Earthstone Energy, Inc. (ESTE) stock soared 12.58% in the current-market trading session at the price of $10.74 after it had entered into definitive agreements to obtain privately-held operated assets in the Midland Basin. ESTE is an independent energy company that works on the procurement, construction, and regulation of oil and natural gas properties.
ESTE Announced Bolt-On Acquisition
On 4th October 2021, ESTE published that it had joined the Bolt-On Acquisition. It had entered into a definitive agreement to obtain privately-held operated assets from two sellers in the Midland Basin. Bolt-On Acquisition has an aggregate purchase price of $73.2 million and is subject to adjustments in customary purchase price. This purchase price includes $49.2 million in cash and 2.6 million shares of ESTE’s Class A common stock worth $24.0 million. The Bolt-On Acquisition will close by the mid of the fourth quarter of 2021, with an effective date of 1st July 2021.
CEO of ESTE, Mr. Robert J. Anderson, remarked that this transaction marks their fourth acquisition this year. The company keeps on advancing their consolidation strategy and enhancing their Midland Basin footprint. Procurement of these high margins and low operating costs are a great addition to their production and cash flow base.
ESTE expects to benefit from additional operational synergies as production operations are combined with other assets in this field. Earthstone looks forward to implementing their strategic approach to lessen costs and improve production and cash flows. They are happy to add incremental scale in an accretive manner without compromising balance sheet or cash flow generation, he added.
Increment in Borrowing Base
On 20th September 2021, ESTE published entering into an amendment to its credit facility. Under the senior secured credit facility, the borrowing base had raised from $550 million to $650 million. As of 31st August 2021, the company had cash of approximately $1.2 million and $286.6 million of long-term debt outstanding. Adjusted for the rise in the borrowing base to $650 million, the company had total liquidity of roughly $364.6 million. It had $1.2 million in cash and an undrawn borrowing base capacity of $363.4 million.
Robert J. Anderson stated that they greatly appreciate the continued support of the lending group as they had been successfully executing their consolidating assets strategy to improve efficiency. The increase in borrowing base is a result of their successful drilling. They will be dedicated to their longstanding financial regulations to advance these efforts, he added.
