Earthstone Energy Inc. entered into an agreement to acquire assets of privately held Chisholm Energy Holdings LLC in New Mexico’s northern Delaware basin.
Chisholm is operating a two-rig drilling program, which Earthstone plans to maintain on the acquired assets (in addition to two rigs Earthstone is running in Midland basin). Earthstone will acquire de-risked drilling inventory with 414 gross (237 net) operated identified locations focused on 1st, 2nd, and 3rd Bone Spring and Wolfcamp A formations with additional potential upside locations. The area covers about 36,100 net acres in the core of Delaware basin in Eddy and Lea Counties, NM.
The Chisolm assets produce about 13,500 boe/d net, with reserves of about 25.8 MMboe. The acquisition is expected to increase Earthstone's net production by about 39% with 44,000-48,000 boe/d of production, and increase Earthstone’s Permian basin acreage by more than 35% to about 138,000 net acres.
The effective date of the Chisholm acquisition will be Nov. 1, 2021, with closing anticipated first-quarter 2022. The aggregate purchase price of the Chisholm acquisition is about $604 million consisting of $340 million in cash at closing, subject to customary closing adjustments, $70 million of deferred cash due over the 12 months after closing, and 19.4 million shares of Earthstone's Class A common stock valued at $194 million based on a closing share price of $9.98 on Dec. 15, 2021.
Chisholm is majority owned by Warburg Pincus LLC and its affiliates.