Jordan Blum, editorial director, Hart Energy: We are here at Hart Energy's A&D Strategies and Opportunities Conference in Dallas. I'm joined by Nick O'Grady, the CEO of Northern Oil and Gas. Thanks so much for being here. Appreciate it. It's obviously been a very busy year for you. Well busy few years, I guess. You all just did the big deal in the Uinta Basin with SM Energy acquiring XCL Resources. I just wanted to get your take on entering the Uinta, why that's such a big deal and why you all are so bullish on Utah.

Nick O'Grady: Yeah, the Uinta Basin has been one of the fastest growing oil basins in the United States over the last few years. We had some institutional knowledge. Actually, one of our board members is a part owner of another one of the private companies in the basin and had some really strong views about it, and we had been talking about ways to enter it over the last several years. And in terms of XCL specifically, one of the big advantages was that the asset had been marketed for some time. So we'd had a long time to dive into it deeply technically. We were really fortunate that ultimately we were able to cross paths with SM during the process. But it was worth noting that when you look at the Lower 48 and you look at, as I mentioned in my speech today, that the number of EURs that exceeded a million barrels a day being drilled in the United States, the Uinta was coming up on the list of, in the top 10 of something like 20% of them drilled in the last year or two.

Meanwhile, it was not very much on investor radar or many others, it's just, it's a relatively tightly held basin. And XCL's asset happened to be sitting directly in the bullseye in some of the highest pressured part of the play. And so when the asset came up for sale, we were highly interested, but it's always a combination of whether we're, as a non-operator interest or not, finding the right partner, the partner that's going to be commercial and looking to make that acquisition. And obviously one that we can come to terms with and agree with on valuation basis as well. And so all the stars aligned and we happen to be successful and we're thrilled. But this is an asset that frankly, while it's great today, I think my most, the thing I'm most excited about is that I think that there is a lot more exploratory potential on the asset than people may understand as opposed to the Permian, which I think it's not to knock the Permian, but I think it's largely understood at this point.

JB: Yeah, so how important is it to kind of be an early mover?

NO: I think that my broader view is that the Uinta, we will see in the next several years more transactions and more attempts to enter in the basin. And I think that the values in the basin will likely go up. And I think that being an early mover, we were not an early mover in the Permian as an example, but ironically, some of the sort of histories of these can be that being an early mover can be a big advantage in terms of price. Then later in the cycle, things can get really overheated, and then coming in a bit after that things can cool off and become more reasonable when things are known. In this case, I think we've been very early, and I think there may be a point where it becomes overheated. I don't think we're at that point yet. However, I do think that the industry has been waking up to the Uinta's potential just in the last few years, especially as the logistics system and the ability to export oil has grown so rapidly.

And that was really the biggest challenge for the play for a long time—not the rock, not to mention the fact that being able to drill horizontally has really unlocked a lot of zones and potential and productivity in the play. But I think that you're going to see more and more activity and more growth out of the basin, and I think it's going to raise some eyebrows. And I'm not sure you guys have done a wonderful job of highlighting some of it, but I don't think the public has necessarily understood it as much. And it'll never rival the Permian in terms of overall size, but I think it can still be quite impactful in the short term.

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JB: Very good. Well, switching gears to I guess what's more of the bread and butter in the Permian, you also just did the deal with Vital Energy, again for Point Energy in the Texas Delaware. Can you just tell me a little bit about that and how it came about?

NO: That's right. Yeah, so Point was an asset we'd actually looked at on our own almost two years ago. So we were very familiar with it and then we wound up partnering with Vital on it this year. It's in the Ward County fairway. It's very near our Forge assets. And when you go through this exercise for a second time, our teams work so well together. And I think what I mentioned in my speech was that I think we have high hopes for the ability to improve technically upon the prior operator. It's not a knock on them, but I just think we've seen the Vital team be able to do amazing things with performance and costs. We certainly don't underwrite to that. We really underwrite it based on its existing performance base. But I think certainly from experience we've seen really good improvements over time.

But this is an asset, what's most exciting to me is that as a non-operator, you really want an asset that is going to be important to your operating partner, and this is an asset that is really important to Vital. It's a really good asset within their portfolio. It's front and center with their short-term development plan. It's really prospective. Some of the wells are some of the best in the overall area, and I think they're going to really go after it in the next few years. And like I said, like you mentioned, it's about as bread and butter as they come. It's really primary zone development and it's got some great embedded infrastructure it as well, which really allows us to kind of step in and develop it right away without any interruption.

JB: Great. Well, thanks again so much for being here. We really appreciate it. To read and watch more, please visit online at HartEnergy.com.

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