Northern Oil and Gas (NYSE:NOG) has agreed to acquire certain non-operated interests in the Delaware Basin from Alpha Energy Partners for an initial purchase price of $157.5M in cash.
The acquisition will be funded with cash on hand, operating free cash flow and borrowings under NOG’s revolving credit facility
NOG may deliver Alpha Energy additional cash consideration depending on average front month NYMEX WTI pricing during the first six months of 2023. The additional consideration, if any, would be paid in the third quarter of 2023.
The acquired assets are located in Lea and Eddy counties, New Mexico and Loving County, Texas, covering ~2,800 acres, 9.6 net producing wells, 2.8 net AFEs and wells-in-process and ~21.2 net undeveloped locations.
Mewbourne Oil is the primary operator of the assets, with Conoco and EOG being the other operators.
The bolt-on acquisition, expected to close in Dec 2022, will to be accretive to key financial metrics in 2023. Average production of ~3,000 to 3,500 Boe per day (68% oil, 2-stream) is expected for 2023, generating an estimated $46.5 to $54.3M of unhedged cash flow in 2023 based on strip pricing as of Sep 28, 2022.
Furthermore, strong growth and free cash flow profile with ~$32M average annual capital spending IS expected on the assets over the next three years, delivering expected production of over 4,000 Boe per day in 2024 and 2025.
Image and article originally from seekingalpha.com. Read the original article here.