Organization and Basis of Presentation

12 Months Ended

Dec. 31, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Note 1. – Organization and Basis of Presentation

Earthstone Energy, Inc. (together with our consolidated subsidiaries, the “Company,” “our,” “we,” “us,” “Earthstone” or similar terms), a Delaware corporation, is a growth-oriented independent oil and natural gas development and production company. In addition, the Company is active in corporate mergers and the acquisition of oil and natural gas properties that have production and future development opportunities. Our operations are all in the up-stream segment of the oil and natural gas industry and all our properties are onshore in the United States.

Oak Valley Resources, LLC (“OVR”) is a Delaware limited liability company formed on December 14, 2012. On December 19, 2014, the Company acquired three operating subsidiaries of OVR, in exchange for shares of Earthstone common stock (the “Exchange”). Prior to the Exchange, OVR was an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas and natural gas liquids (“NGLs”), with properties in Texas, Oklahoma, and Louisiana. OVR was formed through a series of transactions that conveyed properties and committed cash contributions from various investors including EnCap Investments L.P. (“EnCap”), Wells Fargo Central Pacific Holdings, Inc. (“Wells Fargo”), VILLCo Capital II, LLC (“VILLCo”) and an affiliate of OVR, Oak Valley Management, LLC (“OVM”).

Certain prior-period amounts have been reclassified to conform to current-period presentation as follows:

•

Consolidated Statement of Operations – Accretion of asset retirement obligation has been reclassified out of Lease operating expense and included in its own line item in Operating Costs and Expenses. Transaction costs have been reclassified out of General and administrative expense and included in its own line item in Operating Costs and Expenses. Gain on sale of oil and gas properties has be reclassified from within Revenues to its own line item to arrive at Loss from operations. Gathering income has be reclassified from within Revenues to inclusion in Lease operating expense within Operating Costs and Expenses. These reclassifications had no effect on Loss from operations, Loss before income taxes, or Net loss for each of the three years ended December 31, 2016, 2015 and 2014.

•

Consolidated Statement of Cash Flows – Non-cash changes in fair value of the Company’s commodity swaps have been reclassified from the Unrealized (gain) loss on derivative contracts and bifurcated into Total loss (gain) on derivative contracts, net, and Operating portion of net cash received in settlement of derivative contracts. The reclassification had no effect on Net cash provided by operating activities for each of the three years ended December 31, 2016, 2015 and 2014.