Northern Oil and Gas has 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 US$220 million in cash, subject to typical closing adjustments.
The Acquired Assets are primarily located in Ward County, Texas and include approximately 4000 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 >4500 boe/d (2-stream, >75% oil). For the 4Q24, NOG expects average production of >3250 boe/d (2-stream, >75% oil) and approximately US$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 3Q24. As part of the transaction, NOG has placed a US$22 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.
“This transaction further emphasises 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.”