Earthstone Energy, Inc. Announces Termination of Sabalo Acquisition and Cancellation of Special Meeting of Stockholders
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.
Management Comments
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.
Forward-Looking Statements
This release 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 not strictly
historical statements constitute forward-looking statements and may
often, but not always, be identified by the use of such words such as
“expects,” “believes,” “intends,” “anticipates,” “plans,” “estimates,”
“forecast,” “guidance,” “potential,” “possible,” or “probable” or
statements that certain actions, events or results “may,” “will,”
“should,” or “could” be taken, occur or be achieved. The forward-looking
statements include statements about the expected future reserves,
production, financial position, business strategy, revenues, earnings,
costs, capital expenditures and debt levels of the Company, and plans
and objectives of management for future operations. Forward-looking
statements are based on current expectations and assumptions and
analyses made by Earthstone and its management in light of experience
and perception of historical trends, current conditions and expected
future developments, as well as other factors appropriate under the
circumstances. However, whether actual results and developments will
conform to expectations is subject to a number of material risks and
uncertainties, including but not limited to: declines in oil, natural
gas liquids or natural gas prices; the level of success in exploration,
development and production activities; adverse weather conditions that
may negatively impact development or production activities; the timing
of exploration and development expenditures; inaccuracies of reserve
estimates or assumptions underlying them; revisions to reserve estimates
as a result of changes in commodity prices; impacts to financial
statements as a result of impairment write-downs; risks related to level
of indebtedness and periodic redeterminations of the borrowing base
under Earthstone’s credit agreement; Earthstone’s ability to generate
sufficient cash flows from operations to meet the internally funded
portion of its capital expenditures budget; Earthstone’s ability to
obtain external capital to finance exploration and development
operations and acquisitions; the ability to successfully complete any
potential asset dispositions and the risks related thereto; the impacts
of hedging on results of operations; uninsured or underinsured losses
resulting from oil and natural gas operations; Earthstone’s ability to
replace oil and natural gas reserves; and any loss of senior management
or technical personnel. Earthstone’s annual report on Form 10-K for the
year ended December 31, 2017, quarterly reports on Form 10-Q, recent
current reports on Form 8-K, and other SEC filings discuss some of the
important risk factors identified that may affect Earthstone’s business,
results of operations, and financial condition. Earthstone undertakes no
obligation to revise or update publicly any forward-looking statements
except as required by law.
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