Texas Company Buys Midland Basin Assets

Texas headquartered Earthstone Energy, Inc. (NYSE: ESTE) has announced that it has entered into definitive agreements to acquire privately held operated assets in the Midland Basin from two sellers unaffiliated with Earthstone. 

The aggregate purchase price of the acquisition is approximately $73.2 million, consisting of $49.2 million in cash, subject to customary purchase price adjustments, and approximately 2.6 million shares of Earthstone’s Class A common stock, Earthstone noted. The company said it intends to fund the cash portion of the consideration, and fees and expenses, with cash on hand and borrowings under its revolving credit facility. The deal is expected to close by the middle of the fourth quarter of this year, with an effective date of July 1.

Earthstone outlined that the average daily production of the acquired asset base stood at 4,400 barrels of oil equivalent per day during September. The acquired asset base is said to have a low operating cost and high margin, as well as operating synergies when added to Earthstone’s existing assets.

“This transaction will be our fourth acquisition this year as we continue to advance our consolidation strategy and enhance our Midland Basin footprint with additional scale,” Robert J. Anderson, the president and chief executive officer of Earthstone, said in a company statement.

“The mix of consideration between cash and equity in accordance with our focus on maintaining a strong balance sheet positions us well to continue our consolidation efforts. We are pleased to continue to add incremental scale in an accretive manner without sacrificing our balance sheet or free cash flow generation,” he added in the statement.

Back in June, Earthstone announced that it had acquired working interests in assets it operates in southern Gonzales County, Texas, from four separate sellers. The aggregate purchase price of the acquisitions was approximately $48 million in cash. In April, the company revealed that it had entered into definitive agreements to acquire privately held operated assets in the Midland Basin and in January it completed a previously announced acquisition of Independence Resources Management.

Headquartered in The Woodlands, Texas, with an additional base in Midland, Texas, Earthstone Energy describes itself as a growth-oriented, independent energy company engaged in the acquisition, development and operation of oil and natural gas properties. Its primary assets are located in the Midland Basin of west Texas and the Eagle Ford Trend of south Texas.

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