Earthstone Announces Closing of Bighorn Acquisition and Closing of Debt and Equity Financings
Provides balance sheet and liquidity update
Provides an estimate of average daily production for the first quarter of 2022
THE FORESTS, Texas, April 14, 2022 /PRNewswire/ — Earthstone Energy, Inc. (NYSE: ESTE) (“Earthstone”, the “Company”, “us” or “we”), today announced the closing of the acquisition of the assets of the company Bighorn Permian Resources, LLC (“Bighorn”) in the Midland Basin (the “Bighorn Acquisition”). The Company also announced the closing of a $550 million private placement of senior unsecured notes (the “Note Offering”); a $280 million the private placement of shares (the “PIPE”); and an amendment to the Company’s revolving credit facility (the “Credit Facility”).
In addition, the Company provided an update on key balance sheet metrics to March 31, 2022, and adjusted to reflect the recent closings of the Bighorn acquisition, note offering, PIPE and credit facility amendment. In addition, the Company provided an estimate of daily production sales volumes for the first quarter of 2022.
- Closing of the acquisition of Bighorn on April 14, 2022
- Cash Consideration for Bighorn Acquisition Reduced from Announced Amount $770 million of about $131 million for $639 million and equity consideration reduced from approximately 1.2 million shares announced from approximately 6.8 million shares of Class A common stock to 5.7 million shares, both based on preliminary adjustments of the purchase price
- Close it $550 million Notes An investment consisting of 8.0% senior unsecured notes on April 12, 2022
- Close it $280 million HOSE 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
- The estimates that the Company had $337 million availability not drawn on the $800 million commitments under the $1.325 billion borrowing base on the credit facility at March 31, 2022as adjusted for the transactions described here
- Earthstone estimates its average daily production for the first quarter of 2022 at approximately 35,500 Boepd (44% oil, 26% NGL, 30% natural gas), which includes only 45 days of production from the assets we acquired in the north Delaware Chisholm Basin
- Earthstone continues to operate two drill rigs in the Midland Basin and two drill rigs in the north Delaware Bowl
Robert J. AndersonPresident and Chief Executive Officer of Earthstone, said, “We are delighted to have achieved several important milestones in Earthstone’s ongoing transformation as we closed the Bighorn acquisition and significant financings this week. loan and equity. Based on the purchase price adjustments at closing due to strong cash flows from the effective date, we will have funded the Bighorn acquisition with well over 50% equity in the form direct consideration to the seller and the new capital investment of the PIPE, maintaining our conservative approach to the capital structure.
“Combining the recently closed Chisholm acquisition and its high quality inventory in the north Delaware Basin with the acquisition of Bighorn and its low decline, high free cash flow production base in the Midland Basin has created significant additional scale for Earthstone. We believe the balance of high-yielding drill inventory and the strong free cash flow generation base within Earthstone creates an optimal opportunity for value creation as we pursue our operating and growth plan. investment for 2022.
“Our short-term objective will be to continue integration efforts both in the north Delaware basin assets and newly acquired Midland basin assets. We plan to continue our search for additional scale through accretive acquisitions which we believe will result in continued improvement in cost structure and shareholder value creation, while still maintaining the strength of our balance sheet as top priority.”
From March 31, 2022we have had $1 million in cash and $624 million long-term debt outstanding under our credit facility with a borrowing base of $825 million. Subsequent to March 31, 2022, Earthstone completed its previously announced acquisition of Bighorn, closed the $550 million Placement of notes, closed on $280 million BLOWJOB and paid the $70 million cash consideration deferred for the acquisition of Chisholm. After adjusting for the impact of these activities, we estimated total debt outstanding at $1,013 millionmade up of $550 million senior unsecured notes and $463 million debt outstanding under our credit facility, leaving $337 million of undrawn availability $800 million of total commitments under our credit facility.
Along with the closing of the PIPE, the Earthstone Board of Directors grew to eleven members with the appointment of Mr. Frost Cochran. Mr. Cochran is Managing Director and Founding Partner of Post Oak Energy Capital, LP
Earthstone Energy, Inc. is an independent, growth-oriented energy company engaged in acquisitions and the development and operation of oil and gas properties. Its main assets are located in the Western Permian Basin Texas and New Mexico. Earthstone is listed on the New York Stock Exchange under the symbol “ESTE”. For more information, visit the Earthstone website at www.earthstoneenergy.com.
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 are forward-looking statements and can often, but not always, be identified by the use of words such as “expects”, “believes”, “intends”, ” anticipates”, “expects”, “estimates”, “forecasts”, “directions”, “potential”, “possible” or “probable” or statements that certain actions, events or results “may”, “will”, “should” or “could” be taken, occur or be carried out. Forward-looking statements are based on current expectations and assumptions and analyzes 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 to the circumstances. However, whether actual results and developments will conform to expectations are subject to a number of important risks and uncertainties, including, but not limited to: Earthstone’s ability to successfully integrate its combined operations after the recent acquisitions made in 2021 and 2022, and the acquisition of Bighorn and derive the expected benefits therefrom; risks relating to any unforeseen liabilities of Earthstone, or relating to recent acquisitions completed in 2021 and 2022, or the acquisition of Bighorn; decline in oil, natural gas liquids or natural gas prices; the level of success of exploration, development and production activities; adverse weather conditions that may negatively impact development or production activities; the timing of exploration and development expenditures; inaccuracies in reserve estimates or assumptions underlying them; revisions to reserve estimates as a result of changes in commodity prices; impacts on the financial statements resulting from impairments; risks relating to the level of indebtedness and periodic redeterminations of the borrowing base under the credit facility; Earthstone’s ability to generate sufficient operating cash flow to cover the internally funded portion of its capital expenditure budget; Earthstone’s ability to obtain external capital to fund exploration and development operations and acquisitions; the impacts of hedging on results of operations; uninsured or underinsured losses arising from oil and gas operations; Earthstone’s ability to replace oil and natural gas reserves; and any loss of senior management or technical personnel. Earthstone 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 address some of the identified material risk factors that could affect the business, results of operations and Earthstone’s financial condition. Earthstone undertakes no obligation to publicly revise or update any forward-looking statements, except as required by law.
Mark Lumpkin, Jr.
Executive Vice President – Chief Financial Officer
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woods, TX 77380
Vice President of Finance
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woods, TX 77380
SOURCEEarthstone Energy, Inc.