Permian Resources Corp (PR) has announced its plans to acquire Earthstone Energy Inc (ESTE) in an all-stock transaction valued at approximately $4.5 billion, including Earthstone’s net debt. The deal is set to bolster Permian Resources’ exploration and production position in the Delaware basin.
Strengthening Position in Delaware Basin
Will Hickey, Co-CEO of Permian Resources, stated, “We believe the acquisition of Earthstone represents a compelling value proposition for our shareholders and strengthens our position as a premier Delaware Basin independent E&P.” The acquisition of Earthstone’s Northern Delaware position will provide Permian Resources with high-quality acreage, including core inventory that can immediately compete for capital within their portfolio.
Significant Synergies and Growth Prospects
The companies have identified approximately $175 million of annual synergies. Permian expects the deal to generate a significant increase in free cash flow per share, with over 30% accretion per year over the next two years, and over 25% accretion during the next five and ten-year periods.
Dividend Increase
In addition to the acquisition, Permian Resources plans to boost its quarterly base dividend by 20%, raising it to 6 cents per share starting from its first quarter 2024 dividend.
Market Reaction
Following the announcement, shares of Permian Resources fell by 1.6% in premarket trades, while Earthstone Energy’s stock rose by 9.3%.
This strategic acquisition sets Permian Resources on a path of growth and expanding their presence in the Delaware basin. With the added synergies and increased dividend payout, the company is well-positioned to deliver long-term value for its shareholders.
