Earthstone snaps up Midland shale acreage

Texas-focused shale company Earthstone Energy said April 1 that it paid mostly cash to acquire acreage in a portion of the Permian basin.

The company paid $126.5mn to buy 20,300 net acres in the Midland basin, situated within the eastern region of the broader Permian reservoir, from Tracker Resources Development III.

“We paid an attractive price for this producing asset, and while the inventory may not fit into our capital plans this year, the 49 drilling locations represent low-risk and repeatable upside value not included in our purchase price valuation,” Robert Anderson, Earthstone’s president, said.

The purchase was funded by $81.6mn in cash on hand, and another 6.2mn shares of Earthstone’s common stock.

Earthstone estimated the assets in question are producing around 7,800 barrels of oil equivalent/day. Their output should rise by between 5,800 boe/d and 6,000 boe/d in the second half of 2021, it said.

A drilling productivity report published March 15 by the US Energy Information Administration finds the broader Permian is on pace in April to be the largest oil producer by volume among the shale basins in the Lower 48 and the second-largest natural gas producer behind the Appalachia basin.