MINNEAPOLIS — Northern Oil and Gas, Inc. has announced that it has entered into a definitive agreement to acquire the Williston Basin properties of VEN Bakken, LLC (Seller). Seller is a wholly-owned subsidiary of Flywheel Bakken, LLC (formerly Valorem Energy), a portfolio company of the Kayne Private Energy Income Funds. The assets to be acquired (the Assets) are expected to produce approximately 6,600 boed (2-stream) during the second half of 2019 and consist of approximately 18,000 net acres containing 86.9 net producing wells, 2.7 net wells in process, and 47.5 net undrilled locations across the heart of the Williston Basin. The Assets are expected to generate approximately $44.9 million in cash flow from operations (unhedged) during the second half of 2019, with an estimated second half capital expenditure budget of $15.6 million.
Total consideration to be paid to Seller consists of $165 million in cash, a $130 million 6% three-year senior unsecured note due 2022 and approximately 5.6 million shares of Northern’s common stock. The cash and note portions of the consideration are subject to typical closing and post-closing adjustments. The transaction is expected to close and be effective on July 1, 2019.
“This transaction furthers our stated goals of allocating capital to generate free cash flow in low commodity prices, keep debt metrics low, and grow our debt adjusted cash flow per share,” commented Brandon Elliott, CEO of Northern. “Durable cash flows, core drilling inventory, hedges and low leverage should help to generate long term value for shareholders.”
“At an accretive acquisition price of less than 3.5x cash flow, this asset should see multi-year production growth while being self-funding and still generating excess free cash flow,” commented Nick O’Grady, Chief Financial Officer of Northern. “The additional size and scale provided from this acquisition serve to continue to grow our borrowing base and reduce our per unit G&A costs to industry leading levels.”
Northern does not anticipate accessing the public equity or debt markets for this transaction.