MINNEAPOLIS – (COMMERCIAL THREAD) – Northern Oil and Gas, Inc. (American NYSE: NOG):
ACQUISITIONS OF THE PERMIAN BASIN
Northern Oil and Gas, Inc. (NYSE American: NOG) (“Northern”) today announced that it has entered into three definitive agreements to acquire undeveloped interests in approximately 2,900 net acres located in the heart of Reeves County , Texas and Lea. and Eddy Counties, New Mexico for a combined purchase price of $ 102.2 million.
May 2021 production on assets was around 2,200 boe per day (2 stream, 66% oil) and Northern expects average production of 3,700 boe per day in the second half of 2021, assuming a close August 1st. The estimated development plan for the properties over the next several years is expected to increase production to approximately 6,500 boe per day, assuming current tape prices. In this development scenario, Northern predicts that the assets will generate more than $ 100 million in cumulative free cash flow through 2025.
Assets include 5.3 net producing wells, 5.0 net ongoing wells and 23.1 additional net undrilled locations allocated to core areas including Wolfcamp A, Wolfcamp B and 1st to 3rd Sources of bone. The assets are operated primarily by Mewbourne Oil Company, Colgate Energy, ConocoPhillips and EOG Resources.
The effective date of the majority of the transaction value is April 1, 2021. Northern completed the acquisition of a portion of the assets in June and expects to complete the acquisition of the remaining assets in the third quarter of 2021 Northern estimates approximately $ 35 million in capital expenditures on the combined properties to be incurred in 2021, including estimated purchase price adjustments at closing of the acquisitions.
FINANCING OF TRANSACTIONS
The current acquisition is expected to be funded by a combination of common shares and, to the extent necessary, cash and / or borrowings under Northern’s senior secured credit facility and transactions should be immediately accretive.
“These assets represent the winning trifecta,” commented Adam Dirlam, COO of Northern. “We are acquiring high yielding base properties with the best operators, assets with significant inventory and growth potential, and we are entering into a transaction that is expected to have a significant impact on Northern’s free cash flow profile. . We expect to generate over $ 100 million in free cash flow from assets through 2025, based on current coupon prices. ”
“In keeping with our fundamental approach to growing our business, these transactions meet all of our stated objectives,” commented Nick O’Grady, CEO of Northern. “These transactions are immediately accretive to our company and all relevant statistics per share. As promised, along with a reduction in leverage ratios, this means an acceleration of our shareholder dividend strategy, while increasing our inventory and growth profile. ”
UPDATED GUIDE TO CAPITAL EXPENDITURES
Total capital expenditure (in millions)
$ 215 – $ 270
$ 200 – $ 250
Since the start of the year, Northern has dramatically improved its capital efficiency, and after the transaction, capital spending is only expected to increase by $ 15-20 million, despite development capital of around $ 35 million. on acquired properties. The implicit reduction of $ 15 million to $ 20 million in Northern’s previous capital expenditure forecast, combined with the additional cash flow from acquired properties, should serve to strengthen Northern’s estimated free cash flow profile at current coupon prices. .
Northern recorded a conference call to discuss the acquisitions. Those who wish to listen to the conference call can do so by calling the toll-free number US 877-660-6853 or International +1 201-612-7415 and providing the conference ID 13720652.
ABOUT NORTHERN OIL AND GAS
Northern Oil and Gas, Inc. is a company whose primary strategy is to invest in undeveloped minority mining and mining interests in oil and gas properties, with a primary focus in major basins of the United States. More information about Northern Oil and Gas, Inc. can be found at www.northernoil.com.
This press release contains forward-looking statements regarding future events and future results which are subject to safe harbor rules 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 fact included in this press release concerning Northern’s financial condition, business strategy, plans and management objectives for future operations and industry conditions are forward-looking statements, including statements regarding expected production, drilling locations and free cash flow. of Permian’s assets, the expected closing date for the current acquisition, Northern’s planned capital spending for 2021 and management’s intention to recommend an increase in Northern’s quarterly dividend. When used in this press release, forward-looking statements are generally accompanied by words or phrases such as “estimate”, “plan”, “predict”, “believe”, “expect”, “continue”, “Anticipate”, “target,” could “,” plan “,” intend “,” seek “,” a goal “,” will “,” should “,” could “or other similar words and expressions which reflect the uncertainty of future events or results. 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, as well as important factors (many of which are beyond Northern’s control) that could cause actual results to differ materially from those set forth in forward-looking statements, including the following: changes in crude oil and natural gas prices, the pace of drilling and completion activity on Northern properties and properties pending acquisition, the effects of the COVID-19 pandemic and related economic downturn, capacity to acquire additional development opportunities, changes in Northern reserve estimates or value, general economic or industry conditions, nationally and / or in the communities in which Northern operates. activities, changes in the interest rate environment, legislative requirements or regulatory, securities market conditions, Northern’s ability to complete any pending acquisition transaction (including the transactions described herein), other risks and uncertainties associated with the closing of acquisition transactions pending transaction (including the pending transaction described herein), Northern’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 competitive, governmental, regulatory and technical factors affecting Northern’s operations, products, services and prices.
Northern 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 are beyond the control of Northern. Northern does not undertake any obligation to update or revise forward-looking statements, except as required by federal securities laws.