Earthstone Energy today provided an operational and financial update, released 2023 guidance, and announced its year-end 2022 estimated proved reserves.

Robert J. Anderson, President and Chief Executive Officer of Earthstone stated:
“I am exceptionally proud of the Company we have built over the last few years and the team we have assembled that is responsible for such a successful year. 2022 was a significant and transformational year marked by the closing of more than $2.0 billion in acquisitions and production that exceeded 104,000 Boepd in the fourth quarter. We also significantly increased SEC proved reserves by more than 149% during the year and are reporting record reserves and value that reflect the quality and depth of our inventory which currently stands at more than ten years. The quality and productivity of our inventory are clearly apparent in our fourth quarter oil production levels, which, at 46,709 Bopd, exceeded the mid-point of our oil production guidance range by more than nine percent. This record-setting production level was driven by some great wells that came online, driving our strong fourth-quarter performance. In addition, the reported PV-10 value of our proved reserves using strip prices is greater than $4.6 billion, which is approximately $1.6 billion higher than our current enterprise value, further emphasizing the compelling value that Earthstone offers its shareholders.”

“Looking ahead, we continue to believe scale matters in our business. We will continue to look for accretive assets that we believe will increase our scale while at the same time creating additional shareholder value. Our 2023 operating plans are designed to maintain a production profile of approximately 100,000 Boepd.”

Operational Update

The Company has three drilling rigs in the Delaware Basin that are currently operating in Lea County, New Mexico, on Earthstone’s Stateline acreage. The Company holds a 99% working interest in the Cattlemen two-well pad, which will have wells with an average lateral length of 7,500 feet and is targeting the First and Second Bone Spring zones. The Lonesome Dove two-well pad, in which Earthstone holds a 90% working interest, is targeting the First and Second Bone Spring zones. The wells have an average lateral length of 7,500 feet. The third rig is drilling a three-well pad in the El Campeon area. The Company holds a 90% working interest in wells in this area with average lateral lengths of approximately 10,000 feet targeting the Wolfcamp A and B zones. The El Campeon wells will be the first horizontal wells to be drilled across the Stateline of New Mexico and Texas.

The Company is currently operating two drilling rigs in the Midland Basin. One rig is drilling in each of Reagan and Upton Counties of Texas. The Upton County rig is drilling a four-well pad in the Company’s Benedum project area in which it holds a 75% working interest and will average 8,500-foot laterals. The Reagan County rig is drilling a three-well pad in the TSRH project area in which the Company has 60% working interest, and the wells will have approximately 14,300-foot laterals, on average.

Asset Sale

During the fourth quarter of 2022, the Company closed on the sale of a non-core asset in the Midland Basin. Earthstone received net proceeds of approximately $21 million for the Sugg Ranch area, which had an average daily production of approximately 850 Boepd in 2022.

Debt and Liquidity Update

As of December 31, 2022, the Company had approximately $1.054 billion of long-term debt comprised of approximately $539 million of unsecured notes and approximately $515 million outstanding under the Credit Facility. The Credit Facility has a borrowing base of $1.85 billion and elected commitments of $1.2 billion, with undrawn revolving availability of approximately $680 million.

2023 Guidance

The Company’s 2023 capital budget of $725-$775 million assumes a continuous five-rig program consisting of three rigs in the Delaware Basin and two rigs in the Midland Basin. This program is expected to result in the drilling of 82 gross / 62.7 net operated wells and participation in 1.4 net non-operated wells. The Company estimates production for 2023 to average 96,000- 104,000 Boepd (~44% oil).

KeyFacts Energy Industry Directory: Earthstone Energy