NOG Announces Core Northern Delaware Basin Bolt-on Acquisition
Northern Oil and Gas (NYSE: NOG) has announced the acquisition of core non-operated working interest properties in the Northern Delaware Basin for
- Acquisition price of $157.5 million expected to enhance production and cash flow.
- Projected average production growth to over 4,000 Boe per day in 2024 and 2025.
- Strong cash flow profile with average annual capital spending of $32 million expected.
- Additional cash consideration up to $22.5 million contingent on crude oil prices exceeding $87.85 per barrel, posing a risk if prices fall.
- Dependence on external factors such as crude oil prices affecting cash flow and financial metrics.
HIGHLIGHTS
-
Bolt-on acquisition of core non-operated working interest properties in the
Northern Delaware Basin for an initial purchase price of$157.5 million -
Average production of ~3,000 to 3,500 Boe per day (
68% oil, 2-stream) expected for 2023, generating an estimated to$46.5 of unhedged cash flow in 2023 at strip pricing as of$54.3 million September 28, 2022 -
~2,800 net acres located in Lea and
Eddy counties, NM andLoving County, TX with significant Tier-1 inventory (sub-$40 per barrel average breakevens) -
Strong growth and free cash flow profile with
~ average annual capital spending expected on the assets over the next three years, delivering expected production of over 4,000 Boe per day in 2024 and 2025$32 million - Transaction expected to be accretive to key financial metrics in 2023
- Acquisition to be financed with cash on hand, operating free cash flow and borrowings under NOG’s revolving credit facility
NOG has entered into a definitive agreement to acquire certain non-operated interests in the
NOG may deliver the Seller additional cash consideration depending on average front month NYMEX WTI pricing during the first six months of 2023. The amount will be determined on a sliding scale from zero additional consideration if such pricing is below
The acquired assets are located in Lea and
The effective date for the transaction is
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 September Acquisition Presentation at http://ir.northernoil.com.
MANAGEMENT COMMENTS
“NOG continues to execute on creating shareholder value as a proven, reliable and disciplined consolidator of working interests,” commented Nick O’Grady, NOG’s Chief Executive Officer. “These assets are squarely in our core focus area and are poised to deliver substantial growth over the coming years, while delivering significant cash flow to bolster shareholder returns.”
“The Northern Delaware Basin continues to be a key target for our consolidation efforts,” commented
ADVISORS
Citigroup Global Markets served as financial advisor to NOG.
ABOUT
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
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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.
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Investor Relations
(952) 476-9800
ir@northernoil.com
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