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THE WOODLANDS, Texas–(BUSINESS WIRE)–Earthstone Energy, Inc. (NYSE: ESTE) today provided a financial update which highlighted debt reduction achieved in the third quarter of 2020, the successful early completion of the Company’s regularly scheduled borrowing base redetermination under its senior secured revolving credit facility and a related amendment to its Credit Facility.
As of September 30, 2020, the Company estimates that its outstanding debt balance was $130.0 million, which represents a 23% decrease from the $168.6 million of debt outstanding as of June 30, 2020. The Company also completed a redetermination of the borrowing base under its Credit Facility (the “Redetermination”), which resulted in a 13% reduction of the borrowing base from $275 million to $240 million. In conjunction with the Redetermination, the Credit Facility was amended (the “Amendment”). Amongst other things, the Amendment provided for increased flexibility to finance and make acquisitions, a minor increase in the interest rate on outstanding borrowings, limitations on amounts of cash held, and tightened restrictions around paying dividends or making distributions.
Robert J. Anderson, President and Chief Executive Officer of Earthstone, commented, “The $38.6 million reduction in our outstanding debt balances on a quarter over quarter basis is reflective of what we expected as we continued to deliver significant free cash flow(1) during the third quarter. We continue to target a leverage ratio at or below 1x Net Debt to Adjusted EBITDAX at year-end 2020, driven by our well hedged production profile, success in achieving reduced costs and limited capital expenditures. We appreciate our lending group’s continued support in helping us achieve our goals.”
(1) As used in this news release, “free cash flow”, a non-GAAP measure, means Adjusted EBITDAX (a non-GAAP measure), less interest expense, less accrual-based capital expenditures. As used in this news release “Adjusted EBITDAX”, a non-GAAP measure means net income plus, when applicable, accretion of asset retirement obligations; impairment expense; depletion, depreciation and amortization; interest expense, net; transaction costs; loss (gain) on sale of oil and gas properties; unrealized (gain) loss on derivatives; stock-based compensation; and income tax expense.
About Earthstone Energy, Inc.
Earthstone Energy, Inc. is a growth-oriented, independent energy company engaged in development and operation of oil and natural gas properties. The Company’s primary assets are in the Midland Basin of west Texas and the Eagle Ford Trend of south Texas. Earthstone is traded on NYSE under the symbol “ESTE.” For more information, visit the Company’s website at www.earthstoneenergy.com.