Permian Resources Corporation (NYSE:PR) entered into a letter of intent to acquire Earthstone Energy, Inc. (NYSE:ESTE) from EnCap Capital Energy Fund XI, L.P, managed by EnCap Investments L.P. and others on June 5, 2023. Permian Resources Corporation (NYSE:PR) entered into a definitive agreement to acquire Earthstone Energy, Inc. (NYSE:ESTE) from EnCap Capital Energy Fund XI, L.P, managed by EnCap Investments L.P. and others for approximately $2.7 billion on August 21, 2023. The all-stock transaction will consist of 1.446 shares of Permian Resources common stock for each share of Earthstone common stock, representing an implied value to each Earthstone stockholder of $18.64 per share based on the closing price of Permian Resources common stock on August 18, 2023. Permian Resources will issue approximately 211 million shares of common stock in the transaction. After closing, existing Permian Resources shareholders will own approximately 73% of the combined company and existing Earthstone shareholders will own approximately 27% of the combined company. Upon closing of the transaction, Permian Resources? Board of Directors will be expanded to consist of eleven directors, including the addition of two representatives from Earthstone. Permian Resources? executive management team will lead the combined company with the headquarters remaining in Midland, Texas. The merger agreement requires Permian Resources to pay Earthstone a termination fee of $175 million if certain condition are fulfilled. The merger agreement requires Earthstone to pay Permian Resources a termination fee of $87.5 million if certain condition are fulfilled.

The transaction is subject to customary closing conditions, regulatory approvals, antitrust review, registration statement on Form S-4, approval for listing of the shares of Permian Resources class A common stock, delisting of Earthstone shares and shareholder approvals. The transaction has been unanimously approved by the Boards of Directors of both Permian Resources and Earthstone and is expected to close by year-end 2023. As on September 19, 2023, SEC has communicated that it has not reviewed and will not review the proxy statement and now the transaction is expected to close on November 1, 2023. Permian Resources? and Earthstone?s largest shareholders, which currently own approximately 49% and 48% of each respective company?s outstanding shares, have executed a Voting and Support Agreement in connection with the transaction. As per filling on October 3, 2023, Earthstone Energy announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The expiration of the HSR Act waiting period occurred at 11:59 p.m. EDT on October 2, 2023. As of October 30, 2023, the transaction has been approved by the Permian Resources and Earthstone shareholders.

Jefferies LLC and Morgan Stanley & Co. LLC are serving as co-lead financial advisors and Sean T. Wheeler, Debbie P. Yee, Camille Walker, Emily Lichtenheld, Michael W. Rigdon, J. Robert Fowler, Will Bos, David Wheat and William Dong of Kirkland & Ellis LLP is serving as legal advisor to Permian Resources. RBC Capital Markets, LLC and Wells Fargo Securities LLC are serving as financial advisors and; Doug McWilliams, Lande Spottswood, Thomas Zentner, John Grand, Sarah Mitchell Lina Dimachkieh, Sean Becker, John Lynch, Hill Wellford, James Longhofer, Matt Dobbins, counsels Allyson Seger, Regina Ibarra, Evan Miller of Vinson & Elkins L.L.P. serving as legal advisors to Earthstone. Stuart Rogers of Alston & Bird represented Morgan Stanley & Co. LLC as financial advisor to Permian Resources Corporation (NYSE:PR). Morrow Sodali LLC acted as information agent to Permian Resources and Earthstone Energy. Continental Stock Transfer & Trust Company acted as transfer agent to Permian Resources and Direct Transfer, LLC acted as transfer agent to Earthstone. Permian Resources has agreed to pay Morgan Stanley a fee for its services of $10 million. Earthstone Energy has agreed to pay RBC Capital Markets a fee for its services of $17.5 million. Permian Resources has agreed to pay Morrow & Co., LLC a fee for its services of up to $0.020 million. O'Melveny & Myers represented RBC Capital Markets, LLC as financial advisor to Earthstone Energy, Inc.

Permian Resources Corporation (NYSE:PR) completed the acquisition of Earthstone Energy, Inc. from EnCap Capital Energy Fund XI, L.P, managed by EnCap Investments L.P. and others on November 1, 2023.