Common Stock and Preferred Stock

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Common Stock and Preferred Stock

Common Stock and Preferred Stock

Class A Common Stock

At December 31, 2022 and 2021, there were 105,547,139 and 53,467,307 shares of Class A Common Stock issued and outstanding, respectively. During the year ended December 31, 2022, Earthstone issued a total of approximately 28.9 million shares of Class A Common Stock in connection with the Chisholm Acquisition, Bighorn Acquisition and the Titus Acquisition, as well as approximately 25.2 million shares of Class A Common Stock upon conversion of the Series A Convertible Preferred Stock described below. During the year ended December 31, 2021, Earthstone issued a total of approximately 21.5 million shares of Class A Common Stock in connection with the IRM Acquisition, Tracker/Sequel Acquisitions and the Foreland Acquisition. No shares were issued in connection with acquisitions during 2020. During the years ended December 31, 2022, 2021 and 2020, as a result of the vesting and settlement of restricted stock units under the Earthstone Amended and Restated 2014 Long-Term Incentive Plan, as amended (the “2014 Plan”), Earthstone issued 1,273,795, 1,381,825 and 914,905 shares of Class A Common Stock, respectively, of which 429,547, 453,483 and 243,924 shares of Class A Common Stock, respectively, were retained as treasury stock and cancelled to satisfy the related employee income tax liability.

On October 11, 2022, Earthstone purchased and immediately cancelled 3,000,000 shares of Class A Common Stock from certain affiliates of Warburg Pincus LLC (“Warburg”) in a private transaction, for an aggregate purchase price of $43,740,000, or $14.58 per share.

Class B Common Stock

At December 31, 2022 and 2021, there were 34,259,641 and 34,344,532 shares of Class B Common Stock issued and outstanding, respectively. Each share of Class B Common Stock, together with one EEH Unit, is convertible into one share of Class A Common Stock. During the years ended December 31, 2022, 2021 and 2020, 84,891, 664,839 and 251,309 shares, respectively, of Class B Common Stock and EEH Units were exchanged for an equal number of shares of Class A Common Stock.

Series A Convertible Preferred Stock

On January 30, 2022, Earthstone entered into a securities purchase agreement (the “SPA”) with EnCap Energy Capital Fund XI, L.P. (“EnCap Fund XI”), an affiliate of EnCap Investments L.P. (“EnCap”), and Cypress Investments, LLC, a fund managed by Post Oak Energy Capital, LP (“Post Oak” and collectively with EnCap Fund XI, the “Investors”) to sell, in a private placement (the “Private Placement”), 280,000 shares of newly authorized convertible preferred stock, $0.001 par value per share (the “Series A Convertible Preferred Stock”), each share of which would be convertible into 90.0900900900901 shares of Class A Common Stock for anticipated gross proceeds of $280.0 million, at a price of $1,000.00 per share of Series A Convertible Preferred Stock (or $11.10 per share of Class A Common Stock on an as-converted basis). The Private Placement was contingent upon the closing of the Bighorn Acquisition. The Company used the net proceeds from the sale of the Series A Convertible Preferred Stock to partially fund the Bighorn Acquisition. See Note 14. Related Party Transactions for further discussion.

On April 14, 2022, Earthstone, EnCap Fund XI and Cypress consummated the sale and issuance of 280,000 shares of Series A Convertible Preferred Stock pursuant to the SPA in exchange for cash proceeds of $279.3 million, net of offering costs.

On July 6, 2022, the Series A Convertible Preferred Stock automatically converted into 25,225,225 shares of Class A Common Stock. As such, the Series A Convertible Preferred Stock is no longer outstanding and the Investors were issued the 25,225,225 shares of Class A Common Stock upon the conversion of the Series A Convertible Preferred Stock.

On July 15, 2022, Earthstone filed a certificate of elimination with the Secretary of State of the State of Delaware eliminating all provisions of the certificate of designations previously filed by Earthstone with the Secretary of State of the State of Delaware on April 13, 2022 related to the Series A Convertible Preferred Stock.

At December 31, 2022 and 2021, there were no shares of Series A Convertible Preferred Stock issued or outstanding.