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 4, 2022

(Date of earliest event reported)

 

EARTHSTONE ENERGY, INC.

(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

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 4, 2022, Earthstone Energy, Inc. (the “Company”) issued a press release announcing its financial and operating results for the three months ended March 31, 2022. 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 4, 2022, the Company posted to its website a company presentation (the “Presentation Materials”) that management intends to use from time to time. 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 included with this Current Report on Form 8-K:

Exhibit No.	Description
99.1	Press Release dated May 4, 2022.
99.2	Presentation Materials dated May 4, 2022.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

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 4, 2022	By:	/s/ Tony Oviedo
			Tony Oviedo
			Executive Vice President - Accounting and Administration

EX-99.1

Exhibit 99.1

Earthstone Energy, Inc. Reports 2022 First Quarter Financial Results

The Woodlands, Texas, May 4, 2022 – 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, 2022.

First Quarter 2022 Highlights

•Executed the Bighorn Acquisition PSA(1) on January 30, 2022, which closed subsequent to quarter-end on April 14, 2022

•In connection with the closing of the Bighorn Acquisition, we also closed a $550 million Notes Offering comprised of 8.0% senior unsecured notes on April 12, 2022

•Executed a Securities Purchase Agreement(2) on January 30, 2022 for $280 million of Preferred Stock in a private placement, which closed subsequent to quarter-end on April 14, 2022

•Closed the Chisholm Acquisition(3) on February 15,2022

•Net loss attributable to Earthstone Energy, Inc. of $33.5 million, or $(0.53) per Diluted Share

•Net loss of $51.9 million, or $(0.53) per Adjusted Diluted Share(4)

•Adjusted net income(4) of $76.2 million, or $0.78 per Adjusted Diluted Share(4)

•Adjusted EBITDAX(4) of $123.1 million, up 44% compared to 4Q 2021

•Net cash provided by operating activities of $83.0 million

•Free Cash Flow(4) of $35.7 million, up 25% compared to 4Q 2021

•Average daily production of 35,509 Boepd(5), up 17% compared to 4Q 2021

•Capital expenditures of $82.1 million, 16% below the midpoint of 1Q 2022 guidance

(1)On April 14, 2022, we consummated the transactions contemplated in a purchase and sale agreement (the “Bighorn Acquisition”).

(2)On April 14, 2022, we consummated the sale and issuance of 280,000 shares of newly authorized Series A convertible preferred stock of Earthstone (the “Preferred Stock”), pursuant to a securities purchase agreement (the “SPA”), expected to convert into approximately 25.2 million shares of Class A common stock.

(3)On February 15, 2022, we consummated the transactions contemplated in the purchase and sale agreements (the “Chisholm Acquisition”).

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

(5)Represents reported sales volumes.

Management Comments

Robert J. Anderson, President and Chief Executive Officer of Earthstone, stated, “Our strong first quarter results reflect our ongoing transformation and the success of our consolidation strategy to acquire and effectively develop accretive assets. Adjusted EBITDAX for the quarter increased approximately 44% sequentially to $123 million,

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driven by a 15% increase in production and higher commodity prices, as well as our ability to control operating costs and general and administrative expense which has allowed us to maintain high cash margins. This accomplishment is with only having our Delaware Basin assets acquired in the Chisholm Acquisition for 45 days during the first quarter.

"With the significant accomplishments of closing two acquisitions approaching $1.5 billion in purchase price and issuing $550 million of senior unsecured notes this year now behind us, we are focused on executing efficiently with our much larger asset base,” added Mr. Anderson. “The early results of the first wells completed on our newly acquired Delaware assets have been encouraging, and we are eager to continue to see results from our Delaware Basin development program. We are optimistic that we can continue to demonstrate the operational excellence for which we are known, successfully execute on our drilling program, and further increase free cash flow generation. Our robust and growing free cash flow positions us to repay significant amounts of debt for the remainder of the year and we expect to end the year comfortably under our targeted leverage of less than 1.0x debt to Adjusted EBITDAX under current commodity prices.

"Over the last year and a half, we have acquired quality assets that have significantly increased our production levels and cash flows while providing substantial, high quality drilling opportunities. We are pleased with the results of our acquisitions, and we look forward to reporting on the results of our larger asset base and drilling and completion program in the coming quarters. We will remain focused on integrating these new assets, executing our operational plan and generating record levels of free cash flow, which we believe will drive meaningful shareholder value,” concluded Mr. Anderson.

Operations Update

During the first quarter of 2022, we completed and turned to sales five gross (5.0 net) operated wells and commenced drilling ten gross (8.3 net) operated wells in the Midland Basin. In April we completed six gross (6.0 net) wells in Upton County on our Benedum pad.These wells are producing from the Wolfcamp A, B and C targets with initial average results of approximately 900 Boepd (88% oil).These wells averaged approximately 7,600 feet of completed lateral with drilling and completion costs of approximately $800 per foot.

After acquiring the Delaware Basin assets on February 15, 2022, we commenced drilling three gross (1.9 net) operated wells in the Delaware Basin in the first quarter of 2022. We brought online the two-well Minis pad, our first Earthstone completed wells, in April. These two wells, which targeted the Third Bone Spring Harkey Sand formation and are approximately 7,500-foot laterals, have averaged approximately 1,600 Boepd (87% oil) in the first 24 days online.

We continue to operate a four-rig drilling program, with two drilling rigs in the Midland Basin and two drilling rigs in the Delaware Basin. Currently, in the Midland Basin, one rig is drilling a five-well pad in our Barnhart project area in Irion County (100% W.I., 9,900-foot average lateral length). The other rig is drilling a four-well project in our TSRH area in Reagan County (65% W.I., 14,300-foot average lateral length). With two rigs operating in the Midland Basin, we anticipate spudding 40 gross (35.8 net) operated wells and bringing 40 gross (36.7 net) operated wells online in 2022. In the Delaware Basin, one rig is drilling in our Ram project area in Lea County (98% W.I., 10,000-foot average lateral length) on a two-well pad. The other rig is drilling a two-well pad in our Cletus project area in Eddy County (89% W.I., 10,000-foot average lateral length). With two rigs operating in the Delaware Basin, we anticipate spudding 20 gross (11.8 net) operated wells and bringing 18 gross (11.6 net) operated wells online in 2022.

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Selected Financial Data (unaudited)

($000s except where noted)	Three Months Ended March 31,
	2022		2021
Total revenues	$	196,150	$	75,572
Lease operating expense	21,631		10,849
General and administrative expense (excluding stock-based compensation)	6,476		5,051
Stock-based compensation	5,830		3,329
General and administrative expense	$	12,306	$	8,380
Net loss	$	(51,877)	$	(10,556)
Less: Net loss attributable to noncontrolling interest	(18,399)		(4,723)
Net loss attributable to Earthstone Energy, Inc.	(33,478)		(5,833)
Net loss per common share(1)
Basic and Diluted	(0.53)		(0.14)
Adjusted EBITDAX(2)	$	123,089	$	43,843
Production(3):
Oil (MBbls)	1,417		1,057
Gas (MMcf)	5,639		2,445
NGL (MBbls)	839		365
Total (MBoe)(4)	3,196		1,829
Average Daily Production (Boepd)	35,509		20,321
Average Prices:
Oil ($/Bbl)	97.24		57.56
Gas ($/Mcf)	4.07		2.39
NGL ($/Bbl)	42.22		24.40
Total ($/Boe)	61.38		41.32
Adj. for Realized Derivatives Settlements:
Oil ($/Bbl)	75.61		47.67
Gas ($/Mcf)	3.89		2.23
NGL ($/Bbl)	42.22		24.40
Total ($/Boe)	51.46		35.39
Operating Margin per Boe
Average realized price	$	61.38	$	41.32
Lease operating expense	6.77		5.93
Production and ad valorem taxes	4.17		2.75
Operating margin per Boe(2)	50.44		32.64
Realized hedge settlements	(9.92)		(5.93)
Operating margin per Boe (including realized hedge settlements)(2)	$	40.52	$	26.71

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

(2)See the “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).

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Liquidity, Capital Expenditure Update and Equity Capitalization

As of March 31, 2022, we had $0.5 million in cash and $624.2 million of long-term debt outstanding under our senior secured revolving credit facility (the “Credit Facility”) with a borrowing base of $825.0 million. With the $200.8 million of undrawn borrowing base capacity and $0.5 million in cash, we had total liquidity of approximately $201.3 million. Subsequent to March 31, 2022, Earthstone closed on its previously announced Bighorn Acquisition, closed the $550 million Notes Offering, closed the $280 million private placement of Preferred Stock and paid the $70 million of deferred cash consideration for the Chisholm Acquisition. When adjusted to include the impact of these activities and a voluntary reduction in the elected commitments under the Credit Facility to $800 million, we had estimated total debt outstanding of $1,013 million, comprised of $550 million of senior unsecured notes and $463 million of debt outstanding under our Credit Facility, leaving $337 million of undrawn availability on the $800 million of total commitments under our Credit Facility.

Through March 31, 2022, we had incurred $82.1 million of capital expenditures, which is approximately 16% below the midpoint of our first quarter 2022 guidance of $95-100 million. Our full year 2022 capital expenditure guidance remains at $410-$440 million. We expect to fund our remaining 2022 capital expenditures with cash flow from operations while any excess cash flow will be used to pay down debt.

As of April 28, 2022, there were approximately 79.1 million shares of Class A common stock and approximately 34.3 million shares of Class B common stock, or approximately 113.4 million shares of combined common stock outstanding. Additionally, there were 280,000 shares of Preferred Stock outstanding that are expected to be converted into approximately 25.2 million shares of Class A common stock. As of April 28, 2022, assuming the conversion of the Preferred Stock into Class A common stock, there would have been a total of approximately 138.6 million shares of common stock outstanding in aggregate.

Commodity Hedging

Hedging Activities

The following table sets forth our outstanding derivative contracts as of March 31, 2022. When aggregating multiple contracts, the weighted average contract price is disclosed.

As of March 31, 2022:

	Price Swaps
Period	Commodity	Volume (Bbls / MMBtu)	Weighted Average Price ($/Bbl / $/MMBtu)
Q2 - Q4 2022	Crude Oil	3,247,250	$	65.96
Q1 - Q4 2023	Crude Oil	1,277,500	$	76.20
Q2 - Q4 2022	Crude Oil Basis Swap (1)	3,377,500	$	0.51
Q1 - Q4 2023	Crude Oil Basis Swap (1)	730,000	$	0.49
Q2 - Q4 2022	Natural Gas	8,062,000	$	3.55
Q1 - Q4 2023	Natural Gas	3,670,000	$	3.35
Q2 - Q4 2022	Natural Gas Basis Swap (2)	5,500,000	$	(0.33)
Q1 - Q4 2023	Natural Gas Basis Swap (2)	25,550,000	$	(1.28)
Q1 - Q4 2024	Natural Gas Basis Swap (2)	25,620,000	$	(1.04)

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

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

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	Costless Collars
Period	Commodity	Volume (Bbls / MMBtu)	Sold Ceiling ($/Bbl / $/MMBtu)		Bought Floor ($/Bbl / $/MMBtu)
Q2 - Q4 2022	Crude Oil Costless Collar	1,560,000	$	83.59	$	69.42
Q1 - Q4 2023	Crude Oil Costless Collar	1,715,500	$	80.34	$	62.98
Q2 - Q4 2022	Natural Gas Costless Collar	12,782,500	$	5.47	$	3.66
Q1 - Q4 2023	Natural Gas Costless Collar	13,188,000	$	4.84	$	3.28

Hedging Update

The following table sets forth our outstanding derivative contracts at May 2, 2022. When aggregating multiple contracts, the weighted average contract price is disclosed.

	Price Swaps
Period	Commodity	Volume (Bbls / MMBtu /Gals)	Weighted Average Price ($/Bbl / $/MMBtu / $/Gal)
Q2 - Q4 2022	Crude Oil	3,247,250	$	65.96
Q1 - Q4 2023	Crude Oil	1,277,500	$	76.20
Q2 - Q4 2022	Crude Oil Basis Swap (1)	3,377,500	$	0.51
Q1 - Q4 2023	Crude Oil Basis Swap (1)	1,825,000	$	0.57
Q2 - Q4 2022	Natural Gas	8,062,000	$	3.55
Q1 - Q4 2023	Natural Gas	3,670,000	$	3.35
Q2 - Q4 2022	Natural Gas Basis Swap (2)	5,500,000	$	(0.33)
Q1 - Q4 2023	Natural Gas Basis Swap (2)	25,550,000	$	(1.28)
Q1 - Q4 2024	Natural Gas Basis Swap (2)	25,620,000	$	(1.04)

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

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

	Costless Collars
Period	Commodity	Volume (Bbls / MMBtu)	Sold Ceiling ($/Bbl / $/MMBtu)		Bought Floor ($/Bbl / $/MMBtu)
Q2 - Q4 2022	Crude Oil Costless Collar	1,560,000	$	83.59	$	69.42
Q1 - Q4 2023	Crude Oil Costless Collar	2,190,000	$	85.73	$	64.50
Q2 - Q4 2022	Natural Gas Costless Collar	15,355,000	$	6.33	$	4.05
Q1 - Q4 2023	Natural Gas Costless Collar	14,133,000	$	5.34	$	3.46

Conference Call Details

Earthstone is hosting a conference call on Thursday, May 5, 2022 at 12:00 p.m. Eastern (11:00 a.m. Central) to discuss the Company’s financial results for the first quarter of 2022 and its outlook for the remainder of 2022. Prepared remarks by Robert J. Anderson, President and Chief Executive Officer, Mark Lumpkin, Jr., Executive Vice President and Chief Financial Officer and Steven C. Collins, Executive Vice President and Chief Operating Officer, will be followed by a question and answer session.

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.

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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 19, 2022. The number for the replay is 877-660-6853 for domestic calls or 201-612-7415 for international calls, using Replay ID: 13729634.

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. The Company’s primary assets are located in the Midland Basin in West Texas, the Eagle Ford Trend in South Texas and the Delaware Basin in New Mexico. Earthstone is listed 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, and Section 21E of the Securities Exchange Act of 1934, as amended. 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, 2021, recent 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

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EARTHSTONE ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share amounts)

	March 31,		December 31,
ASSETS	2022		2021
Current assets:
Cash	$	482	$	4,013
Accounts receivable:
Oil, natural gas, and natural gas liquids revenues	98,182		50,575
Joint interest billings and other, net of allowance of $19 and $19 at March 31, 2022 and December 31, 2021, respectively	11,980		2,930
Derivative asset	1,849		1,348
Prepaid expenses and other current assets	4,440		2,549
Total current assets	116,933		61,415
Oil and gas properties, successful efforts method:
Proved properties	2,278,496		1,625,367
Unproved properties	280,805		222,025
Land	5,382		5,382
Total oil and gas properties	2,564,683		1,852,774
Accumulated depreciation, depletion and amortization	(429,743)		(395,625)
Net oil and gas properties	2,134,940		1,457,149
Other noncurrent assets:
Office and other equipment, net of accumulated depreciation and amortization of $4,636 and $4,547 at March 31, 2022 and December 31, 2021, respectively	2,389		1,986
Derivative asset	5,810		157
Operating lease right-of-use assets	2,310		1,795
Other noncurrent assets	58,889		33,865
TOTAL ASSETS	$	2,321,271	$	1,556,367
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	69,749	$	31,397
Revenues and royalties payable	52,167		36,189
Accrued expenses	39,179		31,704
Deferred acquisition payment - Chisholm	70,000		—
Asset retirement obligation	609		395
Derivative liability	150,055		45,310
Advances	2,447		4,088
Operating lease liabilities	747		681
Other current liabilities	630		851
Total current liabilities	385,583		150,615
Noncurrent liabilities:
Long-term debt	624,229		320,000
Deferred tax liability	14,404		15,731
Asset retirement obligation	21,509		15,471
Derivative liability	21,775		571
Operating lease liabilities	1,725		1,276
Other noncurrent liabilities	9,744		6,442

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Total noncurrent liabilities	693,386		359,491
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; 73,440,800 and 53,467,307 issued and outstanding at March 31, 2022 and December 31, 2021, respectively	73		53
Class B Common Stock, $0.001 par value, 50,000,000 shares authorized; 34,271,766 and 34,344,532 issued and outstanding at March 31, 2022 and December 31, 2021, respectively	34		34
Additional paid-in capital	967,093		718,181
Accumulated deficit	(193,252)		(159,774)
Total Earthstone Energy, Inc. equity	773,948		558,494
Noncontrolling interest	468,354		487,767
Total equity	1,242,302		1,046,261
TOTAL LIABILITIES AND EQUITY	$	2,321,271	$	1,556,367

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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,
	2022		2021
REVENUES
Oil	$	137,752	$	60,819
Natural gas	22,958		5,852
Natural gas liquids	35,440		8,901
Total revenues	196,150		75,572
OPERATING COSTS AND EXPENSES
Lease operating expense	21,631		10,849
Production and ad valorem taxes	13,315		5,027
Depreciation, depletion and amortization	34,326		24,407
General and administrative expense	12,306		8,380
Transaction costs	10,742		2,106
Accretion of asset retirement obligation	397		290
Exploration expense	92		—
Total operating costs and expenses	92,809		51,059
Income from operations	103,341		24,513
OTHER INCOME (EXPENSE)
Interest expense, net	(5,318)		(2,217)
Loss on derivative contracts, net	(151,480)		(33,263)
Other income, net	47		103
Total other expense	(156,751)		(35,377)
Loss before income taxes	(53,410)		(10,864)
Income tax benefit	1,533		308
Net loss	(51,877)		(10,556)
Less: Net loss attributable to noncontrolling interest	(18,399)		(4,723)
Net loss attributable to Earthstone Energy, Inc.	$	(33,478)	$	(5,833)
Net loss per common share attributable to Earthstone Energy, Inc.:
Basic and Diluted	$	(0.53)	$	(0.14)
Weighted average common shares outstanding:
Basic and Diluted	63,445,649		42,778,916

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EARTHSTONE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	For the Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net loss	$	(51,877)	$	(10,556)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization	34,326		24,407
Accretion of asset retirement obligations	397		290
Settlement of asset retirement obligations	(201)		(15)
Gain on sale of office and other equipment	(22)		—
Total loss on derivative contracts, net	151,480		33,263
Operating portion of net cash paid in settlement of derivative contracts	(31,686)		(10,905)
Stock-based compensation - equity portion	2,301		3,329
Deferred income taxes	(1,327)		(308)
Amortization of deferred financing costs	627		141
Changes in assets and liabilities:
(Increase) decrease in accounts receivable	(48,735)		(5,379)
(Increase) decrease in prepaid expenses and other current assets	(1,896)		367
Increase (decrease) in accounts payable and accrued expenses	21,783		5,389
Increase (decrease) in revenues and royalties payable	14,932		(2,081)
Increase (decrease) in advances	(7,100)		358
Net cash provided by operating activities	83,002		38,300
Cash flows from investing activities:
Acquisition of oil and gas properties, net of cash acquired	(324,198)		(134,641)
Additions to oil and gas properties	(55,925)		(8,913)
Additions to office and other equipment	(590)		(226)
Net cash used in investing activities	(380,713)		(143,780)
Cash flows from financing activities:
Proceeds from borrowings	582,498		177,114
Repayments of borrowings	(278,269)		(68,690)
Cash paid related to the exchange and cancellation of Class A Common Stock	(3,898)		(2,080)
Cash paid for finance leases	—		(20)
Deferred financing costs	(6,151)		(891)
Net cash provided by financing activities	294,180		105,433
Net decrease in cash	(3,531)		(47)
Cash at beginning of period	4,013		1,494
Cash at end of period	$	482	$	1,447
Supplemental disclosure of cash flow information
Cash paid for:
Interest	$	4,580	$	1,922
Non-cash investing and financing activities:
Class A Common Stock issued in IRM Acquisition	$	—	$	76,572
Class A Common Stock issued in Chisholm Acquisition	$	249,515	$	—
Deferred acquisition payment - Chisholm	$	70,000	$	—
Accrued capital expenditures	$	49,853	$	7,775
Lease asset additions - ASC 842	$	678	$	—
Asset retirement obligations	$	86	$	427

10

Earthstone Energy, Inc.
Non-GAAP Financial Measures
Unaudited

The non-GAAP financial measures of Adjusted Diluted Shares, Adjusted EBITDAX, Adjusted Net Income, Free Cash Flow and Operating Margin per Boe, 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 loss because of their 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,
	2022	2021
Class A Common Stock - Diluted(1)	63,445,649	42,778,916
Class B Common Stock	34,322,462	34,502,153
Adjusted Diluted Shares	97,768,111	77,281,069

(1)Does not include potentially dilutive unvested restricted stock units and performance units.

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 loss because of its wide acceptance by the investment community as a financial indicator.

We define “Adjusted EBITDAX” as net loss plus, when applicable, accretion of asset retirement obligations; depreciation, depletion and amortization; interest expense, net; transaction costs; exploration expense; unrealized loss on derivative contracts; stock-based compensation (non-cash and expected to settle in cash); and income tax 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

11

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 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 loss to Adjusted EBITDAX for the periods indicated:

($000s)	Three Months Ended
	March 31,
	2022		2021
Net loss	$	(51,877)	$	(10,556)
Accretion of asset retirement obligations	397		290
Depreciation, depletion and amortization	34,326		24,407
Interest expense, net	5,318		2,217
Transaction costs	10,742		2,106
Exploration expense	92		—
Unrealized loss on derivative contracts	119,794		22,358
Stock based compensation(1)	5,830		3,329
Income tax benefit	(1,533)		(308)
Adjusted EBITDAX	$	123,089	$	43,843

(1)Consists of expense for non-cash equity awards and cash-based liability awards that are expected to be settled in cash. On February 9, 2022, cash-based liability awards were settled in the amount of $8.1 million. Stock-based compensation is included in General and administrative expense in the Condensed Consolidated Statements of Operations.

III. Adjusted Net Income

We define “Adjusted Net Income” as net loss plus, when applicable, unrealized loss on derivative contracts; 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 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.

12

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

($000s, except share and per share data)	Three Months Ended
	March 31,
	2022		2021
Net loss	$	(51,877)	$	(10,556)
Unrealized loss on derivative contracts	119,794		22,358
Transaction costs	10,742		2,106
Income tax effect of the above	(2,485)		(466)
Adjusted Net Income	$	76,174	$	13,442
Adjusted Diluted Shares(1)	97,768,111		77,281,069
Adjusted Net Income per Adjusted Diluted Share	$	0.78	$	0.17

(1)Does not include potentially dilutive unvested restricted stock units and performance units.

IV. 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 Net cash provided by operating activities; less (1) Settlement of asset retirement obligations, Gain on sale of office and other equipment, Amortization of deferred financing costs and Change in assets and liabilities from the Condensed Consolidated Statements of Cash Flows; plus (2) Transaction costs, Exploration expense and the current portion of Income tax benefit from the Condensed Consolidated Statements of Operations; plus (3) the liability portion of stock-based compensation which is included in General and administrative expense in the Condensed Consolidated Statements of Operations; plus (4) the current portion of income tax benefit from the Condensed Consolidated Statements of Operations; less (5) Capital expenditures (accrual basis). Alternatively, Free Cash Flow could be defined as Adjusted EBITDAX (defined above), less interest expense, less accrual-based capital expenditures.

Management believes that Free Cash Flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free Cash Flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.

13

Free Cash Flow for the periods indicated:

($000s)	Three Months Ended
	March 31,
	2022		2021
Net cash provided by operating activities	$	83,002	$	38,300
Adjustments - Condensed Consolidated Statements of Cash Flows
Settlement of asset retirement obligations	201		15
Gain on sale of office and other equipment	22		—
Amortization of deferred financing costs	(627)		(141)
Change in assets and liabilities	21,016		1,346
Adjustments - Condensed Consolidated Statements of Operations
Transaction costs	10,742		2,106
Exploration expense	92		—
Income tax benefit - current	(206)		—
Stock-based compensation - liability portion	3,529		—
Capital expenditures (accrual basis)	(82,109)		(9,801)
Free Cash Flow	$	35,662	$	31,825

Alternate calculation of Free Cash Flow for the periods indicated:

($000s)	Three Months Ended
	March 31,
	2022		2021
Adjusted EBITDAX	$	123,089	$	43,843
Interest expense, net	(5,318)		(2,217)
Capital expenditures (accrual basis)	(82,109)		(9,801)
Free Cash Flow	$	35,662	$	31,825

V. Operating Margin per Boe and Operating Margin per Boe (including realized hedge settlements)

Operating Margin per Boe is a non-GAAP financial measure that we use to evaluate our operating performance on a per Boe basis. We define Operating Margin per Boe as average realized price per Boe minus lease operating expense per BOE and production and ad valorem taxes per Boe. Operating Margin per Boe (including realized hedge settlements) is calculated as the sum of Operating Margin per Boe and Realized hedge settlements per Boe.

Our Operating Margin per Boe measure provides additional information that may be used to further understand our operating margins. We use Operating Margin per Boe 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. Operating Margin per Boe should not be considered as an alternative to, or more meaningful than, net loss as an indicator of operating performance. Operating Margin per Boe, as used by us, may not be comparable to similarly titled measures reported by other companies.

14

EX-99.2

Investor Presentation May 4, 2022 Exhibit 99.2

2 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 benefits of Earthstone Energy, Inc. (“ESTE,” “Earthstone” or the “Company”) and its stockholders from the acquisition (the “Bighorn Acquisition”) of certain assets from Bighorn Permian Resources, LLC (“Bighorn”) by Earthstone, the acquisition (the “Chisholm Acquisition” and with the Bighorn Acquisition, the “Acquisitions”) of certain assets from Chisholm Energy Operating, LLC and Chisholm Energy Agent, Inc. (collectively, “Chisholm”) by Earthstone, the private placement (the “PIPE”) of Series A Convertible Preferred Stock by Earthstone in the amount of $280 million, the expected future reserves, production, financial position, business strategy, revenues, earnings, free cash flow, 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: Earthstone’s ability to integrate the assets acquired in the Acquisitions and achieve anticipated benefits from them; risks relating to any unforeseen liabilities of Earthstone or the assets acquired in the Acquisitions; 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 the Company’s credit facility; Earthstone’s ability to generate sufficient cash flows from operations to fund all or portions of its future capital expenditures budget or to support a shareholder return program; Earthstone’s ability to obtain external capital to finance exploration and development operations and acquisitions; the impacts of hedging on results of operations; uninsured or underinsured losses resulting from oil and natural gas operations; competition for assets, equipment, materials and qualified people; supply chain disruptions; Earthstone’s ability to replace oil and natural gas reserves; any loss of senior management or technical personnel; regulatory matters, including environmental regulations; social, market and regulatory efforts to address climate change; and the direct and indirect impact on most or all of the foregoing on the evolving COVID-19 pandemic. Earthstone’s annual report on Form 10-K for the year ended December 31, 2021, recent 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. The forward-looking statements included in this presentation speak only as of the date of this presentation and Earthstone undertakes no obligation to revise or update publicly any forward-looking statements except as required by law. This presentation contains estimates of Earthstone’s, Bighorn’s and Chisholm’s 2022 production, capital expenditures and 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 for hydrocarbons and unanticipated delays in production and well completions. 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 Earthstone’s expectations. Earthstone’s ability to fund its 2022 and future capital budgets is subject to numerous risks and uncertainties, including volatility in commodity prices and the potential for unanticipated production and completion delays and increases in costs associated with drilling, production and transportation. Use of Non-GAAP Information This presentation may include non-GAAP (generally accepted accounting principles) measures such as PV-10 and Adjusted EBITDAX. Such non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. For additional disclosure regarding such non-GAAP measures, including reconciliations to their most directly comparable GAAP measure, please refer to the Appendix or to Earthstone’s 10-Q and 10-K filings with the SEC. Cautionary Note on Reserves and Resource Estimates The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves. Any reserve estimates provided in this presentation that are not specifically designated as being estimates of proved reserves may include estimated reserves or locations not necessarily calculated in accordance with, or contemplated by, the SEC’s latest reserve reporting guidelines. You are urged to consider closely the oil and gas disclosures in our 2021 Form 10-K and our other reports and filings with the SEC. 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.

3 The New Earthstone: Transformed SMID-Cap, Permian Producer Top Investment Criteria Earthstone’s Qualifications Greater Efficiency from Increased Critical Mass ✓ Six acquisitions since early 2021 increase production by >4x and improve cost and operating efficiencies Top Basins / Long Inventory Life ✓ Midland Basin and Delaware Basin asset base with ~13 years of high quality inventory life High Free Cash Flow Generation with Low Reinvestment Needs ✓ Only ~50% of cash flow needed to maintain production levels, creates robust free cash flow generation(1) Low Leverage ✓ Recent acquisitions approximately leverage neutral and expect to be <1x leverage(2) going forward Progressing Towards Shareholder Returns ✓ “New Earthstone” provides for accelerated consideration of shareholder return program Commitment & Focus ✓ “Do the right thing” commitment to stakeholders, employees and environment (1) Free cash flow defined as Adjusted EBITDAX less interest expense less capital expenditures (accrual basis). (2) Leverage defined as Total Debt/Adjusted EBITDAX.

4 Company Overview Asset Overview  The Woodlands, Texas based E&P company focused on acquisitions, development and production of oil and natural gas in the Permian Basin with ~248,000 net acres  Recent string of six acquisitions has established critical mass  Earthstone standalone estimated 1Q22 production of 35,509 Boe/d (44% oil, 70% liquids) — Includes ~45 days of production from Chisholm Acquisition and none from Bighorn Acquisition — 2Q22 Production Guidance: 70,000 – 74,000 Boe/d — 2H22 Production Guidance: 76,000 – 80,000 Boe/d Earthstone Company Snapshot

5 Capital Structure and Liquidity Snapshot Market Statistics (1) Excludes 5.7MM shares of Class A Common Stock issued to Bighorn on 4/14/22. (2) Includes the impact of the 5.7MM shares of Class A Common Stock issued to Bighorn on 4/14/22. Adjustments also reflect the impact of the closing of the Bighorn Acquisition, the $550MM notes offering, the $280MM PIPE issuance, the payment of the $70MM of deferred cash consideration from the Chisholm Acquisition and the voluntary reduction in the elected commitments under the Credit Facility from $825MM to $800MM, all of which occurred during April 2022. (3) Equity issued in the PIPE was convertible equity that is expected to be converted into 25.2MM shares of Class A Common Stock, including 19.8MM shares to an affiliate of EnCap, 20 days after an information statement is mailed to Earthstone stockholders. Liquidity As of 3/31/22 As of 3/31/22 As Reported As Adjusted ($ in millions, except share price) 1Q22 (1) 1Q22 (2) Class A Common Stock (MM) 73.4 79.1 Class A Expected PIPE Conversion (MM) (3) 0.0 25.2 Class B Common Stock (MM) 34.3 34.3 Total Common Stock Outstanding (MM) 107.7 138.6 Stock Price (as of 5/3/22) $14.33 $14.33 Market Capitalization $1,543.5 $1,986.0 Plus: Revolver Borrowings $624.2 $463.0 Plus: 8% Senior Unsecured Notes $0.0 $550.0 Less: Cash (0.5) (0.5) Enterprise Value $2,167.3 $2,998.5 As of 3/31/22 As of 3/31/22 As Reported As Adjusted ($ in millions) 1Q22 1Q22 Revolver Borrowing Base $825.0 $1,325.0 Revolver Elected Commitments $825.0 $800.0 Less: Revolver Borrowings (624.2) (463.0) Plus: Cash 0.5 0.5 Liquidity $201.3 $337.5

6 Date Announced FY 2020A 12/18/20 4/1/21 10/4/21 12/16/21 1/31/22 Acquisitions Total Acquisition Price ($MM)(1) $182.0 $126.5 $73.2 $603.8 $860.0 $1,846 Consideration Mix (% Cash / % Stock) 72% / 28% 65% / 35% 67% / 33% 68% / 32% 57% / 43% 63% / 37% Proved Developed PV-10 ($mm)(2) $173 $153 $116 $421 $1,012 $1,875 Acquired Net Acreage (000's) 43.4 20.3 10.0 36.1 110.6 220.4 Acquired Drilling Locations(3) 70 49 - 414 49 582 2H22E ~15,300 ~78,000 ESTE… IRM Tracker Foreland Chisholm Bighorn 2H22E Acquisitions Have Transformed Earthstone in 2021-22  Earthstone production base up >400% vs. 2020  Mature base production profile and high quality inventory enables moderate production growth at ~50% reinvestment rate Note: See Appendix for footnotes. Pathway to Scale – Production (Boe/d) (4)

7 Minimize fugitive emissions with the installation of emission reducing equipment in conjunction with new facility construction: ‐ Vapor Recovery Units (“VRUs”) ‐ Air compression equipment for Pneumatic Actuators Target Zero Flaring: Connect natural gas pipelines ahead of flowback and first production negates need for flaring Leak Detection & Repair (“LDAR”) program since 2019 to further minimize air emissions Vast majority of water disposal occurs on pipeline, reducing truck hauls and CO2 emissions Earthstone is an Environmental Partnership Program Participant     Key Environmental Priorities Focus on Responsible Operatorship Highly Focused Environmental Stewardship

8 (1) Peers include CDEV, CPE, FANG, LPI, MTDR, PXD, SM and XEC. Data compiled from company published data for most recent available year (2019 or 2020) and from publicly available EPA reports as of June 1, 2021. 2020 Greenhouse Gas Emissions Intensity of 12.4 (T CO2e / Mboe) 29% Below Permian Peers Avg.(1) 45% Below Permian Peers Avg.(1) 2020 Flaring Intensity of 2.17% (operated gas flared / operated gas produced) Earthstone’s “Do the Right Thing” approach and proactive emissions and flaring initiatives are demonstrated by: Responsible Management of Air Emissions and Flaring

9 Earthstone Overview

10 $19 $61 $97 $146 $144 $248 $603 $939 FY16A FY17A FY18A FY19A FY20A FY21A 1Q22A Annual. FY22 Consensus 0.9x 0.4x 0.8x 1.2x 0.8x 1.0x YE16A YE17A YE18A YE19A YE20A 1Q22A Annual. $10.29 $6.84 $5.66 $5.85 $5.21 $5.45 $6.77 $7.50 $6.43 $7.13 $5.81 $3.87 $3.25 $2.31 $2.03 $1.35 $16.72 $13.97 $11.47 $9.72 $8.46 $7.76 $8.79 $8.85 FY16A FY17A FY18A FY19A FY20A FY21A 1Q22A FY22 Guidance Lease Operating Expense ($/Boe) Cash G&A ($/Boe) (1) Excludes stock-based compensation. FY22 guidance assumes midpoint of FY22 guidance. (2) Includes Earthstone annualized 1Q22 adjusted EBITDAX of $493MM and Chisholm annualized 1Q22 adjusted EBITDAX (prior to Chisholm Acquisition closing) of $110MM. (3) Factset data as of 5/2/22. (4) Reflects debt at 3/31/22; annualized adjusted EBITDAX pro forma for full quarter Chisholm. Excludes impact of Bighorn Acquisition and Senior Unsecured Notes Offering. Average Daily Production (Boe/d) Adjusted EBITDAX ($MM)  Since entering the Permian Basin in 2016, Earthstone has substantially increased production and decreased per unit cash expenses, resulting in increased Adjusted EBITDAX, while maintaining low leverage and preserving financial flexibility Permian Basin Growth Story 4,002 7,869 9,937 13,429 15,276 24,809 35,509 70,000- 74,000 76,000- 80,000 FY16A FY17A FY18A FY19A FY20A FY21A 1Q22A 2Q22 Guidance 2H22 Guidance Midland Basin Other (4) (3) Lease Operating Expense and Cash G&A(1) ($/Boe) Debt / Adjusted LTM EBITDAX (2)

11 $2,658 $2,998 $3,034 $3,113 $5,872 $6,145 $7,761 Peer 1 ESTE Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 14.9 15.3 30.2 64.3 82.7 83.7 84.4 111.9 145.5 Peer 1 ESTE FY20 ESTE 4Q21 Peer 2 Peer 3 Peer 4 ESTE + Chisholm + Bighorn Peer 5 Peer 6 4Q21 Production (MBoe/d) Enterprise Value ($mm) Earthstone’s Significant Growth Transformation Execution of acquisition strategy has increased base production by >400% from ~15,000 Boe/d in ‘20 (1) Source: Factset, Wall Street research. Market Data as of 5/3/22. Peers include: CDEV, CPE, HPK, LPI, MTDR and SM. (1) Assumes conversion of equity issued in the PIPE into 25.2MM shares of Class A Common Stock.

12 $11.57 $11.97 $13.45 $14.82 $15.29 $15.60 $17.43 $18.25 $19.09 ESTE Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 LOE (incl Workovers) Ad Val. & Prod. Taxes Transportation Cash G&A Interest Expense 78% 76% 80% 68% 69% 70% 71% 75% 78% ESTE Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Cash Margin(1) Note: All metrics based on 4Q 2021 results. (1) All-in cash margin calculated as a percentage of revenues; cash margin calculated as revenues 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 and realized hedges. 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, FANG and MTDR. (2) Large-Cap includes: FANG and PXD. SMid-Cap includes: CDEV, CPE, HPK, LPI, MTDR and SM. Large-Cap(2) Avg: $12.71 SMid-Cap(2) Avg: $16.75 ESTE: $11.57 Low Cost Structure Drives Leading Cash Margins All-in Cash Costs ($/Boe)(1) Large-Cap(2) Avg: 78% SMid-Cap(2) Avg: 72% ESTE: 78%

13 Reserve Overview as of 1/1/22(1) (1) Based on third party reserve reports by CG&A and Ryder Scott as of January 1, 2022 run at strip pricing as of 3/15/22. (2) PV-10 is a supplemental non-GAAP financial measure. See Appendix for a reconciliation of PV-10 to the most directly comparable GAAP financial measure. (3) Includes all locations across reserve categories. Gas and NGL pricing scaled with WTI assuming $60/bbl / $3.00/MMbtu. (4) Wells per year based on 4 active rigs each drilling 15 wells per year on average. 1P Reserves at Flat Pricing Reserves and Drilling Inventory Inventory Life Calculation≥25% IRR Operated Locations(3) Reserves (MMBoe) % Total PV-10 Value ($MM)(2) Proved Developed Producing 248 60% $3,521 Proved Developed Non-Producing 7 2% $135 Proved Undeveloped 156 38% $1,817 Total Proved 411 100% $5,472 776 Locations ÷ 60 Wells per Year(4) = >13 years PDP 60% PDNP 2% PUD 38% 411 MMBoe 215 294 325 348 362 287 386 409 414 414502 680 734 762 776 ≤$40 $50 $60 $70 ≥$80 Midland Delaware

14 Financial Overview

15 2022 Guidance Production Guidance Expense & Capex Guidance 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”. Cash G&A is defined as general and administrative expenses excluding stock-based compensation. Production Guidance ESTE + Chisholm + Bighorn 2Q22 ESTE + Chisholm + Bighorn 3Q22 - 4Q22 ESTE + Chisholm + Bighorn FY22 Production (Boe/d) 70,000 - 74,000 76,000 - 80,000 64,250 - 67,750 % Oil ~ 41% ~ 41% ~ 41% % Liquids ~ 67% ~ 67% ~ 67% Expense & Capex Guidance ESTE + Chisholm + Bighorn FY22 Total Capital Expenditures ($MM) $410 - $440 Lease Operating Expense ($/Boe) $7.25 - $7.75 Production & Ad Valorem Taxes (% of Revenue) 7.5% - 8.0% Cash G&A ($MM) $31 - $34

16 Overview Map | 4 Rigs Total (2 Midland Basin, 2 Delaware Basin)  ~$410mm - $440mm capital expenditures  2 drilling rigs in each of Midland Basin and Delaware Basin 2022 Capital Program Earthstone 2022 Capital Budget ($ in millions) Op. D&C Capex - Midland Basin $265 - $285 Op. D&C Capex - Delaware Basin $100 - $105 Total Operated D&C Capex $365 - $390 Non-Operated D&C Capex $20 - $25 Land / Infrastructure $25 Total $410 - $440 Earthstone HZ Drilling Rig

17 Oil and Gas Hedging Summary WTI Hedges (Bbls/d and $/Bbl(1)) Henry Hub Hedges (MMBtu/d and $/MMBtu(1)) Note: Includes all WTI and Henry Hub hedges as of 5/2/22. Does not include basis swaps. (1) Reflects weighted average swap price and weighted average collar floor / ceiling prices for each quarter.  Disciplined approach to hedging majority of near-term volumes to provide cash flow visibility  Lower hedging relative to production and utilization of some collars provide increased commodity upside exposure $64.48 $66.70 $66.70 $64.33 $76.20 $68.03/$82.69 $70.00/$83.96 $70.00/$83.96 $68.45/$82.57 $64.50/$85.73 16,937 17,750 17,750 15,536 9,500 2Q 2022 3Q 2022 4Q 2022 FY 2022 FY 2023 Swaps Collars $3.595 $3.626 $3.332 $3.492 $3.352 $3.985 / $5.901 $4.115 / $6.161 $4.048 / $6.738 $4.008/$6.224 $3.461 / $5.344 75,352 90,000 90,000 72,170 48,775 2Q 2022 3Q 2022 4Q 2022 FY 2022 FY 2023 Swaps Collars

18 Analyst Coverage Firm Analyst Contact Info Alliance Global Partners Jeffrey Campbell / 888-543-4448 / jcampbell@allianceg.com Benchmark Subash Chandra / 212-312-6755 / schandra@benchmarkcompany.com Johnson Rice Charles Meade / 504-584-1274 / cmeade@jrco.com RBC Scott Hanold / 512-708-6354 / scott.hanold@rbccm.com Roth John White / 949-720-7115 / jwhite@roth.com Stephens Cameron Lochridge / 713-993-4212 / cameron.lochridge@stephens.com Truist Neal Dingmann / 713-247-9000 / neal.dingmann@truist.com Water Tower Research Jeff Robertson / 469-343-9962 / jeff@watertowerresearch.com Wells Fargo Joseph McKay / 212-214-8007 / joseph.mckay@wellsfargo.com

19 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 Contact Information

20 Appendix

21 WTI Oil Hedges - Swaps HH Gas Hedges - Swaps Period Volume (Bbls) Volume (Bbls/d) $/Bbl Period Volume (MMBtu) Volume (MMBtu/d) $/MMBtu 2Q 2022 1,085,250 11,926 $64.48 2Q 2022 2,902,500 31,896 $3.595 3Q 2022 1,081,000 11,750 $66.70 3Q 2022 3,266,000 35,500 $3.626 4Q 2022 1,081,000 11,750 $66.70 4Q 2022 1,893,500 20,582 $3.332 2Q - 4Q 2022 3,247,250 11,808 $65.96 2Q - 4Q 2022 8,062,000 29,316 $3.546 FY 2023 1,277,500 3,500 $76.20 FY 2023 3,670,000 10,055 $3.352 WTI Oil Hedges - Collars HH Gas Hedges - Collars Period Volume (Bbls) Volume (Bbls/d) $/Bbl (Floor) $/Bbl (Ceiling) Period Volume (MMBtu) Volume (MMBtu/d) $/MMBtu (Floor) $/MMBtu (Ceiling) 2Q 2022 456,000 5,011 $68.03 $82.69 2Q 2022 3,954,500 43,456 $3.985 $5.901 3Q 2022 552,000 6,000 $70.00 $83.96 3Q 2022 5,014,000 54,500 $4.115 $6.161 4Q 2022 552,000 6,000 $70.00 $83.96 4Q 2022 6,386,500 69,418 $4.048 $6.738 2Q - 4Q 2022 1,560,000 5,673 $69.42 $83.59 2Q - 4Q 2022 15,355,000 55,836 $4.054 $6.334 FY 2023 2,190,000 6,000 $64.50 $85.73 FY 2023 14,133,000 38,721 $3.461 $5.344 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 2Q 2022 1,077,500 11,841 $0.51 2Q 2022 1,820,000 20,000 ($0.327) 3Q 2022 1,150,000 12,500 $0.51 3Q 2022 1,840,000 20,000 ($0.327) 4Q 2022 1,150,000 12,500 $0.51 4Q 2022 1,840,000 20,000 ($0.327) 2Q - 4Q 2022 3,377,500 12,282 $0.51 2Q - 4Q 2022 5,500,000 20,000 ($0.327) FY 2023 1,825,000 5,000 $0.57 FY 2023 25,550,000 70,000 ($1.278) FY 2024 FY 2024 25,620,000 70,000 ($1.041) Oil and Gas Hedges Summary Note: Hedgebook as of 5/2/22.

22 SEC Stand-Alone Reserves Summary & PV-10 – Year-End 2021 As shown in the table below, Earthstone’s stand-alone estimated proved reserves at year end 2021 were independently estimated by Cawley, Gillespie & Associates, Inc. (“CGA”), independent petroleum engineers, and which was prepared in accordance with Securities and Exchange Commission (“SEC”) guidelines, were approximately 147.6 million barrels of oil equivalent (“MMBoe”). SEC rules require that calculations of economically recoverable reserves use the unweighted average price on the first day of the month for the prior twelve-month period. The resulting oil and natural gas prices used for Earthstone’s stand-alone 2021 year end reserve report, prior to adjusting for quality and basis differentials, were $66.56 per barrel and $3.598 per million British Thermal Units (“MMBtu”), respectively. SEC prices net of differentials were $65.64 per barrel, $30.16 per equivalent barrel of NGL and $3.01 per Mcf. Stand-Alone Year-End 2021 SEC Proved Reserves PV-10 is a measure not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) that differs from a measure under GAAP known as “standardized measure of discounted future net cash flows” in that PV-10 is calculated without including future income taxes. Management believes that the presentation of the PV-10 value of our oil and natural gas properties is relevant and useful to investors because it presents the estimated discounted future net cash flows attributable to our estimated proved reserves independent of our income tax attributes, thereby isolating the intrinsic value of the estimated future cash flows attributable to our reserves. We believe the use of a pre-tax measure provides greater comparability of assets when evaluating companies because the timing and quantification of future income taxes is dependent on company-specific factors, many of which are difficult to determine. For these reasons, management uses and believes that the industry generally uses the PV-10 measure in evaluating and comparing acquisition candidates and assessing the potential rate of return on investments in oil and natural gas properties. PV-10 does not necessarily represent the fair market value of oil and natural gas properties. PV-10 is not a measure of financial or operational performance under GAAP, nor should it be considered in isolation or as a substitute for the standardized measure of discounted future net cash flows as defined under GAAP. The table below provides a reconciliation of PV-10 to the standardized measure of discounted future net cash flows (in thousands): Reconciliation of PV-10 Oil Gas NGL Total PV-10 Reserves Category (Mbbls) (MMcf) (Mbbls) (Mboe) ($ in thousands) Proved Developed 35,824 190,999 25,917 93,575 $1,371,697 Proved Undeveloped 25,251 93,882 13,114 54,012 $644,989 Total 61,075 284,881 39,031 147,587 $2,016,686 Present value of estimated future net revenues $2,016,686 Future income taxes, discounted at 10% $198,314 Standardized measure of discounted future net cash flows $1,818,372

23 Alternative Reserves Summary – 1/1/22 The information presented below includes the combination of the stand-alone reserve quantities and PV-10 for Earthstone and for the Chisholm and Bighorn Acquisitions as of January 1, 2022. This alternative summary as shown in the table below has been prepared utilizing NYMEX strip benchmark prices and basis differentials as of March 15, 2022. All three reserve reports were prepared by third party engineers. Alternative 1/1/22 Proved Reserves at NYMEX Strip Pricing as of 3/15/22 Earthstone Chisholm Bighorn Combined Proved Proved Proved Proved Proved Proved Proved Proved Reserves Category Developed Undeveloped Developed Undeveloped Developed Undeveloped Developed Undeveloped Total Oil (MBbls) 35,895 25,250 12,714 24,068 29,254 26,929 77,864 76,247 154,112 Gas (MMcf) 191,292 93,888 36,566 54,679 373,749 118,733 601,606 267,301 868,907 NGL (MBbls) 25,971 72,156 4,632 7,489 46,435 14,751 77,037 94,396 171,433 Total 93,748 113,054 23,441 40,670 137,981 61,469 255,169 215,193 470,363 PV-10 ($ in thousands) $1,585,018 $763,388 $486,334 $550,306 $1,584,026 $503,176 $3,655,379 $1,816,870 $5,472,249

24 Reconciliation of Non-GAAP Financial Measure – Adjusted EBITDAX Earthstone uses Adjusted EBITDAX, a financial measure that is not presented in accordance with 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 (loss) income plus, when applicable, (gain) on sale of oil and gas properties, net; accretion of asset retirement obligations; depletion, depreciation and amortization; transaction costs; interest expense, net; exploration expense; unrealized loss on derivative contracts; stock based compensation(1); and income tax (benefit) expense. Earthstone excludes the foregoing items from net (loss) income 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 (loss) income 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: (1) Consists of expense for non-cash equity awards and also for cash-based liability awards that are expected to be settled in cash. No cash-based liability awards were settled in cash during 2021. On February 9, 2022, cash-based awards were settled in the amount of $8.1 million. Stock-based compensation is included in General and administrative expense in the Consolidated Statements of Operations. FY 2021 Adjusted EBITDAX ($ in 000s)1Q 2022 Adjusted EBITDAX ($ in 000s) FY21 Net (loss) income $61,506 Accretion of asset retirement obligations $1,065 Depreciation, depletion and amortization $106,367 Interest expense, net $10,796 Transaction costs $4,875 (Gain) on sale of oil and gas properties ($738) Exploration expense $341 Unrealized loss on derivative contracts $40,795 Stock based compensation(1) $21,014 Income tax (benefit) expense $1,859 Adjusted EBITDAX $247,880 1Q22 Net (loss) income ($51,877) Accretion of asset retirement obligations $397 Depreciation, depletion and amortization $34,326 Interest expense, net $5,318 Transaction costs $10,742 (Gain) on sale of oil and gas properties $0 Exploration expense $92 Unrealized loss on derivative contracts $119,794 Stock based compensation(1) $5,830 Income tax (benefit) expense ($1,533) Adjusted EBITDAX $123,089

25 Reconciliation of Non-GAAP Financial Measure – Adjusted EBITDAX Earthstone uses Adjusted EBITDAX, a financial measure that is not presented in accordance with 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; depletion, depreciation and amortization; transaction costs; interest expense, net; exploration expense; unrealized loss (gain) on derivative contracts; stock based compensation; and income tax expense. 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 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: Chisholm – 1/1/22 to 2/14/22 Adjusted EBITDAX ($ in 000s) (1) Based on unaudited preliminary operating results, for the period presented, obtained from the seller. 1/1/22 to 2/14/22 Net (loss) income(1) $20,414 Depreciation, depletion and amortization 7,140 Adjusted EBITDAX $27,554

26 Footnotes Page 6 1) IRM Acquisition price of $186MM based on $50.8MM of equity consideration (approximately 12.7MM Class A shares and ESTE share price of $3.99 on 12/16/20) and cash consideration of $135.2MM. Tracker Acquisition price of $126MM based on $44.2MM of equity consideration (approximately 6.2MM Class A shares and ESTE share price of $7.24 on 3/30/21) and cash consideration of $81.6MM. Includes assets from Tracker Resource Development III, LLC and from affiliates of Sequel Energy. Foreland Acquisition price of $73.2MM consisting of $49.2MM cash consideration and 2.6 MM Class A shares and ESTE share price of $9.20 on 9/30/21. Chisholm Acquisition price of $604MM based on $194MM of equity consideration (approximately 19.4MM Class A shares and ESTE share price of $9.98 on 12/15/21) and cash consideration of $410MM. Bighorn Acquisition price of $860MM based on equity consideration of $90MM (approximately 6.8MM Class A shares and ESTE share price of $13.25 on 1/28/22) and $770MM in cash ($280MM of cash raised via PIPE that will initially be in the form of convertible equity that is expected to be converted into 25.2MM shares of Class A Common Stock, including 19.8MM shares to an affiliate of EnCap, 20 days after an information statement is mailed to Earthstone stockholders). Cash consideration for all acquisitions as described above is prior to purchase price adjustments. 2) Based on ESTE estimates; PV-10 as of 12/1/20 based on NYMEX strip pricing as of 11/30/20 for IRM, as of 3/1/21 based on NYMEX strip pricing as of 3/29/21 for Tracker, as of 7/1/21 based on NYMEX strip pricing as of 9/30/21 for Foreland, as of 11/1/21 based on NYMEX strip pricing as of 12/8/21 for Chisholm, and as of 1/1/22 based on NYMEX strip pricing as of 1/18/22 for Bighorn. 3) ESTE estimated gross operated drilling locations exceeding ESTE rate of return threshold based on 11/30/20 NYMEX strip pricing for IRM, $50/bbl flat oil pricing for Tracker, 12/8/21 NYMEX strip pricing for Chisholm, and on NYMEX strip pricing as of 1/18/22 for Bighorn. 4) Reflects midpoint of 2H22 estimated production guidance.

XML

Cover	May 04, 2022
Cover [Abstract]
Document Type	8-K
Document Period End Date	May 04, 2022
Entity Central Index Key	0000010254
Entity Registrant Name	EARTHSTONE ENERGY, INC
Amendment Flag	false
Entity Incorporation, State or Country Code	DE
Entity File Number	001-35049
Entity Tax Identification Number	84-0592823
Entity Address, Address Line One	1400 Woodloch Forest Drive
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	The Woodlands
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77380
City Area Code	281
Local Phone Number	298-4246
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Class A Common Stock, $0.001 par value per share
Trading Symbol	ESTE
Security Exchange Name	NYSE
Entity Emerging Growth Company	false