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EARTHSTONE Energy, Inc. Annual Shareholder Meeting September 25, 2013

EARTHSTONE Energy, Inc. Annual Shareholder Meeting September 25, 2013. “SAFE HARBOR” DISCLOSURE This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.

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EARTHSTONE Energy, Inc. Annual Shareholder Meeting September 25, 2013

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  1. EARTHSTONE Energy, Inc. Annual Shareholder Meeting September 25, 2013

  2. “SAFE HARBOR” DISCLOSURE This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management and information currently available to management. All statements other than statements of historical facts that address activities that we intend, expect or anticipate will or may occur in the future are forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. A discussion of these factors is included in the Company documents filed with the Securities and Exchange Commission.

  3. Company Presentation • 2013 Overview / Background • 2013 Accomplishments • 2013 Financial Results • Current Operations • What Does The Future Look Like? • Summary • Questions & Answers

  4. 2013 Overview • Our Primary Operations are in: – North Dakota – Montana – Southern Texas • We are 87% Oil and 13% Natural Gas • 9.5% Of Production from Federal Lands • Partner-Operated Wells Generate ~ 74% of Production

  5. Company Presentation • 2013 Overview / Background • 2013 Accomplishments • 2013 Financial Results • Current Operations • What Does The Future Look Like? • Summary • Questions & Answers

  6. 2013 Accomplishments • Operational Tempo on the Increase! • Participated in 29 Horizontal Wells • Deployed $13.9M in Capital ($8.8 in 2012) • Generated Reserve Growth of 119% (BOE)

  7. FY 2014 -- So Far! • Operational Tempo Continues to Increase! • Deployed $4.64M in Capital in Q1 • Brought 18 Wells on Production in Banks • Commenced 8 Horizontal Banks Wells • Drilled One Exploratory Well • in Nebraska • Drilled an Additional Injection • Well in South Texas

  8. Company Presentation • 2013 Overview / Background • 2013 Accomplishments • 2013 Financial Results • What Does The Future Look Like? • Summary • Questions & Answers

  9. Depletion Increasing GAAP Accounting – Explained in 10K • Similar to Depreciation, But on a “Units Of Production” Basis (BOE) • Reflects Higher Cost Basis of Newer Wells • Lower Cost Basis of Legacy Wells • Previous Price Volatility • Prior “Ceiling Test” Write Downs • Change In Accounting Principle

  10. Financial Overview Q1-14 Results…In the right direction! • BOE Production up 7% • Gross Profit per BOE up 8% • Gross Revenue up 6% • Income from Operations up 15%

  11. Financial Results Every Quarter Trending Upward EBITDA Net Income Gross Profit

  12. Company Presentation • 2013 Overview / Background • 2013 Accomplishments • 2013 Financial Results • Current Operations • What Does The Future Look Like? • Summary • Questions & Answers

  13. Banks Field

  14. Current Operations Banks Field: • 29 Wells Producing at 3-31-2013 Year End • Contributed 35% of Total Production • 18 New Wells on Production Since Year End • 23 Wells Currently Being Drilled or Completed

  15. Current Operations Banks Field Spacing Unit Ownership

  16. Current Operations Banks Field Spacing Unit Ownership

  17. Current Operations Nebraska: • Drilled Our First Permo-Penn Well • Set Casing – Completion Ongoing • Recovered Some Oil • Insufficient Quantity to Set Production Facilities • Plan to Perforate Additional Interval – Stimulate • May Plug Well if not Successful

  18. Current Operations Legacy South Texas Waterfloods: • Contributed 15% of Total Production Last Year • Drilled 1 Additional Injection Well • New Texas Regulations – Shut-In Wells • Restoring Wells To Production - $100/Bbl. • Insufficient Water Disposal Capacity • Revamp Production/Disposal Facilities • Geologic Re-evaluation Underway

  19. Company Presentation • 2013 Overview / Background • 2013 Accomplishments • 2013 Financial Results • Current Operations • What Does The Future Look Like? • Summary • Questions & Answers

  20. The Future? • Exploration Company • Bulk Of Our Dollars Now Go Into Drilling. • Several Years Of Drilling Ahead Of Us • Banks Field, Indian Hill, Mondak. • Legacy Montana Acreage • Nebraska • South Texas Waterfloods

  21. The Future? • We Are in 24 Spacing Units in Banks Field • Statoil is Drilling 6-7 Wells Per Spacing Unit • We Claimed 76 PUD’s at Year End. • Expect to Convert 25% to PDP’s This Year. • We Have 39 “Possibles” Not Claimed as PUD’s • In Addition to Banks Field, We are in: • 5 Spacing Units in Indian Hill Field. • 4 Spacing Units in Mondak Field. • We Only Claimed 4 PUD’s at Year End.

  22. The Future? Nebraska: • Approximately 30,000 Acres • Approximately 70 Square Miles 3D Seismic • 9 Seismically Defined Prospects • Low Acreage Cost - Low Drilling Costs • Relatively Friendly Regulatory Environment • Expect to Drill at Least 2 More Wells

  23. The Future? • Texas Waterflood: New Geological Analysis • Field Discovered In 1931 • Last Evaluated In 1985 • Pre-Windows Computers/Tools • Modern Computers - Geological Tools • We Already Have New Field Interpretation • We Anticipate A Modest Drilling Program

  24. The Future? • Ambitious Goals for 2014 • CapEx – $17 Million • BOE Sales – 155,000 • Reserves – Convert 25% of PUD’s to PDP’s • Drill at Least 1 Nebraska Well

  25. The Future? • CapEx Funding • Internal Cash Flow - Increasing • Continued Use of Existing Debt Funding • Equity Funding? • Enhance Corporate Capabilities/Structure • Enlarge & Improve Our Financial Team • Strengthen Our Technical Staff • Enhance Technology in the Office & Field

  26. Company Presentation • 2013 Overview / Background • 2013 Accomplishments • 2013 Financial Results • Current Operations • What Does The Future Look Like? • Summary • Questions & Answers

  27. Summary • We Substantially Accomplished Our 2013 Goals • We Have Ambitious Goals for 2014 • Our Main Focus is the Banks Field • Encouraged by Nebraska • Pleased by Potential of South Texas

  28. Company Presentation • 2013 Overview / Background • 2013 Accomplishments • 2013 Financial Results • Current Operations • What Does The Future Look Like? • Summary • Questions & Answers

  29. EARTHSTONE Energy, Inc.

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