Northern Oil and Gas, Inc (NYSE American: NOG) has announced that it has entered into a definitive agreement to buy non-operated interests across over 400 producing wellbores for $154 million in cash, subject to typical closing adjustments.
The wellbores are located primarily in Williams, McKenzie, Mountrail and Dunn Counties, ND, the company revealed, adding that it expects to fund the acquisition with cash on hand, operating free cash flow and borrowings under its revolving credit facility. The effective date for the transaction is October 1 and Northern anticipates closing the deal within 40 days.
October production on the assets is expected to be greater than 4,500 barrels of oil equivalent per day and average more than 4,100 barrels of oil equivalent per day in 2022. The assets, which are operated by multiple operators, include 65.9 net producing wells.
“We remain consistent with our strategy,” Nick O’Grady, the chief executive officer of Northern Oil and Gas said in a company statement. “The focus continues on being the natural consolidator of working interests and executing with financial discipline, concentrating on cost of entry, return on capital employed and cash flow net to our shareholders,” he added.
“Despite purchasing the assets with cash, we still expect a 1x leverage ratio by year-end 2022. With the planned dividend increase, we will have doubled our shareholder return program in less than five months since inception,” O’Grady went on to say.
Adam Dirlam, the chief operating officer of Northern Oil and Gas, said, “this is our third major transaction this year in as many basins”.
“Our team’s ability to actively pivot has provided for consistent optionality to pursue value enhancing opportunities in the most prolific basins across the U.S,” he added.
Back in June, Northern Oil and Gas announced that it had entered into three definitive agreements to acquire non-operated interests across approximately 2,900 net acres located in the heart of Reeves County, Texas, and Lea and Eddy Counties, New Mexico, for a combined purchase price of $102.2 million. In April, the company revealed that that it had closed its previously announced acquisition of properties owned by Reliance Marcellus, LLC. When this deal was first announced in February, it was described as a transformational acquisition in the Marcellus shale.
Northern Oil and Gas is the largest non operated exploration and production company in the United States, according to its website. The company has a primary strategy of investing in non operated minority working and mineral interests in oil and gas properties, with a core area of focus in the premier basins within the United States, its website highlights.
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