Related Party Transactions

3 Months Ended

Mar. 31, 2021

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.

Earthstone's significant shareholder consists of various investment funds managed by a private equity firm who may manage other investments in entities with which the Company interacts in the normal course of business (the “Significant Shareholder”). 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 the Significant Shareholder (not under common control) for cash consideration of approximately $0.4 million.

In connection with the Olenik v. Lodzinski et al. lawsuit described below in Note 13. Commitments and Contingencies, the significant shareholder was also named in the lawsuit. As a result of the Settlement Agreement (defined below), the Company has concluded negotiations with its insurance carrier regarding an allocation of defense costs and settlement contributions above its deductible for all the parties named in the lawsuit. In connection with the Court approved Settlement, the significant shareholder was billed approximately $1.1 million and this amount has been reimbursed as of March 31, 2021.

As discussed in Note 4. Acquisitions, on March 31, 2021, the Company entered into the Tracker/Sequel Purchase Agreements. Pursuant to the Tracker/Sequel Purchase Agreements, the Company will acquire the Tracker Assets for a purchase price of $29.6 million in cash and 4.7 million shares of the Company’s Class A Common Stock. The Significant Shareholder owns approximately 49% of Tracker and is expected to receive approximately 49% of the Tracker purchase price.