Northern Oil and Gas expands Uinta Basin holdings with $17.5m acquisition

Northern Oil and Gas, Inc. (NYSE: NOG) is set to significantly increase its presence in the Uinta Basin following its decision to acquire a 20% undivided interest in the Altamont Assets. The deal, valued at $17.5 million, will enhance the company’s holdings in Utah and is expected to close in early Q4 2024, coinciding with the completion of the XCL Resources acquisition.

In a strategic move to broaden its footprint in the Uinta Basin, Northern Oil and Gas, Inc. has announced the acquisition of a 20% stake in the Altamont Assets, a deal valued at $17.5 million. This acquisition, net to Northern Oil and Gas, includes approximately 6,500 net acres situated primarily in Uintah and Duchesne Counties, Utah. Initial estimates suggest the properties could contain about 18 net undeveloped locations and produce approximately 250 barrels of oil equivalent per day.

The Altamont Assets, previously under contract with XCL Resources, were presented to Northern Oil and Gas and SM Energy Company through a right of first refusal. The deal will see SM Energy operating most of the assets, while Northern Oil and Gas will engage in development activities as outlined in cooperation and joint development agreements tied to the XCL acquisition.

The expansion is a pivotal component of Northern Oil and Gas’s strategy to increase its holdings in the Uinta Basin. The company’s total Uinta acreage will rise to approximately 15,800 net acres, with an estimated 116 net undeveloped locations, representing a significant boost in its exploration and production potential.

Strategic Impact and Management Comments

Nick O’Grady, Chief Executive Officer of Northern Oil and Gas, highlighted the strategic importance of this acquisition. “We are excited to execute the option to purchase additional Uinta assets under our Area of Mutual Interest agreement with SM. The Altamont Assets increase our Uinta footprint substantially and are a testament to the benefits of the joint venture structures we have pursued in recent years. This transaction grows our estimated Uinta inventory by nearly 20% and, given the 70% increase in acreage, provides significant future exploration potential for a minimal cash outlay.”

Advisors and Financing Details

The transaction was supported by RBC Capital Markets, which acted as the financial advisor to Northern Oil and Gas for both the XCL and Altamont acquisitions. Legal representation was provided by Kirkland & Ellis LLP. The purchase will be financed using a combination of cash flow from operations, existing cash reserves, and borrowings from Northern Oil and Gas’s Senior Secured Revolving Credit Facility.

Market Context and Future Prospects

Northern Oil and Gas’s acquisition aligns with a broader trend of increased investment in the Uinta Basin, a region known for its rich deposits of oil and natural gas. The Uinta Basin is a key area for unconventional oil production, particularly from the Green River Formation, which is known for its substantial oil shale deposits. This acquisition will likely position Northern Oil and Gas to capitalise on the region’s exploration and production opportunities.

The XCL Resources deal, which is set to close alongside the Altamont transaction, is part of a larger strategy by Northern Oil and Gas to consolidate its assets and enhance operational efficiencies in the basin. The company’s aggressive expansion efforts underscore its commitment to growing its portfolio and leveraging joint venture agreements to maximise shareholder value.