The Woodlands-based Earthstone Energy Inc. announced Monday it inked a deal to acquire the assets of privately held Bighorn Permian Resources in the Midland Basin for $860 million.
The transaction comes on the heels of Earthstone’s $600 million asset acquisition from Warburg Pincus-backed Chisholm Energy Holdings in December.
Haynes and Boone counseled Earthstone including Austin Elam, partner and co-chair of the oil and gas practice group, partners Kim Mai and Raquel Alvarenga and associates Camie Carlock, Briana Hopes and Reem Abdelrazik. Adam Fogoros from Jones & Keller in Denver also advised Earthstone.
Haynes and Boone also counseled on the Earthstone-Chisholm deal, which is expected to close in mid-February.
Earthstone said the acquisition would boost earnings and increase the company’s size and scale.
The price consists of $770 million in cash and 6.8 million shares of Earthstone’s Class A common stock valued at $90 million based on a closing price of $13.25 on Jan. 28. Closing is anticipated early in the second quarter.
The company plans to fund the deal with cash on hand, proceeds from a $280 million private placement of equity from 47% stockholder EnCap Investments and Post Oak Energy Capital and borrowings from its senior secured revolving credit facility.
Willkie Farr & Gallagher represented Post Oak with a team led by Houston-based partners Michael De Voe Piazza and Jesse Myers and New York-based partner Julian Golay with Houston-based associate Ryan McNamara.
Earthstone said it has obtained commitments from its existing lenders to increase the borrowing base and elected commitments under its credit facility to $1.325 billion from $625 million.
Johnson Rice & Co. was the financial advisor to the audit committee of Earthstone with respect to the PIPE and RBC Capital Markets was the financial advisor to Bighorn.
As a result of these transactions, Post Oak will have the right to appoint one individual to the Earthstone board of directors.
Bighorn, previously known as Sable Permian Resources, was part of the empire of late shale pioneer Aubrey McClendon, according to Bloomberg. JPMorgan Chase & Co. took over the company after the producer failed to attract other bidders during its bankruptcy in 2020, the report said.
“Combining the Bighorn acquisition with the four acquisitions completed in 2021 and the pending Chisholm acquisition, we will have more than quadrupled our daily production rate, greatly expanded our Permian Basin acreage footprint and increased our free cash flow generating capacity by many multiples since year-end 2020,” Earthstone CEO and president Robert J. Anderson said in a statement.