Northern Oil and Gas signs deal to buy core Permian assets

Northern Oil and Gas has signed three agreements to acquire non-operated interests across nearly 2,900 core Permian acres for a total consideration of $102.2m.

These assets are operated primarily by EOG Resources, Mewbourne Oil Company, ConocoPhillips, and Colgate Energy.

The transaction involves 5.3 net producing wells, 5.0 net wells in process, as well as 23.1 net undrilled location in the core zones, including the Wolfcamp A, Wolfcamp B and 1-3 Bone Springs.

Located in the heart of Reeves County, Texas and Lea and Eddy Counties, New Mexico, the assets considered in the transaction reported production of approximately 2,200 barrels of oil equivalent per day (boepd) last month.

In the second half of this year, these assets are expected to have an average production of 3,700boepd.

Moreover, the production of these properties is anticipated to reach around 6,500boepd, subject to development over the coming years.

Northern chief operating officer Adam Dirlam said: “We are acquiring high return core properties with top operators, assets with significant inventory and growth potential, and engaging in a transaction expected to meaningfully impact Northern’s free cash flow profile.

“We expect to generate over $100m in free cash flow from the assets through 2025, based on current strip prices.”

The company has already purchased a portion of the assets in June. It plans to complete the acquisition of the remaining assets in the third quarter of 2021.

Northern chief executive officer Nick O’Grady said: “Consistent with our fundamental approach to growing our enterprise, these transactions achieve all of our stated goals.

“These deals are immediately accretive to our enterprise and all relevant per share statistics. As promised, alongside a reduction in leverage ratios, it means an acceleration of our dividend strategy to shareholders, while augmenting our inventory and growth profile.”

Earlier this year in the Delaware Basin, Lucid Energy started operations at the Red Hills V cryogenic processing plant.

The Red Hills V facility is capable of processing 230 million cubic feet of natural gas per day (MMcf/d).