One of the latest acquisitions in the Permian Basin was announced by Northern Oil and Gas, Inc.
It reached a deal to acquire a 33.33% undivided stake in the Novo Assets in partnership with Earthstone Energy. Purchase price? $500 million in cash and subject to customary closing adjustments according to the announcement.
The assets are primarily located in Eddy County, New Mexico and eastern Culberson County, Texas and include approximately 5,600 net acres, 29.2 net producing wells, 7.2 net wells-in-process and 59.9 low-breakeven net undeveloped locations.
NOG’s net working interest in the acquired assets will be approximately 29%, with an average gross NRI of 77%. The Eddy County assets represent approximately 80% of the allocated value of the transaction. Approximately 98% of the Culberson County allocated value is tied to current production and wells-in-process.
Here’s why NOG wanted to buy into the assets. The recent production was approximately 13,000 Boe per day (2-stream, 54% oil). For the second half of 2023, NOG expects average production of approximately 11,500 Boe per day (2-stream, 53% oil) and approximately $20 million of capital expenditures.
Long term, NOG expects Earthstone to turn in line an average of approximately 6 – 7 wells annually net to NOG, which should sustain production at approximately 10,000 Boe per day (2-stream, excluding NGLs), with consistent oil cuts as a percentage of the total.