Fitch rates Earthstone, notes B+

Fitch Ratings said it gave a first-time indicative long-term issuer default rating of B+ to Earthstone Energy, Inc. and Earthstone Energy Holdings, LLC. It also assigned BB+/RR1 ratings to Earthstone's senior secured reserve based loan credit facility and B+/RR4 ratings to its planned senior unsecured bonds.

“The ratings reflect the close of the planned $550 million in senior unsecured five-year notes, with proceeds being used to partially fund the cash portion of its Bighorn acquisition, as well as to partially repay its RBL. The ratings also consider Earthstone's gross leverage of approximately 1x through Fitch's forecast period, positive FCF generation and operating scale achieved through M&A,” the agency said in a press release.

Fitch said it estimates Earthstone will deliver about $400 million of FCF a year in 2022 and 2023 and about $200 million annually through 2025 under the agency’s base price deck.

The outlook is stable.

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