Earthstone Energy (ESTE) Update - Jan 31
Posted: Tue Jan 31, 2023 12:12 pm
This week I am extending all of the Sweet 16 forecast models through 2024, breaking out 2023 by quarter. I've finished AR, CPE, CRK, CPG and OVV.
Earthstone's updated forecast/valuation model will be posted to the EPG website this afternoon.
Earthstone Energy (ESTE) continues to be my Top Pick for 2023 because they increased production by more than 200% year-over-year in 2022 and I expect them to increase it by 35% to 40% year-over-year in 2023. The two most recent forecast models submitted to TipRanks (both by 5-Star energy sector analysts) are very close to what I am forecasting for total revenues.
Earthstone is an "Aggressive Growth" company that is now generating very strong operating cash flow per share.
> 2021 actual CFPS was $2.65
> My 2022 forecast is $7.07
> My 2023 forecast is $9.10, which compares to TipRanks' forecast of $8.08.
> My 2024 forecast is $10.95, which compares to TipRanks' forecast of $9.38
TipRanks: "RBC Capital analyst Scott Hanold maintained a Hold rating on Earthstone Energy (ESTE) on January 23 and set a price target of $21.00."
My current valuation of $34.00 is just 3.5 X annualized operating cash flow for 2022 to 2024.
I now expect the PV10 Net Asset Value of just Earthstone's proved reserves to be over $30/share as of 12/31/2022.
Earthstone has a lot of "running room" with ~800 net horizontal development drilling locations in the Permian Basin. In Q3 they completed 19 horizontal wells and 7 of them had 30 Day initial production rates of more than 1,500 Boepd. These wells will payout in less than six months at $80/bbl oil prices.
After closing the Bighorn Acquisition in April, they were running four operated drilling rigs and they recently announced adding a fifth rig in September and sticking with a five rig program through 2023. < There is a good chance that their production guidance for 2023 will exceed what I am using in my forecast (105,000 Boepd: 43% crude oil, 31% natural gas and 26% NGLs).
If you are not familiar with ESTE, I recommend that you read the profile we published on the company on 11/18/2022 and then spend time on the Company's website going through their most recent slide presentation. They are going to report strong Q4 results that should draw a lot more attention from the Wall Street Gang. You can find updated profiles on all of the Sweet 16 companies under the Sweet 16 tab on our website.
Earthstone's updated forecast/valuation model will be posted to the EPG website this afternoon.
Earthstone Energy (ESTE) continues to be my Top Pick for 2023 because they increased production by more than 200% year-over-year in 2022 and I expect them to increase it by 35% to 40% year-over-year in 2023. The two most recent forecast models submitted to TipRanks (both by 5-Star energy sector analysts) are very close to what I am forecasting for total revenues.
Earthstone is an "Aggressive Growth" company that is now generating very strong operating cash flow per share.
> 2021 actual CFPS was $2.65
> My 2022 forecast is $7.07
> My 2023 forecast is $9.10, which compares to TipRanks' forecast of $8.08.
> My 2024 forecast is $10.95, which compares to TipRanks' forecast of $9.38
TipRanks: "RBC Capital analyst Scott Hanold maintained a Hold rating on Earthstone Energy (ESTE) on January 23 and set a price target of $21.00."
My current valuation of $34.00 is just 3.5 X annualized operating cash flow for 2022 to 2024.
I now expect the PV10 Net Asset Value of just Earthstone's proved reserves to be over $30/share as of 12/31/2022.
Earthstone has a lot of "running room" with ~800 net horizontal development drilling locations in the Permian Basin. In Q3 they completed 19 horizontal wells and 7 of them had 30 Day initial production rates of more than 1,500 Boepd. These wells will payout in less than six months at $80/bbl oil prices.
After closing the Bighorn Acquisition in April, they were running four operated drilling rigs and they recently announced adding a fifth rig in September and sticking with a five rig program through 2023. < There is a good chance that their production guidance for 2023 will exceed what I am using in my forecast (105,000 Boepd: 43% crude oil, 31% natural gas and 26% NGLs).
If you are not familiar with ESTE, I recommend that you read the profile we published on the company on 11/18/2022 and then spend time on the Company's website going through their most recent slide presentation. They are going to report strong Q4 results that should draw a lot more attention from the Wall Street Gang. You can find updated profiles on all of the Sweet 16 companies under the Sweet 16 tab on our website.