Provides Balance Sheet and Liquidity
Update
Provides Estimated Average Daily Production
for the First Quarter of 2022
THE
WOODLANDS, Texas, April 14,
2022 /PRNewswire/ -- Earthstone Energy, Inc. (NYSE:
ESTE) ("Earthstone", the "Company", "our" or "we"), today
announced the closing of the acquisition of assets of privately
held Bighorn Permian Resources, LLC ("Bighorn") in the Midland
Basin (the "Bighorn Acquisition"). The Company also announced
the closing of a $550 million private
offering of senior unsecured notes (the "Notes Offering"); a
$280 million private placement of
equity (the "PIPE"); and an amendment to the Company's revolving
credit facility (the "Credit Facility").
Further, the Company provided an update on key balance sheet
metrics as of March 31, 2022, and as
adjusted for the recent closings of the Bighorn Acquisition, the
Notes Offering, the PIPE and the amendment to the Credit
Facility. Additionally, the Company provided an estimate of
daily production sales volumes for the first quarter of 2022.
Highlights:
- Closed the Bighorn Acquisition on April
14, 2022
- The cash consideration for the Bighorn Acquisition was reduced
from the announced $770 million by
approximately $131 million to
$639 million and the equity
consideration was reduced from the announced approximately 6.8
million shares of Class A Common Stock by approximately 1.2 million
shares to 5.7 million shares, both based on preliminary purchase
price adjustments
- Closed the $550 million Notes
Offering comprised of 8.0% senior unsecured notes on April 12, 2022
- Closed the $280 million PIPE on
April 14, 2022
- Closed on an amendment to the credit agreement governing the
Credit Facility which, among other things, increased the borrowing
base to $1.325 billion on
April 14, 2022
- Voluntarily elected to reduce commitments under the borrowing
base of the Credit Facility to $800
million on April 14, 2022
- Estimates that the Company had $337
million of undrawn availability on the $800 million of commitments under the
$1.325 billion borrowing base on the
Credit Facility as of March 31, 2022,
as adjusted for the transactions described herein
Operations Update:
- Earthstone estimates its average daily production for the first
quarter of 2022 to be approximately 35,500 Boepd (44% oil, 26%
NGLs, 30% natural gas) which only includes 45 days of production
from the assets we acquired in the northern Delaware Basin from Chisholm
- Earthstone continues to operate two drilling rigs in the
Midland Basin and two drilling rigs in the northern Delaware Basin
Management Comments
Robert J. Anderson, President and
Chief Executive Officer of Earthstone, stated, "We are pleased to
have taken multiple significant steps in the ongoing transformation
of Earthstone as we have closed on the Bighorn Acquisition and on
significant debt and equity financings this week. Based
on the purchase price adjustments at closing as a result of the
significant cash flows from the effective date, we will have funded
the Bighorn Acquisition with well over 50% equity in the form of
direct consideration to the seller and the new equity investment
from the PIPE, maintaining our conservative capital structure.
"Combining the recently closed Chisholm Acquisition and its
high-quality inventory in the northern Delaware Basin with the Bighorn Acquisition
and its low-decline, high free cash flow production base in the
Midland Basin has created significant incremental scale for
Earthstone. We believe that the balance of high return
drilling inventory and strong free cash flow production base within
Earthstone creates an optimal opportunity for value creation as we
continue our 2022 operating and capital plan.
"Our near-term focus will be to continue integration efforts on
both the northern Delaware Basin
assets and the newly acquired Midland Basin assets. We
expect to continue our pursuit of additional scale through
accretive acquisitions that we believe will result in continued
improved cost structure and creation of shareholder value, while
always keeping our balance sheet strength as the top priority."
Liquidity Update
As of March 31, 2022, we had
$1 million in cash and $624 million of long-term debt
outstanding under our Credit Facility with a borrowing base of
$825
million. Subsequent to March 31,
2022, Earthstone closed on its previously announced
Bighorn Acquisition, closed the $550
million Notes Offering, closed the $280 million PIPE and paid the $70 million of deferred cash consideration for
the Chisholm Acquisition. When adjusted to include the
impact of these activities, 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.
Board Appointment
In conjunction with the closing of the PIPE, the Earthstone
Board of Directors has expanded to eleven members with the
appointment of Mr. Frost Cochran. Mr. Cochran is a Managing Director and a founding
partner of Post Oak Energy Capital, L.P.
About Earthstone
Earthstone Energy, Inc. is a growth-oriented, independent energy
company engaged in acquisitions and the development and operation
of oil and natural gas properties. Its primary assets are located
in the Permian Basin of west Texas
and New Mexico. Earthstone is
listed on the New York Stock Exchange under the symbol "ESTE." For
more information, visit Earthstone's website at
www.earthstoneenergy.com.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act, and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Statements that are not strictly historical statements
constitute forward-looking statements and may often, but not
always, be identified by the use of such words such as "expects,"
"believes," "intends," "anticipates," "plans," "estimates,"
"forecast," "guidance," "potential," "possible," or "probable" or
statements that certain actions, events or results "may," "will,"
"should," or "could" be taken, occur or be achieved.
Forward-looking statements are based on current expectations and
assumptions and analyses made by Earthstone and its management in
light of experience and perception of historical trends, current
conditions and expected future developments, as well as other
factors appropriate under the circumstances. However, whether
actual results and developments will conform to expectations is
subject to a number of material risks and uncertainties, including
but not limited to: Earthstone's ability to integrate its combined
operations successfully after recent acquisitions completed in 2021
and 2022, and the Bighorn Acquisition and achieve anticipated
benefits from them; risks relating to any unforeseen liabilities of
Earthstone, or related to the recent acquisitions completed in 2021
and 2022, or the Bighorn Acquisition; declines in oil, natural gas
liquids or natural gas prices; the level of success in exploration,
development and production activities; adverse weather conditions
that may negatively impact development or production activities;
the timing of exploration and development expenditures;
inaccuracies of reserve estimates or assumptions underlying them;
revisions to reserve estimates as a result of changes in commodity
prices; impacts to financial statements as a result of impairment
write-downs; risks related to level of indebtedness and periodic
redeterminations of the borrowing base under the Credit Facility;
Earthstone's ability to generate sufficient cash flows from
operations to meet the internally funded portion of its capital
expenditures budget; Earthstone's ability to obtain external
capital to finance exploration and development operations and
acquisitions; the impacts of hedging on results of operations;
uninsured or underinsured losses resulting from oil and natural gas
operations; Earthstone's ability to replace oil and natural gas
reserves; and any loss of senior management or technical personnel.
Earthstone's annual report on Form 10-K for the year ended
December 31, 2021, recent current
reports on Form 8-K, and other Securities and Exchange Commission
("SEC") filings discuss some of the important risk factors
identified that may affect Earthstone's business, results of
operations and financial condition. Earthstone undertakes no
obligation to revise or update publicly any forward-looking
statements except as required by law.
Contact
Mark Lumpkin, Jr.
Executive Vice President – Chief Financial
Officer
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woodlands, TX 77380
281-298-4246
mark.lumpkin@earthstoneenergy.com
Scott Thelander
Vice President of Finance
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woodlands, TX 77380
281-298-4246
scott@earthstoneenergy.com
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SOURCE Earthstone Energy, Inc.