares of its common stock to Lynden stockholders, which will represent approximately 21 per cent of Earthstone’s outstanding common stock following the closing.

Earthstone’s existing senior management team will lead the combined company, which will have a stronger balance sheet and an asset portfolio focused on the Eagle Ford, Permian Basin, and Bakken, producing approximately 6,100 barrels of oil equivalent per day.

Lynden’s primary assets include:

  • 14,765 gross / 5,883 net acres located in the core Midland Basin counties of Glasscock, Midland, Martin, and Howard, Texas.
    • Working interests in 107 gross / 43.8 net vertical producing Wolfberry wells
    • Working interests in 2 gross / 0.9 net recently drilled horizontal Wolfcamp wells in Glasscock County
    • Working interests in 2 gross / 0.4 net horizontal wells in Martin County (1 gross Lower Spraberry well and 1 gross Wolfcamp well)
  • Over 150 proved gross vertical Wolfberry locations on 20 to 40 acre spacing, with potential for 50 gross horizontal Wolfcamp A and B wells.
  • Additional upside in the expanding horizontal Spraberry trend, multiple benches of the Wolfcamp, and the Cline.
  • Further upside in 104,000 gross / 52,000 net acres in a single contiguous lease on the eastern shelf of the Permian Basin located in Coke, Mitchell, and Sterling Counties, Texas.
  • Daily production of approximately 1,450 Boepd (53% oil, 77% liquids).
  • As of June 30, 2015, SEC proved reserves totaled approximately 13.4 million barrels of oil equivalent (34% proved developed, 50% oil, 76% liquids), as prepared by Lynden’s independent reserve engineers, Cawley, Gillespie & Associates, Inc. The proved reserves exclude any associated reserves related to future horizontal development.
Earthstone

Midland, TX is the epicenter of the Permian Basin oil and gas industry.

CrownQuest Operating LLC (“CrownQuest”) serves as operator of most of Lynden’s assets and has a well-deserved reputation as one of the premier operators in the Midland Basin. Lynden’s first two CrownQuest-operated horizontal Wolfcamp wells in Glasscock County, the Mallard 23 #1H and McDaniel 2413 #1H, were drilled during June and July 2015.

The Mallard 23 #1H well has a lateral length of approximately 6,900 feet and was completed with 35 frac stages. Gross production at the wellhead averaged 505 Boepd (91% oil) in the first 60 days of production.

The McDaniel 2413 #1H well has a lateral length of approximately 9,500 feet and was completed with 48 frac stages. Gross production at the wellhead averaged 600 Boepd (91% oil) in the first 60 days of production.

Earthstone’s most significant assets are located in the Eagle Ford trend of south Texas, and include:

  • 39,875 gross / 19,575 net operated acres located in Karnes, Gonzales, and Fayette Counties, Texas that are being developed in the Eagle Ford and Austin Chalk formations.
    • Working interests in 64 gross / 29.2 net Eagle Ford wells
    • Working interests in 11 gross / 5.1 net Austin Chalk Wells
    • The acreage is further prospective for the Upper Eagle Ford, Buda, and other formations
  • Over 260 gross identified Eagle Ford drilling locations and 8 gross Austin Chalk drilling locations.
  • Daily production of 4,646 Boepd (58% oil, 71% liquids) for the three month period ended September 30, 2015.
  • As of June 30, 2015, SEC proved reserves, as prepared by management, totaled approximately 18.8 million barrels of oil equivalent (47% proved developed, 72% oil, 81% liquids).

Earthstone also has approximately 5,700 net core acres predominantly in McKenzie and Dunn Counties of North Dakota that are being developed in the Bakken and Three Forks formations.

  • An average 4 per cent working interest in approximately 140 gross producing wells.
    • 30 gross wells currently being drilled or completed
    • 200 gross drilling locations

Posted in: Energy Financial

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