Note 1. Basis of Presentation

Organization and Nature of Operations

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 play in South Texas, primarily through our subsidiary, Lonestar Resources America, Inc. (“LRAI”). Lonestar is a Delaware corporation with our common stock listed and traded on the Nasdaq Global Select Market under symbol “LONE”.

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements of Lonestar Resources US Inc., and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These financial statements and the notes thereto should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017 (the “Form 10-K”). Unless indicated otherwise or the context requires, the terms “we,” “our,” “us,” “Company” or “Lonestar,” refer to Lonestar Resources US Inc. and its subsidiaries.

Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end, and the results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the year. In management’s opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of our consolidated financial position as of March 31, 2018 and 2017, our consolidated results of operations for the three months ended March 31, 2018 and 2017, and our consolidated cash flows for the three months ended March 31, 2018 and 2017.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on our reported net (loss) income, current assets, current liabilities, total liabilities or stockholders’ equity.

Net (Loss) Income per Common Share

Basic net (loss) income per common share is computed by dividing the net (loss) income attributable to common stockholders by the weighted average number of common stock outstanding during the period. Diluted net (loss) income per common share is calculated in the same manner but includes the impact of potentially dilutive securities. Potentially dilutive securities consist of warrants, equity compensation awards and preferred equity shares under the as-converted method.

The following table is a reconciliation of the weighted average shares used in the basic and diluted net (loss) income per common share calculations for the periods indicated:

	Three Months Ended
	March 31,
(Unaudited)	2018		2017
Basic weighted average common shares outstanding		24,559,132		21,822,015
Potentially dilutive securities
Warrants		—		760,000
Restricted stock units		—		251,600
Diluted weighted average common shares outstanding		24,559,132		22,833,615

Basic weighted average common shares exclude shares of non-vested restricted stock. As these restricted shares vest, they will be included in the shares outstanding used to calculate basic net (loss) income per common share.

The following securities could potentially dilute earnings per share in the future, but were excluded from the computation of diluted net (loss) income per share, as their effect would have been antidilutive:

	Three Months Ended
	March 31,
(Unaudited)	2018		2017
Preferred stock		14,004,823		—
Warrants		760,000		—
Stock appreciation rights		690,000		—
Restricted stock units		448,709		—