Northern Oil and Gas, Inc. announces the acquisition of Williston Basin Bolton
• Targeted acquisition of $ 154 million of proven productive properties in the Williston Basin
•> 4,500 boe per day of production (2 flows, ~ 65% oil)
• Mature and shallow decline (approximately 18% decline in the first year expected)
• Northern owns existing interests in 84% of the drilling wells acquired, providing high confidence and visibility in the assets acquired.
• One-year unhedged forward operating cash flow is expected to be approximately $ 60 million at current retail price as of October 4, 2021, which is a transaction multiple of the purchase price of about 2.6 x
• De minimis capital expenditure is expected to result in a significant increase in the company’s free cash flow.
• Northern estimates the PV-10 PDP at around $ 205 million, based on the current strip price as of October 4, 2021
• The transaction is expected to be accretive for all significant valuation metrics including TEV / EBITDA, earnings per share, free cash flow and cash flow per share over a multi-year period.
• Northern reiterates current 2021 capital budget of $ 215-260 million
• Management submits a request to Northern’s board of directors for a 33.3% increase in the quarterly dividend to $ 0.06 per share upon closing of the transaction.
MINNEAPOLIS – (BUSINESS WIRE) – Northern Oil and Gas, Inc. (US NYSE: NOG):
ACQUISITION OF THE WILLISTON BASIN
Northern has entered into a definitive agreement to acquire undeveloped interests in more than 400 producing drilling wells located primarily in Williams, McKenzie, Mountrail and Dunn counties, North Dakota, for a purchase price of $ 154 million. dollars in cash, subject to typical closing adjustments. Northern expects to fund the acquisition with cash, free cash flow and borrowings under Northern’s revolving credit facility.
Northern expects a significant increase in its borrowing base from acquired and existing assets and will begin the process of expanding its chosen commitment when it re-determines borrowing base in the fall, which Northern it plans to complete in November 2021.
October production on assets is expected to be above 4,500 boe per day (2 streams, ~ 65% oil) and Northern expects average production of over 4,100 boe per day in 2022 (2 streams, ~ 65% petroleum). Northern expects negligible capital expenditure on the assets.
The assets acquired include 65.9 net producing wells. The assets are operated by several operators in the Williston Basin, and Northern owns existing interests in 84% of the drill wells acquired.
The effective date of the transaction is October 1, 2021 and Northern expects to close the transaction within 40 days.
INCREASE IN SHAREHOLDER RETURNS
In light of the large, low-risk cash flows from the acquired properties, management of Northern expects to submit to the Board of Directors a request for a 33.3% increase in the common share dividend for the fourth quarter of 2021, for shareholders of record as of December 31, 2021. This expected dividend increase of $ 0.06 per common share represents a 100% increase since the launch of a dividend program in May 2021. Under Delaware law , the Board of Directors may approve such a measure within 60 days of the date of registration.
“We remain consistent with our strategy,” commented Nick O’Grady, CEO of Northern. “The focus continues to be on the natural consolidator of vested interests and execution with financial discipline, focusing on cost of entry, return on capital employed and net cash flow for our shareholders. Despite the purchase
assets with cash, we still expect a leverage ratio of 1x by the end of 2022. With the expected dividend increase, we will have doubled our shareholder return program in less than five months since its creation. ”
“This is our third major transaction this year in so many basins,” commented Adam Dirlam, COO of Northern. “Our team’s ability to actively pivot has provided a consistent option to seek value enhancement opportunities in the most prolific basins in the United States.”
Kirkland & Ellis LLP is legal counsel to Northern.
ABOUT NORTHERN OIL AND GAS
Northern Oil and Gas, Inc. is a company whose primary strategy is to invest in undeveloped minority mining and mining interests in oil and gas properties, with a primary focus in major basins of the United States. More information about Northern Oil and Gas, Inc. can be found at www.northernoil.com.
This press release contains forward-looking statements regarding future events and future results which are subject to safe harbor rules 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 fact included in this press release regarding Northern’s financial condition, common stock dividends, including any increases thereof, business strategy, plans and objectives of management for operations. futures and industry conditions are forward-looking statements. When used in this press release, forward-looking statements are generally accompanied by words or expressions such as “estimate”, “plan”, “predict”, “believe”, “expect”, “continue”, ” anticipate “,” target, “” could “,” plan “,” intend “,” seek “,” objective “,” will “,” should “,” could “or other similar words and expressions which reflect the uncertainty of future events or results. 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, as well as important factors (many of which are beyond Northern’s control) that could cause actual results to differ materially from those set forth in forward-looking statements, including the following: changes in crude oil and natural gas prices, the pace of drilling and completion activity on Northern properties and properties pending acquisition, the effects of the COVID-19 pandemic and the associated economic downturn, Northern’s ability to acquire additional development opportunities, changes in Northern reserve estimates or value, general economic or sectoral conditions, nationally and / or in the communities in which Northern operates, changes in the interest rate environment, legal requirements lative or regulatory, securities market conditions, Northern’s ability to complete any pending acquisition transaction (including the transactions described herein), other risks and uncertainties associated with the closing of transaction transactions. ” pending acquisition (including the transactions described in this document), Northern’s ability to raise or access capital, changes in accounting principles, policies or guidelines, financial or political instability, actions war or terrorism, and other, 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 are beyond the control of Northern. Northern does not undertake any obligation to update or revise forward-looking statements, except as required by federal securities laws.
Mike Kelly, CFA
Chief Strategy Officer
Northern Oil and Gas Inc. published this content on 08 October 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on 08 October 2021 20:21:03 UTC.