NOG will obtain a 36.7% stake in the Mascot project for a purchase price of $330m in cash, subject to adjustments, and acquire interest in the midstream assets and associated infrastructure, which represent $36m of the total consideration
NOG to acquire Mascot project. (Credit: WORKSITE Ltd. on Unsplash)
Northern Oil and Gas (NOG) has signed a definitive agreement with Midland-Petro DC Partners (MPDC) to acquire certain properties in the core of the Midland Basin in the US.
Under the terms of the deal, NOG will obtain a 36.7% stake in the Mascot project for a purchase price of $330m in cash, subject to adjustments.
The acquisition includes four drilling spacing units, 12.1 net producing wells, 5.5 net wells-in-process and around 17.3 net undeveloped locations, all located in Midland County, Texas.
NOG expects to produce an average of around 4,400BOE per day in the first quarter of 2023 and about 6,450BOE per day for the full year 2023, from the acquired properties.
The acquisition also includes an interest in the midstream assets and associated infrastructure, which represent $36m of the total consideration of the transaction.
The company intends to fund the transaction using cash on hand, operating free cash flow and borrowings from its revolving credit facility.
NOG chief executive officer Nick O’Grady said: “With this transaction, we showcase NOG’s expanding capabilities. Beyond just a consolidator of non-operated interests, NOG is proving itself to be an adept and preferred partner for the development of high-quality assets.
“This transaction carries a clear and strong development plan that should deliver substantial returns for our investors. Mr Arrington and his team have dedicated over five years to develop this project, and we would like to thank him and his stellar operating team for the opportunity to help see it through.”
The Mascot project is operated by Permian Deep Rock Oil Company, a subsidiary of MPDC.
NOG and MPDC have created a joint operating agreement for the project, with plans to fully develop the units and complete the drilling in 2024.
The transaction is expected to complete the transaction in January 2023, subject to the satisfaction or waiver of customary closing conditions.
Citigroup Global Markets served as a financial advisor, Kirkland & Ellis as the legal advisor to NOG, while Petrie Partners served as a financial advisor, and Hunton Andrews Kurth served as the legal advisor to MPDC.
NOG president Adam Dirlam said: “This acquisition has unique properties versus almost any prior transaction NOG has done.
“As typical, it is focused on one of the highest quality regions in the U.S., but what differentiates this transaction is the surety of development timing and returns, with a clear line of sight to turning valuable acreage into significant free cash flow, rapidly and efficiently.”
Earlier this month, NOG agreed to acquire certain non-operated interests in the northern part of the Delaware Basin, US for $130m in cash from an undisclosed seller.