Earthstone Energy, Inc. announced that it has entered into a security purchase agreement with for a private placement of Series A 280,000 convertible preferred shares at an issue price of $1,000 per share for gross proceeds of $280,000,000 on January 30, 2022. The transaction will include participation from Cypress Investments, LLC and returning investor EnCap Capital Energy Fund XI, L.P, a fund managed by EnCap Investments L.P. The closing of the transaction is conditioned upon and will occur concurrently with the closing of the Bighorn Acquisition. The convertible preferred shares to be issued in the transaction will initially be in the form of convertible equity that will automatically be converted into 25,200,000 shares of Class A stock, including 19,800,000 shares to affiliates of EnCap Investments L.P., 20 days after an information statement is mailed to the company's stockholders. Post the closing, EnCap Investments L.P. will beneficially own approximately 44% of company's total Class A and Class B shares. Further, given that the private placement is with a related party, the Audit Committee of company independently reviewed and approved the issuance of equity to EnCap Investments L.P. As part of the transaction, Post Oak Energy Capital, LP will have the right to appoint one individual to the company's board of directors. Stockholder approval of the conversion feature of the convertible equity and the issuance of company's Class A common stock upon conversion of the convertible equity was approved by a majority consent action of company's stockholders on January 30, 2022.

On February 2, 2022, the company announced that the preferred stock will be convertible into 90.0900900900901 shares Class A common stock at a price of $11.10 per share.