Delaware Expansion Adds Quality Inventory
Earthstone announced an agreement to acquire Novo Oil & Gas Holdings LLC for $1.5 billion on June 15, 2023. Concurrently, Northern Oil & Gas will acquire a pro rata one-third of the assets for $500 million from Earthstone, resulting in a net purchase price of $1.0 billion. The transaction is expected to close in 3Q23 and will have an effective date of May 1, 2023... Earthstone is trading at 2.3x our FY24 adjusted EBITDA estimate based on a year-end 2024 net debt estimate of ~$1.3 billion. Based on FactSet consensus FY24 estimates, the company trades at a discount to a group of Permian-focused peers. Earthstone currently trades at a 27% discount to proved developed PV-10 and a 37% discount to total proved PV-10. Read our May 8, 2023, Management Series report “Benefits of Permian Scale” for a discussion of Earthstone’s approach to building shareholder value through acquisitions.Earthstone Energy is an independent oil and gas company engaged in the acquisition and development of oil and gas reserves through activities that include the acquisition, drilling and development of undeveloped leases, asset and corporate acquisitions and mergers. The company's operations are all in the upstream segment of the oil and natural gas industry and all the company's properties are onshore in the U.S. The company's primary assets are located in the Midland Basin of west Texas and the Eagle Ford Trend of south Texas.
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