Investor Presentation March 17, 2020 Disclaimer Forward-Looking - PDF document

1 Investor Presentation March 17, 2020

Disclaimer Forward-Looking Statements This presentat ion contains forward-looking st atements within the meaning of S ect ion 27A of the S ecurit ies Act of 1933, as amended (t he “ S ecurit ies Act” ), and S ect ion 21E of the S ecurit ies Exchange Act of 1934, as amended (t he “ Exchange Act ” ). S tatement s that are not st rict ly historical statement s const itute forward-looking stat ements and may oft en, but not always, be ident ified by the use of such words such as “ expects,” “ believes,” “ intends,” “ ant icipates,” “ plans,” “ est imates,” “ guidance,” “ target ,” “ potential,” “ possible,” or “ probable” or statements that certain act ions, events or result s “ may,” “ will,” “ should,” or “ could” be taken, occur or be achieved. The forward-looking statement s include statement s about the expected future reserves, product ion, financial posit ion, business st rategy, revenues, earnings, cost s, capit al expenditures and debt levels of the Company, and plans and obj ect ives of management for future operat ions. Forward-looking statement s are based on current expectat ions and assumpt ions and analyses made by Eart hst one and its management in light of experience and perception of hist orical t rends, current condit ions and expected fut ure development s, as well as other fact ors appropriat e under t he circumstances. However, whether actual results and development s will conform t o expectat ions is subj ect t o a number of material risks and uncertaint ies, including but not limited t o: further and substant ial declines in oil, natural gas liquids or natural gas prices; risks relat ing t o any unforeseen liabilit ies; the level of success in explorat ion, development and product ion activit ies; adverse weather condit ions that may negat ively impact development or product ion act ivit ies; the t iming of explorat ion and development expendit ures; inaccuracies of reserve est imat es or assumpt ions underlying them; revisions t o reserve est imates as a result of changes in commodit y prices; impact s t o financial statement s as a result of impairment writ e-downs; risks related t o levels of indebtedness and periodic redet erminat ions of the borrowing base under the Company’ s credit agreement ; Eart hst one’ s abilit y t o generate sufficient cash flows from operat ions t o meet the internally funded port ion of it s capital expenditures budget ; Earthst one’ s abilit y t o obtain external capital t o finance explorat ion and development operat ions and acquisit ions; the abilit y t o successfully complete any potent ial acquisit ions and t he risks relat ed thereto; t he impacts of hedging on results of operat ions; uninsured or underinsured losses result ing from oil and natural gas operat ions; Earthst one’ s abilit y to replace oil and natural gas reserves; and any loss of senior management or key technical personnel. Earthst one’ s 2019 Annual Report on Form 10-K and subsequent , quarterly report s on Form 10-Q and current report s on Form 8-K, and other S ecurit ies and Exchange Commission (“ S EC” ) filings discuss some of the import ant risk fact ors ident ified that may affect Eart hst one’ s business, results of operat ions, and financial condit ion. Earthst one undert akes no obligat ion t o revise or updat e publicly any forward-looking st at ements except as required by law. This presentat ion contains Earthst one’ s 2020 product ion, capital expenditure and operating expense guidance. The actual levels of product ion, capital expendit ures and operat ing expenses may be higher or lower than these est imat es due t o, among other t hings, uncert aint y in drilling schedules, changes in market demand and unant icipated delays in product ion. These est imates are based on numerous assumpt ions. All or any of these assumpt ions may not prove t o be accurate, which could result in actual results differing materially from est imates. No assurance can be made t hat any new wells will produce in line with hist orical performance, or t hat exist ing wells will continue t o produce in line wit h expectat ions. Eart hst one’ s abilit y t o fund its 2020 and future capital budgets is subj ect t o numerous risks and uncertaint ies, including volat ilit y in commodit y prices and the potent ial for unant icipated increases in cost s associated wit h drilling, product ion and t ransport at ion. For addit ional discussion of the fact ors that may cause us not t o achieve our product ion est imates, see Eart hst one’ s filings wit h the S EC, including its Form 10-K and any amendments theret o. We do not undertake any obligat ion t o release publicly t he results of any future revisions we may make t o this prospect ive data or t o update this prospect ive data t o reflect events or circumst ances after the dat e of this presentat ion. Therefore, you are caut ioned not t o place undue reliance on t his informat ion. Industry and Market Data This presentat ion has been prepared by Eart hst one and includes market data and other stat ist ical informat ion from t hird-part y sources, including independent indust ry publicat ions, government publicat ions or other published independent sources. Although Earthst one believes t hese t hird-part y sources are reliable as of their respect ive dates, Earthst one has not independent ly verified t he accuracy or completeness of this informat ion. S ome data are also based on Earthst one’ s good fait h est imat es, which are derived from it s review of int ernal sources as well as t he t hird-part y sources described above. Estimated Ultimate Recovery and Locations Management ’ s use of t he t erm est imated ult imate recovery (“ EUR” ) in this presentat ion describes est imates of potent ially recoverable hydrocarbons that the SEC rules prohibit from being included in filings with the S EC. These are more speculat ive than est imates of proved, probable and possible reserves and accordingly are subj ect t o substant ially greater risk of being actually realized, part icularly in areas or zones where t here has been limited or no drilling hist ory. We include EUR t o demonst rat e what we believe t o be t he pot ent ial for fut ure drilling and product ion by Eart hst one. Actual quant it ies that may be ult imately recovered may differ substant ially from est imat es. Fact ors affect ing ult imate recovery include the scope of the operat ors' ongoing drilling programs, which will be direct ly affected by t he availabilit y of capital, drilling and product ion cost s, availabilit y of drilling services and equipment , drilling results, lease expirat ions, t ransport at ion const raint s, regulat ory approvals and ot her fact ors, and act ual drilling result s, including geological and mechanical fact ors affect ing recovery rat es. Est imates of potent ial resources may also change significant ly as t he development of the propert ies underlying Earthst one's mineral int erests provides addit ional data. This presentat ion also contains Eart hst one’ s int ernal est imat es of it s pot ent ial drilling locat ions, which may prove t o be incorrect in a number of mat erial ways. The act ual number of locat ions t hat may be drilled may differ subst ant ially. 2

Investment Highlights: Leading Small-Cap, Permian Focused Producer Top Investment Criteria Earthstone’s Qualifications Basin & Acreage ✓ High quality, Midland Basin acreage position Position ✓ Conservative balance sheet with ~1.0x leverage (1) Low Leverage High Commodity Price ✓ 81% of 2020 oil production hedges at fixed price of ~$61 per barrel Protection WTI price ($90.3mm MTM of hedge book as of 3/16/20) High Margin, Low Cost ✓ Top quartile cash margins & leading cost structure with ~$13.50 per Boe of all-in cash costs (2) Production ✓ “Do the right thing” commitment to stakeholders, employees and Commitment & Focus environment (1) Reflects 4Q19 total debt / 4Q19 Annualized EBITDAX of 0.9x All-in cash costs measured for full year 2019 and includes lease operating expenses , ad valorem and production taxes, transportation expense, cash G&A expense and interest (2) 3 expense. Excludes impact of income taxes

Delivering Results – 2019 Results vs. Guidance Total Oil CAPEX LOE Cash G&A Production Production +14% +11% +3% -2% -19% 13,429 8,463 $210.4 11,750 7,638 $205.0 $6.50 $4.75 $6.40 $3.87 (Boepd) (Bopd) ($MM) ($/ Boe) (2) ($/ Boe) Guidance (1) Act ual (1) Based on midpoint of FY2019 guidance where applicable (2) Reflects lease operating expenses calculated based on prior methodology (including ad valorem tax). Reported LOE is $0.55 lower due to accounting change by removing ad valorem tax 4

Oil Price Volatility Requires Focused Business Strategy  WTI trading in range of $40-70 per barrel vs. $80-110 per barrel since OPEC / S hale standoff commenced in 2H 2014 — Industry re-geared cost structure and improved efficiencies to create sustainability / profitability  Commodity cycle velocity has doubled: Bear market (-20% WTI price) has occurred every 7 months vs. every 17 months, including 4x since November 2018  Business strategy must account for lower oil price and higher volatility WTI Crude Oil Spot Price Since 2009 $140 Post Financial Crisis – OPEC/Shale Standoff $120 Bear market $110 every 7 months $100 OPEC/Shale Standoff - Current $80 $80 $70 -34% -29% $60 -25% Bear market -21% -23% every 17 months $40 $40 -22% -43% -61% -23% -37% -51% -47% $20 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 S ource: Factset data as of 3/ 9/ 2020 5