8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report: May 6, 2020

(Date of earliest event reported)

(Exact name of registrant as specified in its charter)

Delaware	001-35049	84-0592823
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1400 Woodloch Forest Drive, Suite 300

The Woodlands, Texas 77380

(Address of principal executive offices) (Zip Code)

(281) 298-4246

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value per share	ESTE	New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02 Results of Operations and Financial Condition.

On May 6, 2020, Earthstone Energy, Inc. (the “Company”) issued a press release announcing its financial and operating results for the three months ended March 31, 2020. A copy of the press release is furnished herewith as Exhibit 99.1.

The information in this Current Report on Form 8-K furnished pursuant to Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section, and they shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 7.01 Regulation FD Disclosure.

On May 6, 2020, the Company posted to its website a company presentation (the “Presentation Materials”) that management intends to use from time to time about the Company’s operations and performance. The Company may use the Presentation Materials, possibly with modifications, in presentations to current and potential investors, lenders, creditors, vendors, customers and others with an interest in the Company and its business.

The information contained in the Presentation Materials is summary information that should be considered in the context of the Company’s filings with the Securities and Exchange Commission and other public announcements that the Company may make by press release or otherwise from time to time. The Presentation Materials speak as of the date of this Current Report on Form 8-K. While the Company may elect to update the Presentation Materials in the future or reflect events and circumstances occurring or existing after the date of this Current Report on Form 8-K, the Company specifically disclaims any obligation to do so. The Presentation Materials are furnished herewith as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference.

The information in this Current Report on Form 8-K furnished pursuant to Item 7.01, including Exhibit 99.2, shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to liability under that section, and they shall not be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. By filing this Current Report on Form 8-K and furnishing this information pursuant to Item 7.01, the Company makes no admission as to the materiality of any information in this Current Report on Form 8-K, including Exhibit 99.2, that is required to be disclosed solely by Regulation FD.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished with this Current Report on Form 8-K:

Exhibit No.	Description
99.1	Press Release dated May 6, 2020.
99.2	Presentation Materials dated May 6, 2020.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		EARTHSTONE ENERGY, INC.
Date:	May 6, 2020	By:	/s/ Tony Oviedo
			Tony Oviedo
			Executive Vice President - Accounting and Administration

EX-99.1

Exhibit 99.1

Earthstone Energy, Inc. Reports First Quarter 2020 Financial Results

The Woodlands, Texas, May 6, 2020– Earthstone Energy, Inc. (NYSE: ESTE) (“Earthstone”, the “Company”, “we”, “our” or “us”), today announced financial and operating results for the three months ended March 31, 2020.

First Quarter 2020 Highlights

• Average daily production of 15,767 Boepd⁽¹⁾ 

• Adjusted EBITDAX⁽²⁾ of $38.2 million ($26.63 per Boe)

• All-in cash costs⁽²⁾ of $12.92 per Boe

• Capital expenditures of $41.8 million

• Net income of $36.7 million, or $0.57 per Adjusted Diluted Share⁽²⁾ 

◦ Adjusted net income of $8.2 million, or $0.13 per Adjusted Diluted Share⁽²⁾ 

(1) Represents reported sales volumes.

(2) See "Non-GAAP Financial Measures" section below.

Management Comments

Mr. Robert J. Anderson, President and CEO of Earthstone, commented, “We had a good quarter despite the current economic environment facing our industry by hitting on our internal targets for production, Adjusted EBITDAX and cash costs. Our low-cost business practices continue to serve us well, especially in this environment. Although our industry is facing unprecedented challenges due to both the COVID-19 pandemic and low oil prices, we have executed our adjusted 2020 plan announced in March 2020 with dedication from our employees and service providers alike and we would like to recognize and thank them all for their diligent efforts.”

Mr. Anderson commented further, “We are well positioned to endure this current oil price collapse as we maintain a strong hedge position and relatively low leverage, with ample liquidity, all of which affords us the ability to focus on free cash flow generation for the remainder of 2020. Due to the low oil prices expected in May, we are voluntarily reducing our operated production by 70-80% and estimate total Company production curtailed by 55-70% for the month. Based on oil prices in future months, we will determine curtailments as necessary, therefore, we expect to update our guidance for the remainder of 2020 in the near future. We are now focused on maintaining a strong balance sheet throughout the year and expect our leverage to be below 1x net debt to Adjusted EBITDAX at year-end 2020. In order to achieve this, we are targeting a cash-based general and administrative expense reduction of approximately 25% compared to our prior guidance by focusing on cost control. We are looking to the future as a healthy company with consolidation in mind.”

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Selected Financial Data (unaudited)

($000s except where noted)	Three Months Ended March 31,
	2020		2019
Total revenues	$	45,138	$	40,728
Lease operating expense	9,339		6,061
General and administrative expense (excluding stock-based compensation)	4,438		4,863
Stock-based compensation (non-cash)	2,694		2,212
General and administrative expense	$	7,132	$	7,075
Net income (loss)	$	36,714	$	(38,443	)
Less: Net income (loss) attributable to noncontrolling interest	20,006		(21,239)
Net income (loss) attributable to Earthstone Energy, Inc.	16,708		(17,204)
Net income (loss) per common share(1)
Basic	0.57		(0.60		)
Diluted	0.57		(0.60		)
Adjusted EBITDAX(2)(5)	$	38,203	$	32,568
Production(3):
Oil (MBbls)	880		678
Gas (MMcf)	1,670		827
NGL (MBbls)	276		193
Total (MBoe)(4)	1,435		1,009
Average Daily Production (Boepd)	15,767		11,209
Average Prices:
Oil ($/Bbl)	46.59		52.30
Gas ($/Mcf)	0.65		1.32
NGL ($/Bbl)	11.01		21.66
Total ($/Boe)	31.46		40.37
Adj. for Realized Derivatives Settlements:
Oil ($/Bbl)(5)	56.62		59.81
Gas ($/Mcf)(5)	1.19		1.66
NGL ($/Bbl)	11.01		21.66
Total ($/Boe)(5)	38.25		45.69
Operating Margin per Boe
Average realized price(5)	$	31.46	$	40.37
Lease operating expense	6.51		6.01
Production and ad valorem taxes	2.11		2.57
Operating margin per Boe	22.84		31.79
Realized hedge settlements	6.79		5.32
Operating margin per Boe (including realized hedge settlements)	$	29.63	$	37.11

(1) Net income (loss) per common share attributable to Earthstone Energy, Inc.

(2) See “Non-GAAP Financial Measures” section below.

(3) Represents reported sales volumes.

(4) Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equals one barrel of oil equivalent (Boe).

(5) Includes $2.1 million of cash proceeds related to hedges unwound during the first quarter of 2019.

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Operations Update

We continue to manage and produce our properties, as we wind down drilling and completion activities that were in progress when the current industry conditions began, experiencing no complications arising from the COVID-19 mitigation efforts. The safety of our employees is paramount and we have emphasized the respective guidelines to support such mitigation efforts. Our field personnel are performing their job responsibilities and practicing mitigation guidelines with no issues so far. Non-field personnel have been working remotely, using information technology that is in place as a result of our prior investments and implementation. Thus far, we have been able to manage and conduct both field and non-field functions effectively. We will continue to focus on the health and safety of our employees and support the respective jurisdictional mitigation guidelines.

In the Midland Basin, we entered 2020 with three gross/net operated wells waiting on completion and one drilling rig under contract. We completed these three wells in late March and brought them online in April. Two Wolfcamp B Lower wells on the southeast Reagan County pad have reached peak rates after 27 days and averaged 1,617 Boepd (85% oil) while the Wolfcamp B Upper was still cleaning up when all three wells were shut-in due to low oil prices. We also participated in the completion of 15 gross / 3.1 net non-operated wells in Martin County during the first quarter. The average peak 30-day rate of the Martin County wells was 835 Boepd (85% oil).

With our contracted rig, we finished drilling five wells in our Hamman Upton project and have two wells remaining to be drilled on our six-well Ratliff pad after which the rig will be released. This will conclude our planned drilling and completion program for 2020 after which we will have 11 wells waiting on completion which we will consider completing in late 2020.

Liquidity Update

As of March 31, 2020, we had $5.1 million in cash and $152.0 million of long-term debt outstanding under our senior secured revolving credit facility with a borrowing base of $275 million. With the $123 million of undrawn borrowing base capacity and $5.1 million in cash, we had total liquidity of approximately $128.1 million. Through March 31, 2020, we had incurred $41.8 million of our estimated $50 - $60 million in capital expenditures for 2020. With minimal remaining capital expenditures, coupled with the $92.8 million market value of our consolidated hedge position as of March 31, 2020, we believe we will be able to meet our cash requirements in the near term.

Interest Rate Swap

Effective May 2020, we entered into certain interest rate swaps, exchanging the LIBO Rate for a fixed rate of 0.286% (the “Swap”). The initial notional amount of the Swap is $125 million through May 2022 and decreases to $100 million through May 2023 and $75 million through May 2024.

Commodity Hedging

The following table sets forth our outstanding derivative contracts as of March 31, 2020. When aggregating multiple contracts, the weighted average contract price is disclosed.

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As of March 31, 2020:

	Price Swaps
Period	Commodity	Volume (Bbls / MMBtu)	Weighted Average Price ($/Bbl / $/MMBtu)
Q2 - Q4 2020	Crude Oil	2,199,000	$	57.00
Q1 - Q4 2021	Crude Oil	1,460,000	$	55.16
Q2 - Q4 2020	Crude Oil Basis Swap(1)	1,925,000	$	(1.40	)
Q2 - Q4 2020	Crude Oil Basis Swap(2)	275,000	$	2.55
Q1 - Q4 2021	Crude Oil Basis Swap(1)	1,825,000	$	1.05
Q2 - Q4 2020	Natural Gas	1,925,000	$	2.85
Q2 - Q4 2020	Natural Gas Basis Swap(3)	1,925,000	$	(1.07	)

(1) The basis differential price is between WTI Midland Argus Crude and the WTI NYMEX.

(2) The basis differential price is between WTI Houston and the WTI NYMEX.

(3) The basis differential price is between W. Texas (WAHA) and the Henry Hub NYMEX.

2020 Guidance Update

In light of reducing our operated production in the near-term, as well as the likelihood of similar actions expected from our non-operated production, and with the potential for involuntary curtailments, we are withdrawing our 2020 production and operating cost guidance that was most recently updated in March 2020. We reaffirm our $50 - 60 million capital expenditure guidance for 2020.

Additionally, we are providing a cash-based general and administrative expense guidance range for 2020 of $15.5 million to $16.5 million. The low end of this range approximates a targeted 25% reduction compared to the midpoint of initial guidance, which we aim to achieve primarily through a reduction in executive compensation, but also through broader cost control initiatives which include each of our professional service providers.

Impairments

As an additional result of the severely depressed commodity prices discussed above, we recognized $60.4 million of noncash asset impairments for the three months ended March 31, 2020 that have negatively impacted our results of operations and equity. Impairment expense for the three months ended March 31, 2020 consisted of $25.3 million reduction to Proved properties, $17.5 million reduction to Unproved properties and $17.6 million reduction to Goodwill, all in the Consolidated Balance Sheet as of March 31, 2020. If crude oil price futures continue to decline, we may incur additional impairments to our oil and natural gas properties.

Sustainability

We believe that it is our responsibility to conduct business in-line with our core values of operating with high ethics, integrity and respect for our employees and contractors, the environment we all share and the communities in which we live and work. We invite you to visit our website to review the Sustainability section to better understand our commitment to maintaining high standards for caring for the environment, the health and safety of our communities and our people, including our focus on proper corporate governance.

Conference Call Details

Earthstone is hosting a conference call on Thursday, May 7, 2020 at 12:00 p.m. Eastern (11:00 a.m. Central) to discuss the Company’s financial results for the first quarter of 2020 and its outlook for the remainder of 2020. Prepared remarks by Robert J. Anderson, President and Chief Executive Officer, and Mark Lumpkin, Jr., Executive Vice President and Chief Financial Officer will be followed by a question and answer session.

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Investors and analysts are invited to participate in the call by dialing 877-407-6184 for domestic calls or 201-389-0877 for international calls, in both cases asking for the Earthstone conference call. A webcast will also be available through the Company website (www.earthstoneenergy.com). Please select “Events & Presentations” under the “Investors” section of the Company’s website and log on at least 10 minutes in advance to register.

A replay of the call and webcast will be available on the Company’s website and by telephone until 12:00 p.m. Eastern (11:00 a.m. Central), Thursday, May 21, 2020. The number for the replay is 877-660-6853 for domestic calls or 201-612-7415 for international calls, using Replay ID: 13703047.

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.

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,” “target,” “potential,” “possible,” or “probable” or statements that certain actions, events or results “may,” “will,” “should,” or “could” be taken, occur or be achieved. 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 that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, those set forth in Earthstone’s annual report on Form 10-K for the year ended December 31, 2019, quarterly reports on Form 10-Q, recent current reports on Form 8-K, and other Securities and Exchange Commission (“SEC”) filings. Earthstone undertakes no obligation to revise or update publicly any forward-looking statements except as required by law.

Contact

Mark Lumpkin, Jr.

Executive Vice President – Chief Financial Officer

Earthstone Energy, Inc.

1400 Woodloch Forest Drive, Suite 300

The Woodlands, TX 77380

281-298-4246

mark.lumpkin@earthstoneenergy.com

Scott Thelander

Vice President of Finance

Earthstone Energy, Inc.

1400 Woodloch Forest Drive, Suite 300

The Woodlands, TX 77380

281-298-4246

scott@earthstoneenergy.com

5

EARTHSTONE ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share amounts)

	March 31,			December 31,
ASSETS	2020			2019
Current assets:
Cash	$	5,101		$	13,822
Accounts receivable:
Oil, natural gas, and natural gas liquids revenues	10,845			29,047
Joint interest billings and other, net of allowance of $80 and $83 at March 31, 2020 and December 31, 2019, respectively	11,094			6,672
Derivative asset	72,017			8,860
Prepaid expenses and other current assets	1,597			1,867
Total current assets	100,654			60,268
Oil and gas properties, successful efforts method:
Proved properties	991,209			970,808
Unproved properties	238,477			260,271
Land	5,382			5,382
Total oil and gas properties	1,235,068			1,236,461
Accumulated depreciation, depletion and amortization	(219,823		)	(195,567		)
Net oil and gas properties	1,015,245			1,040,894
Other noncurrent assets:
Goodwill	—			17,620
Office and other equipment, net of accumulated depreciation and amortization of $3,307 and $3,180 at March 31, 2020 and December 31, 2019, respectively	1,271			1,311
Derivative asset	20,769			770
Operating lease right-of-use assets	3,092			3,108
Other noncurrent assets	1,490			1,572
TOTAL ASSETS	$	1,142,521		$	1,125,543
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	24,010		$	25,284
Revenues and royalties payable	41,455			35,815
Accrued expenses	25,495			19,538
Asset retirement obligation	308			308
Derivative liability	—			6,889
Advances	2,690			11,505
Operating lease liabilities	759			570
Finance lease liabilities	153			206
Other current liabilities	14			43
Total current liabilities	94,884			100,158
Noncurrent liabilities:
Long-term debt	152,000			170,000
Deferred tax liability	16,246			15,154
Asset retirement obligation	1,911			1,856
Derivative liability	—			—
Operating lease liabilities	2,333			2,539
Finance lease liabilities	62			85

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Other noncurrent liabilities	139			—
Total noncurrent liabilities	172,691			189,634
Equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized; none issued or outstanding	—			—
Class A Common Stock, $0.001 par value, 200,000,000 shares authorized; 29,852,958 and 29,421,131 issued and outstanding at March 31, 2020 and December 31, 2019, respectively	30			29
Class B Common Stock, $0.001 par value, 50,000,000 shares authorized; 35,060,687 and 35,260,680 issued and outstanding at March 31, 2020 and December 31, 2019, respectively	35			35
Additional paid-in capital	532,623			527,246
Accumulated deficit	(165,003		)	(181,711		)
Total Earthstone Energy, Inc. equity	367,685			345,599
Noncontrolling interest	507,261			490,152
Total equity	874,946			835,751
TOTAL LIABILITIES AND EQUITY	$	1,142,521		$	1,125,543

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EARTHSTONE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share amounts)

	Three Months Ended March 31,
	2020			2019
REVENUES
Oil	$	41,012		$	35,447
Natural gas	1,086			1,094
Natural gas liquids	3,040			4,187
Total revenues	45,138			40,728
OPERATING COSTS AND EXPENSES
Lease operating expense	9,339			6,061
Production and ad valorem taxes	3,023			2,594
Depreciation, depletion and amortization	24,656			14,005
Impairment expense	60,371			—
General and administrative expense	7,132			7,075
Transaction costs	844			370
Accretion of asset retirement obligation	44			54
Exploration expense	301			—
Total operating costs and expenses	105,710			30,159
Gain (loss) on sale of oil and gas properties	204			(125		)
(Loss) income from operations	(60,368		)	10,444
OTHER INCOME (EXPENSE)
Interest expense, net	(1,736		)	(1,449		)
Gain (loss) on derivative contracts, net	99,784			(47,894		)
Other income (expense), net	126			(4		)
Total other income (expense)	98,174			(49,347		)
Income (loss) before income taxes	37,806			(38,903		)
Income tax (expense) benefit	(1,092		)	460
Net income (loss)	36,714			(38,443		)
Less: Net income (loss) attributable to noncontrolling interest	20,006			(21,239		)
Net income (loss) attributable to Earthstone Energy, Inc.	$	16,708		$	(17,204	)
Net income (loss) per common share attributable to Earthstone Energy, Inc.:
Basic	$	0.57		$	(0.60	)
Diluted	$	0.57		$	(0.60	)
Weighted average common shares outstanding:
Basic	29,497,428			28,719,542
Diluted	29,497,428			28,719,542

8

EARTHSTONE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	For the Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net income (loss)	$	36,714		$	(38,443	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	24,656			14,005
Impairment of proved and unproved oil and gas properties	42,751			—
Impairment of goodwill	17,620			—
Accretion of asset retirement obligations	44			54
Settlement of asset retirement obligations	—			(62		)
(Gain) loss on sale of oil and gas properties	(204		)	125
Total (gain) loss on derivative contracts, net	(99,784		)	47,894
Operating portion of net cash received in settlement of derivative contracts	9,739			5,362
Stock-based compensation	2,694			2,212
Deferred income taxes	1,092			(460		)
Amortization of deferred financing costs	80			103
Changes in assets and liabilities:
(Increase) decrease in accounts receivable	13,780			(6,811		)
(Increase) decrease in prepaid expenses and other current assets	(312		)	(2,236		)
Increase (decrease) in accounts payable and accrued expenses	2,846			(7,427		)
Increase (decrease) in revenues and royalties payable	5,640			(5,383		)
Increase (decrease) in advances	(8,814		)	(1,882		)
Net cash provided by operating activities	48,542			7,051
Cash flows from investing activities:
Additions to oil and gas properties	(39,299		)	(48,412		)
Additions to office and other equipment	(87		)	(75		)
Proceeds from sales of oil and gas properties	409			—
Net cash used in investing activities	(38,977		)	(48,487		)
Cash flows from financing activities:
Proceeds from borrowings	17,500			85,244
Repayments of borrowings	(35,500		)	(43,247		)
Cash paid related to the exchange and cancellation of Class A Common Stock	(214		)	(397		)
Cash paid for finance leases	(72		)	(114		)
Net cash (used in) provided by financing activities	(18,286		)	41,486
Net (decrease) increase in cash	(8,721		)	50
Cash at beginning of period	13,822			376
Cash at end of period	$	5,101		$	426
Supplemental disclosure of cash flow information
Cash paid for:
Interest	$	1,676		$	1,255
Non-cash investing and financing activities:
Accrued capital expenditures	$	31,011		$	17,040
Lease asset additions - ASC 842	$	—		$	1,801
Asset retirement obligations	$	21		$	21

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Earthstone Energy, Inc.
Non-GAAP Financial Measures
Unaudited

The non-GAAP financial measures of Adjusted Diluted Shares, Adjusted EBITDAX, Adjusted Net Income, All-In Cash Costs and Free Cash Flow, as defined and presented below, are intended to provide readers with meaningful information that supplements our financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Further, these non-GAAP measures should only be considered in conjunction with financial statements and disclosures prepared in accordance with GAAP and should not be considered in isolation or as a substitute for GAAP measures, such as net income or loss, operating income or loss or any other GAAP measure of financial position or results of operations. Adjusted EBITDAX and Adjusted Net Income are presented herein and reconciled from the GAAP measure of net income (loss) because of its wide acceptance by the investment community as a financial indicator.

I. Adjusted Diluted Shares

We define “Adjusted Diluted Shares” as the weighted average shares of Class A Common Stock - Diluted outstanding plus the weighted average shares of Class B Common Stock outstanding.

Our Adjusted Diluted Shares measure provides a comparable per share measurement when presenting results such as Adjusted EBITDAX and Adjusted Net Income that include the interests of both Earthstone and the noncontrolling interest. Adjusted Diluted Shares is used in calculating several metrics that we use as supplemental financial measurements in the evaluation of our business, none of which should be considered as an alternative to, or more meaningful than, net income as an indicator of operating performance.

Adjusted Diluted Shares for the periods indicated:

	Three Months Ended March 31,
	2020	2019
Class A Common Stock - Diluted	29,497,428	28,719,542
Class B Common Stock	35,230,945	35,452,178
Adjusted Diluted Shares	64,728,373	64,171,720

II. Adjusted EBITDAX

The non-GAAP financial measure of Adjusted EBITDAX (as defined below), as calculated by us below, is intended to provide readers with meaningful information that supplements our financial statements prepared in accordance with GAAP. Further, this non-GAAP measure should only be considered in conjunction with financial statements and disclosures prepared in accordance with GAAP and should not be considered in isolation or as a substitute for GAAP measures, such as net income or loss, operating income or loss or any other GAAP measure of financial position or results of operations. Adjusted EBITDAX is presented herein and reconciled from the GAAP measure of net income (loss) because of its wide acceptance by the investment community as a financial indicator.

We define “Adjusted EBITDAX” as net income (loss) plus, when applicable, accretion of asset retirement obligations; impairment expense; depletion, depreciation and amortization; interest expense, net; transaction costs; (gain) loss on sale of oil and gas properties, net; exploration expense; unrealized (gain) loss on derivative contracts; stock-based compensation (non-cash); and income tax expense (benefit).

Our Adjusted EBITDAX measure provides additional information that may be used to better understand our operations. Adjusted EBITDAX is one of several metrics that we use as a supplemental financial measurement in the evaluation of our business and should not be considered as an alternative to, or more meaningful than, net (loss) income as an indicator of operating performance. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic cost of depreciable and depletable assets. Adjusted EBITDAX, as used by us, may not be comparable to similarly titled measures reported by other companies. We believe that Adjusted EBITDAX is a widely followed measure of operating performance and is one of many

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metrics used by our management team and by other users of our consolidated financial statements. For example, Adjusted EBITDAX can be used to assess our operating performance and return on capital in comparison to other independent exploration and production companies without regard to financial or capital structure and to assess the financial performance of our assets and our company without regard to capital structure or historical cost basis.

The following table provides a reconciliation of Net income (loss) to Adjusted EBITDAX for the periods indicated:

($000s, except per Boe data)	Three Months Ended March 31,
	2020			2019
Net income (loss)	$	36,714		$	(38,443	)
Accretion of asset retirement obligations	44			54
Depletion, depreciation and amortization	24,656			14,005
Impairment expense	60,371			—
Interest expense, net	1,736			1,449
Transaction costs	844			370
(Gain) loss on sale of oil and gas properties	(204		)	125
Exploration expense	301			—
Unrealized (gain) loss on derivative contracts	(90,045		)	53,256
Stock based compensation (non-cash)(1)	2,694			2,212
Income tax expense (benefit)	1,092			(460		)
Adjusted EBITDAX	$	38,203		$	32,568
Total production (MBoe)(2)(3)	1,435			1,009
Adjusted EBITDAX per Boe	$	26.63		$	32.28

(1) Included in General and administrative expense in the Condensed Consolidated Statements of Operations.

(2) Represents reported sales volumes.

(3) Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equals one barrel of oil equivalent (Boe).

III. Adjusted Net Income

We define “Adjusted Net Income” as net income (loss) plus, when applicable, unrealized (gain) loss on derivative contracts; impairment expense; (gain) loss on sale of oil and gas properties; write-off of deferred financing costs; transaction costs; and the associated changes in estimated income tax.

Our Adjusted Net Income measure provides additional information that may be used to further understand our operations. Adjusted Net Income is one of several metrics that we use as a supplemental financial measurement in the evaluation of our business and should not be considered as an alternative to, or more meaningful than, net income (loss) as an indicator of operating performance. Certain items excluded from Adjusted Net Income are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic cost of depreciable and depletable assets. Adjusted Net Income, as used by us, may not be comparable to similarly titled measures reported by other companies. We believe that Adjusted Net Income is a widely followed measure of operating performance and is one of many metrics used by our management team and by other users of our consolidated financial statements. For example, Adjusted Net Income can be used to assess our operating performance and return on capital in comparison to other independent exploration and production companies without regard to financial or capital structure and to assess the financial performance of our assets and our company without regard to capital structure or historical cost basis.

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The following table provides a reconciliation of Net income (loss) to Adjusted Net Income for the periods indicated:

($000s, except share and per share data)	Three Months Ended March 31,
	2020			2019
Net income (loss)	$	36,714		$	(38,443	)
Unrealized (gain) loss on derivative contracts	(90,045		)	53,256
Impairment expense	60,371			—
(Gain) loss on sale of oil and gas properties	(204		)	125
Transaction costs	844			370
Income tax effect of the above	553			(1,103		)
Adjusted Net Income	$	8,233		$	14,205
Adjusted Diluted Shares	64,728,373			64,171,720
Adjusted Net Income per Adjusted Diluted Share	$	0.13		$	0.22

IV. All-In Cash Costs

We define “All-In Cash Costs” as lease operating expenses plus production and ad valorem taxes, interest expense, net, and general and administrative expense (excluding stock-based compensation).

Our All-In Cash Costs measure provides additional information that may be used to further understand our total cost of production. We use All-In Cash Costs as a supplemental financial measurement in the evaluation of our operational performance. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating our results. All-In Cash Costs should not be considered as an alternative to, or more meaningful than, net income (loss) as an indicator of operating performance. All-In Cash Costs, as used by us, may not be comparable to similarly titled measures reported by other companies.

All-In Cash Costs for the periods indicated:

($000s, except per Boe data)	Three Months Ended
	March 31,
	2020		2019
Lease operating expense	$	9,339	$	6,061
Production and ad valorem taxes	3,023		2,594
Interest expense, net	1,736		1,449
General and administrative expense (excluding stock-based compensation)	4,438		4,863
All-In Cash Costs	$	18,536	$	14,967
Total production (MBoe)(1)(2)	1,435		1,009
All-In Cash Costs per Boe	$	12.92	$	14.84

(1) Represents reported sales volumes.

(2) Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equals one barrel of oil equivalent (Boe).

V. Free Cash Flow

Free cash flow is a measure that we use as an indicator of our ability to fund our development activities. We define free cash flow as Adjusted EBITDAX (defined above), less interest expense, less accrual-based capital expenditures.

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EX-99.2

Exhibit 99.2 Investor Presentation May 6, 2020 1

Disclaimer Forward-Looking Statements This presentation 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,” “guidance,” “target,” “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: further and substantial declines in oil, natural gas liquids or natural gas prices; exposure to financial counterparty credit risk related to our derivative transactions; risks relating to any unforeseen liabilities; 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; failures or defaults by interest owners to pay their share of capital and operating costs and expenses; 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 levels of indebtedness and periodic redeterminations of the borrowing base under the Company’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 acquisitions 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; any loss of senior management or key technical personnel; and the direct and indirect impact on most or all of the foregoing on the evolving COVID-19 pandemic. Earthstone’s 2019 Annual Report on Form 10-K and subsequent, quarterly reports on Form 10-Q and current reports on Form 8-K, and other Securities and Exchange Commission (“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. This presentation contains Earthstone’s 2020 production, capital expenditure and operating expense guidance. The actual levels of production, capital expenditures and operating expenses may be higher or lower than these estimates due to, among other things, uncertainty in drilling schedules, oil and natural gas prices, changes in market demand and unanticipated delays in production. These estimates are based on numerous assumptions. All or any of these assumptions may not prove to be accurate, which could result in actual results differing materially from estimates. No assurance can be made that any new wells will produce in line with historical performance, or that existing wells will continue to produce in line with expectations. Earthstone’s ability to fund its 2020 and future capital budgets is subject to numerous risks and uncertainties, including volatility in commodity prices and the potential for unanticipated increases in costs associated with drilling, production and transportation. For additional discussion of the factors that may cause us not to achieve our production estimates, see Earthstone’s filings with the SEC, including its 2019 Form 10-K, Form 10-Qs and Form 8-Ks. We do not undertakeanyobligationtoreleasepubliclytheresultsofanyfuturerevisionswemaymaketothisprospectivedataortoupdatethisprospectivedata to reflect events or circumstances after the date of this presentation. Therefore, you are cautioned not to place undue reliance on this information. Industry and Market Data This presentation has been prepared by Earthstone and includes market data and other statistical information from third-party sources, including independent industry publications, government publications or other published independent sources. Although Earthstone believes these third-party sources are reliable as of their respective dates, Earthstone has not independently verified the accuracy or completeness of this information. Some data are also based on Earthstone’s good faith estimates, which are derived from its review of internal sources as well as the third-party sources described above. Estimated Ultimate Recovery and Locations Management’s use of the term estimated ultimate recovery (“EUR”) in this presentation describes estimates of potentially recoverable hydrocarbons that the SEC rules prohibit from being included in filings with the SEC. These are more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized, particularly in areas or zones where there has been limited or no drilling history. We include EUR to demonstrate what we believe to be the potential for future drilling and production by Earthstone. Actual quantities that may be ultimately recovered may differ substantially from estimates. Factors affecting ultimate recovery include the scope of the operators' ongoing drilling programs, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors, and actual drilling results, including geological and mechanical factors affecting recovery rates. Estimates of potential resources may also change significantly as the development of the properties underlying Earthstone's mineral interests provides additional data. This presentation also contains Earthstone’s internal estimates of its potential drilling locations, which may prove to be incorrect in a number of material ways. The actual number of locations that may be drilled may differ substantially from estimates. 2

Investment Highlights: Leading Small-Cap, Permian Focused Producer Top Investment Criteria Earthstone’s Qualifications Basin & Acreage High quality, Midland Basin acreage position Position ✓ Low Leverage ✓ Conservative balance sheet with ~1.0x leverage(1) 47% liquidity (cash + undrawn availability) on borrowing base after Strong Liquidity ✓ completing Spring 2020 redetermination ~8,000 barrels per day of 2Q-4Q 2020 oil production hedged at fixed High Commodity Price price of $57 per barrel WTI price (~$93mm MTM of hedge book as of Protection ✓ 3/31/20) Top quartile cash margins & leading cost structure with ~$13.50 per High Margin, Low Cost Boe of all-in cash costs(2) for 2019 and continuing trend with $12.92 Production ✓ per Boe in 1Q 2020 “Do the right thing” commitment to stakeholders, employees and Commitment & Focus ✓ environment (1) Reflects 1Q20 total debt / LTM Adjusted EBITDAX at 1Q20 (2) All-in cash costs measured for full year 2019 and includes lease operating expenses, ad valorem and production taxes, transportation expense, cash G&A expense and interest expense. Excludes impact of income taxes 3

Oil Price Volatility Requires Focused Business Strategy . WTI trading in range of $40-70 per barrel vs. $80-110 per barrel since OPEC / Shale standoff commenced in 2H 2014, but with periods above and below trading range, including a historic price drop to negative territory in April 2020 — Industry re-geared cost structure, production flexibilities and improved efficiencies to create sustainability / profitability . Commodity cycle velocity has doubled: Bear market (-20% WTI price) has occurred every 7 months vs. every 17 months, including 4x since November 2018 . Business strategy must account for lower oil price and higher volatility WTI Crude Oil Spot Price Since 2009 $140 Post Financial Crisis – OPEC/Shale Standoff Bear market $120 every 7 months $110 OPEC/Shale Standoff - Current $100 $80 $80 $70 -29% -34% $60 -25% -21% $40 $40 Bear market -61% -22% -43% -23% every 17 months -37% -23% $20 -47% $0 ($20) -160% ($40) Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Source: Factset data as of 4/30/2020 4

Managing Through Oil Price Volatility December 2015 May 2017 October 2017 December 2017 June 2016 Announces Acquisition of Acquired 20,900 Net $40MM Divested Bakken $45MM Common Lynden Energy Corp.; ESTE Acres from Bold Energy, Common Assets for $27MM Equity Offering Enters the Midland Basin LLC in Midland Basin Equity Offering $80 20,000 17,571 $60 15,767 16,000 $40 12,699 12,181 ($/Bbl) WTI 12,000 11,209 10,766 10,454 9,671 9,664 $20 9,071 8,845 7,932 8,000 $0 Total Daily (Boe/d) Production Daily Total 4,517 4,646 4,685 4,735 3,849 3,872 3,759 3,979 4,000 3,576 ($20) 0 ($40) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 EBITDAX ($MM) (1) $5 $9 $8 $4 $2 $5 $3 $7 $5 $15 $19 $22 $25 $21 $26 $24 $32 $34 $30 $50 $38 Capex ($MM) (2) $19 $29 $18 $3 $2 $4 $9 $13 $4 $6 $20 $39 $33 $35 $52 $30 $48 $31 $78 $58 $42 Total Debt / LQA EBITDAX 0.5x 0.3x 0.4x 0.6x 1.4x 0.8x 1.3x 0.5x 0.7x 1.2x 1.0x 0.3x 0.3x 0.3x 0.3x 0.8x 0.9x 0.8x 1.0x 0.9x 1.0x Liquidity ($MM) (3) $128 $113 $110 $92 $74 $84 $89 $80 $80 $97 $91 $183 $166 $207 $203 $197 $155 $221 $210 $169 $128 Liquidity % (3) 160% 142% 137% 115% 93% 112% 118% 100% 100% 64% 61% 99% 90% 92% 90% 71% 56% 68% 65% 52% 47% Source: ESTE management, FactSet, public filings (1) Adjusted 3Q’2018 EBITDAX of $26.4MM includes a one-time legal settlement expense of ~$4.8MM; Annualized 3Q’2018 adjusted EBITDAX calculated by multiplying the pre-legal settlement 3Q’2018 adjusted EBITDAX of $31.2MM by three and adding $26.4MM (2) Reflects additions to oil and gas properties (3) Liquidity defined as revolver availability + cash; Liquidity % defined as (revolver availability + cash) / borrowing base 5

Company Overview  The Woodlands, Texas based E&P company focused on development and production of oil and natural gas with current operations in the Midland Basin Asset Overview Midland Basin (~29,100 core net acres) and the Eagle Ford (~14,500 core net acres)  Strategy of growing through the drill bit, organic leasing, and attractive asset acquisitions and business combinations (1)  2020 1Q production of 15,767 Boe/d (61% oil, 81% liquids) Market Statistics(2) ($ in millions, except share price) Class A Common Stock (MM) 29.9 Class B Common Stock (MM) 35.1 Total Common Stock Outstanding (MM) 64.9 Stock Price (as of 4/30/20) $2.31 Market Capitalization $150.0 Plus: Total Debt (as of 3/31/20) $152.0 Less: Cash (as of 3/31/20) (5.1) Enterprise Value $296.8 Production Summary(1) 1Q20 Net Sales Volumes: 15,767 Boe/d Eagle Ford ESTE Operated 2,252 ESTE Operated ESTE Non-Operated ESTE Non-Operated Midland Basin 13,515 (1) Reflects reported sales volumes (2) Class A and Class B Common Stock outstanding as of 5/1/20. Total debt and cash balances as of 3/31/20 6

Midland Basin Growth Story – But Growth on Pause . Since entering the Midland Basin in 2016, Earthstone has substantially increased production, proved reserves and core acreage while maintaining low leverage and preserving financial flexibility . Well positioned to resume profitable growth in more constructive commodity price environment Average Daily Production (Boe/d)(1) Adjusted EBITDAX ($MM) $180.0 $152.8 $146.3 20,000 $150.0 15,767 $120.0 15,000 13,429 $97.0 9,937 $90.0 10,000 7,869 $60.6 $60.0 11,846 13,515 5,000 4,002 7,999 $30.0 $18.7 4,696 0 1,180 $0.0 FY16A FY17A FY18A FY19A 1Q20A FY16A FY17A FY18A FY19A 1Q20A Annualized Midland Basin Other Lease Operating Expense and Cash G&A ($/Boe)(2) Debt / LTM EBITDAX 2.0x $20.00 $16.72 1.6x $13.97 $15.00 1.2x $6.43 $11.47 1.2x 1.0x $9.72 $9.60 0.9x $10.00 $7.13 0.8x 0.8x $5.81 $3.87 $3.09 0.4x $5.00 $10.29 0.4x $6.84 $5.66 $5.85 $6.51 $0.00 – FY16A FY17A FY18A FY19A 1Q20A FY16A FY17A FY18A FY19A 1Q20A Lease Operating Expenses ($/Boe) Cash G&A ($/Boe) (1) Represents reported sales volumes (2) Excludes stock-based compensation 7

Low Cost Production Generates Leading Cash Margins FY19 All-in Cash Costs ($/Boe) (1) $40.00 ESTE: Large-Cap (2) Avg: Mid-Cap (2) Avg: Small-Cap (2) Avg: $13.48 $11.96 $15.03 $15.41 $30.00 $22.35 $19.41 $20.00 $17.50 $15.11 $16.01 $15.18 $13.48 $15.02 $14.63 $12.39 $13.29 $11.87 $10.20 $10.30 $9.47 $10.00 $0.00 ESTE Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer 1 2 3 4 5 6 7 8 9 10 11 12 13 14 LOE (incl Workovers) Ad Val. & Prod. Taxes Transportation Cash G&A Interest Expense FY19 All-in Cash Margin ($/Boe) (1) $60.00 ESTE: Large-Cap (2) Avg: Mid-Cap (2) Avg: Small-Cap (2) Avg: $28.78 $26.22 $20.12 $21.13 $45.00 $28.78 $26.96 $27.80 $27.21 $30.00 $24.86 $25.04 $23.90 $22.22 $22.73 $18.79 $19.59 $18.62 $17.64 $15.98 $15.00 $12.68 $0.00 ESTE Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer 1 2 3 4 5 6 7 8 9 10 11 12 13 14 (1) All-in cash margin calculated on a per Boe basis as revenues after realized hedge impact less all-in cash costs, which consists of LOE, ad valorem and production taxes, transportation expense, cash G&A expense and interest expense. Excludes impact of income taxes. Cash G&A and interest expense includes expensing of capitalized cash G&A and capitalized interest expense, respectively. Companies that capitalized a portion of their cash G&A and/or interest expense include CDEV, CPE, CXO, FANG, and MTDR (2) Large-Cap includes: CXO, FANG, PXD. Mid-Cap includes: CDEV, CPE, MTDR, SM, PE, WPX, XEC. Small-Cap includes: AXAS, LPI, ROSE, REI. AXAS has not reported 4Q19 financials and is based on YTD3Q19 results; all other peers based on reported FY19 financial results 8

Leading Leverage Metrics but Undervalued Equity Trading YE19 Total Debt / LTM EBITDAX 6.0x ESTE: Large-Cap (1) Avg: Mid-Cap (1)(2) Avg: Small-Cap (1) Avg: 1.2x 1.2x 2.1x 2.7x 4.5x 3.1x 2.9x 3.0x 3.0x 2.6x 2.6x 2.5x 2.1x 1.8x 1.6x 1.8x 1.4x 1.5x 1.5x 1.2x 1.3x 0.6x – ESTE Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer 1 2 3 4 5 6 7 8 9 10 11 12 12 14 Enterprise Value to 2020E EBITDAX ESTE: Large-Cap (1) Avg: Mid-Cap (1) Avg: Small-Cap (1) Avg: 2.2x 6.6x 5.1x 4.4x 8.0x 7.7x 6.8x 6.3x 6.2x 5.7x 5.8x 5.7x 6.0x 4.8x 4.9x 4.3x 4.7x 4.0x 3.5x 3.6x 2.8x 2.2x 2.0x – ESTE Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Source: Factset, Wall Street research. Market Data as of 4/30/20 (1) Large-Cap includes: CXO, FANG, PXD. Mid-Cap includes: CDEV, CPE, MTDR, SM, PE, WPX, XEC. Small-Cap includes: AXAS, LPI, ROSE, REI. AXAS has not reported 4Q19 financials and is based on YTD3Q19 results; all other peers based on reported FY19 financial results (2) CPE’s LTM EBITDAX is adjusted for its acquisition of CRZO 9

Continuous Focus on Operational Improvement . A continued focus on driving down costs and increased efficiencies achieved by developing larger pads and driving down drilling and completion days Actual Drilling, Completions & Equip. Cost ($/Lat Ft.) (1) Average Number of Wells Per Pad $1,500 6.0 4.0 - 5.0 5.0 $1,200 $1,008 $926 4.0 $900 $845 $767 3.0 2.4 $600 2.0 1.7 1.8 $300 1.0 $0 0.0 2H17 FY18 FY19 1Q20 FY17 FY18 FY19 Future Pad Size All-in Frac Costs per Stage ($/Stage) Spud to Rig Release Days per 1,000’ (1)(2) $100,000 3.0 2.6 $80,854 $77,167 $75,000 2.0 2.0 $61,884 2.0 1.9 $56,600 $50,308 $50,000 1.0 $25,000 $0 0.0 1H18 2H18 1H19 2H19 1Q20 2H17 FY18 FY19 1Q20 (1) Excludes wells that required additional casing string or pilot well test. Includes operated Midland Basin wells only 10 (2) Spud to rig release days = average spud to rig release days / (average completed lateral foot/1000)

Highly Focused Environmental Stewardship Key Environmental Priorities Focus on Responsible Operatorship Installation of Vapor Recovery Units (“VRUs”) in conjunction with tank battery construction  minimizes air emissions Target Zero Flaring: Connect natural gas pipelines ahead of flowback and first production  negates need for flaring Started implementation of Leak Detection & Repair (“LDAR”) program in 2019 to further  minimize air emissions Seek to increase Midland Basin oil on pipelines from the wellhead from 13% of production in  2019 to ~42% of production in 2020 Plan for 100% of water disposal on pipeline in the Midland Basin to reduce truck hauls, which,  in turn, reduces CO2 emissions At Earthstone, maintaining environmentally sustainable business practices is a top priority 11

Asset Overview 12

Areas of Operations (1) Total Midland Basin (1) Total Proved Reserves (Mmboe) 94.3 Total Proved Reserves (Mmboe) 89.5 % Proved Developed 33% % Proved Developed 30% % Oil 56% % Oil 54% Total Proved PV-10 ($mm) $820 Total Proved PV-10 ($mm) $725 1Q20 Net Production (Boe/d)(2) 15,767 1Q20 Net Production (Boe/d)(2) 13,515 Gross Producing Wells(3) 354 Gross Producing Wells(3) 230 Net Acres(3) 43,600 Net Acres(3) 29,100 Gross Drilling Locations(3) 512 Gross Drilling Locations(3) 450 Eagle Ford (1) Total Proved Reserves (Mmboe) 4.8 % Proved Developed 100% % Oil 85% Total Proved PV-10 ($mm) $95 1Q20 Net Production (Boe/d)(2) 2,252 Gross Producing Wells(3) 124 Net Acres(3) 14,500 Gross Drilling Locations(3) 62 (1) Reserves and PV10 based on SEC 12/31/19 CGA reserve report (2) Represents reported sales volumes (3) As of 12/31/19 13

Financial Overview 14

Revised Capital Budget, Guidance and 3/31/20 Liquidity Contracts and Obligations ESTE 2020 Revised Capital Budget and Guidance Gross / Net . No long-term service contracts Operated Wells Drilled . Drilling obligations deferred to 2021 and Waiting Gross / Net Net on Operated Non-Op ($ in millions) Completion Wells On Line Wells On Line Drilling and Completion $45 - $55 11 / 9.7 3 / 3.0 3.1 Land / Infrastructure $5 Total $50 - $60 (2) Cash G&A $15.5mm - $16.5mm Liquidity (3/31/2020) 2020 Revised Capital Budget Breakdown(1) ($mm) 3/31/2020 Cash $5.1 9% Revolver Borrowings 152.0 Total Debt $152.0 Revolver Borrowing Base 275.0 91% Less: Revolver Borrowings (152.0) Plus: Cash 5.1 Drilling and Completion Land / Infrastructure Liquidity $128.1 Note: Guidance is forward-looking information that is subject to considerable change and numerous risks and uncertainties, many of which are beyond Earthstone’s control. See “Forward-Looking Statements” (1) Reflects midpoint of FY2020E revised guidance 15

Hedge Book Summary – 100% Swaps (as of 3/31/20) Oil Production Hedges - 100% Swaps Gas Production Hedges - 100% Swaps Period Volume (Bbls) Volume (Bbls/d) $/Bbl Period Volume (MMBtu) Volume (MMBtu/d) $/MMBtu Q2 2020 819,000 9,000 $53.44 Q2 2020 637,000 7,000 $2.850 Q3 2020 736,000 8,000 $57.35 Q3 2020 644,000 7,000 $2.850 Q4 2020 644,000 7,000 $61.15 Q4 2020 644,000 7,000 $2.850 FY 2020 2,896,000 7,913 $57.86 FY 2020 2,562,000 7,000 $2.850 FY 2021 1,460,000 4,000 $55.16 WTI Midland Argus Crude Basis Swaps WAHA Differential Basis Swaps Period Volume (Bbls) Volume (Bbls/d) $/Bbl (Differential) Period Volume (MMBtu) Volume (MMBtu/d) $/MMBtu FY 2020 2,562,000 7,000 ($1.40) FY 2020 2,562,000 7,000 ($1.065) FY 2021 1,825,000 5,000 $1.05 MEH Crude Oil Basis Swaps Period Volume (Bbls) Volume (Bbls/d) $/Bbl (Differential) FY 2020 366,000 1,000 $2.55 Oil Production Swaps(1) Gas Production Swaps (Volumes in Bbls/d) (Volumes in MMBtu/d) 12,000 15,000 8,000 7,000 7,000 10,000 7,996 8,000 4,000 5,000 5,000 4,000 0 0 2Q20 - 4Q20 FY21 2Q20 - 4Q20 Oil Swaps Crude Basis Swaps Gas Swaps WAHA Basis Swaps ESTE hedge book mark-to-market value (as of 3/31/20): ~$93mm (1) Crude basis swaps reflect Midland Argus and MEH crude basis swaps 16

Analyst Coverage Firm Analyst Contact Info Alliance Global Partners Bhakti Pavani / 949-296-3196 / bpavani@allianceg.com Coker Palmer Noel Parks / 215-913-7320 / parks@cokerpalmer.com Imperial Capital Jason Wangler / 713-892-5603 / jwangler@imperialcapital.com Johnson Rice Dun McIntosh / 504-584-1217 / dun@jrco.com Northland Jeff Grampp / 949-600-4150 / jgrampp@northlandcapitalmarkets.com RBC Brad Heffern / 512-708-6311 / brad.heffern@rbccm.com Roth John White / 949-720-7115 / jwhite@roth.com Stephens Gail Nicholson / 301-904-7466 / gail.nicholson@stephens.com SunTrust Neal Dingmann / 713-247-9000 / neal.dingmann@suntrust.com Wells Fargo Tom Hughes / 212-214-5022 / thomas.hughes@wellsfargo.com 17

Contact Information Mark Lumpkin, Jr. EVP, Chief Financial Officer Scott Thelander Vice President of Finance Corporate Offices Houston 1400 Woodloch Forest Drive | Suite 300 | The Woodlands, TX 77380 | (281) 298-4246 Midland 600 N. Marienfeld | Suite 1000 | Midland, TX 79701 | (432) 686-1100 Website www.earthstoneenergy.com 18

Appendix 19

Reconciliation of Non-GAAP Financial Measure – Adjusted EBITDAX Earthstone uses Adjusted EBITDAX, a financial measure that is not presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by Earthstone’s management team and external users of its financial statements, such as industry analysts, investors, lenders and rating agencies. Earthstone’s management team believes Adjusted EBITDAX is useful because it allows Earthstone to more effectively evaluate its operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. Earthstone defines Adjusted EBITDAX as net income plus, when applicable, (gain) loss on sale of oil and gas properties, net; accretion of asset retirement obligations; impairment expense; depletion, depreciation and amortization; transaction costs; interest expense, net; exploration expense; unrealized loss (gain) on derivative contracts; stock based compensation (non-cash); and income tax expense (benefit). Earthstone excludes the foregoing items from net income (loss) in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within their industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP or as an indicator of Earthstone’s operating performance or liquidity. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDAX. Earthstone’s computation of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies or to similar measures in Earthstone’s revolving credit facility. The following table provides a reconciliation of Net income to Adjusted EBITDAX for: 1Q20 Adjusted EBITDAX ($ in 000s) FY 2019 Adjusted EBITDAX ($ in 000s) 1Q 20 FY 19 Net income (loss) $36,714 Net income (loss) $1,580 Accretion of asset retirement obligations $44 Accretion of asset retirement obligations $214 Impairment expense $60,371 Impairment expense $0 Depletion, depreciation and amortization $24,656 Depletion, depreciation and amortization $69,243 Interest expense, net $1,736 Interest expense, net $6,566 Transaction costs $844 Transaction costs $1,077 (Gain) loss on sale of oil and gas properties, net ($204) (Gain) loss on sale of oil and gas properties, net ($3,222) Exploration expense $301 Exploration expense $653 Unrealized loss (gain) on derivative contracts ($90,045) Unrealized loss (gain) on derivative contracts $59,849 Stock based compensation (non-cash) (1) $2,694 Stock based compensation (non-cash) (1) $8,648 Income tax expense $1,092 Income tax expense $1,665 Adjusted EBITDAX $38,203 Adjusted EBITDAX $146,273 (1) Included in General and administrative expense in the Consolidated Statements of Operations 20

Reserves Summary Earthstone’s proved reserves as of December 31, 2019 were independently estimated by Cawley, Gillespie & Associates, Inc. (“CGA”), independent petroleum engineers, utilizing SEC prescribed oil and gas prices of $55.69/bbl and $2.578/mmbtu, respectively, calculated for December 31, 2019. SEC prices net of differentials were $52.60/bbl and $0.91/Mcf for oil and gas, respectively. Year-End 2019 SEC Proved Reserves Oil Gas NGL Total PV-10 Reserves Category (Mbbls) (MMcf) (Mbbls) (Mboe) ($ in thousands) Proved Developed 18,220 35,120 7,447 31,521 $448,533 Proved Undeveloped 34,430 72,870 16,241 62,815 $371,459 Total 52,650 107,990 23,688 94,336 $819,992 Note: PV-10 is a non-GAAP financial measure. See “Non-GAAP Financial Measure – PV-10” 21

Non-GAAP Financial Measure – PV-10 PV-10 is a non-GAAP measure that differs from a measure under GAAP known as “standardized measure of discounted future net cash flows” in that PV-10 is calculated without including future income taxes. Management believes that the presentation of the PV-10 value of our oil and natural gas properties is relevant and useful to investors because it presents the estimated discounted future net cash flows attributable to our estimated proved reserves independent of our income tax attributes, thereby isolating the intrinsic value of the estimated future cash flows attributable to our reserves. We believe the use of a pre-tax measure provides greater comparability of assets when evaluating companies because the timing and quantification of future income taxes is dependent on company-specific factors, many of which are difficult to determine. For these reasons, management uses and believes that the industry generally uses the PV-10 measure in evaluating and comparing acquisition candidates and assessing the potential rate of return on investments in oil and natural gas properties. PV-10 does not necessarily represent the fair market value of oil and natural gas properties. PV-10 is not a measure of financial or operational performance under GAAP, nor should it be considered in isolation or as a substitute for the standardized measure of discounted future net cash flows as defined under GAAP. The table below provides a reconciliation of PV-10 to the standardized measure of discounted future net cash flows (in thousands): Reconciliation of PV-10 Present value of estimated future net revenues (PV-10) $819,992 Future income taxes, discounted at 10% ($30,415) Standardized measure of discounted future net cash flows $789,577 22