THE WOODLANDS, Texas–(BUSINESS WIRE)–Earthstone Energy, Inc. (NYSE: ESTE) (“Earthstone” or the “Company”), today announced that due to the recent significant decline in commodity prices and the related adverse effect on the debt and equity markets, the Company and Sabalo Holdings, LLC (“Sabalo Holdings”) have entered into an agreement to terminate the pending acquisition by the Company of Sabalo Energy, LLC under a Contribution Agreement dated as of October 17, 2018, effective immediately. In addition, the special meeting of Earthstone stockholders scheduled for January 3, 2019 to approve the acquisition has been cancelled. As part of the mutual termination agreement, Earthstone will reimburse Sabalo Holdings for transaction related expenses up to approximately $3.1 million, including costs incurred related to the acquisition of well-bore interests held by Shad Permian, LLC.
Frank A. Lodzinski, Chief Executive Officer of Earthstone, commented, “Despite the high quality of the Sabalo assets and the outstanding opportunity the transaction provided Earthstone, the drastic change in commodity prices and in the debt and equity markets has negatively affected the significant merits of the acquisition. Accordingly, we have mutually agreed to terminate the Contribution Agreement. While we are disappointed with this result, we greatly appreciate the hard work of the Sabalo management team, our officers and employees and our financial partners, as we all worked tirelessly to close this deal.”
Mr. Lodzinski further commented, “We are pleased with our achievements in 2018. As always, our highest priority is to protect our shareholders’ interests and we believe that Earthstone is well-positioned to continue to focus on shareholder returns and successfully withstand even a prolonged downturn in commodity prices and capital markets, given our operating strengths, low leverage, disciplined capital approach, and favorable hedge position. We will continue to concentrate on maintaining a strong balance sheet, operating efficiently, making accretive acquisitions that add production and enhance our acreage positions and pursuing larger transactions that are beneficial to our shareholders. Finally, in January, we expect to provide an operations update, announce our capital program and provide guidance for 2019.”
About Earthstone Energy, Inc.
Earthstone Energy, Inc. is a growth-oriented, independent energy company engaged in the acquisition, development and operation of oil and natural gas properties, primarily in the Midland Basin of west Texas. Earthstone is listed on the New York Stock Exchange under the symbol “ESTE.” For more information, visit the Company’s website at www.earthstoneenergy.com.