Northern Oil and Gas has agreed to purchase a portfolio of North Dakota oil properties for $295 million plus stock, its largest deal yet.
The Minnetonka-based company said it would buy approximately 18,000 net acres containing 86.9 net producing oil wells; 2.7 wells in process; and 47.5 undrilled locations in the core of North Dakota’s Williston Basin. The seller is a subsidiary of Houston-based Kayne Private Energy Income Funds.
Northern said the new assets are expected to produce 6,600 barrels of oil equivalent (BOE) during 2019’s second half, a figure encompassing both oil and gas. The company invests in leases and drilling projects in North Dakota.
With the deal, Northern anticipates generating $44.9 million in cash flow from operations (unhedged) during 2019’s second half, with an estimated capital expenditure of $15.6 million during the same time.
“Durable cash flows, core drilling inventory, hedges and low leverage should help to generate long term value for shareholders,” Northern Oil’s CEO Brandon Elliott said in a press statement. The deal is expected to close by July 1.
Northern Oil announced the purchase Monday after the stock market closed. The company’s stock was trading at $2.90 late Tuesday morning, up 16.5 cents or 6 percent.
Northern Oil will pay Kayne $165 million in cash, along with taking on a $130 million three-year unsecured note at 6% percent interest. The deal also includes 5.6 million shares of Northern stock. The company said it doesn’t expect to tap public equity or debt markets for the transaction.