Lonestar Resources (LONE) - Oct 15

[dan_s]

LONE: Earnings Preview from John White at Roth Capital

Our valuation is based on a net asset value (NAV) analysis which produced $8.04 per share which we adjusted lower to $8.00, which is our target price.

We have updated our 3Q 2019 estimates using actual 3Q 2019 oil and gas prices. Our 3Q 2019 production estimate is unchanged at 17,170 BOE per day. Our 3Q 2019 financial estimates move slightly lower from CFPS/EBITDA $1.09/$36.8 million to $0.92/$34.8 million. Our 3Q 2019 production estimate is a 26% increase over actual 2Q 2019 production.

The 3Q 2019 production growth is a result of a full quarter of production from LONE’s 2 gross/2.0 net wells at Horned Frog that began flow back in June and a partial quarter of production from LONE’s 3 gross/3.0 net wells at Sooner which commenced flow back in late July.

Production growth in 2020 also looks strong with our estimate of 17,616 BOE per day representing an 18% increase over our 2019 estimates. LONE’s 2020 production guidance is in a range of 17,000 to 18,300 BOE per day.

Strong Hedging Program: LONE has hedges which total 7,305 bbls/d for the remainder of 2019 or 42% of our 2H 2019 production estimate at an average WTI price of $54.60/bbl. LONE also has hedges which total 7,480 bbls/d for 2020 or again 42% of our estimated 2020 production at an average WTI price of $56.95/bbl.