Earthstone Energy (ESTE) Update - March 12
Posted: Sat Mar 12, 2022 10:34 am
I listened to the replay of Earthstone's Q4 conference call and I have tweaked a few line items in my forecast/valuation model, but my valuation of $33/share has not changed. With the closing of the BigHorn Acquisition in April, Earthstone will become a much larger company with production of ~74,000 Boepd in May with a clear path to 80,000 Boepd by sometime in Q4 2022.
Based on my assumption that WTI will average $100/bbl in 2022, Earthstone's full-year average realized oil price (net of differentials and cash settlements on their hedges) should be ~$82/bbl. That price compares to their actual realized oil price of $52.18/bbl in 2021. Combining year-over-year production growth in 2022 of 167% with much higher oil, gas and NGL prices, Earthstone should generate $800 to $850 million of operating cash flow and approximately $400 million of free cash flow from operations.
ESTE closed at $12.59 on March 11. That price is just slightly more than 2X my operating cash flow per share forecast for 2022. So, this stock should be a double for us in six months.
TipRanks current price target is $20.80, but does not include any updated price targets since 2/22.
We will be publishing an updated profile on Earthstone next week.
My updated forecast model will be posted to the EPG website later today.
Based on my assumption that WTI will average $100/bbl in 2022, Earthstone's full-year average realized oil price (net of differentials and cash settlements on their hedges) should be ~$82/bbl. That price compares to their actual realized oil price of $52.18/bbl in 2021. Combining year-over-year production growth in 2022 of 167% with much higher oil, gas and NGL prices, Earthstone should generate $800 to $850 million of operating cash flow and approximately $400 million of free cash flow from operations.
ESTE closed at $12.59 on March 11. That price is just slightly more than 2X my operating cash flow per share forecast for 2022. So, this stock should be a double for us in six months.
TipRanks current price target is $20.80, but does not include any updated price targets since 2/22.
We will be publishing an updated profile on Earthstone next week.
My updated forecast model will be posted to the EPG website later today.