On Thursday, the price of Earthstone Energy Inc (NYSE: ESTE) shares for the session ratified at $8.96 to represent an increase of 25.31 percent. Earthstone stock traded 2.38 million shares in that session with its average volume of trading remaining at 365.84K shares.
During the trading session, ESTE stock recorded a new 52-week high while moving up 522.22% from the 52-week low. Following the announcement that it would acquire private assets in the Midland Basin, the ESTE stock price surged.
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What has ESTE been acquiring?
Earthstone is an independent energy company focused on oil and natural gas development and operations. ESTE’s primary assets are in the Midland Basin of West Texas and in the Eagle Ford Trend of south Texas.
Last week, Earthstone announced it has entered into definitive agreements to acquire privately-held assets in the Midland Basin.
- Parties to the agreement with ESTE include Tracker Resource Development III, LLC, and an affiliate, along with affiliates of Sequel Energy Group LLC.
- Sequel and its affiliates hold well-bore interests in some of Tracker’s producing wells.
- EnCap Investments L.P. and 1901 Partners Management LP are part owners of Tracker, each holding 49% while management owns the remaining of the Tracker interest.
- A total of $126.5 million is being spent by Tracker for the acquisition with $81.6 million to be paid in cash.
- In addition to the acquisition, 6.2 million shares of ESTE’s Class A common stock, valued at $44.9 million on March 30, 2021, will be required subject to customary closing adjustments.
- Closing is expected in the third quarter of 2021, with the effective date of the Tracker Acquisition being April 1, 2021.
ESTE’s objectives:
Earthstone Energy (ESTE) strives to reduce costs and increase profit margins throughout its operations to be more lucrative and the current acquisition is part of those profitability efforts. In addition to improving its operational cost efficiencies, this will help ESTE to continue seeking value-enhancing transactions that can be incorporated into its business plan in the long run, ultimately benefiting its shareholders by increasing ESTE stock price.