Oil

Northern Oil makes third Delaware Basin acquisition since August

Northern Oil and Gas continues amassing Permian Basin assets, announcing its third acquisition in the basin since August.

The Minnetonka, Minnesota-based company agreed to acquire non-operated assets, located in Eddy and Lea counties, New Mexico, and Loving and Winkler counties from a private seller for $130 million in cash.

The acquisition brings with it approximately 2,100 net acres, 5.3 net producing wells, 2.1 wells-in-process and approximately 17.2 net undeveloped locations. Primary operator of the assets is Mewbourne Oil; others include Coterra and Permian Resources. The company called it significant Tier 1 inventory with average break-evens below $40 a barrel.

Northern Oil’s run of Permian Basin acquisitions got a jumpstart earlier this year when the company closed a $406.5 million purchase of Veritas Energy’s non-operated Permian Basin assets, its largest acquisition to date. 

The company has also announced a $157.5 million deal to acquire certain non-operated working interests located in Eddy and Lea counties and Loving counties from Alpha Energy Partners. The purchase includes 2,800 net acres, 9.8 net producing wells, 2.8 net authorizations for expenditure and wells in process.

Northern also acquired non-operated properties in Howard County from Laredo Petroleum in August for $110 million.

Average production from this latest acquisition is expected to be about 2,500 barrels of oil equivalent per day in 2023, generating an estimated $55 million of unhedgged cash flow next year, based on strip pricing as of Oct. 10. Northern expects capital spending of $25 million next year on the assets.

“This transaction lies squarely in NOG’s fairway on a number of levels,” NOG President Adam Dirlam said in announcing the transaction. “The assets contain high-quality, low break-even development that is leveraged to some of NOG’s top operating partners, as our investors have come to expect.”
Northern’s primary strategy is investing in non-operated minority working and mineral interests in oil and gas operations, with a core area of focus in the premier basins in the US. It is the largest publicly traded non-operated exploration and production company.

 

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