Earthstone Energy Announces $1.0 Billion Delaware Basin Acquisition - Seite 3

Recent Non-Core Asset Sales

Earthstone sold certain non-core assets in the Midland Basin for cash proceeds of approximately $56 million on May 31, 2023. The divested assets included production of approximately 530 Boepd (~45% oil) and acreage comprising 32 short lateral drilling locations. Earthstone will continue to consider other non-core asset sales as appropriate in the future.

Impact on Earthstone

The estimated impact on Earthstone from the Novo Acquisition, recent non-core asset sale, and expected capital program is described below. Earthstone intends to provide updated guidance in conjunction with the closing of the Novo Acquisition.

Production:

• 4Q 2023 production expected to increase by 30,000-35,000 Boepd (37% oil) relative to the current operating plan and guidance (2023 guidance of 96,000-104,000 Boepd)
• 2024 total Earthstone production expected to decline moderately compared to 4Q 2023 production, with the production profile flattening out in 2H 2024

Capital Expenditures:

• No change to the 2023 capital expenditures guidance of $725-775 million
  

Free Cash Flow:

• Free Cash Flow in 2024 expected to increase by more than 60% given no change to capital expenditures, improved capital efficiency with the Novo drilling inventory and increase in production⁽³⁾
  

Drilling Inventory:

• Delaware Basin acreage position increases by approximately 11,300 net acres to approximately ~56,000 net acres
• Drilling inventory increases 24% to 1,020 gross locations, with approximately 70% of locations in the Delaware Basin
• Extends inventory life to approximately 13 years with a five-rig drilling program
  

Debt Metrics and Liquidity:

• Forecasted leverage at year-end 2023 of 1.1x Last Quarter Annualized (“LQA”) Adjusted EBITDAX⁽²⁾
• Moderate increase to near-term leverage counterbalanced by targeted sub-1.0x leverage within 12 months⁽⁵⁾

Approvals

The Conflicts Committee of the Board of Directors of Earthstone approved and recommended the Novo Acquisition to the Board of Directors of Earthstone, which has approved the Novo Acquisition. No further approvals are required.

Revised Commodity Hedge Positions

In conjunction with the signing of the Novo Acquisition, Earthstone increased its commodity hedge positions, entering into hedge positions accounting for more than 50% of Novo’s proved developed producing oil and gas reserve volumes through 2024.

Investor Presentation and Other Details

Please refer to the “Investors” section of Earthstone’s website, www.earthstoneenergy.com, for access to a presentation highlighting the Novo Acquisition.