Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Lonestar currently has two drilling rigs under contract, each of which provides for a drilling rate of $22.5 thousand per day. The first rig contract commenced in January 2019 and terminates in July 2019 with an early termination fee of $7.0 thousand per day times the remaining number of days left on the contract after the termination date. The second rig contract is an evergreen contract that requires a 30-days cancellation notice with no early termination fees.

In November 2018, the Company signed a dedicated fleet contract that provides for hydraulic fracturing and wireline services at variable rates depending on the work performed. The contract provides for services to cover fourteen wells planned to be drilled during 2019 and expires on December 31, 2019 with no further provisions for early termination. The Company has the ability to further extend the contract on any additional wells added to the 2019 drilling schedule through the expiration date of the contract.

From time to time, we are subject to legal proceedings and claims that arise in the ordinary course of business. Like other crude oil and gas producers and marketers, our operations are subject to extensive and rapidly changing federal and state environmental, health and safety, and other laws and regulations governing air emissions, wastewater discharges and solid and hazardous waste management activities. We are not aware of any pending or overtly threatened legal action against us that could have a material impact on our business.