Earthstone Energy (ESTE) Update - August 19

[dan_s]

ESTE closed at $3.30 on Friday, August 16. My valuation of $8.50 compares to First Call's target price of $9.50 (updated last week).
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Fresh report from John White at Roth Capital sent out this morning (August 19).

Our valuation is based on a net asset value (NAV) analysis which produced $11.86 per share, which we adjusted higher to derive our price target of $12.00.

ESTE: Strong 4Q 2019 Shaping Up: Positive

Solid 2Q as ESTE put up sequential production growth of 13% over 1Q 2019. Well completions will pause in 3Q while ESTE is busy with a large year end drilling campaign which we believe will lead to 4Q production of 13,271 BOE per day. < This compares to my Q4 forecast of 13,100 Boepd.

The pause in well completions during 3Q 2019 leads to lower sequential production which we estimate at 10,208 BOE per day before the strong 4Q 2019 results should kick in.

Solid 2Q 2019: ESTE reported 2Q 2019 production of 12,699 BOE per day, significantly beating our figure of 11,514 BOE per day and the consensus estimate of 11,280 BOE per day. ESTE reported 2Q 2019 adjusted EPS/EBITDA of $0.23/$33.6 million, again exceeding our estimates of $0.21/$31.5 million and the consensus figures of $0.18/$31.6 million.

ESTE is guiding to a 2019 production exit rate in a range of 14,000 BOE per day to 15,000 BOE per day with a midpoint of 14,500 BOE per day. Full year 2019 production guide was increased modestly, from a previous range of 11,00 BOE per day to 12,000 BOE per day to a new, higher range of 11,250 BOE per day to 12,250 BOE per day.