S&P turns Earthstone view to positive

S&P said it revised its outlook for Earthstone Energy Inc. to positive from stable and affirmed the B issuer credit rating and B+ issue-level rating on the company's unsecured notes. The 2 recovery rating (70%-90%; rounded estimate: 85%) is unchanged.

“Earthstone's scale has increased to be more consistent with higher-rated peers. It has closed on six acquisitions since December 2020, including three during fiscal 2022, which increased production and reserves. Full-year 2022 production increased 215% year over year, and fourth-quarter production was over 104,000 boe/d, with 45% oil and 68% total liquids. Earthstone's reserves increased 149% from year-end 2021 to 367,936 MBoe and proved developed reserves increased 183%,” S&P said in a press release.

The improved outlook reflects an expectation that Earthstone will keep constant production of about 100,000 barrels of oil equivalent per day (boe/d) over the next 12 months while generating free cash flow and maintaining FFO to debt above 60%.

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