Northern Oil and Gas, Inc. Announces Core Bolt-on Acquisition
June 10 2020 - 4:42PM
Business Wire
- Acquisition expected to produce approximately 1,200 Boe per day
in 2021, and wells are expected to be online in the first quarter
of 2021
- All acquisition and development capital included in Northern’s
previously stated budget
- Acquisition expected to generate $11.3 million of 2021 cash
flow from operations at June 5, 2020 strip prices; expected payback
period under 1.5 years
- Northern has entered additional commodity hedging instruments
at prices higher than the strip for 2021
Northern Oil and Gas, Inc. (NYSE American: NOG) (“Northern”)
announced today that it has entered into a definitive agreement to
acquire approximately 320 acres of core Williston Basin properties
operated by WPX Energy. Total consideration at closing will consist
of $1.5 million in cash for the acreage, subject to customary
adjustments. Closing is expected on July 1, 2020. Since signing,
Northern has received 9 gross well proposals to fully develop the
unit consisting of 2.1 net wells.
Northern expects approximately $12.5 million of development
capital through 2020 and early 2021, with expected initial sales in
the first quarter of 2021. The acquired assets are expected to
produce 1,200 barrels of oil equivalent (Boe) per day and produce
an estimated $11.3 million of unhedged cash flow from operations in
2021 at the current commodity pricing strip as of June 5, 2020.
Inclusive of the development capital and acquisition costs,
Northern expects a payback period of under 1.5 years.
All acquisition and associated development capital has already
been accounted for in Northern’s recent 2020 capital budget.
In addition, Northern entered into additional crude oil
derivative swaption transactions to hedge a portion of the
production associated with this and other transactions at an
average of $45.48 per barrel for 2021 for 1,500 barrels per day.
That average price is approximately $3.85 higher than the
underlying strip price used to calculate the estimated cash flow
stream described above.
MANAGEMENT COMMENT
“We have consistently believed this environment would create
opportunities for our shareholders in 2020 and beyond, and budgeted
for opportunities like this,” commented Northern’s Chief Operating
Officer, Adam Dirlam. “This acquisition, while modest in size, is
located in the heart of the core with one of the top operators in
the Williston Basin and highlights Northern’s competitive advantage
as an actively managed non-operator. We expect this deal to be
materially accretive to cash flow in 2021, yet represents no
additional capital spending to our stated 2020 budget.”
ABOUT NORTHERN OIL AND GAS
Northern Oil and Gas, Inc. is an exploration and production
company 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 results of operations,
business strategy, plans and objectives of management for future
operations, actual or potential future production and cash flow,
industry conditions, timing and benefits of pending acquisitions,
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,” “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.
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: the completion of the transactions
contemplated by the definitive agreement described above, the
effects of the COVID-19 pandemic and related economic slowdown,
changes in crude oil and natural gas prices, the pace of drilling
and completions activity on Northern’s current properties and
properties pending acquisition, 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 raise or access
capital, changes in accounting principles, policies or guidelines,
financial or political instability, acts of war or terrorism, and
other economic, competitive, governmental, regulatory and technical
factors affecting Northern’s operations, products, services and
prices. Additional information concerning potential factors that
could affect future financial results is included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2019, as
updated from time to time in amendments and subsequent reports
filed with the SEC.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200610005844/en/
Northern Oil and Gas, Inc. Mike Kelly, 952-476-9800 Executive
Vice President, Finance mkelly@northernoil.com
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