Northern Oil and Gas buys core Williston Basin acreage

By Patrick C. Miller | July 31, 2018

Northern Oil and Gas Inc. of Minnetonka, Minnesota, has entered into a definitive agreement with W Energy Partners to purchase 10,600 core acres in the Williston Basin, the largest acquisition in Northern’s history.

At closing, the acquisition will represent approximately 6,750 barrels of oil equivalent per day (boepd) of production. Total consideration at closing will consist of $100 million in cash (subject to customary adjustments) and 56.37 million shares of Northern common stock, which will be subject to an equity lock-up feature.

“The W Energy acquisition will add robust drilling inventory under some of the best acreage in the Williston Basin,” said Mike Reger, Northern’s founder and president. “This asset fits perfectly with Northern’s existing core leasehold and drilling inventory and is highly complementary to our recently announced Pivotal acquisition. With significant excess cash flow from these acquisitions, we are in a position to further our strategy as the natural consolidator of non-operated working interests in the Williston Basin.”

The W Energy acquisition will enable Northern to generate significant free cash flow and substantially reduce leverage. The company’s preliminary estimate of production in the second quarter of 2018 exceeded expectations, increasing 52 percent year-over-year and nearly 17 percent sequentially to average approximately 21,045 boepd in the second quarter. Northern expects to exit 2018 generating substantial free cash flow and expects to have approximately $100 million of cash on hand at year end.

Brandon Elliott, Northern’s CEO, said, “Based on our preliminary estimates, production from our existing assets in the second quarter exceeded our expectations, driven primarily by outstanding organic well performance and a little less than a month of contribution from our recently closed Salt Creek acquisition.”