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Earthstone Energy plans $500 million notes, $475 million revolver
By Marisa Wong
Morgantown, W.Va., Oct. 17 – Earthstone Energy, Inc. announced it intends to issue about $500 million of senior notes and obtain a committed amended and restated senior secured revolving credit facility with a minimum initial borrowing base of $475 million.
Proceeds from the senior notes and the credit facility, along with proceeds from a fully committed $225 million preferred stock issuance, will be used to finance the cash portion of Earthstone’s acquisition of Sabalo Energy, LLC and Sabalo Energy, Inc.
Earthstone has entered into an agreement to acquire all of Sabalo Holdings, LLC’s interests in Sabalo Energy, whose assets include producing and non-producing oil and gas assets in the northern Midland Basin, according to a press release.
The purchase price of $950 million consists of $650 million in cash and $300 million in stock. The transaction is expected to close in late 2018 or in the first quarter of 2019.
In connection with the acquisition, Earthstone entered into a commitment letter on Oct. 17 with a consortium of banks for a $500 million unsecured bridge facility and the revolving credit facility to achieve certainty of financing.
Wells Fargo Securities, LLC and RBC Capital Markets are acting as joint lead arrangers on the revolving credit facility. Wells Fargo Securities, RBC Capital Markets, SunTrust Robinson Humphrey, Inc. and Jefferies Finance LLC are acting as joint lead arrangers on the unsecured bridge facility and joint bookrunners on the planned senior notes offering.
The revolving and bridge facilities are conditioned on, among other things, closing of the Sabalo acquisition.
The Woodlands, Texas-based Earthstone is an oil and gas company with assets primarily in the Midland Basin of West Texas the Eagle Ford Trend of South Texas.
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