Earthstone Energy Inc. (ESTE) remains on an Eagle Ford stakeout, watching for the right deal to expand in the play.

So far the small company has pulled the trigger on a few deals, but it’s also looking for a bigger spot in the Eagle Ford, Bakken or Permian.

In 2015, the company has executed several bolt-on deals, including a tiny 164-net acre deal in McKenzie County, N.D., for $1.4 million.

The company’s larger plans are to acquire another core drilling area in the Bakken, Rockies or Permian. Earthstone continues to be on the hunt for assets even as many companies are marketing properties for capital to drill, reduce debt or survive.

Deal flow remains limited with underperforming private equity assets a significant portion of marketed assets at present, said Dan Katzenberg, senior analyst with Robert W. Baird & Co.

“The company continues to exercise patience, expecting distressed sale activity to eventually accelerate,” Katzenberg said.

As of June 30, the company had $68.5 million of borrowing capacity under its credit agreement and $44.9 million in cash.

So far this year, Earthstone has made an art out of buying small in the big Eagle Ford.

In June, the company acquired a 50% operated interest in two gross Austin Chalk wells, which hold about 970 gross acres in southern Gonzales County, Texas. The Eagle Ford acreage is 100% HBP, with current gross production of 44 barrels of oil equivalent per day (boe/d), all of which was oil.

June acquisitions totaled about $4.1 million.

“The company continues to exercise patience, expecting distressed sale activity to eventually accelerate,” Katzenberg said.

In June, the company also acquired additional acreage in existing Bakken/Three Forks producing units primarily located in the Banks Field of McKenzie County, N.D., for $1.4 million. The small 164-net parcel adds 41 producing wells and 21 wells that are drilling or in the process of being completed.

Earthstone is also considering its own divestment of noncore properties. Katzenberg said Earthstone is focused on drilling the Upper Austin Chalk to hold acreage at a low drilling cost for now.

In April, Earthstone sold its Louisiana properties in DeSoto and Caddo parishes, La., for $3.5 million cash. The company recorded a gain of $1.7 million on the sale.

Earning Interest

For Earthstone’s modest size—its market capitalization is about $220 million—the company has attracted a following of more than a dozen analysts.

Partly, that maybe due to the company’s management team headed by Frank A. Lodzinski, president and CEO, who has helmed three other public companies. Earthstone’s current form emerged from a December 2014 merger with Oak Valley Resources LLC.

Lodzinski said the company continues to be active in acquisition markets, though its purchases likely have made only small impacts so far. As of October, the company had 39,200 Eagle Ford and Bakken net acres and 469 gross locations in the Eagle Ford, Austin Chalk and Bakken/Three Forks.

“In addition to expanding our acreage position, we are actively pursuing meaningful and attractive corporate M&A and asset acquisition opportunities,” he said. “While relatively small, our acquisition and divestiture activities in the second quarter illustrate our direction, and we are working to expand such activities.”

Lodzinski said in August that any large acquisition’s value will be a determining factor.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.