Earthstone Energy Update - Oct 19

[dan_s]

I have updated my forecast/valuation model for ESTE based on the assumption that the acquisition of Sabalo Energy will close on January 1, 2019. My SWAG is that it will close prior to year-end since Earthstone has already done extensive due diligence and they have all of their financing arranged. EnCap is totally behind this deal.

My valuation of ESTE increases by $1.50/share to $16.50.

The merger with Sabalo Energy definitely takes Earthstone to "the Next Level". January production will be ~24,000 BOE per day (70% to 75% crude oil). A three rig program in 2019 should ramp production up to 30,000 BOE per day by the end of 2019. A year from now (assuming WTI oil over $65/bbl), ESTE will be a Prime Takeover Target.

The updated forecast model will be posted to the EPG website this afternoon.