HIGHLIGHTS
- Acquisitions in total consist of 400 net acres, 0.7 net
producing wells, 1.9 net wells in process and 1.0 net undrilled
locations in the core of the Williston Basin
- Production from acquisitions primarily expected to come online
in mid-2021 and average approximately 820 Boe per day in total for
2021
- Initial acquisition costs of $3.2 million in cash and 2.95
million shares of common stock
- Northern expects to pay back its acquisition costs and
development capital expenses related to the properties within
approximately 3 years, and still retaining additional future upside
inventory
- Executed additional exchange agreements which will retire $4.0
million of Senior Notes and $7.6 million of Preferred Stock
Northern Oil and Gas, Inc. (NYSE American: NOG) (“Northern” or
the “Company”) today announced that it has entered into definitive
agreements to acquire producing properties, wells in process and
acreage in the core of the Williston Basin from multiple
counterparties (the “Sellers”). In addition, the Company has
entered into exchange agreements with holders of its Senior Notes
due 2023 and its Series A Preferred Stock.
ACQUISITIONS
Northern has acquired or entered into agreements to acquire
non-operated interests for approximately 400 net acres, 0.7 net
producing wells, 1.9 net wells in process and 1.0 net undrilled
locations from undisclosed Sellers. These assets are primarily
operated by Conoco, Continental Resources and WPX Energy and
located in McKenzie, Mountrail and Dunn counties. The bulk of the
wells in process are expected to come online in the summer of
2021.
All acquisition and development capital in 2020 remains within
Northern’s previously stated capital budget.
Total consideration to be paid to the Sellers consists of $3.2
million in cash and approximately 2.95 million shares of Northern’s
common stock, subject to a 180-day lock-up. Additional
consideration of up to 450,000 shares shall be paid to the Seller
receiving equity consideration, assuming full operation of the
Dakota Access Pipeline over a twelve-month period. These
transactions are expected to close within 60 days.
Northern is providing a multi-year forecast for production
(2-stream), operating cash flow, and development capital for the
acquired properties on an unhedged basis, based on recent strip
pricing as of July 27, 2020. Northern expects to payback its
acquisition costs and expected 2020-2022 capital development
expense related to the properties within approximately 3 years
given the strong free cash flow profile of the assets.
Acquisition Forecast:
2020
2021
2022
2023
Net Wells Turned-in-Line
0.0
1.9
0.3
0.1
Forecasted Production (boe/d)
41
820
784
566
Cash Flow from Operations
$0.1
$8.7
$8.2
$5.9
Development Capital Expenditures
$4.0
$10.5
$2.1
$0.8
MANAGEMENT COMMENT
“We continue to add to our core inventory,” commented Adam
Dirlam, Chief Operating Officer of Northern. “Record levels of
wells-in-process should drive strong volumes, and improve upon our
return on capital employed metrics in 2021 and beyond.”
BALANCE SHEET ENHANCEMENT
Northern entered into an exchange agreement with a holder of the
Company’s 8.5% senior secured notes due 2023. Pursuant to this
agreement, the Company agreed to issue $3.7 million in common
stock, in exchange for $4.0 million aggregate principal amount of
the Notes, based on a forward pricing mechanism. This includes all
accrued interest for the period. This transaction is expected to
close on or about September 8, 2020. Upon closing of this
transaction, the Company expects to have approximately $293.3
million remaining principal amount of Notes outstanding, a
reduction of $124.4 million since year end 2019.
Northern entered into an exchange agreement with a holder of the
Company’s 6.5% Series A Perpetual Cumulative Convertible Preferred
Stock. Pursuant to this agreement, the Company agreed to issue $4.0
million in common stock, in exchange for $7.6 million of
liquidation value of the Preferred Stock, based on a forward
pricing mechanism. This transaction is expected to close on or
about September 8, 2020. Upon closing of this transaction, the
Company expects to have approximately $221.9 million remaining
liquidation value of Preferred Stock outstanding.
These transactions will reduce Northern’s fixed charges by over
$800,000 on an annual basis, assuming full payment of the preferred
dividend.
MANAGEMENT COMMENT
“Northern has continued to methodically reduce its liabilities,”
commented Chad Allen, Chief Financial Officer of Northern. “We
continue a path of acquiring and growing our enterprise while
simultaneously reducing risk for our stakeholders.”
ADVISORS
Kirkland & Ellis acted as exclusive legal advisor to
Northern in connection with the transaction.
ABOUT NORTHERN OIL AND GAS
Northern Oil and Gas, Inc. is a company with a primary strategy
of investing in non-operated minority working and mineral interests
in oil & gas properties, with a core area of focus in the
Williston Basin Bakken and Three Forks play in North Dakota and
Montana.
More information about Northern Oil and Gas, Inc. can be found
at www.NorthernOil.com.
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 Northern’s financial position, business
strategy, plans and objectives of management for future operations
and industry conditions are forward-looking statements. When used
in this release, forward-looking statements are generally
accompanied by terms or phrases such as “estimate,” “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, 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
Northern’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 Northern’s
properties and properties pending acquisition, the effects of the
COVID-19 pandemic and related economic slowdown, infrastructure
constraints and related factors affecting our properties, ongoing
legal disputes over and potential shutdown of the Dakota Access
Pipeline, Northern’s ability to acquire additional development
opportunities, changes in Northern’s reserves estimates or the
value thereof, general economic or industry conditions, nationally
and/or in the communities in which Northern conducts business,
changes in the interest rate environment, legislation or regulatory
requirements, conditions of the securities markets, Northern’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),
Northern’s ability to raise or access capital, changes in
accounting principles, policies or guidelines, financial or
political instability, health-related epidemics, acts of war or
terrorism, and other economic, 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 beyond Northern’s control. Northern does not undertake
any duty to update or revise any forward-looking statements, except
as may be required by the federal securities laws.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200731005071/en/
Mike Kelly, CFA EVP, Finance (952) 476-9800
ir@northernoil.com
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