Net Income (Loss) Per Common Share

6 Months Ended

Jun. 30, 2022

Net Income (Loss) Per Common ShareNet 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 June 30,				Six Months Ended June 30,
(In thousands, except per share amounts)	2022		2021		2022		2021
Net income (loss) attributable to Earthstone Energy, Inc.	$	144,885	$	(8,871)	$	111,407	$	(14,704)

Net income (loss) attributable to Earthstone Energy, Inc. from assumed conversion of Series A Preferred Stock (2)	4,351		—		4,351		—

Net income (loss) attributable to Earthstone Energy, Inc. - Diluted	$	149,236	$	(8,871)	$	115,758	$	(14,704)

Net income (loss) per common share attributable to Earthstone Energy, Inc.:
Basic	$	1.85	$	(0.20)	$	1.57	$	(0.34)
Diluted	$	1.46	$	(0.20)	$	1.37	$	(0.34)

Weighted average common shares outstanding
Basic	78,291,037		44,127,718		70,909,353		43,457,043
Add potentially dilutive securities:
Unvested restricted stock units (1)	493,600		—		506,760		—
Unvested performance units (1)	2,003,778		—		1,979,770		—
Series A Preferred Stock (2)	21,621,621		—		10,870,539		—
Diluted weighted average common shares outstanding	102,410,036		44,127,718		84,266,422		43,457,043

(1)For the three and six months ended June 30, 2022 and 2021, the 1,099,800 performance units granted on January 27, 2021 were excluded due to an assumed settlement in cash and the liability treatment described in Note 9. Stock-Based Compensation. For the three and six months ended June 30, 2021, there were no dilutive effects related to unvested restricted stock units or performance units due to the losses for those periods.

(2)On April 14, 2022, Earthstone issued 280,000 shares of Series A Convertible Preferred Stock which automatically converted into 25,225,225 shares of Class A Common Stock on July 6, 2022. Under the “If-Converted” method, the shares would have been assumed issued on April 14, 2022 which would have resulted in an additional allocation of Net income (loss) attributable to Earthstone Energy, Inc. of $4.4 million for both the three and six months ended June 30, 2022.

The Class B Common Stock, par value $0.001 per share of Earthstone (the “Class B Common Stock” and with the Class A Common Stock, the “Common Stock”) has been excluded, as its conversion would eliminate noncontrolling interest and net income attributable to noncontrolling interest of $73.1 million for the three months ended June 30, 2022 and net income attributable to noncontrolling interest of $54.7 million for the six months ended June 30, 2022 would be added back to Net income attributable to Earthstone Energy, Inc. for the periods then ended, having no dilutive effect on Net income per common share attributable to Earthstone Energy, Inc.

The Class B Common Stock has been excluded, as its conversion would eliminate noncontrolling interest and net loss attributable to noncontrolling interest of $7.0 million for the three months ended June 30, 2021 and net loss attributable to noncontrolling interest of $11.7 million for the six months ended June 30, 2021 would be added back to Net loss attributable to Earthstone Energy, Inc. for the periods then ended, having no dilutive effect on Net loss per common share attributable to Earthstone Energy, Inc.