Permian Basin oil and gas company, Earthstone Energy Inc. ESTE, said on Monday that it has reached an agreement to buy West Texas-focused Bighorn Permian Resources LLC, which is privately owned, for around $860 million in cash as well as stock.
The deal amount constitutes nearly $770 million in cash and approximately 6.8 million of Earthstone’s Class A common stock valued at $90 million, pertaining to Jan 28, 2021, at a closing share price of $13.25.
Earthstone, which had snapped another privately held firm, Chisholm Energy Holdings LLC, in December 2021, said that Bighorn’s assets — mainly situated in the Reagan and Irion counties — are spread over 110,600 net acres. Around 98% of the to-be-acquired properties are operated and its adjusted EBITDAX for 2022 is forecast to be around $348 million. Further, the acreage had an average output of 42,400 barrels of oil equivalent per day/boepd (57% liquids, 25% oil) in November 2021.
According to ESTE’s estimates, the two acquisitions would lead to an increase in its total net production by about 70% to be around the 76,000-80,000 boepd range, 54% growth in its adjusted EBITDAX, and a free cash flow increase of 194%.
Earthstone is currently on an acquisition spree. It concluded four purchases last year. The Bighorn deal together with the pending Chisholm transaction and those completed in 2021 are likely to have boosted the company’s daily output by more than 300% apart from expanding its Permian portfolio and significantly increasing free cash flows.
Earthstone Energy, Inc. is a growth-oriented independent energy company engaged in developing and operating oil and gas properties. The Company’s primary assets are located in the Midland Basin of West Texas and the Eagle Ford trend of South Texas.
Earthstone currently sports a Zacks Rank #1 (Strong Buy). Those interested in the energy sector might want to look at some other similar-ranked stocks. Centennial Resource Development CDEV, Murphy USA MUSA, and Exxon Mobil XOM each sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Centennial’s 2022 earnings is projected at $1.29 per share, which is an increase of approximately 98.4% from the projected year-ago earnings of 65 cents.
Centennial stock has increased 182.7% in a year. The Zacks Consensus Estimate for CDEV’s 2022 earnings per share (EPS) has been revised from $1.12 to $1.29, up about 15% in the past 60 days.
Murphy USA is valued at around $5 billion. The Zacks Consensus Estimate for Murphy USA’s 2022 EPS has been revised 17.2% upward over the past 60 days from $9.45 to $11.08.
Murphy USA beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 20.9%. MUSA stock has rallied around 53.9% in a year.
ExxonMobil beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 55%. ExxonMobil stock has increased around 77.2% in a year.
The Zacks Consensus Estimate for ExxonMobil’s 2022 earnings has been revised upward about 12.8% over the past 60 days from $5.92 to $6.68 per share. XOM is valued at around $312.18 billion.
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