Northern Oil and Gas has signed an agreement to acquire producing wells in the Williston Basin in North Dakota, US, from Pivotal Petroleum Partners, a portfolio company of funds managed by private equity firm Tailwater Capital.
The acquisition will bolster the company’s Williston Basin position and add more than 4,100 barrels of oil equivalent (boe) a day to its production.
Under the terms of the agreement, Northern will pay $68.4m in cash and 25.75 million shares of common stock.
Northern Oil and Gas founder and president Mike Reger said: “This transaction in the core of the Williston Basin is transformative for Northern, with both strong free cash flow and a high rate of return.
“The combination of this asset, along with our significant and growing core inventory of future drilling locations and the outstanding well results we have seen so far in 2018, will achieve our goal to be cash flow positive upon closing, with below-peer debt metrics in 2019.
“We look forward to welcoming Pivotal as a new, significant shareholder in Northern.”
Scheduled to be completed in around 60 days, the acquisition is set to be accretive to cash flow and earnings per share through 2020.
Northern expects to become cash flow positive once the transaction is closed and to realise $56m of cash flow from the acquired asset’s operations over the next 12 months.
Northern also plans to sign hedge agreements for a significant portion of the acquired volumes.
The company’s core area of focus is in the Williston Basin Bakken and Three Forks play in North Dakota and Montana.
