Northern Oil and Gas Inc. bolstered its Permian position with bolt-on acquisitions expected to boost free cash flow by over $100 million.
In a release from the company on June 16, Northern said it had entered into three definitive agreements to acquire nonoperated interests across approximately 2,900 net acres located in the core of the Delaware Basin for a combined purchase price of $102.2 million.
The sellers were not disclosed. However, the acquisitions, according to Northern COO Adam Dirlam, represent the “trifecta” and that the company expects to generate over $100 million in free cash flow from the assets through 2025.
“We are acquiring high return core properties with top operators, assets with significant inventory and growth potential, and engaging in a transaction expected to meaningfully impact Northern’s free cash flow profile,” Dirlam commented in the release.
Based in Minnetonka, Minn., Northern aims to be the go-to resource for operators that want to offload nonoperated working interests in leasehold. Originally focused in the Williston Basin, the company has last year began to branch out into the Marcellus Shale and Permian Basin.
The acquisitions announced June 16 include 5.3 net producing wells, 5 net wells in process and an additional 23.1 net undrilled locations in Reeves County, Texas, and New Mexico’s Lea and Eddy counties.
The assets are operated primarily by Mewbourne Oil Co., Colgate Energy, ConocoPhillips Co. and EOG Resources Inc. Production was approximately 2,200 boe/d in May and Northern expects production to average 3,700 boe/d in the second half of 2021.
Upon closing of the acquisitions, Northern management intends to submit a request for a 50% increase to the quarterly dividend to $0.045 per share, according to the company release.
“These deals are immediately accretive to our enterprise and all relevant per share statistics,” Northern CEO Nick O’Grady added in the release. “As promised, alongside a reduction in leverage ratios, it means an acceleration of our dividend strategy to shareholders, while augmenting our inventory and growth profile.”
Read more about Northern Oil and Gas’ M&A strategy in the May issue of Oil and Gas Investor.
Northern completed a portion of the acquisition in June and anticipates closing the remainder by Aug. 1. The effective date for the majority of the transaction value is April 1.
The company plans to fund the pending acquisition through a combination of a common equity offering and, cash on hand or borrowings under Northern’s senior secured credit facility if necessary.
Recommended Reading
Chevron, in Hess Holding Pattern, Sells $6.8B in Alaska, Canada
2024-10-08 - Chevron Corp., waiting to close a $55 billion takeover of Hess Corp., is selling off non-core assets in Canada and Alaska.
'A Renewed Look': Central Basin Platform's Old Rock Gains New Interest
2024-10-29 - As majors prune their portfolios to sell non-core assets, M&A activity is heating up on the Permian’s Central Basin Platform and Northwest Shelf—and Ring Energy hopes to be a buyer.
Exxon Mobil to Sell Vaca Muerta Assets in Argentina to Pluspetrol
2024-10-31 - Exxon Mobil is divesting some assets, including plans to divest some of its Bakken holdings, following its $60 billion acquisition of Pioneer Natural Resources.
‘Worried’ E&Ps Keep Merging as Shale Ages, Costs Rise—Kimmeridge
2024-10-11 - With just half as many public E&Ps around today as there were in 2017, Kimmeridge and Managing Partner Ben Dell think the E&P space still has—and needs—plenty more M&A.
Midcon Momentum: SCOOP/STACK Plays, New Zones Draw Interest
2024-09-03 - The past decade has been difficult for the Midcontinent, where E&Ps went bankrupt and pulled back drilling activity. But bountiful oil, gas and NGL resources remain untapped across the Anadarko, the SCOOP/STACK plays and emerging zones around the region.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.