Lonestar Resources Announces Second Quarter 2017 Results And Provides Operational Update

FORT WORTH, Texas, Aug. 4, 2017 /PRNewswire/ -- Lonestar Resources US, Inc. (NASDAQ: LONE) (including its subsidiaries, "Lonestar," "we," "us," "our" or the "Company") reported today its financial and operating results for the three months ended June 30, 2017.

SECOND QUARTER HIGHLIGHTS

    --  Lonestar reported a 7% sequential increase in net oil and gas production
        during the three months ended June 30, 2017 ("2Q17").  Net oil and gas
        production averaged 5,635 Boe/d in the second quarter of 2017 compared
        to 5,266 Boe/d during three months ended March 31, 2017 ("1Q17"). The
        Company expects to grow production at an accelerated rate during the
        remainder of 2017 and 2018 as drilling activity accelerates on the
        Company's expanded acreage position.
    --  Adjusted EBITDAX for the quarter ended June 30, 2017 increased 10% to
        $12.7 million, compared to $11.5 million for the quarter ended March 31,
        2017.  Please see "Non-GAAP Financial Measures" at the end of this
        release for the definition of Adjusted EBITDAX, a reconciliation of net
        income (loss) to Adjusted EBITDAX, and the reasons for its use.
    --  On June 15, 2017, Lonestar closed its previously-announced acquisition
        of oil and gas properties in the Eagle Ford Shale play.  After
        post-closing adjustments, Lonestar paid total consideration of $99
        million in cash and approximately 2.7 million shares of Lonestar Series
        B preferred stock, which are convertible into 2.7 million Class A common
        shares. The properties, located in Karnes, Gonzales, DeWitt, Lavaca and
        Fayette Counties, Texas, had Proved reserves of approximately 25.4
        million barrels of crude oil, 3.1 million barrels of natural gas
        liquids, and 17.5 billion cubic feet of natural gas, equating to 31.4
        million barrels of oil equivalent ("MMBOE"), as estimated by Lonestar,
        as of December 31, 2016.
    --  Lonestar estimates that net oil and gas production for the third quarter
        of 2017 will average between 7,600 Boe/d and 8,100 Boe/d, which would
        represent a sequential increase of 35 to 44% over our 2Q17 production.

Lonestar's Chief Executive Officer, Frank D. Bracken, III, stated, "The second quarter is a springboard for Lonestar. While the 2Q17 results minimally reflect the positive impact of our Eagle Ford Shale acquisitions, 3Q17 results will fully reflect their impact, as well as newly-completed wells. Moreover, as we assimilate our new acquisitions, we are increasingly confident in our ability to enhance the value of these assets by better managing the current producing assets and by applying Lonestar's technical abilities to drilling new wells on the properties. We are also encouraged by the apparent coming slowdown in drilling and completion activity disclosed by a number of industry participants which should result in more pliable energy service costs and better availability at a time when Lonestar expects to scale-up our drilling and completion program. In summary, we accomplished much in the first half of 2017, as we significantly grew Lonestar through acquisitions, had exceptional drilling results, and greatly strengthened our financial position and locked-in cash flow and returns by hedging. As a result, we are well-positioned to build shareholder value into the second half of 2017 and beyond."

FINANCIAL UPDATE

    --  Lonestar reported a 7% sequential increase in net oil and gas production
        during the three months ended June 30, 2017 ("2Q17"). Net oil and gas
        production averaged 5,635 Boe/d in the second quarter of 2017 compared
        to 5,266 Boe/d during three months ended March 31, 2017 ("1Q17").
        Production growth was the result of the addition of the Wildcat B1H well
        (50% WI) in May, and the inclusion of the recent acquisitions for 15
        days of the second quarter.
    --  2Q17 production volumes consisted of 3,564 barrels of oil per day (63%),
        1,004 barrels of NGLs per day (18%), and 6,402 Mcf of natural gas per
        day (19%). The Company's production mix for the second quarter of 2017
        was 81% liquid hydrocarbons. While 2Q17 production volumes increased 7%,
        crude oil production increased 10% sequentially, further improving the
        profitability of Lonestar's production.
    --  During the quarter ended June 30(, )2017, Lonestar placed 1.0 gross /
        0.5 net wells onstream. Lonestar has placed 2 gross / 2 net wells online
        at Cyclone thus far in 3Q17, and anticipates placing an additional 2
        gross / 2 net wells at Cyclone later in 3Q17.
    --  Lonestar's operating cost structure saw modest sequential increases in
        the three months ended June 30, 2017, which was predominately caused by
        the Marquis and Battlecat acquisitions and several non-recurring
        charges:
        --  Lease Operating Expense increased from $3.0 million in 1Q17 to $3.5
            million in 2Q17. On a unit-of-production basis, LOE per Boe
            increased 10% sequentially, from $6.24 per Boe in 1Q17 to $6.87 per
            Boe in 2Q17. This increase was partially attributable to the
            inclusion of the Marquis and Battlecat assets for 15 days during the
            quarter, which currently bear higher operating costs. As Lonestar
            integrates the newly acquired properties, we anticipate reducing
            operating costs to superior levels.
        --  General & Administrative Expense was increased from $2.5 million in
            1Q17 to $3.1 million in 2Q17. On a unit-of-production basis, G&A per
            Boe increased 16% sequentially, from $5.26 per Boe in 1Q17 to $6.12
            per Boe in 2Q17. G&A expenses included $0.6 million of non-recurring
            expenses related legal expenses incurred for the establishment
            corporate governance charters, policies and procedures related to
            moving our domicile from Australian to Delaware and listing on the
            NASDAQ, s employee relocation expenses associated with our recent
            acquisitions, and the write-off project evaluation costs. Adjusted
            for these items, G&A expense would have been $2.5 million, or $4.85
            per Boe in 2Q17.
        --  Interest Expense increased from $4.4 million in 1Q17 to $6.0 million
            in 2Q17. Included in Interest Expense was a charge of $1.1 million
            related to the early payment premium associated with the
            extinguishment of the Company's second lien debt. Excluding the
            non-recurring $1.1 million charge associated with the extinguishment
            of debt, adjusted interest expense would have been $4.9 million, or
            $9.56 per Boe in 2Q17.
    --  Since its inception, Lonestar has implemented a strategy using commodity
        derivatives to reduce financial risk and create a higher degree of
        certainty to our cash flows and our returns. As part of this ongoing
        strategy, Lonestar entered into additional WTI crude oil swaps across
        2017, 2018, and 2019. Subsequent to the end of the second quarter:
        --  For 2017, the Company added swaps on 122,600 barrels a price of
            $49.85/bbl for the period of September 2017 through December 2017,
            increasing its coverage for the second half of 2017 to 664,800
            barrels, or approximately 3,613 Bbls/day at a volume weighted
            average price of $53.10/bbl.
        --  For 2018, the Company added swaps on 509,000 barrels at a price of
            $50.17/bbl for the period of January 2018 to December 2018,
            increasing its total crude oil hedge position coverage for 2018 to
            1,713,500, or approximately 4,695 Bbls/day at a volume weighted
            average price of $51.63/bbl.
        --  For 2019, the Company added swaps on 508,900 barrels at a price of
            $50.40/bbl for the period of January 2019 to December 2019,
            increasing its total crude oil hedge position coverage for 2019 to
            1,069,600, or approximately 2,930 Bbls/day at a volume weighted
            average price of $49.16/bbl.
        --  For the period January 1, 2020 through June 30, 2020, the Company
            has WTI crude oil swaps covering approximately 1,119 Bbls/day at an
            average price of $48.90/bbl.
        --  Additionally, we hold contracts that hedge our natural gas
            production, covering 7,000 MMBTU/Day at a weighted average price of
            $3.36 per MMBtu for 2017.
    --  Lonestar reported a net loss attributable to its common stockholders of
        $23.5 million, or ($1.07) per weighted average share, during the three
        months ended June 30, 2017. Excluding, on a tax-adjusted basis, certain
        items that the Company does not view as either recurring or indicative
        of its ongoing financial performance, our adjusted net loss for 2Q17 was
        $1.2 million, or ($0.06) per common share. Most notable among these
        items include: 1) During the three months ended June 30, 2017, the
        Company recorded an impairment charge of approximately $27.1 million
        relating to its West Poplar property located in Montana. Upon completion
        of the Company's recent acquisitions in the Eagle Ford Shale, the
        Company expects to direct virtually all of its capital expenditures
        towards development of its Eagle Ford Shale properties. Given the
        reduced likelihood of directing capital towards to the West Poplar
        asset, the Company fully impaired the asset in the second quarter; 2)
        Lonestar expensed $2.7 million in investment banking fees related to its
        recently announced Eagle Ford Shale property acquisitions; 3) the
        Company expensed $2.8 million related to the early extinguishment of its
        second lien notes; 4) the Company recognized a $3.8 million non-cash
        gain on our commodity derivative contracts related to the change in the
        mark-to-market value of our derivative contracts. Please see Non-GAAP
        Financial Measures for additional information.

OPERATIONS UPDATE

EAGLE FORD SHALE TREND- WESTERN REGION

    --  Asherton - In Dimmit County, no new wells were completed during the
        three months ended June 30, 2017.  The Asherton leasehold is held by
        production, and Lonestar does not currently plan any drilling activity
        here in 2017.
    --  Beall Ranch - In Dimmit County, no new wells were completed during the
        three months ended June 30, 2017.  The Beall Ranch leasehold is held by
        production, and Lonestar does not currently plan any drilling activity
        here in 2017.
    --  Burns Ranch Area - Lonestar is pleased to report continued excellent
        performance out of its three wells drilled at Burns Ranch in 2017- the
        #8H, #9H and #10H.  Lonestar implemented a number of technical
        improvements to these wells which included: employing azimuthal gamma
        ray to stay in our petrophysically determined geo-target through
        multiple dip changes, increasing proppant concentrations to 2,000 lb/ft,
        which included the use of diverters, and more conservatively choke
        managing production to maintain lower Gas-Oil-Ratios ("GOR") in our
        Generation 5 wells ("Gen 5").  Lonestar is encouraged with the results
        of our Gen 5 wells thus far. We believe that our advancement in
        stimulation design has resulted in the increased effectiveness of the
        Gen 5 well stimulations in contacting additional reservoir rock volume
        that allows for a more complex fracture volume in the same fracture
        half-length, resulting in better fracture and drainage efficiency.  At
        57% pressure drawdown, our Gen 3 wells had recovered 40,000 barrels of
        oil.  By contrast, our Gen 5 wells have recovered over 70,000 barrels of
        oil with 57% pressure drawdown, an improvement of 75%.  We believe that
        the rapid increase in GOR that we experienced in our Gen 3 wells
        impaired oil EUR's by prematurely reducing flowing pressures below
        bubble point.  As a result, we have been more stringent in our choke
        management techniques on our Gen 4 and Gen 5 wells as part of our oil
        maximization strategy.  At 70,000 barrels of oil recovery, our Gen 3
        wells exhibited GOR's of 2,700 scf/bbl, while our newer Gen 5 wells,
        which have been more stringently choke-managed, have recovered 70,000
        barrels of oil while registering a GOR of 1,300 scf/bbl.  Lonestar is
        drilling again at Burns Ranch.  The B1H and B2H on Burns Ranch have been
        permitted with the Texas Railroad Commission with projected total depths
        of 17,900 and 18,000 feet respectively. Projected perforated intervals
        for these wells will be approximately 9,000 feet. Lonestar owns a 92%
        working interest and a 69% net revenue interest in these wells.  Upon
        completion of these 2 wells, Lonestar will have completed five producing
        wells on this leasehold during 2017, and consequently, Lonestar will
        have increased its acreage that is Held By Production from approximately
        2,770 gross / 2,673 net acres to approximately 4,632 gross / 3,817 net
        acres, or 95% of our total leasehold.
    --  Horned Frog - In La Salle County, no new wells were completed during the
        three months ended June 30, 2017.  Lonestar holds a total of 5,828 gross
        / 4,642 net acres in the Horned Frog area.  Our 4,402 acre block
        acquired by farm-in is Held By Production, while the 1,426 gross / 1,071
        net acres we acquired in 2017 is in primary term.  We had previously
        planned to drill two wells on this block in 2017, but have elected to
        defer these wells, and Lonestar currently plans to drill two 10,000-foot
        laterals in the first quarter of 2018.

EAGLE FORD SHALE TREND- CENTRAL REGION

    --  Cyclone - During the second quarter of 2017, Lonestar drilled and
        completed the Cyclone #4H and Cyclone #5H.  Lonestar has a 100% working
        interest ("WI") in these wells.  These wells were fracture-stimulated in
        engineered completions with an average proppant concentration of 1,820
        pounds per foot over 30 stages per well, and utilized diverters.  The
        #4H and #5H were placed into flowback operations on July 1, 2017, and
        therefore did not contribute to the Company's second quarter 2017
        financial results.  The Cyclone #4H was completed with a perforated
        interval of 8,706 feet and tested 648 bbls/d and 405 Mcf/d, or 741 Boe/d
        (three-stream) on a 22/64'' choke.  The Cyclone #5H was completed with a
        perforated interval of 9,286 and tested 670 bbls/d and 327 Mcf/d, or 771
        Boe/d (three-stream) on a 22/64'' choke.  On average, these two new
        producers have recovered 7% of their frac load, to date.  It is notable
        that both of these wells were classified at Probable in the Company's
        third-party reserve report as of December 31, 2016, which has positive
        implications for our Proved reserves at year-end 2017.  In addition to
        these completions, Lonestar has drilled the Cyclone #26H and #27H to a
        total depth of 18,125 and 18,098 respectively.  The Cyclone #26H is
        planned to be stimulated in 29 stages with a perforated interval of
        8,600 feet and the Cyclone #27H is planned to be stimulated in 28 stages
        with a perforated interval of 8,500 feet.  Fracture stimulation
        operations on these wells are scheduled to commence in August, 2017. 
        Lonestar has a 100% working interest ("WI") and 79% net revenue interest
        ("NRI") in these wells.  Lonestar continues to encounter success in
        leasing additional tracts which are contiguous to its Cyclone leasehold.
        At December 31, 2016, our acreage totaled 2,906 gross / 2,656 net acres,
        which accommodated 26 gross / 24 net laterals.  At June 30, 2017, we had
        increased our leasehold to 3,762 gross / 3,512 net acres, which
        accommodates 38 gross / 36 net laterals, which in several cases have
        been elongated with our leasehold acquisitions.  Lonestar estimates that
        when production is established on its Cyclone #26H and #27H wells,
        approximately 86% of its leasehold in the Cyclone area will be Held By
        Production.
    --  Pirate - Lonestar completed the Pirate #M1H and Pirate #N1H wells in
        February, 2017.  These wells tested at rates of 331 Boe/d and 429 Boe/d
        respectively.  As of June 30, 2017, the Pirate #M1H produced 36,650 BOE
        and is currently producing 271 Boepd while the Pirate #N1H has produced
        47,600 BOE and is currently producing 309 Boepd. Lonestar holds a 100%
        WI / 76.4% NRI in these wells.

EAGLE FORD SHALE TREND- EASTERN REGION

    --  Brazos & Robertson Counties - Lonestar owns a 50% WI/ 38% NRI in the
        Wildcat B1H, which was placed onstream in May, 2017.  The Company
        previously reported that the Wildcat B1H well established a 30?day
        maximum production rate of 2,123 barrels of oil equivalent per day
        (Boe/d), consisting of 890 barrels of oil per day (42%), 764 barrels of
        natural gas liquids (36%) and 2,815 Mcf per day of natural gas (22%). 
        Today, Lonestar reports that the Wildcat B1H has produced at a 60-day
        rate which has averaged 1,867 barrels of oil equivalent per day (Boe/d),
        consisting of 817 barrels of oil per day (44%), 610 barrels of natural
        gas liquids (33%), and 2,634 Mcf per day of natural gas (23%).  These
        rates were achieved on a 20/64?inch choke, as Lonestar remains
        conservative in its choke management procedures, with a goal of
        maximizing crude oil recoveries.  The Wildcat B1H was classified at
        Probable in the Company's third-party reserve report as of December 31,
        2016.  The results of the Wildcat B1H are extremely encouraging, as
        Lonestar has a sizable leasehold position in the Wildcat Area in the
        deep Eagle Ford section in Brazos County, and notably, has not booked
        any Proved reserves to the area.  Lonestar estimates that its leasehold
        in the Wildcat area holds 38 potential extended-reach drilling
        locations, based on 800-foot spacing.  Lonestar has interpreted its 3-D
        seismic data across its leasehold, and it now conducting rock properties
        analysis with a goal of concluding its resource assessment in September,
        at which point in time it will determine a capital plan for the asset.

CONFERENCE CALL DETAILS

Lonestar will host a live conference call on Monday, August 7, 2017 at 8:00 AM CDT to discuss the second quarter 2017 results and operational highlights.

To access the conference call, participants should dial:

USA: 800-950-8523

International: +1 212-231-2939

A playback of the conference call will be available on the Investor Relations section of Company's website beginning approximately August 8, 2017. The playback will be available for approximately 2 weeks.

ABOUT LONESTAR RESOURCES US, INC.

Lonestar is an independent oil and natural gas company, focused on the development, production and acquisition of unconventional oil, natural gas liquids ("NGLs") and natural gas properties in the Eagle Ford Shale in Texas, where we have accumulated approximately 72,244 gross (57,172 net) acres in what we believe to be the formation's crude oil and condensate windows, as of June 30, 2017. For more information, please visit www.lonestarresources.com.

Cautionary & Forward Looking Statements

Lonestar Resources US Inc. cautions that this press release contains forward-looking statements, including, but not limited to; Lonestar's execution of its growth strategies; growth in Lonestar's leasehold, reserves and asset value; and Lonestar's ability to create shareholder value. These statements involve substantial known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following: volatility of oil, natural gas and NGL prices, and potential write-down of the carrying values of crude oil and natural gas properties; inability to successfully replace proved producing reserves; substantial capital expenditures required for exploration, development and exploitation projects; potential liabilities resulting from operating hazards, natural disasters or other interruptions; risks related using the latest available horizontal drilling and completion techniques; uncertainties tied to lengthy period of development of identified drilling locations; unexpected delays and cost overrun related to the development of estimated proved undeveloped reserves; concentration risk related to properties, which are located primarily in the Eagle Ford Shale of South Texas; loss of lease on undeveloped leasehold acreage that may result from lack of development or commercialization; inaccuracies in assumptions made in estimating proved reserves; our limited control over activities in properties Lonestar does not operate; potential inconsistency between the present value of future net revenues from our proved reserves and the current market value of our estimated oil and natural gas reserves; risks related to derivative activities; losses resulting from title deficiencies; risks related to health, safety and environmental laws and regulations; additional regulation of hydraulic fracturing; reduced demand for crude oil, natural gas and NGLs resulting from conservation measures and technological advances; inability to acquire adequate supplies of water for our drilling operations or to dispose of or recycle the used water economically and in an environmentally safe manner; climate change laws and regulations restricting emissions of "greenhouse gases" that may increase operating costs and reduce demand for the crude oil and natural gas; fluctuations in the differential between benchmark prices of crude oil and natural gas and the reference or regional index price used to price actual crude oil and natural gas sales; and the other important factors discussed under the caption "Risk Factors" in our on our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 23, 2017 our Quarterly Reports on Form 10-Q filed with the SEC, as well as other documents that we may file from time to time with the SEC. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. The forward-looking statements in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release.

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC's definitions for such terms. Estimates of reserves in this press release are based on economic assumptions with regard to commodity prices that differ from the prices required by the SEC (historical 12 month average) to be used in calculating reserves estimates prepared in accordance with SEC definitions and guidelines. In addition, reserve engineering is a complex and subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. The estimates of reserves in this press release were prepared by the Company's internal reserve engineers and are based on various assumptions, including assumptions related to oil and natural gas prices as discussed above, drilling and operating expenses, capital expenditures, taxes and availability of funds and are subject to confirmation and revision from the Company's independent reserve engineering firm. The Company's internal estimates of reserves may not be indicative of or may differ materially from the year-end estimates of the Company's reserves prepared by a third party as a result of the SEC pricing and other assumptions employed by an independent reserve engineering firm. Investors are urged to consider closely the disclosure in the Company's filings with the SEC, which you can obtain from the SEC's website at www.sec.gov.

(Financial Statements to Follow)


                                            Lonestar Resources US Inc.

                                            Consolidated Balance Sheets

                                  (In thousands, except share and per share data)


                                       June 30,                                   December 31,

                                             2017                                          2016
                                             ----                                          ----

    Assets                            (Unaudited)


    Current assets

    Cash and cash equivalents                                        $6,568                       $6,068

    Accounts receivable:

    Oil, natural gas liquid and
     natural gas sales                                                6,054                        4,680

    Joint interest owners and
     other, net                                                       1,648                          867

    Related parties                                                       -                         847

    Derivative financial
     instruments                                                      7,823                        1,730

    Prepaid expenses and other                                        5,445                        2,631
                                                                      -----                        -----


    Total current assets                                             27,538                       16,823


    Oil and gas properties, net,
     using the successful efforts
     method of accounting                                           545,489                      439,228

    Other property and equipment,
     net                                                              2,608                        1,421

    Derivative financial
     instruments                                                      2,681                            -

    Other noncurrent assets                                           3,963                        1,561

    Restricted certificates of
     deposit                                                             76                           76
                                                                        ---                          ---


    Total assets                                                   $582,355                     $459,109
                                                                   ========                     ========


                                                  Lonestar Resources US Inc.

                                           Consolidated Balance Sheets (continued)

                                       (In thousands, except share and per share data)


                                          June 30,                                     December 31,

                                                2017                                            2016
                                                ----                                            ----

    Liabilities and Stockholders'
     Equity                              (Unaudited)


    Current liabilities

    Accounts payable                                                    $10,346                        $14,894

    Accounts payable - related parties                                      176                          1,135

    Oil, natural gas liquid and
     natural gas sales payable                                            6,153                          3,568

    Accrued liabilities                                                  23,083                          9,947

    Accrued liabilities - related
     parties                                                                472                            224

    Derivative financial instruments                                        120                          2,985
                                                                            ---                          -----


    Total current liabilities                                            40,350                         32,753


    Long-term debt                                                      267,203                        204,122

    Long-term debt - related parties                                          -                         3,400

    Deferred tax liability                                               27,035                         38,020

    Other non-current liabilities                                         6,201                          6,052

    Equity warrant liability                                                577                          1,565

    Equity warrant liability -related
     parties                                                              1,098                          2,994

    Asset retirement obligations                                          5,019                          2,683

    Derivative financial instruments                                      1,284                          1,125
                                                                          -----                          -----


    Total liabilities                                                   348,767                        292,714
                                                                        -------                        -------


    Commitments and contingencies


    Mezzanine equity

    Series A-2 convertible
     participating preferred stock,
     $0.001 par value: 74,600 issued
     and outstanding at June 30, 2017
     and 0 issued and outstanding at
     December 31, 2016                                                   72,735                              -


    Stockholders' equity

    Class A voting common stock,
     $0.001 par value, 100,000,000
     shares authorized, 21,822,015
     issued and outstanding at June
     30, 2017 and December 31, 2016,
     respectively                                                       142,652                        142,652

    Class B non-voting common stock,
     $0.001 par value, 5,000 shares
     authorized, 2,500 issued and
     outstanding at June 30, 2017 and
     December 31, 2016, respectively                                          -                             -

    Series A-1 convertible
     participating preferred stock,
     $0.001 par value and Series B
     convertible participating
     preferred stock, $0.001 par
     value, 5,400 shares and 2,684,632
     shares issued and outstanding at
     June 30, 2017, respectively, 0
     and 0 issued and outstanding at
     December 31, 2016, respectively                                          3                              -

    Additional paid-in capital                                          102,107                         87,260

    Accumulated deficit                                                (83,909)                      (63,517)
                                                                        -------                        -------


    Total stockholders' equity                                          160,853                        166,395
                                                                        -------                        -------


    Total liabilities and
     stockholders' equity                                              $582,355                       $459,109
                                                                       ========                       ========


                                                                                  Lonestar Resources US Inc.

                                                                  Consolidated Statements of Operations & Comprehensive Loss

                                                                       (In thousands, except share and per share data)

                                                                                         (Unaudited)


                                               Three Months Ended                                             Six Months Ended

                                                  June 30,                                                  June 30,
                                                  --------                                                  --------

                                           2017                                  2016                                    2017                  2016
                                           ----                                  ----                                    ----                  ----

    Revenues

    Oil sales                                          $15,090                                           $15,168                           $29,580               $24,119

    Natural gas sales                                  1,726                                             1,636                             3,182                 3,257

    Natural gas liquid sales                           1,319                                               999                             2,989                 1,623
                                                       -----                                               ---                             -----                 -----


    Total revenues                                    18,135                                            17,803                            35,751                28,999
                                                      ------                                            ------                            ------                ------


    Costs and expenses

    Lease operating and gas gathering                  3,521                                             4,398                             6,477                 8,758

    Production, ad valorem, and severance
     taxes                                             1,077                                             1,223                             2,114                 2,139

    Rig standby expense                       -                                             1,584                                   -               1,897

    Depletion, depreciation, and
     amortization                                     12,513                                            12,498                            24,635                27,636

    Accretion of asset retirement
     obligations                                          38                                                51                                58                   107

    Loss (gain) on sale of oil and gas
     properties                                          205                                           (1,531)                              348               (1,531)

    Impairment of oil and gas properties              27,081                                             1,938                            27,081                 1,938

    Stock-based compensation                             461                                                95                               639                   191

    General and administrative                         3,139                                             2,858                             5,642                 5,631

    Acquisition costs                     2,726                                                  -                              2,726                    -

    Other (income) expense                              (46)                                              819                              (57)                1,047
                                                         ---                                               ---                               ---                 -----


    Total costs and expenses                          50,715                                            23,933                            69,663                47,813
                                                      ------                                            ------                            ------                ------


    Loss from operations                            (32,580)                                          (6,130)                         (33,912)             (18,814)
                                                     -------                                            ------                           -------               -------


    Other income (expense)

    Interest expense                                 (5,971)                                          (5,629)                         (10,417)             (11,210)

    Amortization of financing costs                  (2,848)                                            (545)                          (3,434)              (1,089)

    Unrealized gain on warrants             614                                                  -                              2,884                    -

    Gain (loss) on derivative financial
     instruments                                       5,416                                           (6,785)                           14,162               (5,069)
                                                       -----                                            ------                            ------                ------


    Total other income (expense), net                (2,789)                                         (12,959)                            3,195              (17,368)
                                                      ------                                           -------                             -----               -------


    Loss before income taxes                        (35,369)                                         (19,089)                         (30,717)             (36,182)


    Income tax benefit                                12,208                                             6,245                            10,621                12,040
                                                      ------                                             -----                            ------                ------


    Net loss                                        (23,161)                                         (12,844)                         (20,096)             (24,142)


    Preferred stock dividends             (296)                                                 -                              (296)                   -
                                           ----                                                ---                               ----                  ---


    Net loss attributable to common
     stockholders                                   (23,457)                                         (12,844)                         (20,392)             (24,142)

    Earnings per share:

    Basic                                              $(1.07)                                          $(1.71)                          $(0.93)              $(3.21)

    Diluted                                            $(1.07)                                          $(1.71)                          $(0.93)              $(3.21)

    Weighted Average Shares Outstanding -
     basic                                        21,822,015                                         7,522,025                        21,822,015             7,522,025

    Weighted Average Shares Outstanding -
     diluted                                      21,822,015                                         7,522,025                        21,822,015             7,522,025

    Comprehensive loss:

    Net loss                                         $(23,161)                                        $(12,844)                        $(20,096)            $(24,142)

    Foreign currency translation
     adjustments                              -                                              (17)                                  -                (16)
                                            ---                                               ---                                 ---                 ---

    Comprehensive loss                               $(23,161)                                        $(12,861)                        $(20,096)            $(24,158)
                                                      ========                                          ========                          ========              ========


                                                                                      Lonestar Resources US Inc.

                                                                                 Consolidated Statements of Cash Flows

                                                                                            (In thousands)

                                                                                              (Unaudited)


                                                    Three Months Ended                   Six Months Ended

                                                         June 30,                          June 30,
                                                         --------                          --------

                                                                  2017                     2016                                   2017         2016
                                                                  ----                     ----                                   ----         ----

    Operating activities

    Net loss                                                           $(23,163)                                       $(12,845)       $(20,096)      $(24,142)

    Adjustments to reconcile net loss to net cash
     provided by operating activities:

    Gain on disposal of oil and gas properties                                 -                                           (919)               -          (919)

    Accretion of asset retirement obligations                                 38                                               51               58             107

    Depreciation, depletion, and amortization                             12,513                                           12,497           24,635          27,636

    Stock-based compensation                                                 461                                               95              639             191

    Deferred taxes                                                      (12,576)                                         (6,260)        (10,985)       (12,129)

    (Gain) losses on derivative financial
     instruments                                                         (5,416)                                           6,785         (14,162)          5,069

    Settlements of derivative financial instruments                        1,167                                            7,664            2,682          18,300

    Impairment of oil and gas properties                                  27,081                                            1,915           27,081           1,938

    Non-cash interest expense                                              2,854                                              275            3,434             550

    Unrealized gain on warrants                                            (613)                                               -         (2,884)              -

    Changes in operating assets and liabilities:

    Accounts receivable                                                      802                                          (1,506)         (1,308)          (818)

    Prepaid expenses and other assets                                    (2,632)                                             333          (3,010)            229

    Accounts payable and accrued expenses                                  3,861                                         (18,266)          11,028         (8,479)
                                                                           -----                                          -------           ------          ------

    Net cash provided by operating activities                              4,377                                         (10,181)          17,112           7,533
                                                                           -----                                          -------           ------           -----


    Investing activities

    Acquisition of oil and gas properties                              (106,615)                                           (652)       (108,179)        (2,717)

    Development of oil and gas properties                               (18,908)                                         (4,417)        (37,750)       (19,003)

    Proceeds from sales of oil and gas properties                              -                                               -               -          2,720

    Purchases of other property and equipment                            (1,509)                                           2,720          (1,522)          (177)
                                                                          ------                                            -----           ------            ----

    Net cash used in investing activities                              (127,032)                                         (2,349)       (147,451)       (19,177)
                                                                        --------                                           ------         --------         -------


    Financing activities

    Proceeds from borrowings and related party
     borrowings                                                           67,079                                           16,500           76,079          23,500

    Payments on borrowings and related party
     borrowings                                                         (17,000)                                         (3,000)        (19,500)       (11,000)

    Proceeds from sale of preferred stock                                 77,800                                                -          77,800               -

    Cost to issue equity                                                       -                                               -         (1,000)           (15)

    Payments of debt issuance costs                                      (2,537)                                               -         (2,537)              -

    Changes in other notes payable                                           (3)                                               6              (3)              -
                                                                             ---                                              ---              ---             ---

    Net cash provided by financing activities                            125,339                                           13,506          130,839          12,485
                                                                         -------                                           ------          -------          ------


    Effect of exchange rate changes on cash and
     cash equivalents                                                          -                                            (17)               -           (16)
                                                                             ---                                             ---              ---            ---


    Increase in cash and cash equivalents                                  2,684                                              959              500             825

    Cash and cash equivalents, beginning of the
     period                                                                3,884                                            4,188            6,068           4,322
                                                                           -----                                            -----            -----           -----

    Cash and cash equivalents, end of the period                          $6,568                                           $5,147           $6,568          $5,147
                                                                          ======                                           ======           ======          ======

                                                                  2017                     2016

    Supplemental information:

    Net cash used by operating activities:

    Cash paid for taxes                                                   $2,240                           $                    -          $2,240   $           -

    Cash paid for interest expense                                         9,762                                           10,377           10,674          11,082

    Non-cash investing and financing activities:

    Preferred stock issued for asset acquisition                         $10,795                           $                    -         $10,795   $           -

    Cost to issue equity included in accounts
     payable                                                               1,500                                                -           1,500               -

NON-GAAP FINANCIAL MEASURES (Unaudited)

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDAX

Adjusted EBITDAX is not a measure of net income as determined by GAAP. Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by management and external users of the Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDAX as net (loss) income before depreciation, depletion, amortization and accretion, exploration costs, non-recurring costs, (gain) loss on sales of oil and natural gas properties, impairment of oil and gas properties, stock-based compensation, interest expense, income tax (benefit) expense, rig standby expense, other income (expense) and unrealized (gain) loss on derivative financial instruments and unrealized (gain) loss on warrants.

Management believes Adjusted EBITDAX provides useful information to investors because it assists investors in the evaluation of the Company's operating performance and comparison of the results of the Company's operations from period to period without regard to its financing methods or capital structure. The Company excludes the items listed above from net income in arriving at Adjusted EBITDAX to eliminate the impact of certain non-cash items or because these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDAX. The Company's computations of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies.

The following table presents a reconciliation of Adjusted EBITDAX to the GAAP financial measure of net income (loss) for each of the periods indicated.


                        Three Months Ended June 30,          Six Months Ended June 30,

    ($ in thousands)     2017                       2016                    2017               2016
    ---------------      ----                       ----                    ----               ----

    Net Loss                      $(23,457)              $(12,844)                     $(20,392)    $(24,141)

    Income tax benefit             (12,208)                (6,245)                      (10,621)     (12,040)

    Interest expense
     (1)                             9,115                   6,174                         14,147        12,298

    Exploration expense                 205                       1                            205             1

    Depletion,
     depreciation,
     amortization and
     accretion                       12,551                  12,549                         24,693        27,744
                                     ------                  ------                         ------        ------

    EBITDAX                        (13,794)                  (365)                         8,032         3,862

    Rig standby expense
     (2)                                 -                  1,584                              -        1,897

    Non-recurring
     costs (3)                        3,127                     321                          3,127           644

    Stock-based
     compensation                       461                      95                            639           190

    Loss (gain) on sale
     of oil and gas
     properties                         205                 (1,531)                           348       (1,531)

    Impairment of oil
     and gas properties              27,081                   1,938                         27,081         1,938

    Unrealized (gain)
     loss on derivative
     financial
     instruments                    (3,770)                 13,176                       (12,109)       21,605

    Unrealized gain on
     warrants                         (613)                      -                       (2,884)            -

    Other (income)
     expense                           (46)                    819                           (50)        1,025
                                        ---                     ---                            ---         -----

    Adjusted EBITDAX                $12,651                 $16,037                        $24,184       $29,630

    (1) Interest expense also includes
     Amortization of finance costs and
     Dividends paid on Series A
     Preferred Stock

    (2) Represents a non-recurring
     cost associated with a rig
     contract that expired in July 2016

    (3) Non-recurring costs consists
     of Acquisitions Costs and General
     and Administrative Expenses
     related to the re-domiciliation
     to the United States, and listing
     on NASDAQ



                                                                               Lonestar Resources US Inc.

                                                 Reconciliation of Income Before Income Taxes As Reported To Income Before Income Taxes

                                                             Excluding Certain Items, a non-GAAP measure (Adjusted Income)

                                                                                      (Unaudited)


                                         Three Months Ended June 30,                                      Six Months Ended June 30,

                                          2017                                    2016                                    2017                  2016
                                          ----                                    ----                                    ----                  ----

                                              (In thousands)                                              (In thousands)

    Loss before income taxes, as
     reported                                       $(35,369)                                          $(19,089)                        $(30,717)    $(36,182)

    Adjustments for special items:

    Impairment of oil and gas properties               27,081                                               1,938                            27,081         1,938

    Early payment premium on Second Lien
     Notes                                              1,050                                                   -                            1,050             -

    Warrant discount recognition due to
     early payment on Second Lien Notes                 1,991                                                   -                            1,991             -

    Legal expenses for corporate
     governance and public reporting
     setup                                                399                                                   -                              399             -

    General & administrative non-
     recurring costs                                      205                                                 321                               212           644

    Rig standby expense                                     -                                              1,584                                 -        1,897

    Stock based compensation                              461                                                  95                               639           190

    Advisory fees for completion of
     acquisition                                        2,726                                                   -                            2,726             -
                                                        -----                                                 ---                            -----           ---

    Income (loss) before income taxes,
     as adjusted                                      (1,456)                                           (15,151)                            3,381      (31,513)


    Income tax benefit (expense), as
     adjusted

    Current                                                 -                                                  -                                -            -

    Deferred (a)                                          506                                               5,263                           (1,174)       10,948
                                                          ---                                               -----                            ------        ------

    Net income (loss) excluding certain
     items, a non-GAAP measure                         $(950)                                           $(9,888)                           $2,207     $(20,565)
                                                        =====                                             =======                            ======      ========


    Preferred stock dividends                           (296)                                              (296)                            (296)        (296)
                                                         ----                                                ----                              ----          ----

    Net income (loss) after preferred
     dividends excluding certain items,
     a non-GAAP measure                              $(1,246)                                          $(10,184)                           $1,911     $(20,861)
                                                      =======                                            ========                            ======      ========


    Non-GAAP income per common share

    Basic                                             $(0.06)                                            $(1.35)                            $0.09       $(2.77)

    Diluted                                           $(0.06)                                            $(1.35)                            $0.09       $(2.77)


    Non-GAAP diluted shares
     outstanding, if dilutive                      21,822,015                                           7,522,025                        21,822,015     7,522,025


    (a) Deferred taxes for 2017 and
     2016 are estimated to be
     approximately 35%



                                                                 Lonestar Resources US Inc.

                                                                     Operating Results

                                                                        (Unaudited)


                                       For the three months                  For the six months

                                          ended June 30,                       ended June 30,
                                        --------------                    --------------

                                       2017                     2016                                 2017    2016
                                       ----                     ----                                 ----    ----

    Daily production volumes by
     product -

    Crude oil (MBbls)                                     3,564                                3,979       3,408   3,696

    NGLs (MBbls)                                          1,004                                1,039         966   1,222

    Natural gas (MMcf)                                    6,402                                9,332       6,466   9,874
                                                          -----                                -----       -----   -----

    Total barrels of oil equivalent
     (Boe/d)                                              5,635                                6,573       5,452   6,564
                                                          =====                                =====       =====   =====


    Daily production volumes by region
     (Boe/d) -

    Eagle Ford Shale                                      5,635                                5,991       5,452   5,974

    Conventional                                              -                                 582           -    590
                                                            ---                                 ---         ---    ---

    Total barrels of oil equivalent
     (Boe/d)                                              5,635                                6,573       5,452   6,564
                                                          =====                                =====       =====   =====


    Average realized prices -

    Crude oil ($ per Bbl)                                $46.52                               $41.89      $47.95  $35.85

    NGLs ($ per Bbl)                                      14.43                                10.58       17.10    7.30

    Natural gas ($ per Mcf)                                2.96                                 1.93        2.72    1.81
                                                           ----                                 ----        ----    ----

    Total Oil Equivalent, excluding
     the effect from hedging                             $35.36                               $29.77      $36.23  $24.28
                                                         ======                               ======      ======  ======

    Total Oil Equivalent, including
     the effect from hedging                             $38.57                               $40.45      $38.31  $38.12
                                                         ======                               ======      ======  ======


    Operating Expenses per BOE:

    Lease operating and gas gathering                     $6.87                                $7.35       $6.56   $7.33

    Production, ad valorem, and
     severance taxes                                       2.10                                 2.04        2.14    1.79

    Depreciation, depletion and
     amortization                                         24.48                                20.98       25.02   23.22

    General and administrative                             6.12                                 4.78        5.72    4.71


                                                               Proforma Lonestar Resources US Inc.

                                                                        Adjusted EBITDAX

                                                                           (Unaudited)


                                                   Three Months Ended June 30, 2017

    ($ in thousands)            Lonestar                          Marquis                          Battlecat Proforma
    ---------------             --------                          -------                          --------- --------

    Net Income (Loss)                    $(23,457)                                         $2,527                $(38)  $(20,968)

    Income tax benefit                    (12,208)                                              -                   -   (12,208)

    Interest expense                         9,115                                               -                   -      9,115

    Exploration expense                        205                                               -                   -        205

    Depletion, depreciation,
     amortization and accretion             12,551                                             945                  278      13,774
                                            ------                                             ---                  ---      ------

    EBITDAX                               (13,794)                                          3,472                  240    (10,082)

    Rig standby expense (1)                      -                                              -                   -          -

    Non-recurring costs (2)                  3,127                                               -                   -      3,127

    Stock-based compensation                   461                                               -                   -        461

    Loss on sale of oil and gas
     properties                                205                                               -                   -        205

    Impairment of oil and gas
     properties                             27,081                                               -                   -     27,081

    Unrealized gain on
     derivative financial
     instruments                           (3,770)                                              -                   -    (3,770)

    Unrealized gain on warrants              (613)                                              -                   -      (613)

    Other income                              (46)                                              -                   -       (46)
                                               ---                                             ---                 ---        ---

    Adjusted EBITDAX                       $12,651                                          $3,472                 $240     $16,363


                                                                             Proforma Lonestar Resources US Inc.

                                                                                      Operating Results

                                                                                         (Unaudited)


                                            Three Months Ended June 30,
                                            ---------------------------

                                       LONE                           MARQUIS                                    BATTLECAT PROFORMA
                                       ----                           -------                                    --------- --------

    Daily production volumes by
     product -

    Crude oil (MBbls)                               3,564                                                 1,133                        177  4,874

    NGLs (MBbls)                                    1,004                                                   229                          - 1,233

    Natural gas (MMcf)                              6,402                                                 1,035                          - 7,436
                                                    -----                                                 -----                        --- -----

    Total barrels of oil equivalent
     (Boe/d)                                        5,635                                                 1,534                        177  7,346
                                                    =====                                                 =====                        ===  =====


    Daily production volumes by region
     (Boe/d) -

    Eagle Ford Shale                                5,635                                                 1,534                        177  7,347
                                                    -----                                                 -----                        ---  -----

    Total barrels of oil equivalent
     (Boe/d)                                        5,635                                                 1,534                        177  7,347
                                                    =====                                                 =====                        ===  =====


    Average realized prices -

    Crude oil ($ per Bbl)                          $46.52                                                $47.42                     $48.32 $46.79

    NGLs ($ per Bbl)                                14.43                                                 16.51                          - 14.83

    Natural gas ($ per Mcf)                          2.96                                                  1.50                          -  2.76
                                                     ----                                                  ----                        ---  ----

    Total Oil Equivalent, excluding
     the effect from hedging                       $35.36                                                $38.49                     $48.32 $36.32
                                                   ======                                                ======                     ====== ======

    Total Oil Equivalent, including
     the effect from hedging                       $38.57                                                $38.49                     $48.32 $38.79
                                                   ======                                                ======                     ====== ======


    Operating Expenses per BOE:

    Lease operating and gas gathering               $6.87                                                $11.75                     $31.23  $8.46

    Production, ad valorem, and
     severance taxes                                 2.10                                                  1.87                       2.23   2.06

    General and administrative                       6.12                                                  0.00                       0.00   4.72

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SOURCE Lonestar Resources US, Inc.