Earthstone Energy NY:ESTE

Buyout for ESTE I think I will just hold

2023-08-21 07:06 ET - News Release


MIDLAND, Texas and THE WOODLANDS, Texas, Aug. 21, 2023 (GLOBE NEWSWIRE) -- Permian Resources Corporation (“Permian Resources” or the “Company”) (NYSE: PR) and Earthstone Energy, Inc. (“Earthstone Energy” or “Earthstone”) (NYSE: ESTE) today announced that they have entered into a definitive agreement under which Permian Resources will acquire Earthstone in an all-stock transaction valued at approximately $4.5 billion, inclusive of Earthstone’s net debt. Under the terms of the transaction, each share of Earthstone common stock will be exchanged for a fixed ratio of 1.446 shares of Permian Resources common stock. The transaction strengthens Permian Resources’ position as a leading Delaware Basin independent E&P with over 400,000 Permian net acres, pro forma production of approximately 300,000 Boe/d1 and an enhanced free cash flow profile to increase returns to shareholders.

Key Highlights

Enhances leading position in the Delaware Basin and increases operating size and scale
Adds significant high-quality inventory offset the Company’s existing core acreage in New Mexico
Highly accretive to key financial metrics before synergies, including operating cash flow, free cash flow and net asset value per share
Expected to be accretive to free cash flow per share by an average of >30% per year during the next two years and >25% per year during the next five and ten years
Expect to achieve synergies that will drive ~$175 million of annual cash flow improvement
Improved free cash flow profile supports 20% increase to base dividend per share and higher future variable shareholder returns
Meets and exceeds all of Permian Resources’ rigorous investment criteria
Maintains strong balance sheet with expected leverage2 of less than 1.0x at closing
Represents an 8% premium to the exchange ratio based on the 20-day volume weighted average share prices

I own a good chunk too and a new high today, almost hit $18

Gambler, I like this one and just broke out on the chart yesterday

Ron has picked some awesome oil&gas stocks, so I am starting a topic here

First Quarter 2022 Highlights

1. Executed the Bighorn Acquisition PSA(1) on January 30, 2022, which closed subsequent to quarter-end on April 14, 2022
   
2. In connection with the closing of the Bighorn Acquisition, we also closed a $550 million Notes Offering comprised of 8.0% senior unsecured notes on April 12, 2022
   
3. Executed a Securities Purchase Agreement(2) on January 30, 2022 for $280 million of Preferred Stock in a private placement, which closed subsequent to quarter-end on April 14, 2022
   
4. Closed the Chisholm Acquisition(3) on February 15,2022
   
5. Net loss attributable to Earthstone Energy, Inc. of $33.5 million, or $(0.53) per Diluted Share
   
6. Net loss of $51.9 million, or $(0.53) per Adjusted Diluted Share(4)
   
7. Adjusted net income(4) of $76.2 million, or $0.78 per Adjusted Diluted Share(4)
   
8. Adjusted EBITDAX(4) of $123.1 million, up 44% compared to 4Q 2021
   
9. Net cash provided by operating activities of $83.0 million
   
10. Free Cash Flow(4) of $35.7 million, up 25% compared to 4Q 2021
    
11. Average daily production of 35,509 Boepd(5), up 17% compared to 4Q 2021
    
12. Capital expenditures of $82.1 million, 16% below the midpoint of 1Q 2022 guidance

Operations Update

During the first quarter of 2022, we completed and turned to sales five gross (5.0 net) operated wells and commenced drilling ten gross (8.3 net) operated wells in the Midland Basin. In April we completed six gross (6.0 net) wells in Upton County on our Benedum pad. These wells are producing from the Wolfcamp A, B and C targets with initial average results of approximately 900 Boepd (88% oil). These wells averaged approximately 7,600 feet of completed lateral with drilling and completion costs of approximately $800 per foot.

After acquiring the Delaware Basin assets on February 15, 2022, we commenced drilling three gross (1.9 net) operated wells in the Delaware Basin in the first quarter of 2022. We brought online the two-well Minis pad, our first Earthstone completed wells, in April. These two wells, which targeted the Third Bone Spring Harkey Sand formation and are approximately 7,500-foot laterals, have averaged approximately 1,600 Boepd (87% oil) in the first 24 days online.

We continue to operate a four-rig drilling program, with two drilling rigs in the Midland Basin and two drilling rigs in the Delaware Basin. Currently, in the Midland Basin, one rig is drilling a five-well pad in our Barnhart project area in Irion County (100% W.I., 9,900-foot average lateral length). The other rig is drilling a four-well project in our TSRH area in Reagan County (65% W.I., 14,300-foot average lateral length). With two rigs operating in the Midland Basin, we anticipate spudding 40 gross (35.8 net) operated wells and bringing 40 gross (36.7 net) operated wells online in 2022. In the Delaware Basin, one rig is drilling in our Ram project area in Lea County (98% W.I., 10,000-foot average lateral length) on a two-well pad. The other rig is drilling a two-well pad in our Cletus project area in Eddy County (89% W.I., 10,000-foot average lateral length). With two rigs operating in the Delaware Basin, we anticipate spudding 20 gross (11.8 net) operated wells and bringing 18 gross (11.6 net) operated wells online in 2022.

Liquidity, Capital Expenditure Update and Equity Capitalization

As of March 31, 2022, we had $0.5 million in cash and $624.2 million of long-term debt outstanding under our senior secured revolving credit facility (the "Credit Facility") with a borrowing base of $825.0 million. With the $200.8 million of undrawn borrowing base capacity and $0.5 million in cash, we had total liquidity of approximately $201.3 million. Subsequent to March 31, 2022, Earthstone closed on its previously announced Bighorn Acquisition, closed the $550 million Notes Offering, closed the $280 million private placement of Preferred Stock and paid the $70 million of deferred cash consideration for the Chisholm Acquisition. When adjusted to include the impact of these activities and a voluntary reduction in the elected commitments under the Credit Facility to $800 million, we had estimated total debt outstanding of $1,013 million, comprised of $550 million of senior unsecured notes and $463 million of debt outstanding under our Credit Facility, leaving $337 million of undrawn availability on the $800 million of total commitments under our Credit Facility.