A drop in commodity prices is blamed for Earthstone Energy backing out of its acquisition of Sabalo Energy LLC based in Corpus Christi, Texas.
The purchase was announced in October but Earthstone Energy, Inc. executives in Houston said that due to the recent significant decline in commodity prices and the re lated adverse effect on the debt and equity markets, it was backing out of the deal.
It’s also canceled a special meeting of stockholders set for Jan. 3, 2019 to approve the acquisition. Earthstone announced that as a result of the cancellation, it would reimburse Sabalo Holdings for transaction related expenses up to nearly $3.1 million.
“Despite the high quality of the Sabalo assets and the outstanding opportunity the transaction provided Earthstone, the drastic change in commodity prices and in the debt and equity markets has negatively affected the significant merits of the acquisition,” said Frank A. Lodzinski, Chief Executive Officer of Earthstone. “Accordingly, we have mutually agreed to terminate the Contribution Agreement. While we are disappointed with this result, we greatly appreciate the hard work of the Sabalo management team, our officers and employees and our financial partners, as we all worked tirelessly to close this deal.”
Earthstone Energy, Inc. is a growth-oriented, independent energy company engaged in the acquisition, development and operation of oil and natural gas properties, primarily in the Midland Basin of west Texas.