Northern Oil And Gas Expands Midland Basin Portfolio

Northern Oil and Gas has entered into a definitive agreement to acquire non-operated interests in the Midland Basin for a purchase price of $110 million in cash, subject to typical closing adjustments.

Northern Oil and Gas expects to fund the acquisition with cash on hand, operating free cash flow and borrowings under NOG’s revolving credit facility.

At closing, production on the assets is expected to be greater than 1,600 boe per day – two-stream with around 87 percent oil. The company expects average production of over 1,800 boe per day over the next twelve months post-closing.

According to Northern Oil and Gas, less than $5 million of capital expenditures will be incurred post-closing in 2022, and does not anticipate revising 2022 capital expenditure guidance for the acquisition. These high-quality properties have operating costs lower than the company’s corporate average.

The acquired assets are located in Howard County, Texas, and includes approximately 1,600 acres, 6.4 net producing wells, 1.6 net wells-in-process, and approximately eight net undeveloped locations. Substantially all of the assets are operated by SM Energy.

The effective date for the transaction is August 1, 2022, and Northern Oil and Gas expects to close the transaction in October 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.

“We continue to focus on a balanced approach to growing our enterprise, with a focus on quality and low-breakeven economics,” says Nick O’Grady, Northern Oil and Gas’ Chief Executive Officer. “NOG continues to build a stronger, more diversified company built to drive higher shareholder returns for the long term.”

“In our second meaningful bolt-on acquisition of 2022, we have found a high-quality prospect that continues to grow our Midland Basin position,” added Adam Dirlam, Northern Oil and Gas President. “Anchored by highly economic inventory, high oil cuts, and a strong operator, this transaction helps continue to build out the Permian Basin as an area of growth for NOG.”

To contact the author, email bojan.lepic@rigzone.com