Earthstone Energy, Inc. [NYSE: ESTE] disclosed that it has inked an agreement to purchase assets situated in the Midland Basin (the Bolt-On Acquisition) from two sellers unaffiliated with Earthstone. Bolt-On acquisition is anticipated to be accretive on all key financial metrics. The Bolt-On Acquisition also includes nearly ~10,000 net acres (100% operated; 67% held by production) in Irion County.
This purchase will be the fourth acquisition of the firm this year as it continues to progress its consolidation strategy and improve its Midland Basin footprint with additional scale. The purchase of these low operating costs, high margins, generating assets at an attractive valuation is a great addition to its production and cash flow base.
Furthermore, the aggregate buying price of the Bolt-On Acquisition is nearly $73.2 million consisting of $49.2 million in cash, dependent on conventional buying price adjustments, and nearly 2.6 million shares of Earthstone’s Class A common stock valued at $24.0 million based on a closing share price of $9.20 on September 30, 2021.
The payment for the transaction comprises 2,611,111 shares of Earthstone’s Class A common stock, which signifies nearly 3.0% of the total outstanding Class A and Class B common stock on a pro forma basis, and nearly $49.2 million of cash. The Bolt-On Acquisition is likely to execute by the middle of the Q4 of 2021 with an effective date of July 1, 2021.