Document and Entity Information
| Document and Entity Information - shares | 3 Months Ended | |
| Mar. 31, 2020 | May 01, 2020 | |
| Document And Entity Information [Line Items] | ||
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Period End Date | Mar. 31, 2020 | |
| Document Fiscal Year Focus | 2020 | |
| Document Fiscal Period Focus | Q1 | |
| Entity Registrant Name | EARTHSTONE ENERGY INC | |
| Entity Central Index Key | 0000010254 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Filer Category | Accelerated Filer | |
| Entity Small Business | true | |
| Entity Emerging Growth Company | false | |
| Entity Current Reporting Status | Yes | |
| Entity Shell Company | false | |
| Class A Common Stock | ||
| Document And Entity Information [Line Items] | ||
| Entity Common Stock, Shares Outstanding | 29,852,958 | |
| Class B Common Stock | ||
| Document And Entity Information [Line Items] | ||
| Entity Common Stock, Shares Outstanding | 35,060,687 |
Condensed Consolidated Balance
| Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
| Current assets: | ||
| Cash | $ 5,101 | $ 13,822 |
| Accounts receivable: | ||
| Oil, natural gas, and natural gas liquids revenues | 10,845 | 29,047 |
| Joint interest billings and other, net of allowance of $80 and $83 at March 31, 2020 and December 31, 2019, respectively | 11,094 | 6,672 |
| Derivative asset | 72,017 | 8,860 |
| Prepaid expenses and other current assets | 1,597 | 1,867 |
| Total current assets | 100,654 | 60,268 |
| Oil and gas properties, successful efforts method: | ||
| Proved properties | 991,209 | 970,808 |
| Unproved properties | 238,477 | 260,271 |
| Land | 5,382 | 5,382 |
| Total oil and gas properties | 1,235,068 | 1,236,461 |
| Accumulated depreciation, depletion and amortization | (219,823) | (195,567) |
| Net oil and gas properties | 1,015,245 | 1,040,894 |
| Other noncurrent assets: | ||
| Goodwill | 0 | 17,620 |
| Office and other equipment, net of accumulated depreciation and amortization of $3,307 and $3,180 at March 31, 2020 and December 31, 2019, respectively | 1,271 | 1,311 |
| Derivative asset | 20,769 | 770 |
| Operating lease right-of-use assets | 3,092 | 3,108 |
| Other noncurrent assets | 1,490 | 1,572 |
| TOTAL ASSETS | 1,142,521 | 1,125,543 |
| Current liabilities: | ||
| Accounts payable | 24,010 | 25,284 |
| Revenues and royalties payable | 41,455 | 35,815 |
| Accrued expenses | 25,495 | 19,538 |
| Asset retirement obligation | 308 | 308 |
| Derivative liability | 0 | 6,889 |
| Advances | 2,690 | 11,505 |
| Operating lease liabilities | 759 | 570 |
| Finance lease liabilities | 153 | 206 |
| Other current liabilities | 14 | 43 |
| Total current liabilities | 94,884 | 100,158 |
| Noncurrent liabilities: | ||
| Long-term debt | 152,000 | 170,000 |
| Deferred tax liability | 16,246 | 15,154 |
| Asset retirement obligation | 1,911 | 1,856 |
| Operating lease liabilities | 2,333 | 2,539 |
| Finance lease liabilities | 62 | 85 |
| Other noncurrent liabilities | 139 | 0 |
| Total noncurrent liabilities | 172,691 | 189,634 |
| Commitments and Contingencies (Note 13) | ||
| Equity: | ||
| Preferred stock, $0.001 par value, 20,000,000 shares authorized; none issued or outstanding | 0 | 0 |
| Additional paid-in capital | 532,623 | 527,246 |
| Accumulated deficit | (165,003) | (181,711) |
| Total Earthstone Energy, Inc. equity | 367,685 | 345,599 |
| Noncontrolling interest | 507,261 | 490,152 |
| Total equity | 874,946 | 835,751 |
| TOTAL LIABILITIES AND EQUITY | 1,142,521 | 1,125,543 |
| Class A Common Stock | ||
| Equity: | ||
| Common stock | 30 | 29 |
| Class B Common Stock | ||
| Equity: | ||
| Common stock | $ 35 | $ 35 |
Condensed Consolidated Balanc_2
| Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
| Joint interest billings and other, allowance | $ 80 | $ 83 |
| Office and other equipment, accumulated depreciation | $ 3,307 | $ 3,180 |
| Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
| Preferred stock, shares issued (in shares) | 0 | 0 |
| Preferred stock, shares outstanding (in shares) | 0 | 0 |
| Class A Common Stock | ||
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
| Common stock, shares issued (in shares) | 29,852,958 | 29,421,131 |
| Common stock, shares outstanding (in shares) | 29,852,958 | 29,421,131 |
| Class B Common Stock | ||
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
| Common stock, shares issued (in shares) | 35,060,687 | 35,260,680 |
| Common stock, shares outstanding (in shares) | 35,060,687 | 35,260,680 |
Condensed Consolidated Statemen
| Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
| Mar. 31, 2020 | Mar. 31, 2019 | |
| REVENUES | ||
| Revenues | $ 45,138,000 | $ 40,728,000 |
| OPERATING COSTS AND EXPENSES | ||
| Lease operating expense | 9,339,000 | 6,061,000 |
| Production and ad valorem taxes | 3,023,000 | 2,594,000 |
| Depreciation, depletion and amortization | 24,656,000 | 14,005,000 |
| Impairment expense | 60,371,000 | 0 |
| General and administrative expense | 7,132,000 | 7,075,000 |
| Transaction costs | 844,000 | 370,000 |
| Accretion of asset retirement obligation | 44,000 | 54,000 |
| Exploration expense | 301,000 | 0 |
| Total operating costs and expenses | 105,710,000 | 30,159,000 |
| Gain (loss) on sale of oil and gas properties | 204,000 | (125,000) |
| (Loss) income from operations | (60,368,000) | 10,444,000 |
| OTHER INCOME (EXPENSE) | ||
| Interest expense, net | (1,736,000) | (1,449,000) |
| Gain (loss) on derivative contracts, net | 99,784,000 | (47,894,000) |
| Other income (expense), net | 126,000 | (4,000) |
| Total other income (expense) | 98,174,000 | (49,347,000) |
| Income (loss) before income taxes | 37,806,000 | (38,903,000) |
| Income tax (expense) benefit | (1,092,000) | 460,000 |
| Net income (loss) | 36,714,000 | (38,443,000) |
| Net loss attributable to noncontrolling interest | 20,006,000 | (21,239,000) |
| Net income (loss) attributable to Earthstone Energy, Inc. | $ 16,708,000 | $ (17,204,000) |
| Net income (loss) per common share attributable to Earthstone Energy, Inc.: | ||
| Basic (in dollars per share) | $ 0.57 | $ (0.60) |
| Diluted (in dollars per share) | $ 0.57 | $ (0.60) |
| Weighted average common shares outstanding: | ||
| Basic (in shares) | 29,497,428 | 28,719,542 |
| Diluted (in shares) | 29,497,428 | 28,719,542 |
| Oil | ||
| REVENUES | ||
| Revenues | $ 41,012,000 | $ 35,447,000 |
| Natural gas | ||
| REVENUES | ||
| Revenues | 1,086,000 | 1,094,000 |
| Natural gas liquids | ||
| REVENUES | ||
| Revenues | $ 3,040,000 | $ 4,187,000 |
Condensed Consolidated Statem_2
| Condensed Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands | Total | Class B Common Stock | Common StockClass A Common Stock | Common StockClass B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Earthstone Energy, Inc. Equity | Noncontrolling Interest | Restricted Stock UnitsCommon StockClass A Common Stock |
| Beginning balance (in shares) at Dec. 31, 2018 | 28,696,321 | 35,452,178 | |||||||
| Beginning balance at Dec. 31, 2018 | $ 826,492 | $ 29 | $ 35 | $ 517,073 | $ (182,497) | $ 334,640 | $ 491,852 | ||
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
| Stock-based compensation expense | 2,212 | 2,212 | 2,212 | ||||||
| Vesting of restricted stock units, net of taxes paid (in shares) | 166,140 | ||||||||
| Vested restricted stock units retained by the Company in exchange for payment of recipient mandatory tax withholdings (in shares) | 59,261 | ||||||||
| Vested restricted stock units retained by the Company in exchange for payment of recipient mandatory tax withholdings | (396) | (396) | (396) | ||||||
| Cancellation of treasury shares (in shares) | (59,261) | ||||||||
| Net income (loss) | (38,443) | (17,204) | (17,204) | (21,239) | |||||
| Ending balance (in shares) at Mar. 31, 2019 | 28,862,461 | 35,452,178 | |||||||
| Ending balance at Mar. 31, 2019 | 790,031 | $ 29 | $ 35 | 518,889 | (199,634) | 319,319 | 470,712 | ||
| Beginning balance (in shares) at Dec. 31, 2019 | 29,421,131 | 35,260,680 | |||||||
| Beginning balance at Dec. 31, 2019 | 835,751 | $ 29 | $ 35 | 527,246 | (181,711) | 345,599 | 490,152 | ||
| Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
| Stock-based compensation expense | 2,694 | 2,694 | 2,694 | ||||||
| Vesting of restricted stock units, net of taxes paid (in shares) | 231,834 | ||||||||
| Vesting of restricted stock units, net of taxes paid | 1 | $ 1 | 1 | ||||||
| Vested restricted stock units retained by the Company in exchange for payment of recipient mandatory tax withholdings (in shares) | 75,695 | ||||||||
| Vested restricted stock units retained by the Company in exchange for payment of recipient mandatory tax withholdings | (214) | (214) | (214) | ||||||
| Cancellation of treasury shares (in shares) | (75,695) | ||||||||
| Class B Common Stock converted to Class A Common Stock (in shares) | 199,993 | 199,993 | (199,993) | ||||||
| Class B Common Stock converted to Class A Common Stock | 0 | 2,897 | 2,897 | (2,897) | |||||
| Net income (loss) | 36,714 | 16,708 | 16,708 | 20,006 | |||||
| Ending balance (in shares) at Mar. 31, 2020 | 29,852,958 | 35,060,687 | |||||||
| Ending balance at Mar. 31, 2020 | $ 874,946 | $ 30 | $ 35 | $ 532,623 | $ (165,003) | $ 367,685 | $ 507,261 |
Condensed Consolidated Statem_3
| Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
| Mar. 31, 2020 | Mar. 31, 2019 | |
| Cash flows from operating activities: | ||
| Net income (loss) | $ 36,714,000 | $ (38,443,000) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
| Depreciation, depletion and amortization | 24,656,000 | 14,005,000 |
| Impairment of proved and unproved oil and gas properties | 42,751,000 | 0 |
| Impairment of goodwill | 17,620,000 | 0 |
| Accretion of asset retirement obligations | 44,000 | 54,000 |
| Settlement of asset retirement obligations | 0 | (62,000) |
| (Gain) loss on sale of oil and gas properties | (204,000) | 125,000 |
| Total (gain) loss on derivative contracts, net | (99,784,000) | 47,894,000 |
| Operating portion of net cash received in settlement of derivative contracts | 9,739,000 | 5,362,000 |
| Stock-based compensation | 2,694,000 | 2,212,000 |
| Deferred income taxes | 1,092,000 | (460,000) |
| Amortization of deferred financing costs | 80,000 | 103,000 |
| Changes in assets and liabilities: | ||
| (Increase) decrease in accounts receivable | 13,780,000 | (6,811,000) |
| (Increase) decrease in prepaid expenses and other current assets | (312,000) | (2,236,000) |
| Increase (decrease) in accounts payable and accrued expenses | 2,846,000 | (7,427,000) |
| Increase (decrease) in revenues and royalties payable | 5,640,000 | (5,383,000) |
| Increase (decrease) in advances | (8,814,000) | (1,882,000) |
| Net cash provided by operating activities | 48,542,000 | 7,051,000 |
| Cash flows from investing activities: | ||
| Additions to oil and gas properties | (39,299,000) | (48,412,000) |
| Additions to office and other equipment | (87,000) | (75,000) |
| Proceeds from sales of oil and gas properties | 409,000 | 0 |
| Net cash used in investing activities | (38,977,000) | (48,487,000) |
| Cash flows from financing activities: | ||
| Proceeds from borrowings | 17,500,000 | 85,244,000 |
| Repayments of borrowings | (35,500,000) | (43,247,000) |
| Cash paid related to the exchange and cancellation of Class A Common Stock | (214,000) | (397,000) |
| Cash paid for finance leases | (72,000) | (114,000) |
| Net cash (used in) provided by financing activities | (18,286,000) | 41,486,000 |
| Net increase (decrease) in cash | (8,721,000) | 50,000 |
| Cash at beginning of period | 13,822,000 | 376,000 |
| Cash at end of period | 5,101,000 | 426,000 |
| Cash paid for: | ||
| Interest | 1,676,000 | 1,255,000 |
| Non-cash investing and financing activities: | ||
| Accrued capital expenditures | 31,011,000 | 17,040,000 |
| Lease asset additions - ASC 842 | 0 | 1,801,000 |
| Asset retirement obligations | $ 21,000 | $ 21,000 |
Basis of Presentation and Summa
| Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
| Mar. 31, 2020 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Earthstone Energy, Inc., a Delaware corporation (“Earthstone” and together with its consolidated subsidiaries, the “Company”), is a growth-oriented independent oil and natural gas development and production company. In addition, the Company is active in corporate mergers and the acquisition of oil and natural gas properties that have production and future development opportunities. The Company's operations are all in the upstream segment of the oil and natural gas industry and all its properties are onshore in the United States. Earthstone is the sole managing member of Earthstone Energy Holdings, LLC, a Delaware limited liability company (together with its wholly-owned consolidated subsidiaries, “EEH”), with a controlling interest in EEH. Earthstone, together with its wholly-owned subsidiary, Lynden Energy Corp., a corporation organized under the laws of British Columbia (“Lynden Corp”), and Lynden Corp’s wholly-owned consolidated subsidiary, Lynden USA Inc., a Utah corporation (“Lynden US”) and also a member of EEH, consolidates the financial results of EEH and records a noncontrolling interest in the Condensed Consolidated Financial Statements representing the economic interests of EEH's members other than Earthstone and Lynden US. The accompanying unaudited Condensed Consolidated Financial Statements and notes thereto have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted. The accompanying unaudited Condensed Consolidated Financial Statements and notes should be read in conjunction with the financial statements and notes included in Earthstone’s 2019 Annual Report on Form 10-K. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for the fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. The Company’s Condensed Consolidated Balance Sheet at December 31, 2019 is derived from the audited Consolidated Financial Statements at that date. Certain prior period amounts have been reclassified to conform to current period presentation within the Condensed Consolidated Financial Statements. Prior period ad valorem taxes which were previously included in Lease operating expenses within the Operating Costs and Expenses section of the Condensed Consolidated Statements of Operations have been reclassified from Lease operating expenses and combined with the previously presented Severance taxes line-item and the combined total presented as Production and ad valorem taxes, also within Operating Costs and Expenses, in order to conform to current period presentation. Additionally, prior period legal expenses related to a previously completed transaction and previously included in General and administrative expense within Operating Costs and Expenses have been reclassified to Transaction costs, also within Operating Costs and Expenses, to conform to current period presentation. These reclassifications had no effect on Income from operations or any other subtotal in the Condensed Consolidated Statements of Operations. Recently Issued Accounting Standards Intangibles – Goodwill and Other – In January 2017, the Financial Accounting Standards Board ("FASB") issued updated guidance simplifying the test for goodwill impairment. The update eliminates the requirement to determine the implied value of goodwill in measuring an impairment loss. Upon adoption, the measurement of a goodwill impairment will represent the excess of the reporting unit’s carrying value over its fair value and will be limited to the carrying value of goodwill. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The update is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company adopted the update effective January 1, 2020. See further discussion of goodwill in Note 15. Goodwill . Fair Value Measurements – In August 2018, the FASB issued an Accounting Standards Update ("ASU") which modifies the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company adopted the update effective January 1, 2020 and the impact was not material to the Condensed Consolidated Financial Statements. Credit Losses - In June 2016, the FASB issued an update that requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income, including loans, debt securities, trade receivables, net investments in leases and available-for-sale debt securities. The amended standard broadens the information that an entity must consider in developing its estimate of expected credit losses, requiring an entity to estimate credit losses over the life of an exposure based on historical information, current information and reasonable and supportable forecasts. The guidance is effective for interim and annual periods beginning after December 15, 2019. The Company adopted the update effective January 1, 2020 and the impact was not material to the Condensed Consolidated Financial Statements. Income Taxes - In December 2019, the FASB issued an update that simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted. The Company is in the process of evaluating the impact of this update, if any, on its Condensed Consolidated Financial Statements. |
Fair Value Measurements
| Fair Value Measurements | 3 Months Ended |
| Mar. 31, 2020 | |
| Fair Value Disclosures [Abstract] | |
| Fair Value Measurements | Fair Value Measurements FASB Accounting Standards Codification ("ASC") Topic 820, defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. ASC 820 provides a framework for measuring fair value, establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets. The three-level fair value hierarchy for disclosure of fair value measurements defined by ASC 820 is as follows: Level 1 – Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Inputs, other than quoted prices within Level 1, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 – Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable. Valuation under Level 3 generally involves a significant degree of judgment from management. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity. The Company reflects transfers between the three levels at the beginning of the reporting period in which the availability of observable inputs no longer justifies classification in the original level. There were no transfers between fair value hierarchy levels for the three months ended March 31, 2020 . Fair Value on a Recurring Basis Derivative financial instruments are carried at fair value and measured on a recurring basis. The derivative financial instruments consist of swaps for crude oil and natural gas. The Company’s swaps are valued based on a discounted future cash flow model. The primary input for the model is published forward commodity price curves. The swaps are also designated as Level 2 within the valuation hierarchy. The fair values of commodity derivative instruments in an asset position include a measure of counterparty nonperformance risk, and the fair values of commodity derivative instruments in a liability position include a measure of the Company’s nonperformance risk. These measurements were not material to the Condensed Consolidated Financial Statements. The following table summarizes the fair value of the Company’s financial assets and liabilities, by level within the fair-value hierarchy (in thousands) : March 31, 2020 Level 1 Level 2 Level 3 Total Financial assets Derivative asset - current $ — $ 72,017 $ — $ 72,017 Derivative asset - noncurrent — 20,769 — 20,769 Total financial assets $ — $ 92,786 $ — $ 92,786 Financial liabilities Derivative liability - current $ — $ — $ — $ — Derivative liability - noncurrent — — — — Total financial liabilities $ — $ — $ — $ — December 31, 2019 Financial assets Derivative asset - current $ — $ 8,860 $ — $ 8,860 Derivative asset - noncurrent 770 770 Total financial assets $ — $ 9,630 $ — $ 9,630 Financial liabilities Derivative liability - current $ — $ 6,889 $ — $ 6,889 Derivative liability - noncurrent — — — — Total financial liabilities $ — $ 6,889 $ — $ 6,889 Other financial instruments include cash, accounts receivable and payable, and revenue royalties. The carrying amount of these instruments approximates fair value because of their short-term nature. The Company’s long-term debt obligation bears interest at floating market rates, therefore carrying amounts and fair value are approximately equal. Fair Value on a Nonrecurring Basis The Company applies the provisions of the fair value measurement standard on a non-recurring basis to its non-financial assets and liabilities, including oil and gas properties, goodwill, business combinations, asset retirement obligations and performance units. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments if events or changes in certain circumstances indicate that adjustments may be necessary. Due to significant declines in commodity prices and global demand for oil and natural gas products resulting from the COVID-19 pandemic, the Company assessed the fair values of its oil and natural gas properties and goodwill resulting in non-cash impairment charges during the three months ended March 31, 2020. See further discussion at Note 4. Asset Impairments . |
Derivative Financial Instrument
| Derivative Financial Instruments | 3 Months Ended |
| Mar. 31, 2020 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Derivative Financial Instruments | Derivative Financial Instruments The Company’s hedging activities consist of derivative instruments entered into in order to hedge against changes in oil and natural gas prices through the use of fixed price swap agreements. Swaps exchange floating price risk in the future for a fixed price at the time of the hedge. Consistent with its hedging policy, the Company has entered into a series of derivative instruments to hedge a significant portion of its expected oil and natural gas production through December 31, 2021. Typically, these derivative instruments require payments to (receipts from) counterparties based on specific indices as required by the derivative agreements. Although not risk free, the Company believes these instruments reduce its exposure to oil and natural gas price fluctuations and, thereby, allow the Company to achieve a more predictable cash flow. The Company’s derivative instruments are cash flow hedge transactions in which it is hedging the variability of cash flow related to a forecasted transaction. The Company does not enter into derivative instruments for trading or other speculative purposes. These transactions are recorded in the Condensed Consolidated Financial Statements in accordance with FASB ASC Topic 815. The Company has accounted for these transactions using the mark-to-market accounting method. Generally, the Company incurs accounting losses on derivatives during periods where prices are rising and gains during periods where prices are falling which may cause significant fluctuations in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations. The Company nets its derivative instrument fair value amounts executed with each counterparty pursuant to an International Swap Dealers Association Master Agreement (“ISDA”), which provides for net settlement over the term of the contract. The ISDA is a standard contract that governs all derivative contracts entered into between the Company and the respective counterparty. The ISDA allows for offsetting of amounts payable or receivable between the Company and the counterparty, at the election of both parties, for transactions that occur on the same date and in the same currency. The Company had the following open crude oil and natural gas derivative contracts as of March 31, 2020 : Price Swaps Period Commodity Volume (Bbls / MMBtu) Weighted Average Price ($/Bbl / $/MMBtu) Q2 - Q4 2020 Crude Oil 2,199,000 $ 57.00 Q1 - Q4 2021 Crude Oil 1,460,000 $ 55.16 Q2 - Q4 2020 Crude Oil Basis Swap(1) 1,925,000 $ (1.40 ) Q2 - Q4 2020 Crude Oil Basis Swap(2) 275,000 $ 2.55 Q1 - Q4 2021 Crude Oil Basis Swap(1) 1,825,000 $ 1.05 Q2 - Q4 2020 Natural Gas 1,925,000 $ 2.85 Q2 - Q4 2020 Natural Gas Basis Swap(3) 1,925,000 $ (1.07 ) (1) The basis differential price is between WTI Midland Crude and the WTI NYMEX. (2) The basis differential price is between WTI Houston and the WTI NYMEX. (3) The basis differential price is between W. Texas (WAHA) and the Henry Hub NYMEX. The following table summarizes the location and fair value amounts of all derivative instruments in the Condensed Consolidated Balance Sheets as well as the gross recognized derivative assets, liabilities, and amounts offset in the Condensed Consolidated Balance Sheets (in thousands) : March 31, 2020 December 31, 2019 Derivatives not designated as hedging contracts under ASC Topic 815 Balance Sheet Location Gross Recognized Assets / Liabilities Gross Amounts Offset Net Recognized Assets / Liabilities Gross Recognized Assets / Liabilities Gross Amounts Offset Net Recognized Assets / Liabilities Commodity contracts Derivative asset - current $ 73,846 $ (1,829 ) $ 72,017 $ 13,321 $ (4,461 ) $ 8,860 Commodity contracts Derivative liability - current $ 1,829 $ (1,829 ) $ — $ 11,350 $ (4,461 ) $ 6,889 Commodity contracts Derivative asset - noncurrent $ 20,769 $ — $ 20,769 $ 1,031 $ (261 ) $ 770 Commodity contracts Derivative liability - noncurrent $ — $ — $ — $ 261 $ (261 ) $ — The following table summarizes the location and amounts of the Company’s realized and unrealized gains and losses on derivatives instruments in the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows (in thousands) : Derivatives not designated as hedging contracts under ASC Topic 815 Three Months Ended Statement of Cash Flows Location Statement of Operations Location 2020 2019 Unrealized gain (loss) Not separately presented Not separately presented $ 90,045 $ (53,256 ) Realized gain Operating portion of net cash received in settlement of derivative contracts Not separately presented 9,739 5,362 Total gain (loss) on derivative contracts, net Gain (loss) on derivative contracts, net $ 99,784 $ (47,894 ) |
Asset Impairments
| Asset Impairments | 3 Months Ended |
| Mar. 31, 2020 | |
| Property, Plant and Equipment [Abstract] | |
| Asset Impairments | Asset Impairments The Company had the following non-cash asset impairment charges for the three months ended March 31, 2020 ( in thousands ): Three Months Ended March 31, 2020 Proved property $ 25,252 Unproved property 17,499 Goodwill 17,620 Impairment expense $ 60,371 See further discussion of non-cash asset impairment charges to Proved property and Unproved property in Note 5. Oil and Natural Gas Properties and non-cash asset impairment charges to Goodwill in Note 15. Goodwill . The Company did no t record any impairments during the three months ended March 31, 2019 . |
Oil and Natural Gas Properties
| Oil and Natural Gas Properties | 3 Months Ended |
| Mar. 31, 2020 | |
| Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
| Oil and Natural Gas Properties | Oil and Natural Gas Properties The Company follows the successful efforts method of accounting for its oil and natural gas properties. Under this method, costs to acquire oil and natural gas properties, drill and equip exploratory wells that find proved reserves, and drill and equip development wells are capitalized. Exploration costs, including unsuccessful exploratory wells and geological and geophysical costs, are charged to operations as incurred. Upon sale or retirement of oil and natural gas properties, the costs and related accumulated depreciation, depletion and amortization are eliminated from the accounts and the resulting gain or loss is recognized. Costs incurred to maintain wells and related equipment, lease and well operating costs, and other exploration costs are charged to expense as incurred. Gains and losses arising from the sale of properties are included in Income from operations in the Condensed Consolidated Statements of Operations. The Company’s lease acquisition costs and development costs of proved oil and natural gas properties are amortized using the units-of-production method, at the field level, based on total proved reserves and proved developed reserves, respectively. For the three months ended March 31, 2020 and 2019 , depletion expense for oil and gas producing property and related equipment was $24.5 million and $13.8 million , respectively. Proved Properties Proved oil and natural gas properties are reviewed for impairment on a nonrecurring basis. The impairment charge reduces the carrying values to their estimated fair values. These fair value measurements are classified as Level 3 measurements and include many unobservable inputs. Fair value is calculated as the estimated discounted future net cash flows attributable to the assets. The Company’s primary assumptions in preparing the estimated discounted future net cash flows to be recovered from oil and gas properties are based on (i) proved reserves, (ii) forward commodity prices and assumptions as to costs and expenses, and (iii) the estimated discount rate that would be used by potential purchasers to determine the fair value of the assets. Unproved Properties Unproved properties consist of costs incurred to acquire undeveloped leases. Unproved oil and gas leases are generally for a primary term of three to five years . In most cases, the term of the unproved leases can be extended by paying a lease renewal fee, meeting contractual drilling obligations, or by the presence of producing wells on the leases. Unproved costs related to successful drilling on unproved leases are reclassified to proved properties. The Company reviews its unproved properties periodically for impairment. In determining whether an unproved property is impaired, the Company considers numerous factors including, but not limited to, current exploration and development plans, favorable or unfavorable exploration activity on the property being evaluated and/or adjacent properties, the Company’s geologists' evaluation of the property, and the remaining months in the lease term for the property. Impairments to Oil and Natural Gas Properties During the three months ended March 31, 2020 , as a result of the recent decline in crude oil price futures, the Company recorded non-cash impairment charges of $25.3 million and $11.3 million to its proved and unproved oil and natural gas properties, respectively, located in the Eagle Ford Trend. As a result of certain acreage expirations, the Company recorded non-cash impairment charges of $6.2 million during the three months ended March 31, 2020 . The Company did no t record any impairments to its oil and natural gas properties for the three months ended March 31, 2019 . Capitalized costs, impairment, and depreciation, depletion and amortization relating to the Company’s oil and natural gas properties as of March 31, 2020 and December 31, 2019 , are summarized below ( in thousands ): March 31, December 31, 2020 2019 Oil and gas properties, successful efforts method: Proved properties $ 1,091,861 $ 1,046,208 Accumulated impairment to proved properties (100,652 ) (75,400 ) Proved properties, net of accumulated impairments 991,209 970,808 Unproved properties 301,666 305,961 Accumulated impairment to Unproved properties (63,189 ) (45,690 ) Unproved properties, net of accumulated impairments 238,477 260,271 Land 5,382 5,382 Total oil and gas properties, net of accumulated impairments 1,235,068 1,236,461 Accumulated depreciation, depletion and amortization (219,823 ) (195,567 ) Net oil and gas properties $ 1,015,245 $ 1,040,894 |
Noncontrolling Interest
| Noncontrolling Interest | 3 Months Ended |
| Mar. 31, 2020 | |
| Noncontrolling Interest [Abstract] | |
| Noncontrolling Interest | Noncontrolling Interest Earthstone consolidates the financial results of EEH and its subsidiaries and records a noncontrolling interest for the economic interest in Earthstone held by the members of EEH other than Earthstone and Lynden US. Net income (loss) attributable to noncontrolling interest in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019 represents the portion of net income (loss) attributable to the economic interest in the Company held by the members of EEH other than Earthstone and Lynden US. Noncontrolling interest in the Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 represents the portion of net assets of the Company attributable to the members of EEH other than Earthstone and Lynden US. The following table presents the changes in noncontrolling interest for the three months ended March 31, 2020 : EEH Units Held By Earthstone and Lynden US % EEH Units Held By Others % Total EEH Units Outstanding As of December 31, 2019 29,421,131 45.5 % 35,260,680 54.5 % 64,681,811 EEH Units and Class B Common Stock converted to Class A Common Stock 199,993 (199,993 ) — EEH Units issued in connection with the vesting of restricted stock units 231,834 — 231,834 As of March 31, 2020 29,852,958 46.0 % 35,060,687 54.0 % 64,913,645 |
Net Income (Loss) Per Common Sh
| Net Income (Loss) Per Common Share | 3 Months Ended |
| Mar. 31, 2020 | |
| Earnings Per Share [Abstract] | |
| Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Net income (loss) per common share—basic is calculated by dividing Net income (loss) by the weighted average number of shares of common stock outstanding during the period. Net income (loss) per common share—diluted assumes the conversion of all potentially dilutive securities and is calculated by dividing Net income (loss) by the sum of the weighted average number of shares of common stock, as defined above, outstanding plus potentially dilutive securities. Net income (loss) per common share—diluted considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares, as defined above, would have an anti-dilutive effect. A reconciliation of Net income (loss) per common share is as follows: Three Months Ended (In thousands, except per share amounts) 2020 2019 Net income (loss) attributable to Earthstone Energy, Inc. $ 16,708 $ (17,204 ) Net income (loss) per common share attributable to Earthstone Energy, Inc.: Basic $ 0.57 $ (0.60 ) Diluted $ 0.57 $ (0.60 ) Weighted average common shares outstanding Basic 29,497,428 28,719,542 Add potentially dilutive securities: Unvested restricted stock units (1) — — Unvested performance units (1) — — Diluted weighted average common shares outstanding 29,497,428 28,719,542 (1) For the three months ended March 31, 2020, the Company had no dilutive effect related to unvested restricted stock units or performance units as, under the treasury stock method, the proceeds from the average unrecognized expense for both during the period were in excess of the weighted average outstanding fair value for the unvested shares for the same period. Class B Common Stock has been excluded, as its conversion would eliminate noncontrolling interest and net income (loss) attributable to noncontrolling interest of $20.0 million for the three months ended March 31, 2020 would be added back to Net income (loss) attributable to Earthstone Energy, Inc. for the period then ended, having no dilutive effect on Net income (loss) per common share attributable to Earthstone Energy, Inc. |
Common Stock
| Common Stock | 3 Months Ended |
| Mar. 31, 2020 | |
| Equity [Abstract] | |
| Common Stock | Common Stock Class A Common Stock At March 31, 2020 and December 31, 2019 , there were 29,852,958 and 29,421,131 shares of Class A Common Stock issued and outstanding, respectively. During the three months ended March 31, 2020 , as a result of the vesting and settlement of restricted stock units under the Earthstone Energy, Inc. Amended and Restated 2014 Long-Term Incentive Plan (the “2014 Plan”), Earthstone issued 307,529 shares of Class A Common Stock, of which 75,695 shares of Class A Common Stock were retained as treasury stock and canceled to satisfy the related employee income tax liability. During the three months ended March 31, 2019 , as a result of the vesting and settlement of restricted stock units under the 2014 Plan, Earthstone issued 225,401 shares of Class A Common Stock, of which 59,261 shares of Class A Common Stock were retained as treasury stock and canceled to satisfy the related employee income tax liability. Class B Common Stock At March 31, 2020 and December 31, 2019 , there were 35,060,687 and 35,260,680 shares of Class B Common Stock issued and outstanding, respectively. Each share of Class B Common Stock, together with one EEH Unit, is convertible into one share of Class A Common Stock. During the three months ended March 31, 2020 , 199,993 shares of Class B Common Stock and EEH Units were exchanged for an equal number of shares of Class A Common Stock. No shares were converted during the three months ended March 31, 2019 . |
Stock-Based Compensation
| Stock-Based Compensation | 3 Months Ended |
| Mar. 31, 2020 | |
| Share-based Payment Arrangement [Abstract] | |
| Stock-Based Compensation | Stock-Based Compensation Restricted Stock Units The 2014 Plan, allows, among other things, for the grant of restricted stock units (“RSUs”). As of March 31, 2020 , the maximum number of shares of Class A Common Stock that may be issued under the 2014 Plan was 6.4 million shares. Each RSU represents the contingent right to receive one share of Class A Common Stock. The holders of outstanding RSUs do not receive dividends or have voting rights prior to vesting and settlement. The Company determines the fair value of granted RSUs based on the market price of the Class A Common Stock on the date of the grant. Compensation expense for granted RSUs is recognized on a straight-line basis over the vesting and is net of forfeitures, as incurred. Stock-based compensation is included in General and administrative expense in the Condensed Consolidated Statements of Operations and is recorded with a corresponding increase in Additional paid-in capital within the Condensed Consolidated Balance Sheets. The table below summarizes RSU award activity for the three months ended March 31, 2020 : Shares Weighted-Average Grant Date Fair Value Unvested RSUs at December 31, 2019 1,107,796 $ 6.60 Granted 568,900 $ 5.15 Vested (307,529 ) $ 6.79 Unvested RSUs at March 31, 2020 1,369,167 $ 5.95 As of March 31, 2020 , there was $8.0 million of unrecognized compensation expense related to the RSU awards which will be recognized over a weighted average period of 1.04 years . For the three months ended March 31, 2020 , Stock-based compensation related to RSUs was $1.7 million . For the three months ended March 31, 2019 , Stock-based compensation related to RSUs was $1.6 million . Performance Units The table below summarizes performance unit (“PSU”) activity for the three months ended March 31, 2020 : Shares Weighted-Average Grant Date Fair Value Unvested PSUs at December 31, 2019 835,625 $ 10.51 Granted 1,043,800 $ 5.36 Unvested PSUs at March 31, 2020 1,879,425 $ 7.65 On January 30, 2020, subject to approval of an amendment to the 2014 Plan to increase the number of available shares thereunder available for awards at the 2020 annual stockholder meeting, the Board of Directors of Earthstone (the “Board”) granted 1,043,800 PSUs to certain officers pursuant to the 2014 Plan. The PSUs are payable in shares of Class A Common Stock based upon the achievement by the Company over a period commencing on February 1, 2020 and ending on January 31, 2023 (the “Performance Period”) of performance criteria established by the Board. The PSUs are eligible to be earned based on the annualized Total Shareholder Return (“TSR”) of the Class A Common Stock during a three-year period beginning on February 1, 2020. Between 0x to 2.0x of the Performance Units are eligible to be earned based on our achieving an annualized TSR based on the following pre-established goals: Company’s Annualized TSR TSR Multiplier 23.9% or greater 2.0 14.5% 1.0 8.4% 0.5 Less than 8.4% 0.0 In the event that greater than 1.0x of the PSUs are earned, such additional PSUs may be paid in cash rather than the issuance of shares of Class A Common Stock. Based on the COVID-19 pandemic and the recent commodity price crash, we believe that the target annualized TSR of 14.5% included in the 2020 PSU awards will be difficult to achieve. The Company accounts for these awards as market-based awards which are valued utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and establishes grant date fair value based on the most likely outcome. For the PSUs granted on January 30, 2020, assuming a risk-free rate of 1.4% and volatility of 62.0% , the Company calculated the weighted average grant date fair value per PSU to be $5.36 . As of March 31, 2020 , there was $9.7 million of unrecognized compensation expense related to the PSU awards which will be amortized over a weighted average period of 1.18 years . For the three months ended March 31, 2020 , Stock-based compensation related to the PSUs was approximately $1.0 million . For the three months ended March 31, 2019 , Stock-based compensation related to the PSUs was approximately $0.6 million . |
Long-Term Debt
| Long-Term Debt | 3 Months Ended |
| Mar. 31, 2020 | |
| Debt Disclosure [Abstract] | |
| Long-Term Debt | Long-Term Debt Credit Facility On November 21, 2019, EEH (the “Borrower”), Wells Fargo Bank, National Association, as Administrative Agent and Issuing Bank (“Wells Fargo”), Royal Bank of Canada, as Syndication Agent, BOKF, NA dba Bank of Texas (“BOKF”) as Issuing Bank with respect to Existing Letters of Credit, SunTrust Bank, as Documentation Agent, and the lenders party thereto (the “Lenders”) entered into a credit agreement (the “Credit Facility”), which replaced the Prior Credit Facility (as defined below), which was terminated on November 21, 2019. Concurrently with the effectiveness of the Credit Facility, the Company terminated that certain credit agreement, dated as of May 9, 2017 (the “Prior Credit Facility”), by and among the Borrower, Earthstone Operating, LLC, EF Non-Op, LLC, Sabine River Energy, LLC, Earthstone Legacy Properties, LLC, Lynden USA Operating, LLC, Bold Energy III LLC (“Bold”), Bold Operating, LLC the guarantors party thereto, the lenders party thereto, and BOKF, as administrative agent. On March 27, 2020, in connection with a redetermination of the borrowing base under the Company's senior secured revolving credit facility (the “Credit Facility”), the borrowing base was set at $275 million , representing a 15% decrease from the previous borrowing base of $325 million . The next regularly scheduled redetermination of the borrowing base is on or around November 1, 2020. The borrowing base under the Credit Facility is subject to redetermination on or about November 1st and May 1st of each year. The amounts borrowed under the Credit Facility bear annual interest rates at either (a) the adjusted LIBO Rate (as customarily defined) (the “Adjusted LIBO Rate”) plus 1.75% to 2.75% or (b) the sum of (i) the greatest of (A) the prime rate of Wells Fargo, (B) the federal funds rate plus ½ of 1.0% , and (C) the Adjusted LIBO Rate for an interest rate period of one month plus 1.0% , (ii) plus 0.75% to 1.75% , depending on the amount borrowed under the credit facility. Principal amounts outstanding under the credit facility are due and payable in full at maturity on November 21, 2024. All of the obligations under the Credit Facility, and the guarantees of those obligations, are secured by substantially all of EEH’s assets. Additional payments due under the Credit Facility include paying a commitment fee of 0.375% to 0.50% per year, depending on the amount borrowed under the credit facility, to the Lenders in respect of the unutilized commitments thereunder. EEH is also required to pay customary letter of credit fees. Effective May 2020, the Company entered into certain interest rate swaps, exchanging the LIBO Rate for a fixed rate of 0.286% (the “Swap”). The initial notional amount of the Swap is $125 million through May 2022 and decreases to $100 million through May 2023 and $75 million through May 2024. The Credit Facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, EEH’s ability to incur additional indebtedness, create liens on assets, make investments, pay dividends and distributions or repurchase its limited liability interests, engage in mergers or consolidations, sell certain assets, sell or discount any notes receivable or accounts receivable and engage in certain transactions with affiliates. In addition, the Credit Facility requires EEH to maintain the following financial covenants: a current ratio of not less than 1.0 to 1.0 and a consolidated leverage ratio of not greater than 4.0 to 1.0. Consolidated leverage ratio means the ratio of (i) the aggregate debt of EEH and its consolidated subsidiaries as at the last day of the fiscal quarter to (ii) EBITDAX for the applicable period. The term “EBITDAX” means, for any period, the sum of consolidated net income for such period plus (a) the following expenses or charges to the extent deducted from consolidated net income in such period: (i) interest, (ii) taxes, (iii) depreciation, (iv) depletion, (v) amortization, (vi) certain distributions to employees related to the stock compensation, (vii) certain transaction related expenses, (viii) reimbursed indemnification expenses related to certain dispositions and investments, (ix) non-cash extraordinary, usual, or nonrecurring expenses or losses, (x) other non-cash charges and minus (b) to the extent included in consolidated net income in such period: (i) non-cash income and (ii) gains on asset dispositions, disposals and abandonments outside of the ordinary course of business. The Credit Facility contains customary affirmative covenants and defines events of default to include failure to pay principal or interest, breach of covenants, breach of representations and warranties, insolvency, judgment default and a change in control. Upon the occurrence and continuance of an event of default, the Lenders have the right to accelerate repayment of the loans and exercise their remedies with respect to the collateral. As of March 31, 2020 , EEH was in compliance with the covenants under the Credit Facility. As of March 31, 2020 , $152.0 million of borrowings were outstanding, bearing annual interest of 2.870% , resulting in an additional $123.0 million of borrowing base availability under the Credit Facility. At December 31, 2019 , there were $170.0 million of borrowings outstanding under the Credit Facility. For the three months ended March 31, 2020 , the Company had borrowings of $17.5 million and $35.5 million in repayments of borrowings. For the three months ended March 31, 2020 , interest on borrowings averaged 3.60% per annum, which excluded commitment fees of $0.2 million and amortization of deferred financing costs of $0.1 million . For the three months ended March 31, 2019 , interest on borrowings averaged 4.64% per annum, which excluded commitment fees of $0.2 million and amortization of deferred financing costs of $0.1 million . The Company’s policy is to capitalize the financing costs associated with its debt and amortize those costs on a straight-line basis over the term of the associated debt. These capitalized costs are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. No costs associated with the Credit Facility were capitalized during the three months ended March 31, 2020 nor 2019. |
Asset Retirement Obligations
| Asset Retirement Obligations | 3 Months Ended |
| Mar. 31, 2020 | |
| Asset Retirement Obligation Disclosure [Abstract] | |
| Asset Retirement Obligations | Asset Retirement Obligations The Company has asset retirement obligations associated with the future plugging and abandonment of oil and gas properties and related facilities. Revisions to the liability typically occur due to changes in the estimated abandonment costs, well economic lives, and the discount rate. The following table summarizes the Company’s asset retirement obligation transactions recorded during the three months ended March 31, (in thousands) : 2020 Beginning asset retirement obligations $ 2,164 Liabilities incurred 23 Accretion expense 44 Divestitures (10 ) Revision of estimates (2 ) Ending asset retirement obligations $ 2,219 |
Related Party Transactions
| Related Party Transactions | 3 Months Ended |
| Mar. 31, 2020 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions FASB ASC Topic 850 , Related Party Disclosures , requires that information about transactions with related parties that would make a difference in decision making shall be disclosed so that users of the financial statements can evaluate their significance. Flatonia Energy, LLC (“Flatonia”), which owns approximately 5.9% of the outstanding Class A Common Stock and approximately 2.7% of the combined voting power of the Company's outstanding Class A Common Stock and Class B Common Stock as of March 31, 2020 , is a party to a joint operating agreement (the “Operating Agreement”) with a subsidiary of the Company. The Operating Agreement covers certain jointly owned oil and natural gas properties located in the Eagle Ford Trend in Texas. In connection with the Operating Agreement, the Company made payments to Flatonia of $3.3 million and received payments from Flatonia of $1.0 million for the three months ended March 31, 2020 . For the three months ended March 31, 2019 , the Company made payments to Flatonia of $4.3 million and received payments from Flatonia of $1.3 million . At March 31, 2020 and December 31, 2019 , amounts receivable from Flatonia in connection with the Operating Agreement were $0.7 million and $0.6 million , respectively. Payables related to revenues outstanding and due to Flatonia as of March 31, 2020 and December 31, 2019 were $0.8 million and $1.1 million , respectively. Earthstone's majority shareholder consists of various investment funds managed by a venture capital firm who may manage other investments in entities with which the Company interacts in the normal course of business. On February 12, 2020, the Company sold certain of its interests in oil and natural gas leases and wells in an arm’s length transaction to a portfolio company of Earthstone’s majority shareholder (not under common control) for cash consideration of approximately $0.4 million . In connection with Olenik v. Lodzinski et al. (described below), Earthstone’s majority shareholder was also named in the lawsuit. The Company is currently in negotiations with its insurance carrier around an allocation of litigation costs above its deductible for all the parties named in the lawsuit. Once the allocation is agreed upon, cost will be assigned to each party affected. As of March 31, 2020, the Company has not recorded a receivable for prospective insurance settlement proceeds. Charges associated with this legal action are included in Transaction costs in the Condensed Consolidated Statements of Operations. Any proceeds received from the Company’s insurance carrier will be recorded as a reduction of Transactions costs in the period received. See Note 13. Commitments and Contingencies . |
Commitments and Contingencies
| Commitments and Contingencies | 3 Months Ended |
| Mar. 31, 2020 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies Legal From time to time, Earthstone and its subsidiaries may be involved in various legal proceedings and claims in the ordinary course of business. Olenik v. Lodzinski et al.: On June 2, 2017, Nicholas Olenik filed a purported shareholder class and derivative action in the Delaware Court of Chancery against Earthstone’s Chief Executive Officer, along with other members of the Board, EnCap Investments L.P. (“EnCap”), Bold, Bold Holdings and Oak Valley Resources, LLC. The complaint alleges that Earthstone’s directors breached their fiduciary duties in connection with the contribution agreement dated as of November 7, 2016 and as amended on March 21, 2017 (the “Bold Contribution Agreement”), by and among Earthstone, EEH, Lynden US, Lynden USA Operating, LLC, Bold Holdings and Bold. The Plaintiff asserts that the directors negotiated the business combination pursuant to the Bold Contribution Agreement (the “Bold Transaction") to benefit EnCap and its affiliates, failed to obtain adequate consideration for the Earthstone shareholders who were not affiliated with EnCap or Earthstone management, did not follow an adequate process in negotiating and approving the Bold Transaction and made materially misleading or incomplete proxy disclosures in connection with the Bold Transaction. The suit seeks unspecified damages and purports to assert claims derivatively on behalf of Earthstone and as a class action on behalf of all persons who held common stock up to March 13, 2017, excluding defendants and their affiliates. On July 20, 2018, the Delaware Court of Chancery granted the defendants’ motion to dismiss and entered an order dismissing the action in its entirety with prejudice. The Plaintiff filed an appeal with the Delaware Supreme Court. On February 6, 2019, the Delaware Supreme Court heard oral arguments from the Plaintiff’s and Defendants’ counsel. On April 5, 2019, the Delaware Supreme Court affirmed the Delaware Court of Chancery’s dismissal of the proxy disclosure claims but reversed the Delaware Court of Chancery’s dismissal of the other claims, holding that the allegations with respect to those claims were sufficient for pleading purposes. Earthstone and each of the other defendants believe the claims are entirely without merit and intend to mount a vigorous defense. The ultimate outcome of this suit is uncertain, and while Earthstone is confident in its position, any potential monetary recovery or loss to Earthstone cannot be estimated at this time. Environmental and Regulatory As of March 31, 2020 , there were no known environmental or other regulatory matters related to the Company’s operations that are reasonably expected to result in a material liability to the Company. |
Income Taxes
| Income Taxes | 3 Months Ended |
| Mar. 31, 2020 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company’s corporate structure requires the filing of two separate consolidated U.S. Federal income tax returns and one Canadian income tax return which include Lynden US, Earthstone, and Lynden Corp. As such, taxable income of Earthstone cannot be offset by tax attributes, including net operating losses, of Lynden US, nor can taxable income of Lynden US be offset by tax attributes of Earthstone. Earthstone and Lynden US record a tax provision, respectively, for their share of the book income or loss of EEH, net of the non-controlling interest. As EEH is treated as a partnership for U.S. Federal income tax purposes, it is not subject to income tax at the federal level and only recognizes the Texas Margin Tax. During the three months ended March 31, 2020 , the Company recorded income tax expense of approximately $1.1 million which included (1) income tax expense for Lynden US of $0.7 million as a result of its share of the distributable income from EEH, (2) deferred income tax expense for Earthstone of $2.9 million as a result of its share of the distributable income from EEH, which was used to reduce the valuation allowance recorded against its deferred tax asset which was previously recorded as future realization of the net deferred tax asset cannot be assured and (3) deferred income tax expense of $0.4 million related to the Texas Margin Tax. Lynden Corp incurred no material income or loss, or related income tax expense or benefit, for the three months ended March 31, 2020 . During the three months ended March 31, 2019 , the Company recorded income tax benefit of approximately $0.5 million which included (1) income tax benefit for Lynden US of $0.8 million as a result of its share of the distributable income from EEH, (2) income tax benefit for Earthstone of $2.9 million as a result of its share of the distributable income from EEH, which was used to reduce the valuation recorded against its deferred tax asset as future realization of the net deferred tax asset cannot be assured and (3) deferred income tax expense of $0.3 million related to the Texas Margin Tax. Lynden Corp incurred no material income or loss, or related income tax expense or benefit, for the three months ended March 31, 2019. |
Goodwill
| Goodwill | 3 Months Ended |
| Mar. 31, 2020 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| Goodwill | Goodwill Goodwill represents the excess of the purchase price of assets acquired over the fair value of those assets. The fair value of Goodwill is classified as a Level 3 measurement according to the fair value hierarchy defined by ASC 820. Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances dictate that the carrying value of goodwill may not be recoverable. Such test includes an assessment of qualitative and quantitative factors. If the results of such tests are such that the fair value of the reporting unit is less than the carrying value, goodwill is then reduced by an amount that is equal to the amount by which the carrying value exceeds the fair value. A future cash flow analysis of the Midland properties, to which the Goodwill was associated, was performed based on commodity price futures as of March 31, 2020. The resulting fair value was lower than the net book value of the associated properties. Additionally, the Company’s enterprise value, calculated as the combined market capitalization of the Company’s equity and the fair value of the Company’s long-term debt, was lower than the fair value of the assets, without allocating between the Company's two major properties, Midland properties and Eagle Ford properties. Accordingly, the entire balance of Goodwill was impaired. As such, the Company recorded a $17.6 million non-cash impairment charge during the three months ended March 31, 2020 . The Company did no t have any non-cash impairment charges to its goodwill for the three months ended March 31, 2019. Accumulated impairments to Goodwill as of March 31, 2020 and December 31, 2019 were $36.7 million and $19.1 million , respectively. |
Basis of Presentation and Sum_2
| Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
| Mar. 31, 2020 | |
| Accounting Policies [Abstract] | |
| Recently Issued Accounting Standards | Recently Issued Accounting Standards Intangibles – Goodwill and Other – In January 2017, the Financial Accounting Standards Board ("FASB") issued updated guidance simplifying the test for goodwill impairment. The update eliminates the requirement to determine the implied value of goodwill in measuring an impairment loss. Upon adoption, the measurement of a goodwill impairment will represent the excess of the reporting unit’s carrying value over its fair value and will be limited to the carrying value of goodwill. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The update is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company adopted the update effective January 1, 2020. See further discussion of goodwill in Note 15. Goodwill . Fair Value Measurements – In August 2018, the FASB issued an Accounting Standards Update ("ASU") which modifies the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The Company adopted the update effective January 1, 2020 and the impact was not material to the Condensed Consolidated Financial Statements. Credit Losses - In June 2016, the FASB issued an update that requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income, including loans, debt securities, trade receivables, net investments in leases and available-for-sale debt securities. The amended standard broadens the information that an entity must consider in developing its estimate of expected credit losses, requiring an entity to estimate credit losses over the life of an exposure based on historical information, current information and reasonable and supportable forecasts. The guidance is effective for interim and annual periods beginning after December 15, 2019. The Company adopted the update effective January 1, 2020 and the impact was not material to the Condensed Consolidated Financial Statements. Income Taxes - In December 2019, the FASB issued an update that simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted. The Company is in the process of evaluating the impact of this update, if any, on its Condensed Consolidated Financial Statements. |
Fair Value Measurements (Tables
| Fair Value Measurements (Tables) | 3 Months Ended |
| Mar. 31, 2020 | |
| Fair Value Disclosures [Abstract] | |
| Summary of Fair Value of Financial Assets and Liabilities | The following table summarizes the fair value of the Company’s financial assets and liabilities, by level within the fair-value hierarchy (in thousands) : March 31, 2020 Level 1 Level 2 Level 3 Total Financial assets Derivative asset - current $ — $ 72,017 $ — $ 72,017 Derivative asset - noncurrent — 20,769 — 20,769 Total financial assets $ — $ 92,786 $ — $ 92,786 Financial liabilities Derivative liability - current $ — $ — $ — $ — Derivative liability - noncurrent — — — — Total financial liabilities $ — $ — $ — $ — December 31, 2019 Financial assets Derivative asset - current $ — $ 8,860 $ — $ 8,860 Derivative asset - noncurrent 770 770 Total financial assets $ — $ 9,630 $ — $ 9,630 Financial liabilities Derivative liability - current $ — $ 6,889 $ — $ 6,889 Derivative liability - noncurrent — — — — Total financial liabilities $ — $ 6,889 $ — $ 6,889 |
Derivative Financial Instrume_2
| Derivative Financial Instruments (Tables) | 3 Months Ended |
| Mar. 31, 2020 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Schedule of Open Crude Oil and Natural Gas Derivative Contracts | The Company had the following open crude oil and natural gas derivative contracts as of March 31, 2020 : Price Swaps Period Commodity Volume (Bbls / MMBtu) Weighted Average Price ($/Bbl / $/MMBtu) Q2 - Q4 2020 Crude Oil 2,199,000 $ 57.00 Q1 - Q4 2021 Crude Oil 1,460,000 $ 55.16 Q2 - Q4 2020 Crude Oil Basis Swap(1) 1,925,000 $ (1.40 ) Q2 - Q4 2020 Crude Oil Basis Swap(2) 275,000 $ 2.55 Q1 - Q4 2021 Crude Oil Basis Swap(1) 1,825,000 $ 1.05 Q2 - Q4 2020 Natural Gas 1,925,000 $ 2.85 Q2 - Q4 2020 Natural Gas Basis Swap(3) 1,925,000 $ (1.07 ) (1) The basis differential price is between WTI Midland Crude and the WTI NYMEX. (2) The basis differential price is between WTI Houston and the WTI NYMEX. (3) The basis differential price is between W. Texas (WAHA) and the Henry Hub NYMEX. |
| Schedule of Location and Fair Value Amounts of All Derivative Instruments | The following table summarizes the location and fair value amounts of all derivative instruments in the Condensed Consolidated Balance Sheets as well as the gross recognized derivative assets, liabilities, and amounts offset in the Condensed Consolidated Balance Sheets (in thousands) : March 31, 2020 December 31, 2019 Derivatives not designated as hedging contracts under ASC Topic 815 Balance Sheet Location Gross Recognized Assets / Liabilities Gross Amounts Offset Net Recognized Assets / Liabilities Gross Recognized Assets / Liabilities Gross Amounts Offset Net Recognized Assets / Liabilities Commodity contracts Derivative asset - current $ 73,846 $ (1,829 ) $ 72,017 $ 13,321 $ (4,461 ) $ 8,860 Commodity contracts Derivative liability - current $ 1,829 $ (1,829 ) $ — $ 11,350 $ (4,461 ) $ 6,889 Commodity contracts Derivative asset - noncurrent $ 20,769 $ — $ 20,769 $ 1,031 $ (261 ) $ 770 Commodity contracts Derivative liability - noncurrent $ — $ — $ — $ 261 $ (261 ) $ — |
| Summary of Realized and Unrealized Gains and Losses on Derivative Instruments | The following table summarizes the location and amounts of the Company’s realized and unrealized gains and losses on derivatives instruments in the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows (in thousands) : Derivatives not designated as hedging contracts under ASC Topic 815 Three Months Ended Statement of Cash Flows Location Statement of Operations Location 2020 2019 Unrealized gain (loss) Not separately presented Not separately presented $ 90,045 $ (53,256 ) Realized gain Operating portion of net cash received in settlement of derivative contracts Not separately presented 9,739 5,362 Total gain (loss) on derivative contracts, net Gain (loss) on derivative contracts, net $ 99,784 $ (47,894 ) |
Asset Impairments (Tables)
| Asset Impairments (Tables) | 3 Months Ended |
| Mar. 31, 2020 | |
| Property, Plant and Equipment [Abstract] | |
| Schedule of non-cash impairment charges | The Company had the following non-cash asset impairment charges for the three months ended March 31, 2020 ( in thousands ): Three Months Ended March 31, 2020 Proved property $ 25,252 Unproved property 17,499 Goodwill 17,620 Impairment expense $ 60,371 |
Oil and Natural Gas Properties
| Oil and Natural Gas Properties Oil and Natural Gas Properties (Tables) | 3 Months Ended |
| Mar. 31, 2020 | |
| Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
| Capitalized Costs Relating to Oil and Gas Producing Activities Disclosure | Capitalized costs, impairment, and depreciation, depletion and amortization relating to the Company’s oil and natural gas properties as of March 31, 2020 and December 31, 2019 , are summarized below ( in thousands ): March 31, December 31, 2020 2019 Oil and gas properties, successful efforts method: Proved properties $ 1,091,861 $ 1,046,208 Accumulated impairment to proved properties (100,652 ) (75,400 ) Proved properties, net of accumulated impairments 991,209 970,808 Unproved properties 301,666 305,961 Accumulated impairment to Unproved properties (63,189 ) (45,690 ) Unproved properties, net of accumulated impairments 238,477 260,271 Land 5,382 5,382 Total oil and gas properties, net of accumulated impairments 1,235,068 1,236,461 Accumulated depreciation, depletion and amortization (219,823 ) (195,567 ) Net oil and gas properties $ 1,015,245 $ 1,040,894 |
Noncontrolling Interest (Tables
| Noncontrolling Interest (Tables) | 3 Months Ended |
| Mar. 31, 2020 | |
| Noncontrolling Interest [Abstract] | |
| Summary of Changes in Noncontrolling Interest | The following table presents the changes in noncontrolling interest for the three months ended March 31, 2020 : EEH Units Held By Earthstone and Lynden US % EEH Units Held By Others % Total EEH Units Outstanding As of December 31, 2019 29,421,131 45.5 % 35,260,680 54.5 % 64,681,811 EEH Units and Class B Common Stock converted to Class A Common Stock 199,993 (199,993 ) — EEH Units issued in connection with the vesting of restricted stock units 231,834 — 231,834 As of March 31, 2020 29,852,958 46.0 % 35,060,687 54.0 % 64,913,645 |
Net Income (Loss) Per Common _2
| Net Income (Loss) Per Common Share (Tables) | 3 Months Ended |
| Mar. 31, 2020 | |
| Earnings Per Share [Abstract] | |
| Reconciliation of Net (Loss) Income Per Common Share | A reconciliation of Net income (loss) per common share is as follows: Three Months Ended (In thousands, except per share amounts) 2020 2019 Net income (loss) attributable to Earthstone Energy, Inc. $ 16,708 $ (17,204 ) Net income (loss) per common share attributable to Earthstone Energy, Inc.: Basic $ 0.57 $ (0.60 ) Diluted $ 0.57 $ (0.60 ) Weighted average common shares outstanding Basic 29,497,428 28,719,542 Add potentially dilutive securities: Unvested restricted stock units (1) — — Unvested performance units (1) — — Diluted weighted average common shares outstanding 29,497,428 28,719,542 (1) For the three months ended March 31, 2020, the Company had no dilutive effect related to unvested restricted stock units or performance units as, under the treasury stock method, the proceeds from the average unrecognized expense for both during the period were in excess of the weighted average outstanding fair value for the unvested shares for the same period. |
Stock-Based Compensation (Table
| Stock-Based Compensation (Tables) | 3 Months Ended |
| Mar. 31, 2020 | |
| Share-based Payment Arrangement [Abstract] | |
| Summary of Unvested RSU and PSU Award Activity | The table below summarizes RSU award activity for the three months ended March 31, 2020 : Shares Weighted-Average Grant Date Fair Value Unvested RSUs at December 31, 2019 1,107,796 $ 6.60 Granted 568,900 $ 5.15 Vested (307,529 ) $ 6.79 Unvested RSUs at March 31, 2020 1,369,167 $ 5.95 The table below summarizes performance unit (“PSU”) activity for the three months ended March 31, 2020 : Shares Weighted-Average Grant Date Fair Value Unvested PSUs at December 31, 2019 835,625 $ 10.51 Granted 1,043,800 $ 5.36 Unvested PSUs at March 31, 2020 1,879,425 $ 7.65 |
| Schedule of Total Shareholder Return Goals | Between 0x to 2.0x of the Performance Units are eligible to be earned based on our achieving an annualized TSR based on the following pre-established goals: Company’s Annualized TSR TSR Multiplier 23.9% or greater 2.0 14.5% 1.0 8.4% 0.5 Less than 8.4% 0.0 |
Asset Retirement Obligations (T
| Asset Retirement Obligations (Tables) | 3 Months Ended |
| Mar. 31, 2020 | |
| Asset Retirement Obligation Disclosure [Abstract] | |
| Summary of Asset Retirement Obligation Transactions | The following table summarizes the Company’s asset retirement obligation transactions recorded during the three months ended March 31, (in thousands) : 2020 Beginning asset retirement obligations $ 2,164 Liabilities incurred 23 Accretion expense 44 Divestitures (10 ) Revision of estimates (2 ) Ending asset retirement obligations $ 2,219 |
Fair Value Measurements (Detail
| Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
| Financial assets | ||
| Derivative asset - current | $ 72,017 | $ 8,860 |
| Derivative asset - noncurrent | 20,769 | 770 |
| Financial liabilities | ||
| Derivative liability - current | 0 | 6,889 |
| Fair Value on a Recurring Basis | ||
| Financial assets | ||
| Derivative asset - current | 72,017 | 8,860 |
| Derivative asset - noncurrent | 20,769 | 770 |
| Total financial assets | 92,786 | 9,630 |
| Financial liabilities | ||
| Derivative liability - current | 0 | 6,889 |
| Derivative liability - noncurrent | 0 | 0 |
| Total financial liabilities | 0 | 6,889 |
| Level 1 | Fair Value on a Recurring Basis | ||
| Financial assets | ||
| Derivative asset - current | 0 | 0 |
| Derivative asset - noncurrent | 0 | |
| Total financial assets | 0 | 0 |
| Financial liabilities | ||
| Derivative liability - current | 0 | 0 |
| Derivative liability - noncurrent | 0 | 0 |
| Total financial liabilities | 0 | 0 |
| Level 2 | Fair Value on a Recurring Basis | ||
| Financial assets | ||
| Derivative asset - current | 72,017 | 8,860 |
| Derivative asset - noncurrent | 20,769 | 770 |
| Total financial assets | 92,786 | 9,630 |
| Financial liabilities | ||
| Derivative liability - current | 0 | 6,889 |
| Derivative liability - noncurrent | 0 | 0 |
| Total financial liabilities | 0 | 6,889 |
| Level 3 | Fair Value on a Recurring Basis | ||
| Financial assets | ||
| Derivative asset - current | 0 | 0 |
| Derivative asset - noncurrent | 0 | |
| Total financial assets | 0 | 0 |
| Financial liabilities | ||
| Derivative liability - current | 0 | 0 |
| Derivative liability - noncurrent | 0 | 0 |
| Total financial liabilities | $ 0 | $ 0 |
Derivative Financial Instrume_3
| Derivative Financial Instruments - Schedule of Open Crude Oil and Natural Gas Derivative Contracts (Details) | 3 Months Ended |
| Mar. 31, 2020MMBTU$ / MMBTU$ / bblbbl | |
| Crude Oil, Q2-Q4 2020 | Crude Oil | |
| Derivative [Line Items] | |
| Crude oil volume (Bbl) | bbl | 2,199,000 |
| Weighted Average Price ($/Bbl / $/MMBtu) | 57 |
| Crude Oil, Q1-Q4 2021 | Crude Oil | |
| Derivative [Line Items] | |
| Crude oil volume (Bbl) | bbl | 1,460,000 |
| Weighted Average Price ($/Bbl / $/MMBtu) | 55.16 |
| Crude Oil Basis Swap, Swap One, Q2-Q4 2020 | Crude Oil | |
| Derivative [Line Items] | |
| Crude oil volume (Bbl) | bbl | 1,925,000 |
| Crude Oil Basis Swap, Q2-Q4 2020 | Crude Oil | |
| Derivative [Line Items] | |
| Crude oil volume (Bbl) | bbl | 275,000 |
| Crude Oil Basis Swap, Swap Two, Q1-Q4 2021 | Crude Oil | |
| Derivative [Line Items] | |
| Crude oil volume (Bbl) | bbl | 1,825,000 |
| Weighted Average Price ($/Bbl / $/MMBtu) | 1.05 |
| Natural Gas, Q2-Q4 2020 | |
| Derivative [Line Items] | |
| Natural gas volume (MMBtu) | MMBTU | 1,925,000 |
| Weighted Average Price ($/Bbl / $/MMBtu) | 2.85 |
| Natural Gas Basis Swap, Q2-Q4 2020 | Natural Gas Basis Swap | |
| Derivative [Line Items] | |
| Natural gas volume (MMBtu) | MMBTU | 1,925,000 |
| Short | Crude Oil Basis Swap, Swap One, Q2-Q4 2020 | Crude Oil | |
| Derivative [Line Items] | |
| Weighted Average Price ($/Bbl / $/MMBtu) | (1.40) |
| Short | Crude Oil Basis Swap, Q2-Q4 2020 | Crude Oil | |
| Derivative [Line Items] | |
| Weighted Average Price ($/Bbl / $/MMBtu) | 2.55 |
| Short | Natural Gas Basis Swap, Q2-Q4 2020 | Natural Gas Basis Swap | |
| Derivative [Line Items] | |
| Weighted Average Price ($/Bbl / $/MMBtu) | $ / MMBTU | (1.07) |
Derivative Financial Instrume_4
| Derivative Financial Instruments - Schedule of Location and Fair Value Amounts of All Derivative Instruments (Details) - Derivatives Not Designated as Hedging Contracts - Commodity Contracts - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
| Derivative asset - current | ||
| Derivative Asset [Abstract] | ||
| Gross Recognized Assets | $ 73,846 | $ 13,321 |
| Gross Amounts Offset, Assets | (1,829) | (4,461) |
| Total financial assets | 72,017 | 8,860 |
| Derivative liability - current | ||
| Derivative Liability [Abstract] | ||
| Gross Recognized Liabilities | 1,829 | 11,350 |
| Gross Amounts Offset, Liabilities | (1,829) | (4,461) |
| Total financial liabilities | 0 | 6,889 |
| Derivative asset - noncurrent | ||
| Derivative Asset [Abstract] | ||
| Gross Recognized Assets | 20,769 | 1,031 |
| Gross Amounts Offset, Assets | 0 | (261) |
| Total financial assets | 20,769 | 770 |
| Derivative liability - noncurrent | ||
| Derivative Liability [Abstract] | ||
| Gross Recognized Liabilities | 0 | 261 |
| Gross Amounts Offset, Liabilities | 0 | (261) |
| Total financial liabilities | $ 0 | $ 0 |
Derivative Financial Instrume_5
| Derivative Financial Instruments - Summary of Realized and Unrealized Gains and Losses on Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
| Mar. 31, 2020 | Mar. 31, 2019 | |
| Derivative Instruments, Gain (Loss) [Line Items] | ||
| Realized gain | $ (9,739) | $ (5,362) |
| (Loss) gain on commodity contracts, net | 99,784 | (47,894) |
| Derivatives Not Designated as Hedging Contracts | (Loss) Gain On Derivative Contracts, Net | ||
| Derivative Instruments, Gain (Loss) [Line Items] | ||
| Unrealized gain (loss) | 90,045 | (53,256) |
| Realized gain | 9,739 | 5,362 |
| (Loss) gain on commodity contracts, net | $ 99,784 | $ (47,894) |
Asset Impairments (Details)
| Asset Impairments (Details) - USD ($) | 3 Months Ended | |
| Mar. 31, 2020 | Mar. 31, 2019 | |
| Oil And Natural Gas Properties [Line Items] | ||
| Impairment of proved and unproved oil and gas properties | $ 42,751,000 | $ 0 |
| Goodwill | 17,620,000 | 0 |
| Impairment expense | 60,371,000 | $ 0 |
| Proved Oil and Natural Gas Properties | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Impairment of proved and unproved oil and gas properties | 25,252,000 | |
| Unproved Oil and Gas Properties | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Impairment of proved and unproved oil and gas properties | $ 17,499,000 | |
Oil and Natural Gas Propertie_2
| Oil and Natural Gas Properties (Details) - USD ($) | 3 Months Ended | |
| Mar. 31, 2020 | Mar. 31, 2019 | |
| Oil And Natural Gas Properties [Line Items] | ||
| Impairment of proved and unproved oil and gas properties | $ 42,751,000 | $ 0 |
| Impairment expense | 60,371,000 | 0 |
| Proved Oil and Natural Gas Properties | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Depletion expenses | 24,500,000 | $ 13,800,000 |
| Impairment of proved and unproved oil and gas properties | 25,252,000 | |
| Unproved Oil and Gas Properties | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Impairment of proved and unproved oil and gas properties | $ 17,499,000 | |
| Unproved Oil and Gas Properties | Minimum | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Unproved oil and gas lease term | 3 years | |
| Unproved Oil and Gas Properties | Maximum | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Unproved oil and gas lease term | 5 years | |
| Oil and Gas Properties, Subject to Acreage Expirations | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Impairment of proved and unproved oil and gas properties | $ 6,200,000 | |
| Eagle Ford Trend | Proved Oil and Natural Gas Properties | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Impairment of proved and unproved oil and gas properties | 25,300,000 | |
| Eagle Ford Trend | Unproved Oil and Gas Properties | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Impairment of proved and unproved oil and gas properties | $ 11,300,000 | |
Oil and Natural Gas Propertie_3
| Oil and Natural Gas Properties - Schedule of Capitalized Costs, Impairment, and Depreciation (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
| Oil And Natural Gas Properties [Line Items] | ||
| Proved properties | $ 991,209 | $ 970,808 |
| Net oil and gas properties | 1,015,245 | 1,040,894 |
| Unproved properties | 238,477 | 260,271 |
| Land | 5,382 | 5,382 |
| Total oil and gas properties, net of accumulated impairments | 1,235,068 | 1,236,461 |
| Accumulated depreciation, depletion and amortization | (219,823) | (195,567) |
| Proved Oil and Natural Gas Properties | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Proved properties | 1,091,861 | 1,046,208 |
| Accumulated impairment | (100,652) | (75,400) |
| Net oil and gas properties | 991,209 | 970,808 |
| Unproved Oil and Gas Properties | ||
| Oil And Natural Gas Properties [Line Items] | ||
| Accumulated impairment | (63,189) | (45,690) |
| Net oil and gas properties | 238,477 | 260,271 |
| Unproved properties | $ 301,666 | $ 305,961 |
Noncontrolling Interest - Summ
| Noncontrolling Interest - Summary of Changes in Noncontrolling Interest (Details) - shares | 3 Months Ended | |
| Mar. 31, 2020 | Dec. 31, 2019 | |
| Class A Common Stock | ||
| Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
| Outstanding, beginning balance (in shares) | 29,421,131 | |
| Outstanding, ending balance (in shares) | 29,852,958 | |
| Earthstone Energy Holdings, LLC | ||
| Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
| Outstanding, beginning balance (in shares) | 64,681,811 | |
| Outstanding, ending balance (in shares) | 64,913,645 | |
| Earthstone Energy Holdings, LLC | Restricted Stock Units | ||
| Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
| EEH Units issued in connection with the vesting of restricted stock units (in shares) | 231,834 | |
| Earthstone Energy Holdings, LLC | Bold Transaction | Class A Common Stock | ||
| Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
| EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 0 | |
| EEH Units Held By Earthstone and Lynden US | Earthstone Energy Holdings, LLC | ||
| Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
| Outstanding, beginning balance (in shares) | 29,421,131 | |
| Outstanding, ending balance (in shares) | 29,852,958 | |
| Percentage of EEH Units Held By Earthstone and Lynden | 46.00% | 45.50% |
| EEH Units Held By Earthstone and Lynden US | Earthstone Energy Holdings, LLC | Restricted Stock Units | ||
| Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
| EEH Units issued in connection with the vesting of restricted stock units (in shares) | 231,834 | |
| EEH Units Held By Earthstone and Lynden US | Earthstone Energy Holdings, LLC | Bold Transaction | Class A Common Stock | ||
| Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
| EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 199,993 | |
| EEH Units Held By Others | Earthstone Energy Holdings, LLC | ||
| Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
| Outstanding, beginning balance (in shares) | 35,260,680 | |
| Outstanding, ending balance (in shares) | 35,060,687 | |
| Percentage of EEH Units Held By Others | 54.00% | 54.50% |
| EEH Units Held By Others | Earthstone Energy Holdings, LLC | Bold Transaction | Class A Common Stock | ||
| Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
| EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | (199,993) |
Net Income (Loss) Per Common _3
| Net Income (Loss) Per Common Share - Reconciliation of Net Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
| Mar. 31, 2020 | Mar. 31, 2019 | |
| Earnings Per Share [Abstract] | ||
| Net income (loss) attributable to Earthstone Energy, Inc. | $ 16,708 | $ (17,204) |
| Net income (loss) per common share attributable to Earthstone Energy, Inc.: | ||
| Basic (in dollars per share) | $ 0.57 | $ (0.60) |
| Diluted (in dollars per share) | $ 0.57 | $ (0.60) |
| Weighted average common shares outstanding | ||
| Basic (in shares) | 29,497,428 | 28,719,542 |
| Add potentially dilutive securities: | ||
| Unvested restricted stock units (in shares) | 0 | 0 |
| Unvested performance units (in shares) | 0 | 0 |
| Diluted weighted average common shares outstanding (in shares) | 29,497,428 | 28,719,542 |
Net Income (Loss) Per Common _4
| Net Income (Loss) Per Common Share - Narrative (Details) - USD ($) | 3 Months Ended | |
| Mar. 31, 2020 | Mar. 31, 2019 | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Net income (loss) attributable to noncontrolling interest | $ 20,006,000 | $ (21,239,000) |
| Dilutive effect on net income (loss) per common share attributable to Earthstone Energy, Inc | 0 | |
| Class B Common Stock | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Net income (loss) attributable to noncontrolling interest | $ 20,000,000 | |
Common Stock (Details)
| Common Stock (Details) - shares | 3 Months Ended | ||
| Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
| Member Units | Bold Contribution Agreement | |||
| Capital Unit [Line Items] | |||
| Stock conversion (in shares) | 1 | ||
| Class A Common Stock | |||
| Capital Unit [Line Items] | |||
| Common stock, shares issued (in shares) | 29,852,958 | 29,421,131 | |
| Common stock, shares outstanding (in shares) | 29,852,958 | 29,421,131 | |
| Class A Common Stock | Bold Contribution Agreement | |||
| Capital Unit [Line Items] | |||
| Stock conversion (in shares) | 1 | ||
| Class A Common Stock | 2014 Plan | |||
| Capital Unit [Line Items] | |||
| Common shares issued during period under stock plan (in shares) | 307,529 | 225,401 | |
| Common stock repurchased (in shares) | 75,695 | 59,261 | |
| Class B Common Stock | |||
| Capital Unit [Line Items] | |||
| Common stock, shares issued (in shares) | 35,060,687 | 35,260,680 | |
| Common stock, shares outstanding (in shares) | 35,060,687 | 35,260,680 | |
| EEH Units and Class B Common Stock converted to Class A Common Stock (in shares) | 199,993 | ||
Stock-Based Compensation - Nar
| Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 30, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
| Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Performance-based restricted stock granted (in shares) | 568,900 | |||
| Weighted average fair value per share (in dollars per share) | $ 5.95 | $ 6.60 | ||
| Performance Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Performance-based restricted stock granted (in shares) | 1,043,800 | |||
| Weighted average fair value per share (in dollars per share) | $ 7.65 | $ 10.51 | ||
| 2014 Plan | Restricted Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Number of shares authorized to be issued under the plan (in shares) | 6,400,000 | |||
| Unrecognized compensation expense related to unvested stock | $ 8 | |||
| Weighted average remaining vesting period of unrecognized compensation expense | 1 year 15 days | |||
| Stock-based compensation expense | $ 1.7 | $ 1.6 | ||
| 2014 Plan | Restricted Stock Units | Bold Contribution Agreement | Class A Common Stock | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Number of shares of common stock that each holder has contingent right to receive (in shares) | 1 | |||
| 2014 Plan | Performance Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Stock-based compensation expense | $ 1 | $ 0.6 | ||
| Performance-based restricted stock granted (in shares) | 1,043,800 | |||
| Risk-free interest rate | 1.40% | |||
| Expected volatility (as a percent) | 62.00% | |||
| Weighted average fair value per share (in dollars per share) | $ 5.36 | |||
| Unrecognized compensation expense related to PSU awards | $ 9.7 | |||
| Remaining vesting period of unrecognized compensation expense (in years) | 1 year 2 months 5 days | |||
| Minimum | Performance Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Relative total shareholder return, percentage | 0.00% | |||
| Relative total shareholder return, cash issued, percentage | 100.00% | |||
| Maximum | Performance Stock Units | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Relative total shareholder return, percentage | 200.00% |
Stock-Based Compensation - Sum
| Stock-Based Compensation - Summary of Unvested Award Activity (Details) | 3 Months Ended |
| Mar. 31, 2020$ / sharesshares | |
| Restricted Stock Units | |
| Shares | |
| Unvested at beginning period (in shares) | shares | 1,107,796 |
| Granted (in shares) | shares | 568,900 |
| Vested (in shares) | shares | (307,529) |
| Unvested at end period (in shares) | shares | 1,369,167 |
| Weighted-Average Grant Date Fair Value | |
| Unvested at beginning of period, Weighted-Average Grant Date Fair Value (in dollars per share) | $ / shares | $ 6.60 |
| Granted, Weighted-Average Grant Date Fair Value (in dollars per share) | $ / shares | 5.15 |
| Vested, Weighted-Average Grant Date Fair Value (in dollars per share) | $ / shares | 6.79 |
| Unvested at end of period, Weighted-Average Grant Date Fair Value (in dollars per share) | $ / shares | $ 5.95 |
| Performance Stock Units | |
| Shares | |
| Unvested at beginning period (in shares) | shares | 835,625 |
| Granted (in shares) | shares | 1,043,800 |
| Unvested at end period (in shares) | shares | 1,879,425 |
| Weighted-Average Grant Date Fair Value | |
| Unvested at beginning of period, Weighted-Average Grant Date Fair Value (in dollars per share) | $ / shares | $ 10.51 |
| Granted, Weighted-Average Grant Date Fair Value (in dollars per share) | $ / shares | 5.36 |
| Unvested at end of period, Weighted-Average Grant Date Fair Value (in dollars per share) | $ / shares | $ 7.65 |
Stock-Based Compensation - Sch
| Stock-Based Compensation - Schedule of Target Multipliers (Details) - Performance Stock Units | 3 Months Ended |
| Mar. 31, 2020 | |
| Maximum | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Company's Annualized TSR (as a percent) | 8.40% |
| TSR Multiplier | 0.00% |
| TSR Range - 23.9% | Minimum | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Company's Annualized TSR (as a percent) | 23.90% |
| TSR Multiplier | 200.00% |
| TSR Range - 14.5% | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| TSR Multiplier | 100.00% |
| TSR Range - 14.5% | Minimum | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Company's Annualized TSR (as a percent) | 14.50% |
| TSR Range - 8.4% | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| TSR Multiplier | 50.00% |
| TSR Range - 8.4% | Minimum | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Company's Annualized TSR (as a percent) | 8.40% |
Long-Term Debt (Details)
| Long-Term Debt (Details) | Mar. 27, 2020USD ($) | Nov. 21, 2019 | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | May 31, 2024USD ($) | May 31, 2023USD ($) | May 31, 2020USD ($) | Mar. 26, 2020USD ($) | Dec. 31, 2019USD ($) |
| Debt Instrument [Line Items] | |||||||||
| Long-term debt outstanding | $ 152,000,000 | $ 170,000,000 | |||||||
| Long-term debt, percentage bearing annual interest rate | 2.87% | ||||||||
| Amount of borrowings | $ 17,500,000 | ||||||||
| Repayments of borrowings | $ 35,500,000 | ||||||||
| Averaged interest rate on borrowings | 3.60% | 4.64% | |||||||
| Commitment fees on borrowings | $ 200,000 | $ 200,000 | |||||||
| Amortization of deferred financing costs | 80,000 | 103,000 | |||||||
| EEH Credit Agreement | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Current borrowing base under EEH credit agreement | $ 275,000,000 | $ 325,000,000 | |||||||
| Decrease in borrowing base (as a percent) | 15.00% | ||||||||
| Credit agreement, covenant, current ratio | 1 | ||||||||
| Credit agreement, covenant, leverage ratio | 4 | ||||||||
| Long-term debt outstanding | 152,000,000 | $ 170,000,000 | |||||||
| Additional borrowing base available under credit agreement | $ 123,000,000 | ||||||||
| Capitalized costs associated with borrowings | $ 0 | ||||||||
| EEH Credit Agreement | Minimum | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Applicable margin percentage | 0.75% | ||||||||
| Commitment fee percentage | 0.375% | ||||||||
| EEH Credit Agreement | Maximum | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Applicable margin percentage | 1.75% | ||||||||
| Commitment fee percentage | 0.50% | ||||||||
| EEH Credit Agreement | London Interbank Offered Rate (LIBOR) | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Applicable margin percentage | 1.00% | ||||||||
| EEH Credit Agreement | London Interbank Offered Rate (LIBOR) | Minimum | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Applicable margin percentage | 1.75% | ||||||||
| EEH Credit Agreement | London Interbank Offered Rate (LIBOR) | Maximum | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Applicable margin percentage | 2.75% | ||||||||
| EEH Credit Agreement | Federal Funds Rate | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Applicable margin percentage | 0.50% | ||||||||
| Interest Rate Swap | Subsequent Event | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Derivative instrument, fixed interest rate | 0.286% | ||||||||
| Notional amount of interest rate swap | $ 125,000,000 | ||||||||
| Scenario, Forecast | Interest Rate Swap | |||||||||
| Debt Instrument [Line Items] | |||||||||
| Notional amount of interest rate swap | $ 75,000,000 | $ 100,000,000 |
Asset Retirement Obligations (D
| Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
| Mar. 31, 2020 | Mar. 31, 2019 | |
| Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
| Beginning asset retirement obligations | $ 2,164 | |
| Liabilities incurred | 23 | |
| Accretion expense | 44 | $ 54 |
| Divestitures | (10) | |
| Revision of estimates | (2) | |
| Ending asset retirement obligations | $ 2,219 | |
Related Party Transactions (Det
| Related Party Transactions (Details) - USD ($) $ in Millions | Feb. 12, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
| Related Party Transaction [Line Items] | ||||
| Proceeds from sale of interest in oil and gas leases | $ 0.4 | |||
| Flatonia Energy, LLC | ||||
| Related Party Transaction [Line Items] | ||||
| Payments made to related party | $ 3.3 | $ 4.3 | ||
| Payments received from related party | 1 | $ 1.3 | ||
| Amounts receivable from related party | 0.7 | $ 0.6 | ||
| Amounts payable to related party | $ 0.8 | $ 1.1 | ||
| Flatonia Energy, LLC | Class A Common Stock | ||||
| Related Party Transaction [Line Items] | ||||
| Percentage of common stock acquired | 5.90% | |||
| Flatonia Energy, LLC | Common Class A and Common Class B | ||||
| Related Party Transaction [Line Items] | ||||
| Percentage of common stock acquired | 2.70% |
Income Taxes (Details)
| Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
| Mar. 31, 2020 | Mar. 31, 2019 | |
| Income Tax Disclosure [Line Items] | ||
| Income tax expense (benefit) | $ 1,092 | $ (460) |
| Deferred income tax expense (benefit) | 1,092 | (460) |
| Earthstone Energy Holdings, LLC | ||
| Income Tax Disclosure [Line Items] | ||
| Income tax expense (benefit) | 2,900 | 2,900 |
| Deferred income tax expense (benefit) | 400 | 300 |
| Lynden US | ||
| Income Tax Disclosure [Line Items] | ||
| Income tax expense (benefit) | $ 700 | $ 800 |
Goodwill (Details)
| Goodwill (Details) - USD ($) | 3 Months Ended | ||
| Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |||
| Impairment of goodwill | $ 17,620,000 | $ 0 | |
| Accumulated impairment to goodwill | $ 36,700,000 | $ 19,100,000 | |
Uncategorized Items - este-2020
| Label | Element | Value |
| Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 166,000 |
| Noncontrolling Interest [Member] | ||
| Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 99,000 |
| Parent [Member] | ||
| Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 67,000 |
| Retained Earnings [Member] | ||
| Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 67,000 |