Earthstone Energy (ESTE) Valuation Update - Oct 18

[dan_s]

At the time of this post, ESTE was trading at $22.18 and First Call's price target was $25.71.

The merger with Permian Resources is now expected to close on October 31st. See last sentence below from their Oct 3 press release.

THE WOODLANDS, Texas, Oct. 03, 2023 (GLOBE NEWSWIRE) -- Earthstone Energy, Inc. (NYSE: ESTE) (“Earthstone”, the “Company”), today announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with respect to the previously-announced agreement for Permian Resources Corporation (NYSE: PR) (“Permian Resources”) to acquire all outstanding shares of Earthstone at an exchange ratio of 1.446 shares of Permian Resources for each Earthstone share.

The expiration of the HSR Act waiting period occurred at 11:59 p.m. EDT on October 2, 2023, which was a condition to the closing of the pending transaction. Completion of the transaction is subject to the satisfaction of the remaining customary closing conditions, including approval by Earthstone stockholders. The Earthstone special meeting is scheduled to be held on Monday October 30, 2023 at 10:00 AM. The transaction is expected to close shortly thereafter.
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As a stand alone company, my current valuation of ESTE is $32/share.
TipRanks: "In the last 3 months, 4 ranked analysts set 12-month price targets for ESTE. The average price target among the analysts is $25.00. Neal Dingmann, a 5-Star analyst at Truist Financial, updated his price target on October 16th. Neal rates ESTE a BUY with a price target of $26.00."

The merger of ESTE into Permian Resources (PR) is an all-stock merger that will create a Permian Basin pure play with ~311,000 Boepd of production in Q4 2023 and a lot of running room in the core area of the Delaware Basin, the western sub-basin of the Permian. In my opinion, PR will be a "Screaming Takeover Target" a minute after the merger with ESTE closes.