Earthstone Energy (ESTE) Update - Jan 31

[dan_s]

Now you know why I left ESTE in the Sweet 16.

Earthstone is an "Aggressive Growth" company that is backed by shareholders with deep pockets. They are going to report Q4 2021 production of approximately 29,000 Boepd and more than 60% year-over-year production growth in 2021.

Now it gets even better:

After they close the Chisholm Acquisition in mid-February and the Bighorn Acquistion early in Q2 2022, Earthstone's production will be approximately 75,000 Boepd, putting them on pace for full-year 2022 a year-over-year production growth rate of more than 150%. They should exit 2022 with production of more than 80,000 Boepd (40% oil, 28% NGLs and 32% natural gas).

I have updated my forecast/valuation model based on the low end of their updated full-year production guidance.
My valuation of ESTE is $26 share, which compares to the current share price of $13.77.
Note that when the Chisholm and Bighorn acquisitions close and their 2H 2022 guidance confirms my valuation model, a higher valuation multiple should be justified.

I think the Wall Street Gang will begin paying a lot more attention to ESTE.