Lonestar Resources Ltd. (OTCQX: LNREF, ASX: LNR) has closed a new $500 million senior secured credit facility, which replaces its previous $400 million facility. Lonestar has also closed a $100 million joint development agreement (JDA) with IOG Capital LP. The agreement with IOG provides incremental non-recourse capital for Lonestar to drill wells in its focus area of the Eagle Ford shale play.
Lonestar's new senior secured credit facility was arranged by Citibank NA and features an expanded borrowing base of $180 million, an increase of $30 million associated with the $150 million borrowing base under its previous facility.
Lonestar's agreement with IOG Capital makes available a maximum of $100 million in funds to be used in drilling incremental Eagle Ford shale wells. The JDA, which calls for IOG to participate as a non-operated working interest owner, states that the funds can be deployed toward the drilling and completion of Eagle Ford shale wells that meet the collective return criteria of Lonestar and IOG.
The JDA calls for IOG to contribute up to 90% of the initial capital for wells drilled in the program, with Lonestar contributing the remainder of well costs. After IOG achieves a specified return, Lonestar's working interest would increase to 90%.
Lonestar is an independent oil and gas company involved in exploration, production, and acquisition of unconventional oil and gas reserves. The company is primarily focused on the Eagle Ford shale play, and is also evaluating the resource potential of its 50,000-acre block in the Williston Basin.