[Context: On July 31, Crestview Partners-backed W Energy Partners sold Williston Basin assets to Northern Oil & Gas (NYSE American: NOG) for more than $300m ($100m in cash and 56.37m in common stock). Further details, advisors and related links are below.]
W ENERGY PARTNERS | CRESTVIEW PARTNERS
Northern Oil and Gas, Inc. Announces the Largest Acquisition in the Company’s History and Preliminary Second Quarter 2018 Production in Excess of 21,000 Boe per day
MINNEAPOLIS–July 31, 2018 –(BUSINESS WIRE)–Northern Oil and Gas, Inc. (NYSE American: NOG) announced today that it has entered into a definitive agreement with W Energy Partners for the largest acquisition in Northern’s history. At closing, the acquisition will represent approximately 6,750 barrels of oil equivalent (Boe) per day of production and 10,600 net acres in the core of the Williston Basin. Total consideration at closing will consist of $100 million in cash (subject to customary adjustments) and 56.37 million shares of Northern common stock, which will be subject to an equity lock-up feature.
In addition, Northern is pre-announcing preliminary second quarter 2018 average production of over 21,000 Boe per day, which is substantially above consensus expectations.
>>The W Energy assets are expected to produce approximately 6,750 Boe per day at closing, will add 10,600 net acres in the core of the Williston Basin, and will be meaningfully accretive on a cash flow and earnings basis
>>The W Energy acquisition, combined with the recently announced Pivotal acquisition, upon closing, will allow Northern to generate significant free cash flow and substantially reduce leverage
>>Northern’s preliminary estimate of production in the second quarter of 2018 exceeded expectations, increasing 52% year-over-year and nearly 17% sequentially to average approximately 21,045 Boe per day in the second quarter
>>Northern expects to exit 2018 generating substantial free cash flow and expects to have approximately $100 million of cash on hand at year end
“The W Energy acquisition will add robust drilling inventory under some of the best acreage in the Williston Basin,” commented Northern’s founder and President, Mike Reger. “This asset fits perfectly with Northern’s existing core leasehold and drilling inventory and is highly complementary to our recently announced Pivotal acquisition. With significant excess cash flow from these acquisitions, we are in a position to further our strategy as the natural consolidator of non-operated working interests in the Williston Basin.”
“Based on our preliminary estimates, production from our existing assets in the second quarter exceeded our expectations, driven primarily by outstanding organic well performance and a little less than a month of contribution from our recently closed Salt Creek acquisition,” commented Northern’s Chief Executive Officer, Brandon Elliott. “Upon the closing of both the Pivotal and W Energy acquisitions, we will be generating significant free cash flow along with below-peer leverage ratios. We look forward to welcoming Crestview Partners as another new, long-term shareholder.”
Northern has entered into a definitive purchase agreement with an affiliate of W Energy Partners, a portfolio company of Crestview Partners. The assets to be acquired comprise 10,600 acres and, at closing, an estimated 6,750 Boe per day of production. The acquisition is expected to generate approximately $95 million in cash flow in 2019, with an estimated 2019 base capital plan of approximately $42 million, representing a 17% free cash flow yield based upon purchase price. Total consideration at closing will consist of $100 million in cash (subject to customary adjustments) and 56.37 million shares of Northern common stock. The shares will be subject to a limited lock-up over a 13-month post-closing period, which includes a mechanism for additional consideration if Northern’s stock trades below certain price targets. The acquisition is expected to close in approximately 60 days, with an effective date of July 1, 2018.
Faegre Baker Daniels LLP acted as legal counsel for Northern. W Energy was advised on the sale process by RBC Richardson Barr with Vinson & Elkins LLP as legal counsel.
PRELIMINARY FINANCIAL INFORMATION
The foregoing preliminary unaudited financial and operating information, including production, net acres and estimated benefits of pending acquisitions, is based upon estimates and subject to completion of our financial closing procedures and external audit and interim review processes. Such financial information has been prepared by management solely on the basis of currently available information. The preliminary unaudited information does not represent and is not a substitute for a comprehensive statement of financial and operating results, and our actual results may differ materially from these estimates because of final adjustments, the completion of our financial closing procedures, and other developments after the date of this release.
ABOUT NORTHERN OIL AND GAS
Northern Oil and Gas, Inc. is an exploration and production company with a core area of focus in the Williston Basin Bakken and Three Forks play in North Dakota and Montana.
More information about Northern Oil and Gas, Inc. can be found at
ABOUT CRESTVIEW PARTNERS
Founded in 2004, Crestview Partners is a value-oriented private equity firm. The firm is based in New York and manages funds with over $7 billion of aggregate capital commitments. Crestview primarily focuses on specialty areas including energy, media, industrials and financial services. Within energy, Crestview is an active investor in the E&P sector, in addition to the oilfield services and midstream spaces.