Energy company, Earthstone Energy (NYSE: ESTE) was up in trading on Monday after it announced that it will be acquired by Permian Resources Corp. (PR) in an all-stock deal valued at around $4.5 billion, inclusive of Earthstone’s net debt. According to the terms of the deal, each share of Earthstone will be exchanged for 1.446 shares of Permian Resources common stock. The acquisition is expected to close by the end of this year.
The total synergies from this acquisition are expected to drive around $175 million in annual cash flow improvements, which includes $145 million of operational and general, and administrative synergies likely to be fully realized by the end of next year. Moreover, the acquisition is projected to be accretive to all relevant per-share metrics including operating cash flow, free cash flow, and net asset value per share.
Will Hickey, Co-CEO of Permian Resources commented, “We believe the acquisition of Earthstone represents a compelling value proposition for our shareholders and strengthens our position as a premier Delaware Basin independent E&P [exploration and production]. Earthstone’s Northern Delaware position brings high-quality acreage with core inventory that immediately competes for capital within our portfolio.”
Year-to-date, ESTE stock has gained by more than 40%.
