HIGHLIGHTS
- Joint acquisition with Vital Energy, Inc. (“Vital”) of certain
assets (the “Point Assets”) of Point Energy Partners, LLC
(“Point”), a Vortus Investments company (“Vortus”) for $1.1
billion
- NOG purchasing a 20% undivided stake in the Point Assets (the
“Acquired Assets”) for $220 million in cash (all numbers below are
net to NOG)
- The Acquired Assets include >4,500 Boe per day (2-stream,
excluding NGLs, >75% oil) of recent production and ~4,000 net
leasehold and mineral acres, located primarily in Ward County,
TX
- Cash flow from operations on the Acquired Assets expected to be
>$75 million in the next twelve months (starting 10/1/2024),
based on recent strip prices, representing a transaction multiple
on the unadjusted purchase price of <2.9x
- Strong free cash flow profile on the Acquired Assets with
>$40 million expected over the next twelve months (starting
10/1/2024). See “Non-GAAP Financial Measures” below
- Significant purchase price reduction expected at closing due to
April 2024 effective date
- Transaction to be funded by cash flow from operations, cash on
hand and borrowings under NOG’s Senior Secured Revolving Credit
Facility
Northern Oil and Gas, Inc. (NYSE: NOG) (the “Company” or “NOG”)
today announced that it has entered into a definitive agreement to
acquire a 20% undivided stake in the Point Assets in the Delaware
Basin, in partnership with Vital Energy, Inc., for a purchase price
net to NOG of $220.0 million in cash, subject to typical closing
adjustments.
The Acquired Assets are primarily located in Ward County, Texas
and include approximately 4,000 net leasehold and mineral acres,
26.4 net producing wells, 1.6 net wells-in-process and ~12.1
low-breakeven net undeveloped locations. Upon closing, the operator
of the assets will be Vital, with NOG participating in development
pursuant to cooperation and joint operating agreements entered into
with Vital in connection with the acquisition.
Recent production on the Acquired Assets was >4,500 Boe per
day (2-stream, >75% oil). For the fourth quarter of 2024, NOG
expects average production of >3,250 Boe per day (2-stream,
>75% oil) and approximately $11.3 million of capital
expenditures.
The effective date for the transaction is April 1, 2024, and NOG
expects to close the transaction in the late third quarter of 2024.
As part of the transaction, NOG has placed a $22.0 million deposit
in escrow prior to closing. The obligations of the parties to
complete the transactions contemplated by the purchase agreement
are subject to the satisfaction or waiver of customary closing
conditions.
MANAGEMENT COMMENTS
“This transaction further emphasizes NOG’s position as the most
reliable and consistent partner for the purchase and development of
high-quality properties,” commented Nick O’Grady, NOG’s Chief
Executive Officer. “We are very excited to again work alongside our
partners at Vital to develop the Point Assets with strong alignment
and cooperation. These assets will be easily funded on-balance
sheet and their strong cash flows should provide for immediate
growth and significant accretion to per share metrics, shareholder
returns and the potential for compounding of growth in the years to
come.”
“The Point Assets sit directly in our area of interest and close
to our existing Delaware holdings,” commented Adam Dirlam, NOG’s
President. “With our partners at Vital, we expect to responsibly
develop these assets with an aligned plan that will deliver strong
returns for our respective stakeholders over the coming years.”
ADVISORS
Kirkland & Ellis LLP is serving as NOG’s legal counsel.
Houlihan Lokey served as financial advisor to Vital. Gibson Dunn
& Crutcher LLP is serving as legal counsel to Vital. Jefferies
LLC served as financial advisor to Point and Vortus. Akin Gump
Straus Hauer & Feld LLP is serving as legal counsel to Point
and Vortus.
ABOUT NOG
NOG is a real asset company with a primary strategy of acquiring
and investing in non-operated minority working and mineral
interests in the premier hydrocarbon producing basins within the
contiguous United States. More information about NOG can be found
at www.noginc.com.
NON-GAAP FINANCIAL MEASURES
This release includes certain financial measures that are not
calculated in accordance with U.S. generally accepted accounting
principles (“GAAP”), including free cash flow. These non-GAAP
financial measures are not measures of financial performance
prepared or presented in accordance with GAAP and may exclude items
that are significant in understanding and assessing our financial
results. Therefore, these measures should not be considered in
isolation, and users of any such information should not place undue
reliance thereon. NOG believes the presentation of these metrics
may be useful to investors because it supplements investors’
understanding of its operating performance by providing information
regarding performance that excludes items it believes do not
directly affect its core operations. NOG defines free cash flow as
(i) cash flows from operations before changes in working capital
and other items, less (ii) capital expenditures, excluding
non-budgeted acquisitions and changes in accrued capital
expenditures and other items. From time-to-time NOG provides
forward-looking free cash flow estimates or targets; however, NOG
is unable to provide a quantitative reconciliation of the
forward-looking non-GAAP measure to its most directly comparable
forward-looking GAAP measure because management cannot reliably
quantify certain of the necessary components of such forward
looking GAAP measure. The reconciling items in future periods could
be significant.
SAFE HARBOR
This press release contains forward-looking statements regarding
future events and future results that are subject to the safe
harbors 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 facts included
in this release regarding NOG’s financial position, common stock
dividends, business strategy, plans and objectives of management
for future operations, industry conditions, capital expenditures,
production, cash flow, hedging and other matters are
forward-looking statements. When used in this release,
forward-looking statements are generally accompanied by terms or
phrases such as “estimate,” “guidance,” “project,” “predict,”
“believe,” “expect,” “continue,” “anticipate,” “target,” “could,”
“plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other
words and similar expressions that convey the uncertainty of future
events or outcomes. Items contemplating or making assumptions about
actual or potential future sales, production, drilling locations,
capital expenditures, market size, collaborations, and trends or
operating results also constitute such forward-looking
statements.
Forward-looking statements involve inherent risks and
uncertainties, and important factors (many of which are beyond
NOG’s control) that could cause actual results to differ materially
from those set forth in the forward-looking statements, including
the following: changes in crude oil and natural gas prices, the
pace of drilling and completions activity on NOG's properties and
properties pending acquisition, infrastructure constraints and
related factors affecting our properties, cost inflation or supply
chain disruptions, NOG's ability to acquire additional development
opportunities, integration and benefits of property acquisitions,
or the effects of such acquisitions on NOG’s cash position and
levels of indebtedness, the projected capital efficiency savings
and other operating efficiencies and synergies resulting from NOG’s
acquisition transactions, changes in NOG's reserves estimates or
the value thereof, general economic or industry conditions,
nationally and/or in the communities in which NOG conducts
business, changes in the interest rate environment, legislation or
regulatory requirements, conditions of the securities markets,
increasing attention to environmental, social and governance
matters, NOG's ability to consummate any pending acquisition
transactions (including the transactions described herein), other
risks and uncertainties related to the closing of pending
acquisition transactions (including the transactions described
herein), NOG's ability to raise or access capital, cyber incidents,
changes in accounting principles, policies or guidelines, events
beyond NOG’s control, including a global or domestic health crisis,
acts of terrorism, political or economic instability or armed
conflict in oil and gas producing regions or elsewhere, and other
economic, competitive, governmental, regulatory and technical
factors affecting NOG's operations, products and prices.
NOG 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 beyond NOG's control. Accordingly, results actually
achieved may differ materially from expected results described in
these statements. Forward-looking statements speak only as of the
date they are made. NOG does not undertake, and specifically
disclaims, any duty to update or revise any forward-looking
statements to reflect events or circumstances after the date of
such statements, except as may be required by applicable law or
regulation.
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version on businesswire.com: https://www.businesswire.com/news/home/20240725689562/en/
Evelyn Leon Infurna Vice President of Investor Relations (952)
476-9800 ir@northernoil.com
Northern Oil and Gas (NYSE:NOG)
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