Earthstone Energy Sued Over $860 Million Deal, EnCap Financing

An Earthstone Energy Inc. investor sued the company in Delaware, citing concerns that financing for its planned $860 million acquisition of Bighorn Permian Resources LLC reflects self-dealing by Earthstone’s largest stockholder, EnCap Investments LP.

The lawsuit, made public Thursday, seeks internal files to investigate suspicions that a $280 million private stock sale to EnCap and Post Oak Energy Capital LP—allegedly at a 16% discount to Earthstone’s stock price before public disclosure of the Bighorn deal—is the result of wrongdoing.

The company’s limited disclosures indicate the financing is “a conflicted, related-party transaction with Earthstone’s controlling stockholder,” without a vote by public ...