Permian Resources Corp. has stated that it would acquire Earthstone Energy in an all-stock transaction valued at around $4.5 billion, including debt.

Woodlands-based rival Earthstone Energy has assets in the Delaware Basin located in West Texas and New Mexico. Delaware Basin, a part of the wider Permian Basin, has the necessary infrastructure and is known for its high productivity and large undeveloped reserves.

According to the deal, each share of Earthstone common stock will be exchanged for a fixed ratio of 1.446 shares of Permian Resources common stock.

With the acquisition, Permian Resources will double the size of its properties in the Permian Basin to more than 400,000 acres, with projected production of approximately 300,000 Boe/d, according to the statement.

Thus, this deal will give Permian Resources an anticipated market capitalization of $10 billion and make it the third-largest player in the broader Permian Basin region of West Texas and New Mexico.

“After evaluating over $20 billion of potential transactions during the past twelve months, we firmly believe the acquisition of Earthstone represented the best transaction for Permian Resources,” said James Walter, co-CEO of Permian Resources.

After closing the deal by the end of 2023, existing Permian Resources and Earthstone shareholders would own about 73% and 27% of the combined company, respectively.

Robert Anderson, President and Chief Executive Officer of Earthstone, expressed his pleasure with this transaction noting “In less than three years, we have grown Earthstone from a small-cap E&P company producing approximately 15,000 Boe/d to one with a production base of over 130,000 Boe/d, delivering significant value enhancement for shareholders along the way.”