Earthstone Energy Inc. (NYSE MKT: ESTE) has joined the hunt for a transformational deal in the Permian Basin—or a pickup in the Eagle Ford—now that its foot is in the door of the Midland Basin.

In May, The Woodlands, Texas-based company closed its acquisition of Lynden Energy, which held 5,900 net acres in the Midland.

Earthstone is now drilling a Wolfcamp A horizontal well in the Midland’s Howard County, Texas, area, with expectations that results will be ready by fourth-quarter 2016.

The new Wolfcamp well could provide a post-Lynden acquisition catalyst for additional transactions in the Permian, said Daniel P. Katzenberg, senior research analyst at Baird Equity Research.

“Despite current elevated price tags for acreage in the area, management is not afraid to pay up for a material position there based on confidence in the company’s operating ability and this team’s historical track record of M&A-related success,” Katzenberg said. “The company also is pursuing distressed Eagle Ford M&A, which could complement ESTE’s existing operated position in the play.”

Frank A. Lodzinski, Earthstone’s president and CEO, said the company is intent on finding and closing “a large asset or large corporate acquisition that will really be transformative and impactful on the company.”

On an Aug. 9 earnings call, Lodzinski said the Delaware Basin is a possible target for deals, though he added, “I’m not going to go to the Delaware for 6,000 acres or something.”

Earthstone’s Permian-Eagle Ford strategy involves locking down acreage that would significantly change the company.

“The Permian, as you know, is hot, hot, hot,” Lodzinski said. “Our angle there is, we’re very good operators even with some of the high prices being paid.”

However, to work any deal will have to be something that is accretive and will impact the company.

“We’re going to compete out there diligently, provided we like the geology; the science,” he said.

Though the company has always operated in more than one basin, a pickup in the Permian would be a matter of discussion for the management team and board. The company has $80 million in cash and $50 million in available debt.

Along with the Permian, distressed Eagle Ford assets are also on the table, he said. The Eagle Ford has an entirely different A&D atmosphere, Lodzinski said.

“The bid-ask spread in the Eagle Ford, the whole dynamics of the A&D in the Eagle Ford is just very, very different than the Permian,” he said.

Eagle Ford prices are lower, and companies are in distressed situations “where we believe our balance sheet, track record, demonstrated operational expertise, [and] transparence” can appeal to ownership.

“We think that those things lead up to us taking over a distress situation,” Lodzinski said. “The bondholders are going to end up holding a lot of stuff in the Eagle Ford and we’d like to appeal to them.”

But Lodzinski appears more keenly interested in making a move in the Permian.

“We’re hoping to land something in the Midland Basin that makes sense,” he said. “That’s one of the reasons why we acquired Lynden.”

Darren Barbee can be reached at dbarbee@hartenergy.com.