Northern Oil and Gas (NOG) has signed a definitive agreement to acquire non-operated interests in the Williston Basin for an initial cash price of $170m from a private party (seller).
Under the terms of the agreement, the seller may earn an additional $5m in 2023, contingent on WTI oil prices exceeding $92.50 as of 30 December 2022.
The assets included in the acquisition are primarily located in Dunn, McKenzie and Williams Counties, covering nearly 3,500 acres of area.
They include 9.2 net producing wells, 2.6 net wells-in-process and 14.9 net engineered economic undeveloped locations.
The assets are primarily operated by Marathon Oil, Continental Resources and ConocoPhillips.
NOG owns previously owns around 50% interests of the acquired property value.
NOG chief executive officer Nick O’Grady said: “As the natural consolidator of working interests, our strong financial position has allowed us to recycle our substantial free cash flow into meaningful growth opportunities.
“Importantly, we still expect less than a 1x leverage ratio by year-end 2022. We are well ahead of our goals for this year, but these developments are setting the stage for material growth in volumes and cash flow for 2023.”
The transaction is expected to close in August 2022, subject to satisfaction of certain customary closing conditions.
Upon closing, NOG anticipates producing an average of around 2,500 Boe per day over the next 12 months (2-stream, ~83% oil).
Also, the company estimates around $15m in capital expenditures for this year.
The properties included in the transaction have operated at lower costs compared to its corporate average on its Williston Basin properties, said NOG.
The company expects to fund the acquisition through available cash, operating free cash flow and borrowings under its revolving credit facility.
Kirkland & Ellis served as legal advisor and Raymond James as lead financial advisor to NOG on the transaction.
NOG president Adam Dirlam said: “While the Permian continues to be a source of growth, we continue to find significant opportunities to grow our Williston Basin position.
“Anchored by significant inventory, high oil cuts, strong margins and existing ownership in over 50% of the properties, this bolt-on transaction fits perfectly with our strategy.”
