Lonestar (LONE) CFPS and shareholder value

[cmm3rd]

LONE closed on 10/21 @ $2.31.

First Call's most recent estimated CFPS for 2019 was $3.19 and for 2020 $4.23.

So, PPS/’19 CFPS (First Call) = 2.31/3.19 = 0.72.
PPS/’20 CFPS (First Call) = 2.31/4.23 = 0.54..

Q2 results were announced on 8/5, so presumably Q3 will be about 3 months later. Q3 2018 was announced on 11/5/2018.

Hopefully, given 2019 capex, their production numbers will be good and any guidance positive. Have not found when they announced 2019 capex, so no idea when they will guide 2020 capex, production, operational CF, etc. If they fail to guide to at least some meaningful FCF for 2020 (as was strongly hinted in recent presentation), WS will punish shareholders further. The entire industry is acquiescing to WS' "live within cash flow" mandate and severely punishing shareholders of companies whose management refuse to do so because they believe higher commodity prices are just around the corner.

CEO 2018 comp was just under $2.2 million (2017 just under $2.6 million). https://lonestarresources.com/investor- ... c-filings/

It's time to build shareholder value (or at least arrest value destruction), whatever that takes. Growing production is great, but it builds shareholder value only if WS rewards the company for doing so. The reverse has been happening, with pps down over the last 12 months from $8.80 to $2.31, about a 74% loss. That's serious destruction of shareholder value. Meanwhile, regular growth in preferred share count (dividends on pfd are paid in more pfd shares) is only increasing ownership dilution and/or reducing net cash flow.

The market is sending Frank and the rest of the BOD a message. Are they going to listen?

[cviller]

At the current share price of $2.37, how much dilution this year?

[dan_s]

The share count that I use in 2020 for my valuation model is based on maximum dilution, which you can confirm by looking at the 10Q. I doubt that maximum dilution will ever occur.

Lonestar should be funding all capex going forward with cash flow from operations.

[cmm3rd]

I doubt that maximum dilution will ever occur.

Dan,

What is your expectation for ultimate disposition of the preferred shares?

[dan_s]

Probably paid off in cash.