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Lilis Energy Says First Two Wolfcamp Wells Beat Expectations

San Antonio-based Lilis Energy Inc. (LLEX), which began trading on the Nasdaq Tuesday, has drilled and completed its first two operated horizontal Wolfcamp B wells in the Delaware Basin, a sub-basin of the Permian, with initial production rates “significantly exceeding” the expected type curve, the company said Wednesday.

“To drill two successful Wolfcamp B wells on our first operated efforts is a real testament to the technical talents possessed by our operational team…” said CEO Avi Mirman.

The Bison #1H was turned to sales on Jan. 19 and had a recent 24-hour rate of 2,128 boe/d (2,375 boe/d on a three-stream basis) (75% liquids), or 344 boe/d per 1,000 lateral feet. The well has been online for 55 days and is currently producing on a restricted choke with more than 1,800 lbs of flowing tubing pressure. The Bison's 6,897-foot lateral was completed with 35 stages (200-foot plug to plug spacing) with 2,200 pounds/foot of sand. The Bison #1H is currently performing above the 923,000 boe corporate type curve for a 1.5-mile lateral and has not yet reached a peak 30-day initial production rate.

The Grizzly #1H well was turned to sales on Feb. 9 and had a recent 24-hour rate of 1,392 boe/d (1,666 boe/d on a three-stream basis) (65% liquids) or 406 boe/d per 1,000 lateral feet. The well has been online for 34 days and is currently producing on a restricted choke with more than 1,850 pounds of flowing tubing pressure. The Grizzly's 4,103-foot lateral was completed with 20 stages (200-foot plug to plug spacing) with 2,200 pounds/foot of sand. The well is currently performing above the 738,000 boe corporate type curve for a one-mile lateral and has not yet reached a peak 30-day initial production rate.

The Hippo #1H well is currently at a total depth of 16,580 feet measured depth (MD) and is scheduled for hydraulic fracturing next week. The well is anticipated to have a 4,000-foot treatable lateral completed with 20 stages (200-foot plug to plug spacing) with 2,200 pounds/foot of sand.

The Lion #1H well is scheduled to begin drilling on Tuesday (March 21) and is anticipated to have a 4,000-foot treatable lateral completed with 20 stages.

The company plans to spend $45 million this year to drill and complete 10 gross (eight net) wells, primarily targeting the Wolfcamp B. Based on recent offset operator activity that continues to derisk and delineate multiple benches prospective across its acreage position, Lilis may drill additional zones in the second half of 2017. The company plans to continue upgrading its existing infrastructure, which could include drilling additional water and saltwater disposal wells.

Funding for the drilling and completion budget through December is expected to come from cash on hand, cash flow from operations and availability under the company's $50 million term credit facility.

The company has increased its Delaware leasehold position from the initial acquisition footprint of about 3,500 net acres to more than 7,000. More acreage acquisitions are planned. Besides the Delaware, Lilis is also active in the Denver-Julesburg Basin.

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