Earthstone Energy (ESTE) 10-Q 12 Nov 14 2015 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Sep. 30, 2014	Nov. 11, 2014
Document And Entity Information	'	'
Entity Registrant Name	'EARTHSTONE ENERGY INC	'
Entity Central Index Key	'0000010254	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--03-31	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	1,737,360
Document Fiscal Period Focus	'Q2	'
Document Fiscal Year Focus	'2015	'

Condensed_Consolidated_Balance

Condensed Consolidated Balance Sheets (USD $)	Sep. 30, 2014	Mar. 31, 2014
ASSETS	'	'
Cash and cash equivalents	$2,687,000	$2,671,000
Accounts receivable:	'	'
Oil and gas sales	4,058,000	3,895,000
Joint interest and other receivables net of allowance of ($15,000) at September 30, 2014 and March 31, 2014	321,000	758,000
Other current assets	1,174,000	1,043,000
Total current assets	8,240,000	8,367,000
Oil and gas properties, full cost method:	'	'
Proved properties	71,301,000	67,186,000
Unproved properties	643,000	773,000
Accumulated depletion and impairment	-33,769,000	-31,496,000
Net oil and gas properties	38,175,000	36,463,000
Support equipment and other non-current assets net of accumulated depreciation of ($469,000) and ($514,000), respectively	747,000	791,000
Total non-current assets	38,922,000	37,254,000
Total assets	47,162,000	45,621,000
LIABILITIES AND SHAREHOLDERS' EQUITY	'	'
Accounts payable	1,278,000	430,000
Accrued liabilities	5,220,000	5,243,000
Total current liabilities	6,498,000	5,673,000
Long-term liabilities:	'	'
Long-term debt	7,000,000	9,000,000
Deferred tax liability	4,902,000	4,486,000
Asset retirement obligation, less current portion	2,170,000	2,068,000
Total long-term liabilities	14,072,000	15,554,000
Total liabilities	20,570,000	21,227,000
Shareholders' equity:	'	'
Preferred shares, $0.001 par value, 600,000 authorized and none issued or outstanding	0	0
Common shares, $0.001 par value, 6,400,000 shares authorized and 1,768,000 and 1,753,000 shares issued, respectively	18,000	18,000
Additional paid-in capital	23,525,000	23,436,000
Treasury stock, at cost, 15,000 and 24,000 shares, respectively	-460,000	-458,000
Retained earnings	3,509,000	1,398,000
Total shareholders' equity	26,592,000	24,394,000
Total liabilities and shareholders' equity	$47,162,000	$45,621,000

Condensed_Consolidated_Balance1

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2014	Mar. 31, 2014
Assets:	'	'
Allowance of joint interest and other receivable, net	($15,000)	($15,000)
Accumulated depreciation on support equipment and other non-current assets, net	($469,000)	($514,000)
Shareholders' Equity:	'	'
Preferred stock, par value	$0.00	$0.00
Preferred stock, Authorized	600,000	600,000
Preferred stock, Issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value	$0.00	$0.00
Common stock, Authorized	6,400,000	6,400,000
Common stock, Issued	1,768,000	1,753,000
Treasury stock, shares	15,000	24,000

Condensed_Consolidated_Stateme

Condensed Consolidated Statements of Operations (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues:	'	'	'	'
Oil and gas sales	$5,161,000	$4,627,000	$10,375,000	$8,209,000
Well service and water-disposal revenue	32,000	45,000	56,000	58,000
Total revenues	5,193,000	4,672,000	10,431,000	8,267,000
Expenses:	'	'	'	'
Oil and gas production	1,198,000	868,000	2,217,000	1,703,000
Production tax	500,000	431,000	973,000	740,000
Well service and water-disposal	30,000	19,000	49,000	56,000
Depletion and depreciation	1,185,000	980,000	2,330,000	1,766,000
Accretion of asset retirement obligation	54,000	49,000	107,000	98,000
General and administrative	771,000	659,000	2,029,000	1,352,000
Total expenses	3,738,000	3,006,000	7,705,000	5,715,000
Income from operations	1,455,000	1,666,000	2,726,000	2,552,000
Other income (expense):	'	'	'	'
Interest and other income	5,000	7,000	9,000	15,000
Interest and other expenses	-53,000	-44,000	-114,000	-77,000
Total other income (expense)	-48,000	-37,000	-105,000	-62,000
Income before income tax	1,407,000	1,629,000	2,621,000	2,490,000
Current income tax expense	86,000	43,000	92,000	70,000
Deferred income tax expense	207,000	362,000	418,000	503,000
Total income tax expense	293,000	405,000	510,000	573,000
Net income	$1,114,000	$1,224,000	$2,111,000	$1,917,000
Per share amounts:	'	'	'	'
Basic	$0.65	$0.72	$1.23	$1.12
Diluted	$0.64	$0.72	$1.22	$1.12
Weighted average common shares outstanding:	'	'	'	'
Basic	1,718,964	1,710,445	1,719,003	1,710,445
Diluted	1,728,794	1,710,445	1,727,804	1,710,445

Condensed_Consolidated_Stateme1

Condensed Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:	'	'
Net income	$2,111,000	$1,917,000
Adjustments to reconcile net income to net cash provided by operating activities:	'	'
Depletion and depreciation	2,330,000	1,766,000
Deferred income tax expense	418,000	503,000
Accretion of asset retirement obligation	107,000	98,000
Share-based compensation	89,000	95,000
Amortization of deferred financing costs	8,000	5,000
Change in:	'	'
Accounts receivable, net	274,000	-328,000
Other current assets	-223,000	98,000
Accounts payable, accrued and other liabilities	1,110,000	63,000
Net cash provided by operating activities	6,224,000	4,217,000
Cash flows from investing activities:	'	'
Oil and gas properties	-4,234,000	-7,457,000
Purchases of support equipment and other non-current assets	-37,000	-164,000
Other	65,000	-27,000
Net cash used in investing activities	-4,206,000	-7,648,000
Cash flows from financing activities:	'	'
Repayments on long-term debt	-2,000,000	0
Borrowings on long-term debt	0	4,000,000
Deferred financing fees	0	-5,000
Repurchase of common shares	-2,000	0
Net cash (used in) provided by financing activities	-2,002,000	3,995,000
Cash and cash equivalents:	'	'
Net increase in cash and cash equivalents	16,000	564,000
Cash and cash equivalents, beginning of period	2,671,000	2,180,000
Cash and cash equivalents, end of period	2,687,000	2,744,000
Supplemental disclosure of cash flow information:	'	'
Cash paid for interest	101,000	60,000
Cash paid for income tax	0	1,000
Non-cash:	'	'
Increase in oil and gas property due to asset retirement obligation	20,000	63,000
Accrued capital expenditures	0	2,193,000
Prepaid capital expenditures	$35,000	$0

1_Basis_of_Presentation

1. Basis of Presentation	6 Months Ended
	Sep. 30, 2014
Accounting Policies [Abstract]	'
1. Basis of Presentation	'
	The accompanying interim financial statements of Earthstone Energy, Inc. (formerly Basic Earth Science Systems, Inc.) are unaudited.  However, in the opinion of management, the interim data includes any applicable adjustments necessary for a fair presentation of the financial and operational results for the interim period according to generally accepted accounting principles in the United States of America (“U.S. GAAP”).
	At the directive of the Securities and Exchange Commission ("SEC") to use “plain English” in public filings, the Company will use such terms as “we,” “our,” “us” or “the Company” in place of Earthstone Energy, Inc. and its wholly-owned subsidiary.  When such terms are used in this manner throughout the notes to the unaudited condensed consolidated financial statements, they are in reference only to the corporation, Earthstone Energy, Inc. and its subsidiaries, and are not used in reference to the Board of Directors, corporate officers, management, or any individual employee or group of employees.
	The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the SEC.  Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.  We believe the disclosures made are adequate to make the information not misleading and suggest that these financial statements be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the previous fiscal year-end.
	Further, the results of operations for the three and six months covered by this report, are not necessarily indicative of the operating results that may be expected for the full fiscal year.
	Pending Strategic Combination.  On May 15, 2014, the Company and Oak Valley Resources, LLC ("Oak Valley"), entered into an Exchange Agreement (the "Exchange Agreement"). The Exchange Agreement provides that upon the terms and subject to the conditions set forth in the Exchange Agreement, Oak Valley will contribute to the Company the membership interests of its three subsidiaries, each a limited liability company, inclusive of producing assets, undeveloped acreage and an estimated $142.5 million in cash and contractually obligated capital contributions, in exchange for the issuance of approximately 9.1 million shares of the Company's common stock ("Common Stock") to Oak Valley (the "Exchange"). Following the Exchange, current Earthstone stockholders will own 16% of the Company's outstanding Common Stock and Oak Valley will own 84% of the Company's outstanding Common Stock. The Exchange Agreement has been approved by the Board of Directors of Earthstone and the board of managers of Oak Valley. Following the execution of the Exchange Agreement, Oak Valley brought a proposed acquisition to Earthstone that would increase the combined Company’s interest in Oak Valley’s principal operated properties (the “Flatonia contribution”). After consideration and approval by the Earthstone Board of Directors, a contribution agreement relating to the Flatonia contribution was entered into on October 16, 2014. The consideration for the Flatonia contribution, which is subject to Earthstone stockholder approval and conditioned on the closing of the Exchange, is the issuance of 21.4% of the outstanding shares of Earthstone common stock after giving effect to the exchange and the Flatonia contribution, approximately 2.95 million shares. After giving effect to the two transactions, the existing stockholders of Earthstone will own 12.6%, Oak Valley will own 66.0%, and Flatonia Energy LLC, the contributing party in the Flatonia contribution (“Flatonia”), will own 21.4%, respectively, of Earthstone.
	Pending closing of the Exchange, the Company has agreed in the Exchange Agreement to various covenants and restrictions related to the conduct of its business including, among others (i) to conduct its business in the ordinary course consistent with past practices, (ii) to retain the services of its present officers and key employees, (iii) to use commercially reasonable efforts to comply, in all material respects, with applicable laws and material contracts, (iv) not to issue, sell, grant, dispose of, accelerate or modify, as appropriate, any of its securities, (v) not to redeem, purchase or acquire any of its outstanding securities, except in connection with vesting, settlement of, forfeiture of, or tax withholding with respect to, any equity or equity-based awards granted under any Company equity plan that is outstanding as of the date of the Exchange Agreement, (vi) not to incur, refinance or assume any indebtedness for borrowed money other than borrowings under the Company's existing credit facility, (viii) not to sell, transfer, lease, farmout or otherwise dispose of any of the Company's properties with a fair market value in excess of $1 million, (ix) not to make any unbudgeted capital expenditure(s) in excess of $5 million without the consultation and consent of Oak Valley, which consent shall not be unreasonably withheld, delayed or conditioned, or except as may be reasonably required to conduct emergency operations, repairs or replacements on any well, pipeline or other facility, or (x) not to (A) materially increase the compensation of any executive officer, (B) pay any bonus or incentive compensation, (C) grant any new equity or non-equity based compensation award, except as required by applicable law or any employee benefit plans. The Company does not anticipate that the subject covenants and restrictions agreed to in the Exchange Agreement will materially interfere with, change, alter or otherwise impact the Company's ongoing continuing activities over the next several months until the Exchange is consumated or otherwise terminated.
	The foregoing descriptions of the Exchange Agreement, the Exchange, and the Flatonia contribution do not purport to be complete and are qualified in their entirety by the other terms and provisions of the Exchange Agreement, copies of which are attached to the Current Report on Form 8-K as filed by the Company with the SEC on May 16, 2014 and October 17, 2014. Copies of these subject Form 8-Ks can be obtained by accessing the SEC's website at http://www.sec.gov.
	Fair Value Measurements.  Financial instruments and nonfinancial assets and liabilities, whether measured on a recurring or non-recurring basis, are recorded at fair value.  A fair value hierarchy, established by the Financial Accounting Standards Board (“FASB”), prioritizes the inputs used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
	The Company’s financial instruments consist of cash and cash equivalents, trade receivables, trade payables, accrued liabilities, and long-term debt, all of which are considered to be representative of their fair market value, due to the short-term highly liquid nature and/or the floating interest rate structure of these instruments.
	Use of Estimates.  The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  These estimates and assumptions concern matters that are inherently uncertain.  Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary.  Actual results could differ from those estimates.
	Recent Accounting Pronouncements. In July 2013, the FASB issued, ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”).  ASU 2013-11 addresses the diversity in practice that exists for the balance sheet presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. ASU No. 2013-11 was effective for the Company’s fiscal quarter ending June 30, 2014. ASU 2013-11 impacts balance sheet presentation only. The impact of the new rule is not material.

2_Earnings_Per_Share

2. Earnings Per Share	6 Months Ended
	Sep. 30, 2014
Per share amounts:	'
2. Earning Per Share	'
	Basic earnings per share attributable to Earthstone shareholders is computed by dividing net income attributable to Earthstone shareholders by the weighted average number of common shares outstanding during the period.  Diluted earnings per share attributable to Earthstone shareholders is computed by dividing the net income attributable to Earthstone shareholders by the weighted average number of common shares outstanding during the period adjusted to include the effects of potentially dilutive securities.  Potentially dilutive securities include incremental shares issuable upon the vesting of common shares issued to the employees and directors of Earthstone.
	The amounts used in computing earnings per share and the effects of potentially dilutive securities on the weighted average number of common shares were as follows:
		Three Months Ended				Six Months Ended
		9/30/14		9/30/13		9/30/14		9/30/13
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
	Net income attributable to Earthstone
	Energy, Inc. shareholders	$	1,114,000	$	1,224,000	$	2,111,000	$	1,917,000
	Weighted average number of shares
	used in basic earnings per share		1,718,964		1,710,445		1,719,003		1,710,445
	Effects of dilutive securities:
	Unvested common shares *		9,830		-		8,801		-
	Weighted average number of shares
	used in diluted earnings per share		1,728,794		1,710,445		1,727,804		1,710,445
	Basic earnings per share attributable to
	Earthstone Energy, Inc. shareholders	$	0.65	$	0.72	$	1.23	$	1.12
	Diluted earnings per share attributable to
	Earthstone Energy, Inc. shareholders	$	0.64	$	0.72	$	1.22	$	1.12
	* As of September 30, 2013, we have excluded unvested common shares outstanding from the calculation of diluted earnings per share, as the inclusion of these shares would have been anti-dilutive.

3_Other_Current_Assets

3. Other Current Assets	6 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
3. Other Current Assets	'
		9/30/14		3/31/14
		(Unaudited)
	Drilling and completion cost prepayments	$	543,000	$	223,000
	Prepaid income tax		289,000		379,000
	Lease and well equipment inventory		253,000		310,000
	Other current assets		49,000		40,000
	Prepaid insurance premiums		40,000		91,000
	Total other current assets	$	1,174,000	$	1,043,000

4_Accrued_Liabilities

4. Accrued Liabilities	6 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
4. Accrued Liabilities	'
		9/30/14		3/31/14
		(Unaudited)
	Accrued operations payable	$	4,227,000	$	4,209,000
	Accrued compensation		341,000		317,000
	Short-term asset retirement obligation		291,000		411,000
	Accrued income tax payable and other		221,000		180,000
	Revenue and production taxes payable		140,000		126,000
	Total accrued liabilities	$	5,220,000	$	5,243,000

5_Oil_and_Gas_Properties

5. Oil and Gas Properties	6 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
5. Oil and Gas Properties	'
		9/30/14			3/31/14
		(Unaudited)
	Proved properties	$	71,301,000		$	67,186,000
	Unproved properties		643,000			773,000
	Less accumulated depletion and impairment		(33,769,000	)		(31,496,000	)
	Net oil and gas properties	$	38,175,000		$	36,463,000
	As of September 30, 2014, the Company has recorded $71,301,000 as proved property costs.  As of March 31, 2014, the Company had recorded $67,186,000 as proved property costs.  Additions of $3,985,000 have been recorded during the six months ended September 30, 2014, and included in these additions are $3,916,000 related to intangible drilling and completion costs and tangible drilling and completion costs. Of the total additions recorded during the six months ended September 30, 2014, 80% relate to our work in North Dakota.
	As of September 30, 2014, the Company has recorded $643,000 as unproved property costs.  As of March 31, 2014, the Company had recorded $773,000 as unproved property costs.  For the six months ended September 30, 2014, the Company recorded additional unproved property costs of $29,000 related to wells in progress.  During the six months ended September 30, 2014, $50,000 in well costs and $54,000 in costs related to acreage were transferred from unevaluated to depletable properties.  In addition, there were leased acreage expirations of approximately $55,000.

6_Long_Term_Debt

6. Long Term Debt	6 Months Ended
	Sep. 30, 2014
Debt Disclosure [Abstract]	'
6. Long Term Debt	'
	During the six months ended September 30, 2014, the Company repaid $2 million of the outstanding balance on its credit facility.  As of September 30, 2014, the Company had an outstanding balance under the Credit Facility of $7 million.

7_Income_Tax

7. Income Tax	6 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
7. Income Tax	'
	The provision for income tax is comprised of:
		Three Months Ended						Six Months Ended
		September 30,						September 30,
		2014			2013			2014			2013
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	Current:
	Federal	$	77,000		$	35,000		$	79,000		$	55,000
	State		9,000			8,000			13,000			15,000
	Total current income tax		86,000			43,000			92,000			70,000
	Deferred:
	Federal		197,000			342,000			397,000			475,000
	State		10,000			20,000			21,000			28,000
	Total deferred income tax		207,000			362,000			418,000			503,000
	Income tax expense	$	293,000		$	405,000		$	510,000		$	573,000
	A reconciliation between the income tax provision at the statutory rate on income tax and the income tax provision for the three and six months ended is as follows:
		Three Months Ended						Six Months Ended
		September 30,						September 30,
		2014			2013			2014			2013
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	Federal tax at statutory rate	$	478,000		$	555,000		$	891,000		$	847,000
	State taxes, net of federal benefit		14,000			23,000			26,000			32,000
	Excess percentage depletion		(200,000	)		(175,000	)		(403,000	)		(310,000	)
	Other adjustments, net		1,000			2,000			(4,000	)		4,000
	Income tax expense	$	293,000		$	405,000		$	510,000		$	573,000
	Effective rate expressed as a percentage
	of income before income tax		20.8	%		24.9	%		19.5	%		23	%
	The overall effective tax rate expressed as a percentage of book income before income tax for the current three and six month periods, as compared to the same periods in the prior year, was lower due to an increase in the deduction for excess percentage depletion related to an increase in annualized oil and gas sales.
	Net deferred tax assets and liabilities were comprised of:	September 30,			March 31,
		2014			2014
		(Unaudited)
	Deferred tax assets:
	Statutory depletion carry-forward	$	2,466,000		$	2,190,000
	Net operating loss carry-forward		14,000			-
	Other accruals		67,000			103,000
	Allowance for doubtful accounts		5,000			5,000
	Gross deferred tax assets		2,552,000			2,298,000
	Deferred tax liabilities:
	Depletion, depreciation and intangible drilling costs		(7,454,000	)		(6,784,000	)
	Gross deferred tax liabilities		(7,454,000	)		(6,784,000	)
	Deferred tax liabilities, net	$	(4,902,000	)	$	(4,486,000	)
	Projections of future income taxes and their timing require significant estimates with respect to future operating results.  Accordingly, deferred taxes may change significantly as more information and data is gathered with respect to such events as changes in commodity prices, their effect on the estimate of oil and gas reserves and the depletion of these long-lived reserves.
	The Company is subject to U.S. federal income tax and income tax from multiple state jurisdictions.
	The Company's federal income tax returns for the prior three tax years of filings and state income tax returns for the prior four years of tax filings are still subject to examination by tax authorities.

1_Summary_of_Significant_Accou

1. Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Sep. 30, 2014
Accounting Policies [Abstract]	'
Fair Value Measurements	'
	Financial instruments and nonfinancial assets and liabilities, whether measured on a recurring or non-recurring basis, are recorded at fair value.  A fair value hierarchy, established by the Financial Accounting Standards Board (“FASB”), prioritizes the inputs used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
	The Company’s financial instruments consist of cash and cash equivalents, trade receivables, trade payables, accrued liabilities, and long-term debt, all of which are considered to be representative of their fair market value, due to the short-term highly liquid nature and/or the floating interest rate structure of these instruments.
Use of Estimates	'
	The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions concern matters that are inherently uncertain.  Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary. Actual results could differ from those estimates.
Recent Accounting Pronouncements	'
	In July 2013, the FASB issued, ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”).  ASU 2013-11 addresses the diversity in practice that exists for the balance sheet presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. ASU No. 2013-11 was effective for the Company’s fiscal quarter ending June 30, 2014. ASU 2013-11 impacts balance sheet presentation only. The impact of the new rule is not material.

2_Earnings_Per_Share_Tables

2. Earnings Per Share (Tables)	6 Months Ended
	Sep. 30, 2014
Earnings Per Share Tables	'
Amounts used in computing earnings per share and the effects of potentially dilutive securities	'
		Three Months Ended				Six Months Ended
		9/30/14		9/30/13		9/30/14		9/30/13
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
	Net income attributable to Earthstone
	Energy, Inc. shareholders	$	1,114,000	$	1,224,000	$	2,111,000	$	1,917,000
	Weighted average number of shares
	used in basic earnings per share		1,718,964		1,710,445		1,719,003		1,710,445
	Effects of dilutive securities:
	Unvested common shares *		9,830		-		8,801		-
	Weighted average number of shares
	used in diluted earnings per share		1,728,794		1,710,445		1,727,804		1,710,445
	Basic earnings per share attributable to
	Earthstone Energy, Inc. shareholders	$	0.65	$	0.72	$	1.23	$	1.12
	Diluted earnings per share attributable to
	Earthstone Energy, Inc. shareholders	$	0.64	$	0.72	$	1.22	$	1.12
	* As of September 30, 2013, we have excluded unvested common shares outstanding from the calculation of diluted earnings per share, as the inclusion of these shares would have been anit-dilutive.

3_Other_Current_Assets_Tables

3. Other Current Assets (Tables)	6 Months Ended
	Sep. 30, 2014
Other Current Assets Tables	'
Other Current Assets	'
		9/30/14		3/31/14
		(Unaudited)
	Drilling and completion cost prepayments	$	543,000	$	223,000
	Prepaid income tax		289,000		379,000
	Lease and well equipment inventory		253,000		310,000
	Other current assets		49,000		40,000
	Prepaid insurance premiums		40,000		91,000
	Total other current assets	$	1,174,000	$	1,043,000

4_Accrued_Liabilities_Tables

4. Accrued Liabilities (Tables)	6 Months Ended
	Sep. 30, 2014
Accrued Liabilities Tables	'
Accrued Liabilities	'
		9/30/14		3/31/14
		(Unaudited)
	Accrued operations payable	$	4,227,000	$	4,209,000
	Accrued compensation		341,000		317,000
	Short-term asset retirement obligation		291,000		411,000
	Accrued income tax payable and other		221,000		180,000
	Revenue and production taxes payable		140,000		126,000
	Total accrued liabilities	$	5,220,000	$	5,243,000

5_Oil_And_Gas_Properties_Table

5. Oil And Gas Properties (Tables)	6 Months Ended
	Sep. 30, 2014
Oil And Gas Properties Tables	'
Oil and Gas Properties	'
		9/30/14			3/31/14
		(Unaudited)
	Proved properties	$	71,301,000		$	67,186,000
	Unproved properties		643,000			773,000
	Less accumulated depletion and impairment		(33,769,000	)		(31,496,000	)
	Net oil and gas properties	$	38,175,000		$	36,463,000

6_Income_Tax_Tables

6. Income Tax (Tables)	6 Months Ended
	Sep. 30, 2014
Income Tax Tables	'
Provision for income tax	'
		Three Months Ended						Six Months Ended
		September 30,						September 30,
		2014			2013			2014			2013
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	Current:
	Federal	$	77,000		$	35,000		$	79,000		$	55,000
	State		9,000			8,000			13,000			15,000
	Total current income tax		86,000			43,000			92,000			70,000
	Deferred:
	Federal		197,000			342,000			397,000			475,000
	State		10,000			20,000			21,000			28,000
	Total deferred income tax		207,000			362,000			418,000			503,000
	Income tax expense	$	293,000		$	405,000		$	510,000		$	573,000
Reconciliation between the income tax provision at the statutory rate on income tax and the income tax provision	'
		Three Months Ended						Six Months Ended
		September 30,						September 30,
		2014			2013			2014			2013
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	Federal tax at statutory rate	$	478,000		$	555,000		$	891,000		$	847,000
	State taxes, net of federal benefit		14,000			23,000			26,000			32,000
	Excess percentage depletion		(200,000	)		(175,000	)		(403,000	)		(310,000	)
	Other adjustments, net		1,000			2,000			(4,000	)		4,000
	Income tax expense	$	293,000		$	405,000		$	510,000		$	573,000
	Effective rate expressed as a percentage
	of income before income tax		20.8	%		24.9	%		19.5	%		23	%
Net deferred tax assets and liabilities	'
	Net deferred tax assets and liabilities were comprised of:	September 30,			March 31,
		2014			2014
		(Unaudited)
	Deferred tax assets:
	Statutory depletion carry-forward	$	2,466,000		$	2,190,000
	Net operating loss carry-forward		14,000			-
	Other accruals		67,000			103,000
	Allowance for doubtful accounts		5,000			5,000
	Gross deferred tax assets		2,552,000			2,298,000
	Deferred tax liabilities:
	Depletion, depreciation and intangible drilling costs		(7,454,000	)		(6,784,000	)
	Gross deferred tax liabilities		(7,454,000	)		(6,784,000	)
	Deferred tax liabilities, net	$	(4,902,000	)	$	(4,486,000	)

2_Earnings_Per_Share_Details

2. Earnings Per Share (Details) (USD $)	3 Months Ended				6 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Earnings Per Share Details	'		'		'		'
Net income attributable to Earthstone Energy, Inc. Shareholders	$1,114,000		$1,224,000		$2,111,000		$1,917,000
Weighted average number of shares used in basic earnings per share	1,718,964		1,710,445		1,719,003		1,710,445
Effects of dilutive securities:	'		'		'		'
Unvested common shares*	$9,830	[1]	$0	[1]	$8,801	[1]	$0	[1]
Weighted average number of shares used in diluted earnings per share	1,728,794		1,710,445		1,727,804		1,710,445
Basic earnings per share attributable to Earthstone Energy, Inc. Shareholders	$0.65		$0.72		$1.23		$1.12
Diluted earnings per share attributable to Earthstone Energy, Inc. Shareholders	$0.64		$0.72		$1.22		$1.12
[1]	*As of September 30, 2013, we have excluded unvested common shares outstanding from the calculation of diluted earnings per share, as the inclusion of these shares would have been anti-dilutive.

3_Other_Current_Assets_Details

3. Other Current Assets (Details) (USD $)	Sep. 30, 2014	Mar. 31, 2014
Other Current Assets Details	'	'
Drilling and completion cost prepayments	$543,000	$223,000
Prepaid income tax	289,000	379,000
Lease and well equipment inventory	253,000	310,000
Other current assets	49,000	40,000
Prepaid insurance premiums	40,000	91,000
Total other current assets	$1,174,000	$1,043,000

4_Accrued_Liabilities_Details

4. Accrued Liabilities (Details) (USD $)	Sep. 30, 2014	Mar. 31, 2014
Accrued Liabilities Details	'	'
Accrued operations payable	$4,227,000	$4,209,000
Accrued compensation	341,000	317,000
Short-term asset retirement obligation	291,000	411,000
Accrued income tax payable and other	221,000	180,000
Revenue and production taxes payable	140,000	126,000
Total accrued liabilities	$5,220,000	$5,243,000

5_Oil_and_Gas_Properties_Detai

5. Oil and Gas Properties (Details) (USD $)	Sep. 30, 2014	Mar. 31, 2014
Oil And Gas Properties Details	'	'
Proved properties	$71,301,000	$67,186,000
Unproved properties	643,000	773,000
Less accumulated depletion and impairment	-33,769,000	-31,496,000
Net oil and gas properties	$38,175,000	$36,463,000

6_Long_Term_Debt_Details_Narra

6. Long Term Debt (Details Narrative) (USD $)	6 Months Ended
	Sep. 30, 2014
Long Term Debt Details Narrative	'
Repayment of Outstanding balance on credit facility	$2,000,000
Outstanding balance on credit facility	$7,000,000

7_Income_Tax_Details

7. Income Tax (Details) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Current:	'	'	'	'
Federal	$77,000	$35,000	$79,000	$55,000
State	9,000	8,000	13,000	15,000
Total current income tax	86,000	43,000	92,000	70,000
Deferred:	'	'	'	'
Federal	197,000	342,000	397,000	475,000
State	10,000	20,000	21,000	28,000
Total deferred income tax	207,000	362,000	418,000	503,000
Income tax expense	$293,000	$405,000	$510,000	$573,000

7_Income_Tax_Details_1

7. Income Tax (Details 1) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Tax Details 1	'	'	'	'
Federal tax at statutory rate	$478,000	$555,000	$891,000	$847,000
State taxes, net of federal benefit	14,000	23,000	26,000	32,000
Excess percentage depletion	-200,000	-175,000	-403,000	-310,000
Other adjustments, net	1,000	2,000	-4,000	4,000
Income tax expense	$293,000	$405,000	$510,000	$573,000
Effective rate expressed as a percentage of income before income tax	20.80%	24.90%	19.50%	23.00%

7_Income_Tax_Details_2

7. Income Tax (Details 2) (USD $)	Sep. 30, 2014	Mar. 31, 2014
Deferred tax assets:	'	'
Statutory depletion carry-forward	$2,466,000	$2,190,000
Net operating loss carry-forward	14,000	0
Other accruals	67,000	103,000
Allowance for doubtful accounts	5,000	5,000
Gross deferred tax assets	2,552,000	2,298,000
Deferred tax liabilities:	'	'
Depletion, depreciation and intangible drilling costs	-7,454,000	-6,784,000
Gross deferred tax liabilities	-7,454,000	-6,784,000
Deferred tax liabilities, net	($4,902,000)	($4,486,000)