In This Article:
Northern Oil and Gas, Inc. NOG announced two strategic acquisitions. It has secured non-operated interests in the Northern Delaware and Appalachian basins for a combined initial purchase price of $170 million in cash and 107,657 shares of common stock. This strategic expansion is expected to boost NOG's production and financial performance in the years to come.
Northern Delaware Basin Acquisition
NOG's acquisition in the Northern Delaware Basin encompasses non-operated interests spanning approximately 3,000 net acres, primarily located in Lea and Eddy Counties, NM. The acquired assets currently generate an average production of around 2,800 barrels of oil equivalent (Boe) per day. NOG anticipates a slight decline in production to an average of 2,500 Boe per day in 2024. The company already owns approximately 90% of the Delaware Basin leasehold and is optimistic about the long-term growth potential of these assets.
Appalachian Basin Acquisition
The second acquisition expands NOG's presence in the Appalachian Basin, securing non-operated interests in Jefferson, Harrison, Belmont, and Monroe Counties, OH. These assets currently contribute an average production of 23 million cubic feet of gas equivalent (MMcfe) per day. NOG expects production to remain stable in 2024 and plans to invest around $14 million in capital expenditures (in these assets) during 2023.
Transaction Details and Closing Conditions
NOG's swift and decisive action in securing these valuable assets was evident in the transactions’ effective date — Nov 1, 2023.
For the Northern Delaware Basin Acquisition, NOG has placed a substantial $17.1 million deposit, with the remaining funding scheduled for closing in the first quarter of 2024, subject to standard closing conditions.
The effective date for the Appalachian Basin transaction was Nov 1, 2023, with an anticipated closure in the fourth quarter of 2023, subject to the satisfaction of typical closing conditions.
Strategic Implications
These acquisitions align with NOG's strategy of acquiring and investing in high-quality, non-operated minority working and mineral interests in premier hydrocarbon-producing basins within the contiguous United States. The strategic expansion is expected to yield several benefits, which have been discussed below.
Increased Production and Revenue: The acquired assets are expected to contribute to a substantial increase in NOG's production and revenue streams.
Enhanced Financial Performance: The acquisitions are anticipated to be accretive to key financial metrics, including earnings per share and cash flow, in 2024 and on a multi-year basis.