Energy Prospectus

I have confirmed that Earthstone will be closing the BigHorn Acquistion this month, possibly this week.

BigHorn will more than double Earthstone's daily production from 30,244 Boe per day in Q4 to over 72,000 Boe per day in Q2 2022. The Company's production should be over 75,000 Boepd at the end of Q2 and over 80,000 Boepd at the end of this year. My 2023 forecast now looks too conservative.

In my March 14th profile on Earthstone I said "I expect them to start paying dividends in 2H 2022 and announce a stock repurchase plan."

I now think they will use their surge in operating cash flow (over $250 million per quarter) to ramp up their drilling program and/or go after more acquisition targets. The large-caps are all focused on giving the Wall Street Gang what they want (dividends and stock buybacks). This gives Earthstone more high quality buying opportunities.

My SWAG: Post BigHorn, the PV-10 value of just Earthstone's proved reserves (P1 only) should be over $4 Billion using $90/bbl WTI and $5/MMBtu HH ngas. This projects to net asset value per share of just P1 reserves to over $25/share by year-end. Using P2 reserves, the PV-10 net asset value should be over $35/share.

Post-BigHorn, Earthstone's production mix gets more "gassy": Approximately 42% crude oil, 33% natural gas and 25% NGLs.

"In my March 14th profile on Earthstone I said "I expect them to start paying dividends in 2H 2022 and announce a stock repurchase plan."

Dan In the Fourth quarter earnings conference they said cash dividends--Their financing source that owns 62% by Pincus Warburg--they want cash return!!

Jeffrey Campbell

Okay, great. And so last one, I'll ask, I am going to approach the return to capital to shareholders a little bit differently. If you can provide some color on what you see as the relative merits of a dedicated dividend, or a special dividend, or share repurchases, I think that would be helpful insight.

Robert Anderson Okay. Well, let me just say one thing first, the buyback is probably the lowest alternative, because we're two-thirds held by some really good shareholders and investors and board members. How about that? And then the other two, I'll let Mark chime in here, because I've been doing all the talking.

I think they have their eye on several acquisitions. With higher oil & gas prices than anticipated when they negotiated the deal, BigHorn should payout in less than two years. Personally, I would like them to focus on growth rather than pay a 4% or 5% dividend. Stock Buybacks rarely lead to higher share prices.

With a clear path to production of 100,000 Boepd, Earthstone should draw a lot of Wall Street attention. The numbers look very good.

I was on the Q4 CC and I did hear Robert say they are considering a dividend. Just remember that the BOD decides on dividends and Frank Lodzinski is a "Growth Guy".

Dan, thanks for the updated information. I like the growth strategy. Will be adding to my position.