Earthstone Energy — Merger or Acquisition (August 2023)
20 slides from Earthstone Energy's merger presentation, Aug 23, 2023
Slide 1: A Premier Delaware Basin Independent
A Premier Delaware Basin Independent AUG UST 2 1 , 20 23 Exhibit 99.1
Slide 2: Important Information
Important Information 2 No Offer or Solicitation This communication relates to a proposed business combination transaction (the “Transaction”) between Earthstone and Permian. This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offe
Slide 3: Transaction Highlights
Complementary Core Northern Delaware Positions Adds significant core inventory that immediately competes for capital Enhances Position as Premier Delaware Basin Independent Combined business has >400,000 Permian net acres and ~300 MBoe/d1 Transaction Highlights New Mexico Texas P P (1) Pro forma net
Slide 4: Transaction Overview
4 Transaction Overview • Transaction Value: ~$4.5 Bn2 • All stock consideration: 1.446 shares of Permian Resources per share of Earthstone – Represents an ~8% premium to the exchange ratio based on 20-day VWAP as of August 18, 2023 • Pro forma combined enterprise value of $14 Bn and market capitaliz
Slide 5: Earthstone Acquisition Meets and Exceeds All Investment Criteria
5 Earthstone Acquisition Meets and Exceeds All Investment Criteria • Purchased at near PDP value, while adding high-quality inventory • Attractive valuation relative to recent private transactions and public Permian multiples Disciplined acquisition strategy Accretive to key metrics Add high-quality
Slide 6: Disciplined Acquisition Strategy Has Led to Enhanced Shareholder Value
Disciplined Acquisition Strategy Has Led to Enhanced Shareholder Value 6 Grassroots / Bolt-On Acquisitions (<$200 MM) • Successfully executing on the ground game and envision continued opportunity • Significant opportunity to optimize ESTE’s existing position through acreage swaps and trades Recent
Slide 7: Earthstone – High Quality Northern Delaware E&P Undervalued by the Market
0 5 10 15 20 25 1 2 3 4 5 6 7 8 9 10 11 12 N o rm a liz e d O il p e r W e ll (M B o / 1 ,0 0 0 ’) Months Earthstone’s well productivity is ~5% higher than the Delaware Basin average 7 Earthstone – High Quality Northern Delaware E&P Undervalued by the Market ESTE’s market valuation does not fully
Slide 8: Significant Proven Delaware Basin Value with Material Upside
Eddy Lea West Eddy Hat Mesa East Lea Novo Significant Proven Delaware Basin Value with Material Upside Expanded Core Northern Delaware Position with Upside 8 Hat Mesa • Primary: 1st, 2nd and 3rd Bone Spring inventory immediately competes for capital • Upside: 2nd Bone Spring Carb, 3rd Bone Spring Ca
Slide 9: Substantial Synergies Across Combined Platform
9 Substantial Synergies Across Combined Platform • Combined team will be led by PR’s executive management team, but will include key contributors from all parties • Identified tangible savings through enhanced production operations, personnel and contract services optimization and reduced midstream
Slide 10: Leveraging Delaware Scale and Optimized Operations to Drive Synergies
~1,470 ~1,700 LTM Average Completed ft/day $1.27 $1.17 Q2’23 Cash G&A ($/BOE) ~740 ~1,120 LTM Average Drilled ft/day Leveraging Delaware Scale and Optimized Operations to Drive Synergies General & Administrative3Lease Operating Expense2Drilling Efficiencies1 (1) Efficiency metrics reflect last twelv
Slide 11: Strong Balance Sheet with Enhanced Credit Profile
11 Strong Balance Sheet with Enhanced Credit Profile (1) Source: FactSet data as of August 18, 2023. (2) Yield to worst for investment grade peers including Ovintiv, Marathon, Diamondback, and Coterra as of August 18, 2023. (3) Reflects the aggregate principal amount and is not adjusted for unamorti
Slide 12: Framework for 2024 Capital Allocation
12 Framework for 2024 Capital Allocation Operational Overview Combined company operating 11 rigs, primarily focused on Delaware Basin Plan to continue Earthstone’s plan of having 1 of the 2 rigs currently in the Midland Basin shift to the Delaware Basin Preliminary 2024 Plan ~90% of capital al
Slide 13: Business Combination Magnifies Operating Scale
-- 100 200 300 400 500 600 700 800 PXD OXY EOG FANG DVN CTRA APA OVV MTDR CPE VTLE SM MRO 13 Business Combination Magnifies Operating Scale PR ESTE Pro Forma PR Enterprise Value ($Bn) (2) $9.5 $4.5 $14.0 Total Production (MBoe/d) 166 133(1) ~300 Oil Mix (%) 51% 41% 46% Permian Net Acreage (000s) 180
Slide 14: Compelling Value Proposition Continues with Premier Assets & Increased Scale
14 Compelling Value Proposition Continues with Premier Assets & Increased Scale 3.7x 4.3x 5.5x 6.0x 12.8x MTDR FANG PXD S&P 500 EV / 2024E EBITDAX1 (1) Market data as of August 18, 2023. Assumes an Earthstone equity value of $2.7 Bn as of 8/18/2023 and the assumption of $1.8 Bn in net indebtedness a
Slide 15: Appendix
Appendix
Slide 16: Continuing The Plan For Organized, Thoughtful Sponsor Ownership
Continuing The Plan For Organized, Thoughtful Sponsor Ownership 16 Average Daily Trading Value ($ MM) Similar Sponsor Ownership % Increased Liquidity & Trading Volume High-Quality Sponsors Significant CEO Ownership Sponsor Ownership (%)1 % of Total Equity Owned by CEO3,4Pro Forma Ownership Structure
Slide 17: Continued Execution on Capital Return Strategy
17 Continued Execution on Capital Return Strategy Total Return of Capital Q2’23 ($’s in millions, except per share data) Adj. Free Cash Flow1,2 $80 Base Dividend ($ / Share) $0.05 Shares Outstanding3 566 Base Dividend $28 Adj. FCF less Base Dividend1 $51 Payout Ratio 50% Target Variable Return of Ca
Slide 18: Combined Company is Well Positioned for Additional Index Inclusion
Combined Company is Well Positioned for Additional Index Inclusion (1) Market data as of August 18, 2023. (2) S&P Index constituent data from FactSet as of August 18, 2023, Russell Index constituent data per FTSE Russell as of August 18, 2023. 18 Total Market Capitalization1 ($Bn) $159 $76 $57 $56 $
Slide 19: Pro Forma Hedge Book Overview
19 Pro Forma Hedge Book Overview1 (1) As of August 16, 2023. Hedge Position Detail Bal. 2023 FY 2024 FY 2025 Q3 Q4 2023 Q1 Q2 Q3 Q4 2024 Q1 Q2 Q3 Q4 2025 WTI Fixed Price Swaps Total Volume (Bbl) 2,240,000 2,401,200 4,641,200 2,011,100 1,974,500 1,978,000 1,978,000 7,941,600 450,000 455,000 460,000 4
Slide 20: Reconciliation of Free Cash Flow and Adjusted Free Cash Flow
20 Reconciliation of Free Cash Flow and Adjusted Free Cash Flow (1) Free cash flow and Adjusted free cash flow are non-GAAP financial measures Free Cash Flow Reconciliation1 Based on Cash Capital Expenditures Three Months Ended June 30, ($ in thousands) 2023 2022 Net cash provided by operating activ
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