23 August 2023

Permian Resources acquires Earthstone Energy

Permian Resources has entered into an agreement to acquire Earthstone Energy. After accounting for assumed debt, the total value of the transaction is approximately US$4.5 billion.

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In previous years, Earthstone Energy executed its growth strategy by successfully completing three transactions valued at approximately $2.7 billion. These included the acquisition of assets in the Delaware Basin from Chisholm Energy Holdings in December 2021 for $604 million and assets in New Mexico from Titus Oil & Gas Production II for $627 million in June 2022. In addition to these transactions, Earthstone recently added the $1.5 billion acquisition of Novo Oil & Gas Holdings.

Permian Resources, which was formed in 2016 as Centennial Resource Development by former EOG Resources CEO Mark Papa, is approaching the one-year anniversary of its merger with Colgate Energy, which transformed it to its current size and gave it the name Permian Resources. Upon completion of the transaction with Earthstone Energy, Permian Resources will be producing approximately 300,000 barrels of oil per day (boepd).

In the second quarter of this year, there was a significant increase in M&A activity in the upstream sector in the United States, totalling US$24 billion. This marked a significant increase of 167% from the slower first quarter and represented the highest level since 2021, according to energy research firm Enverus. During the period, Enverus tracked 20 deals, more than 25 percent of which exceeded the $1 billion mark.

Earthstone's shares rose as much as 18%, while Permian's shares rose 2.5% on the day the deal was announced.