Earthstone Energy (ESTE) Q1 Results - May 5

[dan_s]

Wed, May 5, 2021, 3:26 PM

Earthstone Energy, Inc. (NYSE: ESTE) ("Earthstone", the "Company", "we", "our" or "us"), today announced financial and operating results for the three months ended March 31, 2021.

Year-to-Date 2021 Highlights

Closed the IRM Acquisition on January 7, 2021

Signed the Tracker/Sequel Purchase Agreements on March 31, 2021 with an anticipated closing early in the third quarter of 2021

Average daily production of 20,321 Boepd < Compares to my forecast of 18,550 Boepd as IRM acquisition added more production than expected.

Adjusted EBITDAX of $43.8 million ($23.97 per Boe)

All-in cash costs of $12.65 per Boe

Operating Margin of $32.64 per Boe ($26.71 including realized hedge settlements)

Free Cash Flow of $31.8 million

Net loss of $10.6 million, or $0.14 per Adjusted Diluted Share

Adjusted net income of $13.4 million, or $0.17 per Adjusted Diluted Share < Compares to my forecast of $3.0 million net income, $0.04 per share.

On January 7, 2021, we closed our acquisition (the "IRM Acquisition") of Independence Resources Management, LLC and certain of its affiliates ("IRM").
On March 31, 2021, the Company entered into two purchase and sale agreements (the "Tracker/Sequel Purchase Agreements"). A significant shareholder of Earthstone owns 49% of Tracker.

Management Comments

Mr. Robert J. Anderson, President and CEO of Earthstone, commented, "The first quarter of 2021 was outstanding for the Earthstone team as we continue to grow our business, while maintaining low debt compared to cash flows. We closed and integrated the IRM assets, had strong financial results with almost $32 million in free cash flow, reduced debt by $37 million from $260 million upon closing IRM to $223 million at quarter-end and announced another accretive acquisition. Despite an estimated 5-7% reduction in volumes for the quarter due to the effects of the winter storm in February, we reported strong operational performance with over 20,000 Boepd of production and continued cost control. We resumed our drilling program in March and completed five wells in the quarter. Finally, we announced the next step in our consolidation effort with the Tracker/Sequel Purchase Agreements which are expected to close early in the third quarter. With the strong start to the year, we expect to deliver on our previous commitment to increasing scale and profitable growth."

Operational Update

The Company completed five wells and initiated a one-rig drilling program in the Midland Basin during the first quarter of 2021. Five gross (3.7 net) wells were completed in Upton County in the Hamman project in the Wolfcamp A and B zones. Peak 30-day production averaged 493 Boepd (86% oil) per well with average completed lateral lengths of approximately 4,600 feet from each of the five wells. The drilling program began with a three-well pad (2.1 net wells) in Midland County targeting the Jo Mill, Lower Spraberry and Wolfcamp B zones. The wells will have average laterals of approximately 6,800 feet. We will follow this pad with a four-well pad (95% working interest) on the recently acquired IRM acreage in Midland County. Completion activity on the Midland County wells is expected to begin in the second quarter with wells turned online in the third quarter. We then expect to keep the rig in Upton County for the remainder of the year.
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I will update my forecast/valuation model on Thursday morning. There is significant upside to my valuation of $14.00 thanks to higher than expected production and rising commodity prices.

[Fraser921]

Nice!

Dan you are on a roll!