ESTE Earthstone Energy Inc

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 1)*

Earthstone Energy, Inc.

(Name of Issuer)

Class A Common Stock, par value $0.001 per share

(Title of Class of Securities)

27032D304

(CUSIP Number)

Ryan J. Mathews

Post Oak Energy Capital, LP

34 S. Wynden Drive, Suite 300

Houston, TX 77056

(713) 571-9393

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

Copies to:

Jesse P. Myers and Michael De Voe Piazza

Gibson, Dunn & Crutcher LLP

811 Main Street

Houston, TX 77002

(346) 718-6600

July 6, 2022

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box:  ☐

NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Explanatory Note

This Amendment No. 1 (this “Amendment”) amends and supplements the Schedule 13D filed on April 22, 2022 (the “Original 13D” and, as further amended and supplemented by this Amendment, the “Schedule 13D”) by Cypress Investments, LLC, a Delaware limited liability Company (“Cypress”), Post Oak Energy Capital, LP, a Delaware limited partnership (“Post Oak”), and Post Oak Energy Holdings, LLC, a Delaware limited liability company (“POEH”), and relates to the beneficial ownership of the shares of Class A common stock, par value $0.001 per share (“Class A Common Stock”), of Earthstone Energy, Inc., a Delaware corporation (“Earthstone”). Except as otherwise specified in this Amendment, all items left blank remain unchanged in all material respects and any items that are reported are deemed to amend and restate the corresponding items in the Original Schedule 13D in their entirety. Capitalized terms used but not defined herein have the respective meanings ascribed to them in the Original Schedule 13D.

This Amendment is being filed on behalf of the reporting persons identified on the cover pages of this Amendment.

Item 2. Identity and Background

This Amendment amends and restates Item 2 of the Original 13D in its entirety as set forth below:

(a) This Schedule 13D is filed jointly by the following entities (each, a “Reporting Person” and, collectively, the “Reporting Persons”):

(i) Cypress Investments, LLC, a Delaware limited liability company (“Cypress”). Cypress directly holds 10,017,213 shares of Class A Common Stock.

(ii) Post Oak Energy Capital, LP, a Delaware limited partnership (“Post Oak”), is the sole managing member of Cypress.

(iii) Post Oak Energy Holdings, LLC, a Delaware limited liability company (“POEH”), is the sole general partner of Post Oak.

The limited partners and members (collectively, the “Related Persons”) of Post Oak and POEH, respectively, are set forth in Schedule I hereto, including each Related Person’s present principal occupation, which is incorporated herein by reference. The principal business address of each of the Related Persons is c/o Post Oak Energy Capital, LP, 34 S. Wynden Drive, Suite 300, Houston, TX 77056.

By virtue of the agreements made pursuant to the Voting Agreement (as defined below), the Reporting Persons, EnCap Investments L.P. and the Warburg Parties (as defined in the Voting Agreement) may be deemed to constitute a group for purposes of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Reporting Persons expressly disclaim any beneficial ownership of shares of Common Stock (as defined below) or any other equity security beneficially owned by EnCap Investments L.P., the Warburg Parties or any of their respective affiliates and such shares are not the subject of this Schedule 13D. This Schedule 13D does not reflect any Common Stock or any other equity securities beneficially owned by EnCap Investments L.P., the Warburg Parties or any of their respective affiliates. For a description of the relationship between the Reporting Persons, EnCap Investments L.P. and the Warburg Parties, see Item 4 below.

(b) The address of the principal business office of each of the Reporting Persons is 34 S. Wynden Drive, Suite 300, Houston, TX 77056.

(c) The principal business of each of the Reporting Persons is investing in securities of energy companies and related assets, including securities of Earthstone.

(d) None of the Reporting Persons, nor, to the best of their knowledge, any Related Person, has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

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(e) None of the Reporting Persons, nor, to the best of their knowledge, any Related Person, has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration

This Amendment amends and restates Item 3 of the Original 13D in its entirety as set forth below:

On April 14, 2022 (the “Closing Date”), Cypress purchased 60,000 shares of Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), of Earthstone at a price of $1,000 per share pursuant to the Securities Purchase Agreement, dated as of January 30, 2022, by and among Earthstone, Cypress and EnCap Energy Capital Fund XI, L.P. (“EnCap Fund XI”) (the “PIPE SPA”). On July 6, 2022 (the 21st calendar day after Earthstone mailed a definitive information statement to holders of its Class A Common Stock and Class B common stock, par value $0.001 per share (“Class B Common Stock” and, together with the Class A Common Stock, “Common Stock”), notifying them that holders of a majority of the outstanding Common Stock had consented to the conversion feature of the Series A Preferred Stock and the issuance of Class A Common Stock upon conversion of the Series A Preferred Stock), each share of Series A Preferred Stock automatically converted into shares of Class A Common Stock. Each share of Series A Preferred Stock converted into a number of shares of Class A Common Stock determined by dividing the liquidation preference of the Series A Preferred Stock, which is equal to the purchase price per share of Series A Preferred Stock plus the amount of any accrued and unpaid dividends through the date of conversion, by the conversion price. Because the Series A Preferred Stock converted into Class A Common Stock prior to October 1, 2022, no dividends were paid or accrued on the Series A Preferred Stock. Accordingly, (i) each share of Series A Preferred Stock automatically converted into 90.0900900900901 shares of Class A Common Stock at the initial conversion price of $11.10 per share of Class A Common Stock and (ii) the Series A Preferred Stock held by Cypress automatically converted into an aggregate of 5,405,405 shares of Class A Common Stock (and the Series A Preferred Stock held by Cypress and EnCap Fund XI automatically converted, in the aggregate, into 25,225,225 shares of Class A Common Stock). As of January 30, 2022, Earthstone had received written consent for the conversion feature of the Series A Preferred Stock and the issuance of the Class A Common Stock issuable upon conversion of the Series A Preferred Stock from stockholders representing more than 50% of Earthstone’s outstanding Common Stock.

On the Closing Date, Cypress purchased 4,611,808 shares of Class A Common Stock from EnCap Energy Capital Fund VII, L.P. (“EnCap Fund VII”) at a price of $11.10 per share pursuant to a Securities Purchase Agreement, dated as of January 30, 2022, by and between Cypress and EnCap Fund VII (the “EnCap SPA” and, together with the PIPE SPA, the “SPAs”).

Item 4. Purpose of Transaction

This Amendment amends and restates Item 3 of the Original 13D in its entirety as set forth below:

General

The Reporting Persons acquired the securities covered by this Schedule 13D for investment purposes.

The Reporting Persons acquired the securities described in this Schedule 13D in connection with the closings of the SPAs and the conversion on July 6, 2022 of the 60,000 shares of Series A Preferred Stock acquired by Cypress pursuant to the PIPE SPA. The Reporting Persons intend to review their investments in Earthstone on a continuing basis. Any actions the Reporting Persons might undertake may be made at any time and from time to time without prior notice and will be dependent upon the Reporting Persons’ review of numerous factors, including, but not limited to: an ongoing evaluation of Earthstone’s business, financial condition, operations and prospects; price levels of Earthstone’s securities; general market, industry and economic conditions; the relative attractiveness of alternative business and investment opportunities; and other future developments.

The Reporting Persons may acquire additional securities of Earthstone, or retain or sell all or a portion of the securities then held, in the open market or in privately negotiated transactions. In addition, subject to the terms of the Voting Agreement (as defined below), the Reporting Persons may engage in discussions with management, the board of directors, and stockholders of Earthstone and other relevant parties or encourage, cause or seek to cause Earthstone or

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such persons to consider or explore extraordinary corporate transactions, such as: a merger, reorganization or take-private transaction that could result in the de-listing or de-registration of the Class A Common Stock; sales or acquisitions of assets or businesses; changes to the capitalization or dividend policy of Earthstone; or other material changes to the Earthstone’s business or corporate structure, including changes in management or the composition of the board of directors.

Other than as described above, the Reporting Persons do not currently have any plans or proposals that relate to, or would result in, any of the matters listed in Items 4(a)—(j) of Schedule 13D, although, depending on the factors discussed herein, the Reporting Persons may change their purpose or formulate different plans or proposals with respect thereto at any time.

Voting Agreement

On the Closing Date, and in connection with the consummation of the transactions contemplated by the PIPE SPA, Cypress entered into a Voting Agreement (the “Voting Agreement”), by and among Cypress, Earthstone, EnCap Investments L.P. (“EnCap”) and certain affiliates of Warburg Pincus, LLC party thereto (the “Warburg Parties”). Pursuant to the Voting Agreement, Cypress has the right to designate one nominee to be nominated by Earthstone at each applicable annual (or special) meeting of stockholders of Earthstone to serve as a director on the Earthstone board of directors. The Voting Agreement also obligates Cypress, EnCap and the Warburg Parties to, among other things, vote all of their respective shares of Common Stock for the Board’s nominees for election as directors at any meeting of Earthstone’s shareholders. The Voting Agreement will terminate upon the later to occur of: (a) the first date on which Cypress and its affiliates collectively beneficially own less than 5.5% of Earthstone’s outstanding Common Stock, and (b) the one-year anniversary of the Voting Agreement. The Voting Agreement may be terminated earlier if Cypress delivers written notice to each of the other parties terminating the Voting Agreement in its entirety with respect to Cypress.

Registration Rights Agreement

In connection with the consummation of the transactions contemplated by the PIPE SPA, Cypress entered into a registration rights agreement, dated as of the Closing Date (the “Registration Rights Agreement”), by and among Cypress, Earthstone and EnCap Fund XI, pursuant to which Earthstone is obligated to, among other things, file a registration statement on Form S-3 with the SEC providing for the registration of the shares of Class A Common Stock underlying the Series A Preferred Stock (as well as any other shares of Class A Common Stock owned by Cypress and EnCap Fund XI, including the shares of Class A Common Stock purchased by Cypress from EnCap Fund VII pursuant to the EnCap SPA) and cooperate in certain underwritten offerings thereof. Cypress and EnCap Fund XI also have customary piggyback registration rights under the Registration Rights Agreement.

The foregoing descriptions of the SPAs, Voting Agreement and the Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, each of which is attached as an exhibit to the Schedule 13D and is incorporated herein by reference.

Item 5. Interest in Securities of the Issuer

This Amendment amends and restates Item 5 of the Original 13D in its entirety as set forth below:

The information contained on the cover pages of this Schedule 13D and in Item 3 is incorporated herein by reference. Unless otherwise noted, all percentages of Class A Common Stock outstanding contained herein (a) are based on 79,101,902 shares of Class A Common Stock outstanding as of June 29, 2022, based on Earthstone’s Registration Statement on Form S-3 filed with the SEC on July 5, 2022, (b) include 5,405,405 shares of Class A Common Stock issued to Cypress upon the automatic conversion of its Series A Preferred Stock on July 6, 2022, (c) include 19,819,820 shares of Class A Common Stock issued to EnCap Fund XI upon the automatic conversion of its Series A Preferred Stock on July 6, 2022 and (d) exclude the 34,261,641 shares of Class B Common Stock outstanding as of June 29, 2022, based on Earthstone’s Registration Statement on Form S-3 filed with the SEC on July 5, 2022, which outstanding shares of Class B Common Stock (none of which are held by the Reporting Persons), together with an equivalent number of membership units of Earthstone Energy Holdings, LLC, a Delaware limited liability company (“EEH”), are exchangeable by the holders thereof for shares of Class A Common Stock on a one-for-one basis.

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(a) and (b)

In the aggregate, the Reporting Persons beneficially own, as of the date hereof, 10,017,213 shares of Class A Common Stock, representing 9.6% of the outstanding shares of Class A Common Stock.

(i) Cypress has shared voting and dispositive power over 10,017,213 shares of Class A Common Stock, representing 9.6% of the outstanding shares of Class A Common Stock;

(ii) Post Oak, by virtue of its status as the sole managing member of Cypress, has shared voting and dispositive power over 10,017,213 shares of Class A Common Stock, representing 9.6% of the outstanding shares of Class A Common Stock; and

(iii) POEH, by virtue of its status as the sole general partner of Post Oak, has shared voting and dispositive power over 10,017,213 shares of Class A Common Stock, representing 9.6% of the outstanding shares of Class A Common Stock.

In addition, by virtue of the agreements made pursuant to the Voting Agreement, the Reporting Persons, EnCap Investments L.P. and the Warburg Parties may be deemed to constitute a group for purposes of Rule 13d-3 under the Exchange Act. In the aggregate, such group will beneficially own 92,486,513 shares of Class A Common Stock, representing 66.9% of the outstanding Class A Common Stock as of June 29, 2022 (calculated on the basis of an assumed combined total of 138,283,651 shares of Class A Common Stock outstanding, which assumed combined total (i) includes 79,101,902 shares of Class A Common Stock outstanding as of June 29, 2022, based on Earthstone’s Registration Statement on Form S-3 filed by Earthstone with the SEC on July 5, 2022, (ii) includes an aggregate of 25,225,225 shares of Class A Common Stock that were newly issued to Cypress and EnCap Fund XI upon the automatic conversion of the Series A Preferred Stock on July 6, 2022, and (iii) assumes that the 33,956,524 shares of Class B Common Stock held by entities affiliated with EnCap Investments L.P., based on Amendment No. 10 to the Schedule 13D filed by such entities with the SEC on July 7, 2022, were exchanged, along with an equivalent number of membership units of EEH, for newly issued shares of Class A Common Stock on a one-for-one basis. The aggregate beneficial ownership noted above for the Reporting Persons, EnCap Investments L.P. and the Warburg Parties assumes that (i) entities affiliated with EnCap Investments L.P. collectively hold 2,303,000 shares of Class A Common Stock, based on Amendment No. 10 to the Schedule 13D filed by such entities with the SEC on July 7, 2022, and (ii) the Warburg Parties collectively hold 26,389,956 shares of Class A Common Stock, based on Amendment No. 1 to the Schedule 13D filed by the Warburg Parties with the SEC on February 23, 2022.

The Reporting Persons expressly disclaim any beneficial ownership of shares of Common Stock or any other equity security beneficially owned by EnCap Investments L.P., the Warburg Parties or any of their respective affiliates. This Schedule 13D does not reflect any Common Stock or any other equity securities beneficially owned by EnCap Investments L.P., the Warburg Parties or any of their respective affiliates.

(c) Except as set forth in Items 3 and 4 above, during the past 60 days none of the Reporting Persons or Related Persons has effected any transactions in the Common Stock.

(d) None.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer

This Amendment amends and supplements Item 6 of the Original 13D to add the following information for updating as set forth below:

Item 3 above summarizes certain provisions of the SPAs and Item 4 above summarizes certain provisions of the Voting Agreement and Registration Rights Agreement and are incorporated herein by reference. A copy of each of these agreements is attached as an exhibit to this Schedule 13D, and is incorporated herein by reference.

Except as disclosed in this Schedule 13D, none of the Reporting Persons nor any of the Related Persons has any contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of Earthstone, including but not limited to any contracts, arrangements, understandings or relationships concerning the transfer or voting of such securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies.

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SIGNATURES

After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.

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