THE WOODLANDS, Texas , March 9, 2022 /PRNewswire/ -- Earthstone Energy, Inc. (NYSE: ESTE) ("Earthstone", the "Company", "we" or "us"), today announced financial and operating results for the quarter and year ended December 31, 2021 .
Fourth Quarter 2021 Highlights
Full Year 2021 Highlights
See "Non-GAAP Financial Measures" section below.
Represents reported sales volumes.
On January 7, 2021, we closed our acquisition (the "IRM Acquisition") of Independence Resources Management, LLC and certain of its affiliates ("IRM").
On July 20, 2021, we consummated the transactions contemplated in two purchase and sale agreements (the "Tracker Acquisition"). A significant shareholder of Earthstone owned 49% of Tracker.
We acquired additional working interests in certain of our Eagle Ford Trend properties in May and June 2021 for $48.0 million.
On November 2, 2021, we consummated the transactions contemplated in two purchase and sale agreements (the "Foreland Acquisition").
Management Comments
Robert J. Anderson , President and Chief Executive Officer of Earthstone, stated, "Our outstanding fourth quarter results reflect both our employees' dedication and our transformation into a larger, low-cost producer in the Permian Basin. We completed four acquisitions during 2021, enabling us to more than double our average daily production in the fourth quarter compared to 2020 and to expand our operating footprint. Driven by our high-margin drilling program and successful acquisition strategy, we were able to increase Free Cash Flow and Adjusted EBITDAX by approximately 48% and 72%, respectively, when compared to 2020.
"So far in 2022, we have closed the Chisholm Acquisition and announced the Bighorn Acquisition, which when combined with our existing asset base, should more than double our average daily production yet again in the second half of the year compared to the beginning of 2022. Based on the mid-point of our guidance, we anticipate that we will generate significant Free Cash Flow in 2022 while only reinvesting a little more than half of our Adjusted EBITDAX. We have intentionally structured these accretive acquisitions of well-located assets in such a way that it maintains the strength of our balance sheet, and we expect to be below our target leverage of 1.0x Debt to Adjusted EBITDAX by year-end 2022.
"While we remain open to potential acquisitions that fit our criteria, we intend to make efficient integration our near-term priority. We are better positioned today to optimize our operations and generate substantial Free Cash Flow, and we are confident that our strategy and execution will drive meaningful shareholder value. We enter 2022 as a transformed company compared to who we were a year ago and we are excited to be moving forward as a larger and stronger company."
Current Operations
We continue to operate four drilling rigs with two in each of the Midland Basin and the northern Delaware Basin. Thus far in 2022, we have brought online five gross (5.0 net) wells in the Midland Basin. Prior to the closing of the Chisholm Acquisition on February 15, 2022 , five gross (3.2 net) wells were brought online in the northern Delaware Basin. Currently, we are completing six gross (6.0 net) wells in Upton County, Texas with a single frac crew. Additionally, six gross (4.8 net) wells are waiting on completion across our Midland Basin operated assets and four gross (2.7 net) wells are waiting on completion across our Delaware Basin operated assets. We expect to maintain this development pace throughout 2022, as disclosed in our recently released guidance.
Selected Financial Data (unaudited)
($000s except where noted)
Three Months Ended
Years Ended
December 31,
December 31,
Lease operating expense
General and administrative expense (excluding stock-based compensation)
General and administrative expense
Net income (loss)
Less: Net income (loss) attributable to noncontrolling interest
Net income (loss) attributable to Earthstone Energy, Inc.
Net income (loss) per common share (1)
Adjusted EBITDAX (2)
Average Daily Production (Boepd)
Adj. for Realized Derivatives Settlements:
Operating Margin per Boe
Average realized price
Lease operating expense
Production and ad valorem taxes
Operating margin per Boe (2)
Realized hedge settlements
Operating margin per Boe (including realized hedge settlements)
Net income (loss) per common share attributable to Earthstone Energy, Inc.
See "Non-GAAP Financial Measures" section below.
Represents reported sales volumes.
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equals one barrel of oil equivalent (Boe).
Liquidity Update
As of December 31, 2021 , we had $4.0 million in cash and $320.0 million of long-term debt outstanding under our Credit Facility with a borrowing base of $650.0 million . With the $330.0 million of undrawn borrowing base capacity and $4.0 million in cash, we had total liquidity of approximately $334.0 million .
As of March 1, 2022 , we had approximately $1 million in cash and $652 million of long-term debt outstanding under our Credit Facility, with a borrowing base of $825 million . With the $173 million of undrawn borrowing base capacity and $1 million in cash, we had total liquidity of approximately $174 million . Furthermore, lenders under the Credit Facility have committed to increasing the borrowing base and elected commitments by an incremental $500 million to $1,325 million conditioned upon the closing of the Bighorn Acquisition, which is anticipated to occur in mid-April.
Capital Expenditures
During 2021, we incurred capital expenditures of approximately $130.5 million , on an accrual basis, primarily consisting of drilling and completion costs. The Company's 2022 capital budget of $410 -440 million assumes a four-rig program consisting of two rigs operating in the Midland Basin and two rigs operating in the Delaware Basin. This program is expected to result in the spudding of 60 gross / 47.6 net operated wells and bringing 58 gross / 48.3 net operated wells online and spudding 20 gross / 4.1 net non-operated wells and bringing 19 gross / 4.2 net non-operated wells online in 2022.
Hedge Position
Hedging Activities
The following table sets forth our outstanding derivative contracts at December 31 , 2021. When aggregating multiple contracts, the weighted average contract price is disclosed.
(Bbls / MMBtu)
Crude Oil Basis Swap(1)
Natural Gas Swap
Natural Gas Basis Swap(2)
Natural Gas Swap
The basis differential price is between WTI Midland Argus Crude and the WTI NYMEX.
The basis differential price is between W. Texas (WAHA) and the Henry Hub NYMEX.
Costless Collars
(Bbls / MMBtu)
Bought Floor
Sold Ceiling
Crude Oil Costless Collar
Crude Oil Costless Collar
Natural Gas Costless Collar
Natural Gas Costless Collar
Hedging Update
The following table sets forth our outstanding derivative contracts at March 1 , 2022. When aggregating multiple contracts, the weighted average contract price is disclosed.
(Bbls / MMBtu)
Crude Oil Basis Swap(1)
Crude Oil Basis Swap(1)
Natural Gas Swap
Natural Gas Basis Swap(2)
Natural Gas Swap
Natural Gas Basis Swap(2)
Natural Gas Basis Swap(2)
The basis differential price is between WTI Midland Argus Crude and the WTI NYMEX.
The basis differential price is between W. Texas (WAHA) and the Henry Hub NYMEX.
Costless Collars
(Bbls / MMBtu)
Bought Floor
Sold Ceiling
Crude Oil Costless Collar
Crude Oil Costless Collar
Natural Gas Costless Collar
Natural Gas Costless Collar
Conference Call Details
Earthstone is hosting a conference call on Thursday, March 10, 2022 at 11:00 a.m. Eastern ( 10:00 a.m. Central) to discuss the Company's operations and financial results for the fourth quarter and full year 2021 and its outlook for 2022. Prepared remarks by Robert J. Anderson , President and Chief Executive Officer, Mark Lumpkin, Jr. , Executive Vice President and Chief Financial Officer and Steven C. Collins , Executive Vice President and Chief Operating Officer, will be followed by a question-and-answer session.
Investors and analysts are invited to participate in the call by dialing 877-407-6184 for domestic calls or 201-389-0877 for international calls, in both cases asking for the Earthstone conference call. A webcast will also be available through the Company's website (www.earthstoneenergy.com). Please select "Events & Presentations" under the "Investors" section of the Company's website and log on at least 10 minutes in advance to register.
A replay of the call will be available on the Company's website and by telephone until 11:00 a.m. Eastern ( 10:00 a.m. Central), Thursday, March 24, 2022 . The number for the replay is 877-660-6853 for domestic calls or 201-612-7415 for international calls, using Replay ID: 13727616.
About Earthstone Energy, Inc.
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 , the Eagle Ford Trend in South Texas and the Delaware Basin in New Mexico . Earthstone is traded on the NYSE under the symbol "ESTE." For more information, visit the Company's website at www.earthstoneenergy.com.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as "expects," "believes," "intends," "anticipates," "plans," "estimates," "guidance," "target," "potential," "possible," or "probable" or statements that certain actions, events or results "may," "will," "should," or "could" be taken, occur or be achieved. Forward-looking statements are based on current expectations and assumptions and analyses made by Earthstone and its management in light of experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, those set forth in Earthstone's annual report on Form 10-K for the year ended December 31, 2021 and other Securities and Exchange Commission filings. Earthstone undertakes no obligation to revise or update publicly any forward-looking statements except as required by law.
Mark Lumpkin, Jr.
Executive Vice President – Chief Financial Officer
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woodlands, TX 77380
281-298-4246
[email protected]
Scott Thelander
Vice President of Finance
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woodlands, TX 77380
281-298-4246
[email protected]
EARTHSTONE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share and per share amounts)