Pr to buy them
1.446 of Pr per este
18.64 at fridays closing price
All stock deal means PR falls. Expect between 17.25 and 17.75 today
https://investor.earthstoneenergy.com/press-releases/press-releases-details/2023/Permian-Resources-to-Acquire-Earthstone-Energy-in-All-Stock-Transaction-Creating-a-14-Billion-Premier-Delaware-Basin-Independent-EP/default.aspx
Conf call at 830 am est
This is good news for other names. Expect good day today
Alert alert ESTE merger with PR
Re: Alert alert ESTE merger with PR
Pr is getting a steal, priced BELOW PDP
Dan's Target price was $32, it is being "merged" at 18.25, 43 % lower than Dan's number
Dan, why don't you take down all TP based on market values being concluded?
If one analyzes this deal, I'm willing to bet insiders make huge money on vested options.
Dan's Target price was $32, it is being "merged" at 18.25, 43 % lower than Dan's number
Dan, why don't you take down all TP based on market values being concluded?
If one analyzes this deal, I'm willing to bet insiders make huge money on vested options.
Re: Alert alert ESTE merger with PR
Keep in mind that this is an all stock deal. My valuations are based on all cash deals, which are higher since all future upside is being sold.
With an all stock deal you keep the upside and PR + ESTE has a lot of "running room" that can be fully developed with operating cash flow.
With an all stock deal you keep the upside and PR + ESTE has a lot of "running room" that can be fully developed with operating cash flow.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Alert alert ESTE merger with PR
The market value is reflected at the open and like Frazer said, the insiders who have knowledge of the value of the company have agreed to essentially a 15%-20% premium at $18.5 + per share. This premium is the "market" at this time.
Re: Alert alert ESTE merger with PR
Bummer.... was hoping ESTE was going to be a double. I know that PR may still pay off... but trying to figure out why this experienced ESTE management team would sell out so low.
Re: Alert alert ESTE merger with PR
why? vesting of their stock options, When they make the filing thats the first thing im going to look at
If you were running the place , would you take 50 m , to sellout the others?
If you were running the place , would you take 50 m , to sellout the others?
Re: Alert alert ESTE merger with PR
I agree the market premium is 15-20%. I am hoping that Jerry Jones doesn't get any ideas (why wouldn't he) going into 2025 to take CRK public float out at 15% premium to depressed pricing. That's what Goodrich insider Paloma did two years ago.
Re: Alert alert ESTE merger with PR
This should not be a "bummer" if you own ESTE. Why?
BTW this a common misunderstanding with all-stock mergers. They are not "sales".
Your shares are not being purchased. No one is taking your share of Earthstone's upside away from you. All they've done is combine their running room with Permian Resources (PR) running room for a lot more upside potential. Plus, you will be getting dividends.
> ESTE is merging into PR to form a "Powerhouse Upstream" company that has HUGE upside in the Delaware Basin.
> You will own more shares in a much larger company that will draw a lot more of Wall Street's attention.
> All-Stock mergers should just be viewed as "upsizing the company".
1+1 = 2.5 because the combined running room can now be developed at lower D&C costs and lower operating expenses per Boe. The cost of capital (interest rates) is also lower for larger companies. < This is what "synergy" is and it is significant in a merger of this size.
Since both companies are in the Sweet 16, I have accurate forecast models for both companies. So, it is easy for me just to add them together.
Here is what 2024 looks like PR post-merger:
> Production of 332,000 Boepd (47.4% oil, 29.3% natural gas and 23.3% NGLs)
> Assuming realized prices of $85/bbl for oil, $2.25/mcf for ngas and $23/bbl for NGLs), total revenues should be $6.0 billion. Their combined capital expenditure in 2023 are approximately $2.2 billion and should be about the same in 2024.
> Operating cash flow should be $4.1 billion ($5.41 per share). So, Free Cash Flow should be $1.8 to $2.0 billion (~$2.50/share).
> In my opinion, a 12-month price target of 4X operating cash flow per share is reasonable ($21.65 per share). This is a very low multiple for a company with lots of free cash flow that has over a decade of high-quality running room.
> At the time of this post PR was trading at $12.79.
My proforma forecast model will be posted to the EPG website in a few minutes.
BTW this a common misunderstanding with all-stock mergers. They are not "sales".
Your shares are not being purchased. No one is taking your share of Earthstone's upside away from you. All they've done is combine their running room with Permian Resources (PR) running room for a lot more upside potential. Plus, you will be getting dividends.
> ESTE is merging into PR to form a "Powerhouse Upstream" company that has HUGE upside in the Delaware Basin.
> You will own more shares in a much larger company that will draw a lot more of Wall Street's attention.
> All-Stock mergers should just be viewed as "upsizing the company".
1+1 = 2.5 because the combined running room can now be developed at lower D&C costs and lower operating expenses per Boe. The cost of capital (interest rates) is also lower for larger companies. < This is what "synergy" is and it is significant in a merger of this size.
Since both companies are in the Sweet 16, I have accurate forecast models for both companies. So, it is easy for me just to add them together.
Here is what 2024 looks like PR post-merger:
> Production of 332,000 Boepd (47.4% oil, 29.3% natural gas and 23.3% NGLs)
> Assuming realized prices of $85/bbl for oil, $2.25/mcf for ngas and $23/bbl for NGLs), total revenues should be $6.0 billion. Their combined capital expenditure in 2023 are approximately $2.2 billion and should be about the same in 2024.
> Operating cash flow should be $4.1 billion ($5.41 per share). So, Free Cash Flow should be $1.8 to $2.0 billion (~$2.50/share).
> In my opinion, a 12-month price target of 4X operating cash flow per share is reasonable ($21.65 per share). This is a very low multiple for a company with lots of free cash flow that has over a decade of high-quality running room.
> At the time of this post PR was trading at $12.79.
My proforma forecast model will be posted to the EPG website in a few minutes.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Alert alert ESTE merger with PR
Can’t help but wonder if PR has their eyes on VTLE now.
Re: Alert alert ESTE merger with PR
I doubt it. PR will have more than enough running room post-merger with ESTE. Plus, VTLE is primarily a Midland Basin company, although they did recently add a new core area in the Delaware Basin.
MTDR would be a more likely target for a company wanting to expand in the Delaware Basin.
MTDR would be a more likely target for a company wanting to expand in the Delaware Basin.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group