Northern Oil and Gas teams in Permian acquisition

Northern Oil and Gas (NOG) said June 15 it had entered into a definitive agreement to partner with Earthstone Energy in the acquisition of a 33.3% undivided interest in certain Permian Basin assets from Novo Oil & Gas for $500mn.

Concurrently, Earthstone said it had entered into an agreement to acquire all of Novo, a privately-held company backed by EnCap Investments, for $1.5bn. With the transaction, Earthstone will retain 66.6% of Novo at an effective price of $1bn.

The acquired assets, in the Delaware basin of the Permian, recently produced about 13,000 barrels of oil equivalent (boe)/day, 54% of which was oil. NOG expects second half production to average about 11,500 boe/day, 53% oil.

Net to Earthstone’s interest, the assets recently produced about 38,000 boe/day (37% oil, 66% liquids) from 114 wells.

The transaction is expected to close in Q3 2023, with an effective date of May 1, 2023, subject to customary closing conditions.