Investing.com -- Shares in Earthstone Energy (NYSE:ESTE) surged on Monday after the oil and gas group agreed to be acquired by peer Permian Resources (NYSE:PR) in a deal worth approximately $4.5 billion.
The all-stock transaction will consist of 1.446 shares of Permian Resources common stock for each share of Earthstone common stock, the companies said, representing an implied value of $18.64 per share and a premium of 14.8% based on Earthstone's last close on Friday.
Shares in Permian also climbed by over 2%.
Both Earthstone's and Permian's boards of directors unanimously backed the agreement, which still needs both regulatory and shareholder approval. It is expected to close by the end of this year.
Factoring in the deal, Midland, Texas-based Permian will strengthen its pro forma production to about 300,000 barrels of oil equivalent per day.
Permian's presence in the lucrative Delaware Basin in between New Mexico and Texas would also be boosted. The area of the wider Permian Basin is known for having high productivity, large undeveloped reserves and established infrastructure.
Earthstone has recently expanded its own holdings in the Delaware Basin through the acquisition of two assets in the northern portion of the shale patch, along with a purchase of Novo Oil & Gas Holdings.
"Earthstone’s Northern Delaware position brings high-quality acreage with core inventory that immediately competes for capital within our portfolio,” said Will Hickey, Co-CEO of Permian, in a statement.