Northern Oil and Gas (NOG), which owns interests in the major oil and gas basins in the US, is set to acquire certain assets in the Northern Delaware and Appalachian Basins for a total of $170m.
NOG has agreed with an undisclosed party to acquire the remaining non-operated interests across nearly 3,000 net acres, located predominantly in Lea and Eddy Counties, New Mexico.
The assets constitute 13 producing wells, one well in development and an estimated 26.3 net undeveloped locations, representing around 13.5 years of inventory.
The current production capacity of the assets is around 2,800boe per day, which is expected to be 2,500boe per day in 2024, and more than 3,500boe per day in 2025 through 2030.
NOG estimates a capital expenditure of $25 to $30m on the assets in 2024, with similar levels of expenditure expected each year, through 2027.
The transaction is expected to be completed in the first quarter of 2024, subject to the satisfaction of typical closing conditions, with an effective date of 1 November 2023.
NOG has already placed a $17.1m deposit for the acquisition with the remaining consideration to be paid at closing.
NOG CEO Nick O’Grady said: “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.
“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.”
NOG has also signed a separate agreement with another private party to purchase non-operated interests in Jefferson, Harrison, Belmont, and Monroe Counties, Ohio.
The acquired properties include around 0.8 net producing wells and 1.7 net wells-in-process, whose primary target zone of the assets to be acquired is the Point Pleasant/Utica Shale.
The Appalachian Basin assets currently produce around 23MMcfe per day, which is expected to increase in 2024.
NOG estimates around $14m in capital expenditures on the assets this year and around $8m of capital expenditures in 2024.
The transaction is expected to close in the fourth quarter of this year, subject to the satisfaction of typical closing conditions, with an effective date of 1 November 2023.
All the assets to be acquired by NOG are operated by Ascent Resources, a US-based privately held exploration and production company.
Citi served as financial advisor and Kirkland & Ellis as legal advisor to NOG, while TPH&Co served as financial advisor to the seller, on the Delaware Basin transaction.
Steptoe & Johnson served as legal advisor to NOG on the Utica transaction.
NOG president Adam Dirlam said: “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.
“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.”
