Imperial Capital Raises Price Target on Earthstone Energy (ESTE) to $22

Imperial Capital reiterated an Outperform rating on Earthstone Energy (NYSE: ESTE), and raised the price target to $22.00 (from $20.00). Imperial highlighted ESTE’s decision to preserve its balance sheet and maximize shareholder value by pursuing an Austin Chalk drilling program to HBP the majority of its Eagle Ford acreage, while preserving its Eagle Ford potential for higher commodity prices.

Analyst Kim Pacanovsky commented, "We are maintaining our Outperform rating on ESTE shares and are raising our one-year price target to $22 from $20, about 24% above the recent share price. With a continued challenging crude oil environment, we highlight ESTE’s decision to preserve its balance sheet and maximize shareholder value by pursuing an Austin Chalk drilling program to HBP the majority of its Eagle Ford acreage, while preserving its Eagle Ford potential for higher commodity prices. With its $45mn net cash position and $68.8mn of availability on its revolver (and our current estimate of a 2016 capex budget of $28mn), ESTE remains nimble to adjust operations to swings in the commodity environment without impairing its balance sheet. Its recent outperformance among its small cap peers leads to our confidence that ESTE can better withstand the latest slide in commodity prices. In 2016, we expect that ESTE will be able to maintain its 4Q15 production exit rate, live within its cash flow, and continue to add bolt-on acreage to its Eagle Ford position, with a sizeable acquisition in the Eagle Ford or Permian still a possibility."

For an analyst ratings summary and ratings history on Earthstone Energy click here. For more ratings news on Earthstone Energy click here.

Shares of Earthstone Energy closed at $17.75 yesterday.

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