Earthstone Energy — Q2 2023 Earnings Presentation
25 slides from Earthstone Energy's earnings presentation, Aug 2, 2023
Slide 1: 2Q23 Earnings Presentation
2Q23 Earnings Presentation A u g u s t 2 , 2 0 2 3 1 EExhibit 99.2
Slide 2: Disclaimer: Forward-Looking Statements
Disclaimer Forward-Looking Statements This presentation 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
Slide 3: Earthstone's Differentiating Factors
Returns Focused Modest cash flow needed to maintain production levels, creates robust free cash flow generation1 Top Basins / Long Inventory Life Delaware Basin and Midland Basin asset base with ~13 years of high quality inventory life Earthstone’s Differentiating Factors 3 Strategic Consolidator Ei
Slide 4: Corporate Snapshot
Texas New Mexico Corporate Snapshot 4Note: See Appendix for footnotes. Earthstone Acreage Permian Basin Area MIDLAND BASIN DELAWARE BASIN Select Operational Data (Pro Forma Novo) 460 MMBoe Estimated Proved Reserves1 $5.4 Billion Proved PV-10 at Strip1 130 - 135 MBoe/d (41% Oil) 4Q23E Production ~223
Slide 5: Record Production Drives Strong Second Quarter Results
35,000- 37,000 70,000- 74,000 86,000- 90,000 98,000- 102,000 96,000- 104,000 96,000- 104,000 115,000- 120,000 130,000- 135,000 35,509 77,125 94,329 104,766 104,450 105,493 1Q22A 2Q22A 3Q22A 4Q22A 1Q23A 2Q23A 3Q23E 4Q23E Record Production Drives Strong Second Quarter Results 5See Appendix for non-GAA
Slide 6: Highly Accretive Novo Transaction Significantly Expands Delaware Basin Scale
Highly Accretive Novo Transaction Significantly Expands Delaware Basin Scale 6 Acquisition Highlights Pro Forma Snapshot Combined Delaware Basin Acreage Overview 1. Based on Earthstone management estimates for the next twelve months from 5/1/23 and NYMEX strip prices as of 5/24/23; excludes the impa
Slide 7: $1.5B Highly Accretive Delaware Basin Acquisition
$1.5B Highly Accretive Delaware Basin Acquisition1 Net purchase price of $1.0 billion represents 2.7x NTM Adj. EBITDAX, ~30% NTM unlevered FCF yield 2,3 Key Purchase Enhances Scale and Operational Synergies Materially expands existing Delaware Basin footprint and adds basin synergies Meaningful FCF
Slide 8: Novo Acquisition Drives Strong Financial Accretion and Maintains Financial Strength
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 0.0x 1.0x 2.0x 3.0x 4.0x FY16A FY17A FY18A FY19A FY20A FY21A FY22A ESTE FY23E PF Novo FY24E Adj. EBITDAX Debt / Adj. EBITDAX Novo Acquisition Drives Strong Financial Accretion and Maintains Financial Strength 8 1. Adjusted EBITDAX and FCF estimates
Slide 9: Strategic Divestitures in the Past Twelve Months
Strategic Divestitures in the Past Twelve Months 9 Earthstone Divestitures • Earthstone has netted >$100 MM from selling non-core assets in the Midland Basin/Eagle Ford over the past year • Proceeds used to repay RBL debt Date July 2022 December 2022 May 2023 Geographical Area Eagle Ford Midland Bas
Slide 10: Shareholder Value Accretion Reflected in Significant Proved Reserves Growth
$0.5 B 79 MMBoe $2.0 B 148 MMBoe $7.8 B 368 MMBoe $4.6 B 352 MMBoe¹ $5.4 B 460 MMBoe² $4.0 B YE20 SEC Pricing YE21 SEC Pricing YE22 SEC Pricing 1/1/23 Reserves 12/30/22 Strip¹ 5/1/23 Reserves 05/24/23 Strip² Enterprise Value³ PUD PD Shareholder Value Accretion Reflected in Significant Proved Reserve
Slide 11: Deep Inventory of High-Return Drilling Locations
MIDLAND New Mexico Earthstone Acreage Texas Deep Inventory of High-Return Drilling Locations 11 Recent Well Results # Pad Peak IP-30 (Boepd) Oil (%) Lateral Length (ft) WI (%) 1 Lonesome Dove (4 Wells) 1,762 72% ~7,710’ 90% 2 Cattlemen (2 Wells) 1,934 67% ~7,722’ 67% 3 Barnhart (4 Wells) 1,032¹ 86%
Slide 12: Earthstone Offers an Attractive Value Opportunity
3.0x 5.8x 5.3x 4.4x 3.6x 3.3x 3.1x 2.3x 5.0x 4.7x 3.2x 3.1x 1.8x ESTE Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 11 Peer 10 Peer 12 20% 7% 10% 4% 9% 11% 12% 13% 8% 16% 17% 20% 21% ESTE Peer 1 Peer 2 Peer 7 Peer 3 Peer 5 Peer 6 Peer 4 Peer 9 Peer 10 Peer 11 Peer 12 Peer 8 Ear
Slide 13: Recently Published Inaugural Sustainability Report
Recently Published Inaugural Sustainability Report 13 Minimized Air Emissions Installed Vapor Recovery Towers (“VRTs”) and Vapor Recovery Units (“VRUs”) with tank battery construction minimizes air emissions ✓ Targeted Zero Flaring Connected natural gas pipelines ahead of flowback and first producti
Slide 14: Company Guidance
Company Guidance 14 Note: Guidance is forward-looking information that is subject to considerable change and numerous risks and uncertainties, many of which are beyond Earthstone’s control. See “Forward-Looking Statements”. Guidance assumes Novo transaction closes on August 15th 2023. 1. Cash G&A is
Slide 15: Appendix
Appendix 15
Slide 16: Oil and Gas Hedge Summary
Oil and Gas Hedge Summary 16 Oil Hedge Positions (WTI based, Bbls/d, and $/Bbl)¹ Natural Gas Hedge Positions (HH based, MMBtu/d, and $/MMBtu)² Focused on protecting cash flow while leaving upside for a stronger commodity outlook • Utilize a mix of collars, swaps and puts on oil and gas production •
Slide 17: Oil and Gas Hedge Positions
Oil and Gas Hedge Positions 17Note: Hedgebook as of 8/2/23. WTI Oil Hedges - Swaps HH Gas Hedges - Swaps Oil Swap Schedule Period Volume (Bbls) Volume (Bbls/d) $/Bbl Period Volume (MMBtu) Volume (MMBtu/d) $/MMBtu 2Q 2023 409,500 4,500 $76.94 2Q 2023 1,137,500 12,500 $3.349 3Q 2023 492,000 5,348 $75.
Slide 18: Reconciliation of Non-GAAP Financial Measure – Adjusted EBITDAX
Reconciliation of Non-GAAP Financial Measure – Adjusted EBITDAX 18 2Q 2023 Adjusted EBITDAX ($ in 000s) 1. Consists of expense for non-cash equity awards and cash-based liability awards that are expected to be settled in cash. On February 8, 2023, cash-based liability awards were settled in the amou
Slide 19: Reconciliation of Non-GAAP Financial Measure – Free Cash Flow
Reconciliation of Non-GAAP Financial Measure – Free Cash Flow 19 2Q 2023 Free Cash Flow ($ in 000s) Free Cash Flow is a non-GAAP financial measure that Earthstone uses as an indicator of our ability to fund our development activities and reduce our leverage. Earthstone defines Free Cash Flow as Net
Slide 20: Estimated Proved Reserves Summary as of 5/1/23 at NYMEX Strip Pricing
Estimated Proved Reserves Summary as of 5/1/23 at NYMEX Strip Pricing as of 5/24/23 20 This summary of proved developed reserve volumes and values as shown in the table below is based on management estimates and has been prepared as of May 1, 2023, utilizing NYMEX strip benchmark prices and basis di
Slide 21: SEC Proved Reserves Summary & PV-10 – Year-End 2022
SEC Proved Reserves Summary & PV-10 – Year-End 2022 21 Year-End 2022 SEC Proved Reserves Reconciliation of PV-10 As shown in the table below, Earthstone’s estimated proved reserves at year end 2022 were estimated by Cawley, Gillespie & Associates, Inc. (“CGA”), independent petroleum engineers, and w
Slide 22: SEC Stand-Alone Reserves Summary & PV-10 – Year-End 2021
SEC Stand-Alone Reserves Summary & PV-10 – Year-End 2021 22 Stand-Alone Year-End 2021 SEC Proved Reserves Reconciliation of PV-10 As shown in the table below, Earthstone’s stand-alone estimated proved reserves at year end 2021 were independently estimated by CGA and which was prepared in accordance
Slide 23: SEC Stand-Alone Reserves Summary & PV-10 – Year-End 2020
SEC Stand-Alone Reserves Summary & PV-10 – Year-End 2020 23 Year-End 2020 SEC Proved Reserves Reconciliation of PV-10 Earthstone’s proved reserves as of December 31, 2020 were independently estimated by CGA, utilizing SEC prescribed oil and gas prices of $39.57/bbl and $1.985/mmbtu, respectively, ca
Slide 24: Market Capitalization Table
Market Capitalization Table 24 Provided as of 8/2/2023¹ 1. Based on current shares outstanding (as of 7/25/23). 2. Based on current shares outstanding (as of 7/25/23) and ESTE estimated net debt at 7/31/23, as adjusted for the expected 8/15/23 closing of Novo, including the midpoint of ESTE manageme
Slide 25: Notes and Supplemental Information
1. Free cash flow is a non-GAAP financial measure defined as Adjusted EBITDAX less interest expense, net, less the current portion of income tax expense, less accrual-based capital expenditures. See Appendix for reconciliation of non-GAAP financial measures. 2. Leverage is a non-GAAP financial measu