Northern Oil and Gas to acquire Delaware Basin assets from Alpha Energy Partners

Northern Oil and Gas (NOG), a US-based energy company, has signed an agreement with Alpha Energy Partners to acquire its non-operated interests in the Delaware Basin for $157.5 million in cash.

Located in Lea and Eddy counties, New Mexico and Loving County, Texas, the assets consist of approximately 2,800 acres, 9.6 net producing wells, 2.8 net authorization for expenditure (AFEs), and wells-in-process and approximately 21.2 net undeveloped locations.

Mewbourne Oil is the main operator of the assets, while the other operators include Conoco and EOG.

Nick O’Grady — Northern Oil and Gas CEO said: “NOG continues to execute on creating shareholder value as a proven, reliable and disciplined consolidator of working interest. These assets are squarely in our core focus area and are poised to deliver substantial growth over the coming years, while delivering significant cash flow to bolster shareholder returns.”

Northern Oil and Gas to acquire Delaware Basin assets from Alpha Energy Partners for $157.5m. Photo courtesy of John R Perry from Pixabay.

The assets included in the acquisition are expected to record average production of about 3,000 to 3,500 Boe per day (68% oil, 2-stream) in 2023.

In addition, they are anticipated to see approximately $32 million average annual capital spending expected on the assets over the next three years, with an expected production of more than 4,000 Boe per day in 2024 and 2025.

Adam Dirlam — Northern Oil and Gas President said: “The Northern Delaware Basin continues to be a key target for our consolidation efforts. This asset has some of the highest quality, lowest-cost inventory we have acquired, and is leveraged to NOG’s top operator in the Permian.”

The transaction is expected to be completed in December 2022.

Northern Oil and Gas intends to fund the transaction with cash on hand, operating free cash flow and borrowings under its revolving credit facility.