Northern Oil and Gas buys Williston basin assets in its largest acquisition to date

MINNEAPOLIS -- Northern Oil and Gas, Inc., has announced 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 boed 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 boed, which is substantially above consensus expectations.

Highlights:

• The W Energy assets are expected to produce approximately 6,750 boed 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 boed 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

Acquisition

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 bpd 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.