NOG Announces Additional Core Northern Delaware Basin Bolt-on Acquisition

Rhea-AI Summary

Northern Oil and Gas (NYSE: NOG) has announced the acquisition of non-operated working interest properties in the Northern Delaware Basin for $130 million. The assets include approximately 2,100 net acres and are expected to produce around 2,500 Boe per day at an estimated $55 million unhedged cash flow in 2023, yielding a 2.4x transaction multiple. Capital spending is projected at $25 million for 2023, with expectations that the acquisition will enhance key financial metrics.

Positive

• Acquisition of core assets for $130 million expected to enhance cash flow and production.
• Estimated production of ~2,500 Boe per day generating ~$55 million cash flow in 2023.
• Significant Tier-1 inventory with low breakeven costs (<$40 per barrel).
• Projected capital spending of ~$25 million on assets indicates commitment to growth.

Negative

• None.

HIGHLIGHTS

• Bolt-on acquisition of core non-operated working interest properties in the Northern Delaware Basin for a purchase price of $130.0 million
• Average production of ~2,500 Boe per day (68% oil, 2-stream) expected for 2023, generating an estimated $55 million of unhedged cash flow in 2023 at strip pricing as of October 10, 2022 (~2.4x transaction multiple)
• ~2,100 net acres located in Lea and Eddy Counties, NM and Loving & Winkler Counties, TX with significant Tier-1 inventory (sub-$40 per barrel average breakevens)
• Strong growth and free cash flow profile with ~$25 million capital spending expected on the assets in 2023
• Transaction expected to be accretive to key financial metrics

MINNEAPOLIS--(BUSINESS WIRE)-- Northern Oil and Gas, Inc. (NYSE: NOG) (the “Company” or “NOG”) today announced the acquisition of Northern Delaware Basin properties.

DELAWARE BASIN ACQUISITION

NOG has entered into a definitive agreement to acquire certain non-operated interests (the “Assets”) in the Delaware Basin from a private seller (the “Seller”) for a purchase price of $130.0 million in cash, subject to typical closing adjustments.

The acquired assets are located in Lea and Eddy Counties, New Mexico and Loving and Winkler Counties, Texas, and include approximately 2,100 net acres, 5.3 net producing wells, 2.1 net wells-in-process and approximately 17.2 net undeveloped locations. The primary operator of the assets is Mewbourne Oil, one of the most cost efficient and active operators in the Northern Delaware Basin. Other operators include Coterra and Permian Resources.

The effective date for the transaction is November 1, 2022, and NOG expects to close the transaction in December 2022. The obligations of the parties to complete the transactions contemplated by the purchase agreement are subject to the satisfaction or waiver of customary closing conditions.

HEDGING UPDATE

In addition to its continuous hedging program, NOG has hedged, as standard practice, a significant portion of the production from the pending transaction. Updated hedge schedules can be found in NOG’s related October Acquisition Presentation at http://ir.northernoil.com.

MANAGEMENT COMMENTS

“NOG continues to press its advantage as a well-capitalized, reliable and consistent purchaser of high-quality non-operated properties,” commented Nick O’Grady, NOG’s Chief Executive Officer. “More importantly, NOG’s technical team continues to underwrite for returns with precision and focus on the best assets available in the marketplace today.”

“This transaction lies squarely in NOG’s fairway on a number of levels,” commented Adam Dirlam, NOG’s President. “The Assets contain high-quality, low breakeven development that is leveraged to some of NOG’s top operating partners, as our investors have come to expect.”

ADVISORS

Wells Fargo Securities served as financial advisor to NOG for the acquisition. Kirkland & Ellis LLP is serving as the Company’s legal advisor for the acquisition.

TPH&Co., the energy business of Perella Weinberg Partners, served as financial advisor to the Seller. Bracewell LLP is serving as the Seller’s legal advisor.

ABOUT NORTHERN OIL AND GAS

NOG is a company with a primary strategy of investing in non-operated minority working and mineral interests in oil & gas properties, with a core area of focus in the premier basins within the United States. More information about NOG can be found at www.northernoil.com.

SAFE HARBOR

This press release contains forward-looking statements regarding future events and future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). All statements other than statements of historical facts included in this release regarding NOG’s financial position, common stock dividends, business strategy, plans and objectives of management for future operations, industry conditions, capital expenditures, production, cash flow, hedging and other matters are forward-looking statements. When used in this release, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “guidance,” “project,” “predict,” “believe,” “expect,” “continue,” “anticipate,” “target,” “could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond NOG’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: changes in crude oil and natural gas prices, the pace of drilling and completions activity on NOG's properties and properties pending acquisition, the effects of the COVID-19 pandemic and related economic slowdown, NOG's ability to acquire additional development opportunities, integration and benefits of property acquisitions, or the effects of such acquisitions on Northern’s cash position and levels of indebtedness, changes in NOG's reserves estimates or the value thereof, general economic or industry conditions, nationally and/or in the communities in which NOG conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, NOG's ability to consummate any pending acquisition transactions (including the transactions described herein), other risks and uncertainties related to the closing of pending acquisition transactions (including the transactions described herein), NOG's ability to raise or access capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, and other economic, competitive, governmental, regulatory and technical factors affecting NOG's operations, products, services and prices.

NOG has based these forward-looking statements on its current expectations and assumptions about future events. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond NOG's control. NOG does not undertake any duty to update or revise any forward-looking statements, except as may be required by the federal securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221010005845/en/

Investor Relations

(952) 476-9800

ir@northernoil.com

Source: Northern Oil and Gas, Inc.

FAQ

What is the acquisition by Northern Oil and Gas about?

Northern Oil and Gas is acquiring non-operated working interest properties in the Northern Delaware Basin for $130 million, expected to produce 2,500 Boe per day.

How much cash flow is Northern Oil and Gas expecting from the new acquisition?

The company anticipates generating approximately $55 million in unhedged cash flow from the acquisition in 2023.

What is the expected production from the acquired properties in 2023?

The acquired properties are expected to yield around 2,500 Boe per day in production.

When is the acquisition by Northern Oil and Gas expected to close?

The acquisition is expected to close in December 2022.

What is the significance of the acquisition for Northern Oil and Gas's financial metrics?

The transaction is anticipated to be accretive to key financial metrics, enhancing the company's performance.