NOG announces joint acquisition with SM Energy; entering the Uinta Basin with the largest transaction in the company’s history; very favorable for key financial indicators

Oil and Gas 360

---

MINNEAPOLIS–(BUSINESS WIRE)– Northern Oil and Gas, Inc. (NYSE: NOG) (the “Company” or “NOG”) announced today that it has entered into a definitive agreement to acquire a 20% undivided interest in XCL Assets in partnership with SM Energy Company for a net purchase price to NOG of $510.0 million in cash, subject to customary closing adjustments.

The acquired assets are located primarily in Uintah and Duchesne counties, Utah, and consist of approximately 9,300 net acres and 97.6 guaranteed net greenfield sites, normalized to 10,000-foot spur lines. Significant additional growth sites remain in Deep and Upper Cube. The development plan is based on a conservative and extended spur line from the current operator. The Company anticipates a significant return on investment from increased spur lengths (expanded to 3 miles) and cost savings from an integrated, co-owned sand mine facility that is scheduled to be operational within twelve months.

Following the closing and transfer of services, SM will be the operator of almost all assets, while NOG will participate in development pursuant to the cooperation and joint development agreements concluded in connection with the acquisition.

Recent production from the Acquired Assets was >10,500 Boe per day (2 streams, >85% oil). Upon closing in 2024, NOG expects average production of >10,000 boe/d (dual streams, >85% oil) and capital expenditures of approximately $45 million. Longer term, NOG expects SM to supply NOG with an average of approximately 7-9 wells per year, which is expected to maintain production at >10,000 Boe per day (2 streams, >85% oil).

The effective date of the transaction is May 1, 2024, and SM and NOG expect the transaction to close in late third quarter or early fourth quarter 2024. As part of the transaction, NOG has deposited $25.5 million in escrow prior to closing. The parties’ obligations to complete the acquisition are subject to the satisfaction or waiver of customary closing conditions.

COMMENTS BY THE MANAGEMENT BOARD

“NOG continues to define itself as a leading domestic, non-operating franchise, with low leverage, growing cash returns, diversified both by region and commodity mix. The acquisition of XCL is consistent with our strategy of investing in top quality assets with significant growth potential and long-term headroom, developed and managed by leading operators,” commented Nick O’Grady, CEO of NOG. “The Uinta Basin has become one of the best and fastest-growing oil resources in the United States, and SM is well-established as one of our best and most responsible operators. We look forward to working with them for many years to come. We believe this transaction will be the most accretive in our history, delivering net earnings per share and free cash flow benefits both immediately and over the long term.”

“With XCL, we are acquiring a multi-level fee position with significant long-term growth potential,” commented Adam Dirlam, CEO of NOG. “These assets exemplify our earnings-focused strategy: immediate delivery while offering significant exploration potential, which further enhances NOG’s optionality. As with our previous co-development transactions, we have developed a tailored, conservative development and management plan with a proven E&P firm. We continue to be the partner of choice for our operators as the largest, best-capitalized and most reliable working interest owner in the United States.”

ADVISORS

RBC Capital Markets is serving as financial advisor to NOG in the acquisition. Jefferies LLC is serving as exclusive financial advisor to XCL.

Kirkland & Ellis LLP is legal counsel to NOG. Vinson & Elkins LLP is legal counsel to XCL.

PREVIOUSLY RECORDED DISCUSSION

NOG has posted a recorded investor discussion and presentation regarding this announcement on its website. The recorded discussion can be accessed here: Joint Acquisition of XCL.

ABOUT THE LEG

NOG is an asset company whose primary strategy is to acquire and invest in unoperated minority mining and mineral interests in major hydrocarbon-producing deposits in the contiguous United States. More information about NOG can be found at www.noginc.com.

SAFE PORT

This press release contains forward-looking statements about future events and future results that are subject to the safe harbors created by 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, contained in this release regarding NOG’s financial condition, results of operations and financial results, business strategy, dividend plans and practices, plans and objectives of management for future operations, industry conditions, capital expenditures, production, cash flows, hedging and other matters are forward-looking statements. In this release, forward-looking statements are typically identified by terms or phrases such as “estimate,” “guidance,” “project,” “anticipate,” “believe,” “expect,” “continue,” “predict,” “goal,” “could,” “plan,” “intend,” “seek,” “target,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or results. Items that consider or make assumptions about actual or potential future sales, production, drilling locations, capital expenditures, market size, partnerships, 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 NOG’s control) that could cause actual results to differ materially from those contemplated by the forward-looking statements, including: changes in crude oil and natural gas prices; the pace of drilling and completion on NOG’s properties and properties pending acquisition; infrastructure constraints and related factors affecting NOG’s properties; cost inflation or supply chain disruptions; ongoing legal disputes relating to and the potential closure of the Dakota Access Pipeline; NOG’s ability to acquire additional development opportunities, potential or pending acquisitions (including the transactions described herein), anticipated capital efficiency savings and other operating efficiencies and synergies resulting from NOG’s acquisitions, integration and property acquisition benefits or the effects of such acquisitions on NOG’s cash position and debt levels; changes in NOG reserve estimates or values; disruptions to NOG’s operations due to acquisitions and other significant transactions; general economic or industry conditions, nationally and/or in the communities in which NOG operates; changes in the interest rate environment, legal or regulatory requirements, or securities market conditions; increased attention to environmental, social and governance matters; NOG’s ability to complete any pending acquisitions (including the transactions described herein); other risks and uncertainties related to the completion of pending acquisitions (including the transactions described herein); NOG’s ability to raise or access capital; cybersecurity incidents; changes in accounting rules, policies or guidelines; events beyond NOG’s control, including global or national health crises, acts of terrorism, political or economic instability or armed conflict in oil and gas producing regions or elsewhere; and other economic, competitive, governmental, regulatory and technical factors affecting NOG’s business, products and prices.

NOG has based these forward-looking statements on its current expectations and assumptions regarding future events. While management believes these expectations and assumptions are 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 NOG’s control. As a result, actual results achieved may differ materially from the anticipated results described in these statements. Forecasts speak only as of the date they are made. NOG does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of such statements, except as required by applicable law or regulation.

Source: Northern Oil and Gas, Inc.