Earthstone Energy (ESTE) Q4 Results - March 9

[dan_s]

Load up on this small-cap that is growing rapidly into a mid-cap. Earthstone's production is going from 30,244 Boepd in Q4 2021 to over 72,000 Boepd by the end of April. Lots of the Wall Street Gang will be on the call tomorrow.

THE WOODLANDS, Texas, March 9, 2022 /PRNewswire/ -- Earthstone Energy, Inc. (NYSE: ESTE) ("Earthstone", the "Company", "we" or "us"), today announced financial and operating results for the quarter and year ended December 31, 2021.

Fourth Quarter 2021 Highlights

Executed the Chisholm Acquisition PSA on December 15, 2021 which closed subsequent to year-end on February 15, 2022

Closed the Foreland Acquisition on November 2, 2021

Net income attributable to Earthstone Energy, Inc. of $39.8 million, or $0.72 per Diluted Share

Net income of $69.1 million or $0.77 per Adjusted Diluted Share

Adjusted net income of $41.0 million or $0.46 per Adjusted Diluted Share < Compares to my forecast of $26.9 million net income ($0.31/share).

Adjusted EBITDAX of $85.3 million, up 186% compared to Q4 2020

Net cash provided by operating activities of $83.6 million < Compares to my forecast of $76.6 milion.

Free Cash Flow of $28.5 million, up 238% compared to Q4 2020

Average daily production of 30,244 Boepd, up 104% compared to Q4 2020 < Agrees with my forecast.

Full Year 2021 Highlights

Closed the IRM Acquisition, Tracker Acquisition, Eagle Ford working interest acquisitions and Foreland Acquisition

$2.0 billion PV-10 value of estimated total proved reserves of 147.6 MMBoe at December 31, 2021 based on SEC pricing

$1.4 billion PV-10 value of estimated proved developed reserves of 93.6 MMBoe included in total proved reserve estimates above

Net income attributable to Earthstone Energy, Inc. of $35.5 million, or $0.71 per Diluted Share

Net income of $61.5 million or $0.73 per Adjusted Diluted Share

Adjusted net income of $105.4 million or $1.25 per Adjusted Diluted Share

Adjusted EBITDAX of $247.9 million, up 72% year over year

Net cash provided by operating activities of $230.9 million

Free Cash Flow of $106.6 million, up 48% year over year

Average daily production of 24,809 Boepd, up 62% year over year < ESTE is an "Aggressive Growth" company that is building rapidly thru strategic acquisitions. My valuation of $27.50 pre-release will be going up a lot tomorrow.

Management Comments

Robert J. Anderson, President and Chief Executive Officer of Earthstone, stated, "Our outstanding fourth quarter results reflect both our employees' dedication and our transformation into a larger, low-cost producer in the Permian Basin. We completed four acquisitions during 2021, enabling us to more than double our average daily production in the fourth quarter compared to 2020 and to expand our operating footprint. Driven by our high-margin drilling program and successful acquisition strategy, we were able to increase Free Cash Flow and Adjusted EBITDAX by approximately 48% and 72%, respectively, when compared to 2020.

"So far in 2022, we have closed the Chisholm Acquisition and announced the Bighorn Acquisition, which when combined with our existing asset base, should more than double our average daily production yet again in the second half of the year compared to the beginning of 2022. Based on the mid-point of our guidance, we anticipate that we will generate significant Free Cash Flow in 2022 while only reinvesting a little more than half of our Adjusted EBITDAX. We have intentionally structured these accretive acquisitions of well-located assets in such a way that it maintains the strength of our balance sheet, and we expect to be below our target leverage of 1.0x Debt to Adjusted EBITDAX by year-end 2022.

"While we remain open to potential acquisitions that fit our criteria, we intend to make efficient integration our near-term priority. We are better positioned today to optimize our operations and generate substantial Free Cash Flow, and we are confident that our strategy and execution will drive meaningful shareholder value. We enter 2022 as a transformed company compared to who we were a year ago and we are excited to be moving forward as a larger and stronger company."

[dan_s]

I have updated my forecast/valuation model for ESTE and it will be posted to the EPG website on March 10 morning.
My valuation (based on WTI averaging $100/bbl in 2022) increases by $5.50 to $33/share.

ESTE closed on March 9 at $13.58.

[Roadster]

The conference call was interesting. Management is focused on getting all the acquisitions completed. Then it will be interesting to review ESTE.