Earthstone Energy (ESTE) Updated Valuation - May 6

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Earthstone Energy (ESTE) Updated Valuation - May 6

Post by dan_s »

ESTE is currently trading for $8.65. First Call's price target is $9.94, based on lots of outdated forecasts.

I have updated my forecast/valuation for Earthstone. My valuation is $14.00/share.

Earthstone's Q1 results beat my forecast, especially for oil production. Also, their realized NGL prices went from $17.18/bbl in Q4 to $24.40/bbl in Q1. None of their NGLs are hedged (4,050 bbls per day in Q4).

Earthstone's management team is highly respected and the Company has strong financial backers. They are growing via the acquisition route and they have another acquisition ("Tracker") that should close in Q3 and take production up from 20,321 Boepd to 28,000 Boepd when the deal closes.

Earthstone is the smallest company in the Sweet-16, but I promoted it from our Small-Cap Growth Portfolio because I knew it was going to grow rapidly. This company is being built for a sale in 3 to 5 years. Get in at under $10 now and you should be richly rewarded in a few years.
Dan Steffens
Energy Prospectus Group
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