HIGHLIGHTS

Northern Oil and Gas (NOG) has entered into a definitive agreement to acquire a 49% stake in Ohio Utica Shale Assets in partnership with Infinity for a purchase price, net to NOG, of $588.0 million in cash, subject to customary closing adjustments.

UPSTREAM ASSETS

The Acquired Assets are located in the Utica shale of eastern Ohio and include approximately 35,000 net acres with over 100 gross identified undeveloped locations.

The acquired upstream asset is one of the few remaining growth assets in the core of the Utica that can support a full rig development pace for multiple years. The upstream asset has an expected 2026 production, net to NOG, of ~65 MMcfe per day (2-stream, 92% gas) for 2026 with a 30%+ compound annual growth rate in production through the end of the decade, assuming a development plan with a continuous one rig program. The upstream asset represents a ~43% working interest net to NOG. In addition, the asset features a low PDP decline rate of ~15% in the next twelve months, falling to ~13% over the next several years. The asset is expected to generate ~$100MM in unhedged cash flow from operations net to NOG in 2026 at recent strip prices with ~19% generated by the midstream assets. The substantial growth expected on the assets on a go-forward basis is based on an average annual capital program of ~$100 million at a single rig cadence.

MIDSTREAM ASSETS

Captive midstream offers opportunity to drive best in class margins with limited incremental midstream growth-capital required. The midstream system has been built to accommodate a peak historical gross level of ~600 MMcfe per day. Significant midstream infrastructure with 140 miles of pipe supporting low- and high-pressure gathering, compression and 90 miles of water delivery systems. The Acquired Assets are positioned to realize improved pricing via direct connections to premium out of basin markets via the Tallgrass Rex pipeline.

The midstream system has ample capacity at regional processing plants (MPLX/Blue Racer) to grow future volumes and provides optionality across phase windows driven by both a rich and dry gas system. Midstream cash flows are expected to grow by 75% by 2028. NOG also believes that third party volume opportunities exist over time driving higher throughput and generating fee-based revenue, creating further upside.

Upon closing and transition of services, Infinity will be the operator of substantially all of the assets, with NOG participating in development pursuant to cooperation and multi-year joint development agreements entered into in connection with the acquisition.

The effective date for the transaction is July 1, 2025, and closing is expected by the end of the first quarter of 2026. Due to the effective date, NOG expects to receive a material downward closing purchase price adjustment. In connection with signing, NOG is placing a $58.8 million deposit in escrow. The obligations of the parties to complete the acquisition are subject to satisfaction or waiver of customary closing conditions.

MANAGEMENT COMMENTS

'NOG is singularly focused on executing transactions that add value to our platform for the long-term. We are extremely pleased to be partnering with Infinity on one of the last growth assets in the core of the Utica. The vertical integration of this asset adds an incremental dimension of value creation for shareholders and enhances resiliency with lower breakevens to generate free cash flow through cycle,' commented Nick O’Grady, NOG’s Chief Executive Officer. 'The Utica has emerged as one of the target rich natural gas plays in the United States. Infinity has already been a strong operating partner for NOG, and we share their focus on creating value. Our alignment in that vein sets the ground for a successful partnership, and we look forward to working together to achieve our mutual desire to generate returns for our respective investors. This transaction is now the largest we have done to date and is an excellent addition to our Appalachian portfolio, offering the benefit of an integrated midstream and a long-term, visible growth path well past the end of the decade.'

'This Utica transaction exemplifies the intersection where NOG shines – identifying and acquiring best in class assets with the potential for significant long-term upside while also providing valuable capital to like-minded operators seeking to expand their footprint,' commented Adam Dirlam, NOG’s President. 'These assets epitomize our returns-focused strategy: delivering immediately while offering significant growth potential further enhancing NOG’s optionality. Importantly, like our precedent joint development transactions, we have devised an aligned, conservative development and governance plan with a proven E&P company. We continue to be the partner of choice for our operators as the largest, best capitalized and most dependable non-op working interest owner in the United States.'

ADVISORS

Moelis & Company served as financial advisor to NOG for the acquisition.

Gibson, Dunn & Crutcher LLP is serving as legal counsel to NOG for the acquisition.

Original announcement link

Source: Norther Oil and Gas