Earthstone Energy Announces $1.0 Billion Delaware Basin Acquisition

Highly Accretive Transaction in Delaware Basin Meaningfully Increases Scale

THE WOODLANDS, Texas, June 15, 2023 (GLOBE NEWSWIRE) -- Earthstone Energy, Inc. (NYSE: ESTE) (“Earthstone”, the “Company”, “our”, or “we”) today announced that it has entered into an agreement (the “Agreement”) to acquire Novo Oil & Gas Holdings, LLC (“Novo”), a privately-held Delaware Basin focused E&P company backed by EnCap Investments L.P. (“EnCap”), for $1.5 billion. Concurrently, Northern Oil and Gas, Inc. (NYSE: NOG) (“Northern”) will acquire working interests equal to a pro-rata 33⅓ % of the oil and gas assets of Novo for $0.5 billion from Earthstone, resulting in a $1.0 billion purchase price net to Earthstone for the retained 66⅔ % interest (the “Novo Acquisition”). Consideration at closing will be subject to customary purchase price adjustments. The effective date of the Novo Acquisition is May 1, 2023, and closing is anticipated to occur in the third quarter of 2023, subject to customary closing conditions.  

The Novo Acquisition is expected to be funded with cash on hand and borrowings under the Company’s senior secured revolving credit facility (the “Credit Facility”). In conjunction with the Novo Acquisition, Earthstone has secured $250 million of incremental commitments from existing lenders. This increases elected commitments under Earthstone’s Credit Facility from the current $1.4 billion to $1.65 billion and provides for ~$1.2 billion in undrawn commitments at closing based on $452 million debt outstanding as of March 31, 2023.  

Robert J. Anderson, President and CEO of Earthstone, commented, “Over the past few years, we strategically positioned the Company as a significant operator in the Permian Basin. In 2022, we materially advanced our consolidation strategy, closing three accretive acquisitions totaling ~$2.0 billion, including two significant northern Delaware Basin asset acquisitions. I am pleased that we are continuing to further our consolidation strategy with today’s announcement of the Novo Acquisition as we further build our northern Delaware Basin asset base. With significant production volumes from the Novo Acquisition, we expect Earthstone’s near-term production levels to surpass 135,000 barrels of oil equivalent per day (“Boepd”). Further, we anticipate Free Cash Flow to increase significantly compared to standalone Earthstone as we have added substantial producing assets but are not increasing capital expenditures. The addition of approximately 200 high-quality, low breakeven locations deepens our drilling inventory and with our flat rig count, extends our inventory life significantly to over a decade. We believe the benefits of continued consolidation are very compelling, and we strongly believe this is a value-creating transaction for Earthstone. We are also pleased that Northern recognized the value of these assets and chose to participate in this highly accretive transaction.”