HIGHLIGHTS
- Bolt-on acquisitions of core non-operated working interest
properties in the Northern Delaware and Appalachian Basins for a
combined initial purchase price of $170 million in cash and 107,657
shares of common stock, subject to typical closing adjustments
- Combined average expected 2024 production of ~6,500 Boe per day
(26% oil, 2-stream)
- Combined cash flow from operations for the acquisitions
expected to be $57.5 - $62.5 million in 2024, representing a 2.8 -
3.0x purchase price multiple, based on recent commodity strip
pricing
- Expecting approximately $33 - $38 million in total 2024 capital
expenditures on the combined assets
- NOG has existing ownership interests in approximately 90% of
the Delaware Basin leasehold
- Transactions expected to be accretive to key financial metrics
in 2024 and on a multi-year basis
- Acquisitions to be financed with cash on hand, operating free
cash flow and borrowings under NOG’s revolving credit facility
- NOG hedged a portion of the expected production on a multi-year
basis, at higher than current pricing levels, prior to signing
Northern Oil and Gas, Inc. (NYSE: NOG) (“NOG” or “Company”)
today announced two acquisition transactions.
NORTHERN DELAWARE BASIN TRANSACTION
NOG has entered into a definitive agreement with a private party
to acquire non-operated interests across ~3,000 net acres located
primarily in Lea and Eddy Counties, New Mexico. NOG owns existing
interests in approximately 90% of the leasehold. Current production
is ~2,800 Boe per day (2-stream, ~67% oil). NOG expects 2024
production to average ~2,500 Boe per day (2-stream, ~67% oil) but
expects significant future growth on the assets, with average
production of >3,500 Boe per day for 2025 through 2030. Capital
expenditures on the assets are expected to be in the range of $25 -
$30 million to be incurred in 2024, with similar expected levels
annually through 2027.
The acquired assets include 13.0 net producing wells, 1.0 net
well in process and an estimated 26.3 net undeveloped locations,
representing approximately 13.5 years of inventory at sustaining
capital levels. The undeveloped assets are of extremely high
quality, with an average pre-tax PV-10 breakeven of less than $45
per barrel. Mewbourne Oil is the largest operator, controlling
approximately 80% of the assets.
The effective date for the transaction is November 1, 2023. NOG
has placed a $17.1 million deposit for the acquisition with the
balance of the funding to occur at closing, which is expected in
the first quarter of 2024, subject to the satisfaction of typical
closing conditions.
APPALACHIAN BASIN TRANSACTION
NOG has entered into a definitive agreement with a separate
private party to acquire non-operated interests in Jefferson,
Harrison, Belmont, and Monroe Counties, Ohio. The primary target
zone is the Point Pleasant/Utica Shale.
Current production is approximately 23 MMcfe per day (~3,800 Boe
per day, ~100% gas) and NOG expects average production in 2024 at
slightly higher levels. NOG expects to incur approximately $14
million of capital expenditures on the assets in 2023 (which may be
included in whole, or in part, as a portion of the initial closing
settlement, depending on timing), and $8 million of capital
expenditures in 2024.
The acquired properties include approximately 0.8 net producing
wells and 1.7 net wells-in-process. Substantially all the assets
are operated by Ascent Resources, one of the top Utica producers in
Ohio.
The effective date for the transaction is November 1, 2023, with
an expected close in the fourth quarter of 2023, subject to the
satisfaction of typical closing conditions.
MANAGEMENT COMMENTS
“These transactions demonstrate our continued ability to
successfully acquire high quality assets in the core of their
respective basins, with best-in-class operating parties,” commented
Nick O’Grady, Chief Executive Officer of NOG. “We expect the assets
to be accretive in 2024 and to accelerate further in future years.
We are also pleased to expand our Appalachian presence into some of
the best parts of the Ohio Utica Shale as we continue to grow our
natural gas portfolio in the region over time. Notably, at the
current pricing strip, we still expect to reach our ~1x leverage
ratio target in 2024 and cash generating assets such as these
should add to dividend capacity over time.”
“After closing, our Permian lands will approach ~40,000 net
acres and definitively become our most active and largest basin in
terms of activity and production,” commented Adam Dirlam, NOG’s
President. “Our focus remains on low-breakeven, resilient inventory
that works in nearly any price environment, and these assets
deliver in spades. On the Appalachian front, we are acquiring
assets in the core of the Utica under one of the most prolific
operators, with a focus on near-term development. As we continue to
build data in the area, there is significant potential for longer
term expansion.”
ADVISORS
Citi served as financial advisor to NOG for the Delaware Basin
transaction.
TPH&Co, the energy business of Perella Weinberg Partners,
served as financial advisor to the Delaware Basin seller.
Kirkland & Ellis LLP is serving as NOG’s legal advisor for
the Delaware Basin transaction. Steptoe & Johnson is serving as
NOG’s legal advisor for the Utica transaction.
ABOUT NOG
NOG is a real asset company with a primary strategy of acquiring
and investing in non-operated minority working and mineral
interests in the premier hydrocarbon producing basins within the
contiguous 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, production, cash flows, capital expenditures, business
strategy, plans and objectives of management for future operations
and industry conditions are forward-looking statements. When used
in this release, forward-looking statements are generally
accompanied by terms or phrases such as “estimate,” “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, NOG’s ability to acquire additional
development opportunities, 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/20231120044408/en/
Evelyn Leon Infurna Vice President, Investor Relations (952)
476-9800 ir@northernoil.com
Northern Oil and Gas (NYSE:NOG)
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