Northern Oil and Gas, Inc. (NYSE: NOG) announced today that it has finalized a definitive agreement to acquire a 20% undivided interest in the XCL Assets in partnership with SM Energy Company. The cash purchase price net to NOG is $510.0 million, subject to customary closing adjustments.
The acquired assets are primarily situated in Uintah and Duchesne Counties, Utah, encompassing about 9,300 net acres and 97.6 underwritten net undeveloped locations with 10,000 foot laterals normalized. Significant upside potential remains in the Deep and Upper Cube areas. The development strategy involves conservative spacing adjustments and potential for extended lateral lengths up to 3 miles, with cost efficiencies expected from an integrated co-owned sand mine facility set to begin operations within twelve months.
Following the transaction’s closure and transition, SM Energy will operate most of the assets, while NOG will participate in development under cooperation and joint development agreements established in connection with the acquisition.
Recent production from the acquired assets exceeded 10,500 barrels of oil equivalent per day (>85% oil). Post-closing in 2024, NOG anticipates average production of over 10,000 barrels of oil equivalent per day (>85% oil) with approximately $45 million in capital expenditures. Long-term projections include SM turning in line an average of 7 – 9 wells annually net to NOG, sustaining production levels above 10,000 barrels of oil equivalent per day (>85% oil).
The effective date for the transaction is May 1, 2024, with the anticipated closing slated for late Q3 or early Q4 2024. NOG has deposited $25.5 million into escrow as part of the transaction, contingent upon customary closing conditions being met or waived by the parties.
