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Earthstone (ESTE) to Acquire $627M Northern Delaware Asset

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Earthstone Energy, Inc. (ESTE - Free Report) has announced an accord to purchase the New Mexico assets of Titus Oil & Gas Production. The low-cost high-margin assets are situated in the prolific northern Delaware Basin.

The acquisition price is approximately $627 million. Earthstone Energy said that for acquiring the assets, it will employ cash of $575 million along with its 3.9 million shares Class A common stock. It expects the deal to close in the third quarter of 2022.

The assets to be purchased by ESTE are spread across 7,900 net acres in the core of Delaware Basin – a sub-basin of broader Permian, the most prolific basin in the United States – in Lea and Eddy Counties, New Mexico. The to-be-acquired properties have average net production of roughly 31,800 barrels of oil equivalent per day (BoE/d) in June from 37 net operated wells.

The deal, once completed, will significantly increase Earthstone Energy’s cashflows. In the fourth quarter of this year, ESTE expects the agreement to increase its net production by 18,000 to 23,000 BoE/d, of which 65% will be crude oil. In the prolific Delaware Basin, ESTE’s acreage position will get boosted to roughly 44,000 net acres.  

Currently, Earthstone Energy carries a Zacks Rank #2 (Buy). Other prospective players in the energy space include Antero Resources (AR - Free Report) , Whiting Petroleum and Matador Resources Company (MTDR - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources is a leading upstream energy player with a strong presence in the gas-rich prolific Appalachian Basin in West Virginia and Ohio. In the past 60 days, Antero Resources has witnessed upward earnings estimate revisions for 2022 and 2023.

The substantial exposure to improving commodity price is a huge positive for Antero Resources.

Whiting Petroleum is a leading upstream energy company and the top producer of crude oil in North Dakota. With oil prices improving rapidly, Whiting Petroleum is expected to continue generating handsome cash flows while maintaining a healthy balance sheet.

Headquartered in Denver, CO, Whiting Petroleum has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

Improving oil prices is a boon for Matador Resources’ upstream operations. This is because MTDR has a strong presence in oil-rich core acres of the Wolfcamp and Bone Spring plays in the Delaware Basin. Favorable oil price is likely to aid Matador Resources in increasing production volumes.


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