By David French
(Reuters) -Northern Oil and Gas has made an acquisition offer for Granite Ridge Resources, a smaller U.S. producer with operations in basins including the Permian and Eagle Ford (NYSE:F), according to people familiar with the matter.
Minneapolis, Minnesota-based Northern has submitted at least two offers for Granite Ridge, the sources said, adding the latest bid, made in recent weeks, was at a roughly 20% premium to the target's share price.
While Granite Ridge's management has rebuffed the overtures so far, Northern remains interested in a deal and could sweeten its offer next year, the sources said, requesting anonymity as the discussions are confidential.
Granite Ridge's shares closed more than 10% higher after the news on Friday, giving the company a market value of about $809 million. It also had debt net of cash of about $136 million as of the end of September this year, according to data from LSEG.
Northern, which has a market capitalization of about $3.6 billion, reversed marginal gains and closed 1.2% lower.
"The company frequently sends expressions of interest to acquire assets or businesses," Northern said in a statement.
It said that many such requests are rejected, and it "is not currently engaged in formal negotiations to acquire Granite Ridge".
Granite Ridge declined to comment.
Granite Ridge is majority-owned by entities controlled by private equity firm Grey Rock Investment Partners, which was founded by Matt Miller and Griffin Perry, who also serve as co-chairmen of the Dallas-based company. The other co-founder of Grey Rock, Kirk Lazarine, also sits on the board.
The company's shares, which have been trading in New York since its 2022 merger with a blank-check acquisition firm backed by former speaker of the U.S. House of Representatives Paul Ryan, had lost more than 40% of their value from the time of listing until Thursday's close.
Both Northern and Granite Ridge specialize in so-called non-op production, which means they contribute a share of the drilling costs and other expenses to get a share of the revenue from the sale of hydrocarbons, while another producer is in charge of the day-to-day operations of the oil and gas wells.
Northern is one of the largest non-op producers in the U.S. shale patch, and has grown in recent times through a variety of smaller acquisitions, partnerships and joint ventures.
If it succeeds in clinching a deal for Granite Ridge, it would rank as Northern's largest ever acquisition.
Northern and Granite Ridge operate across multiple shale basins, including the Permian Basin located in Texas and New Mexico, and the Williston formation in North Dakota. A takeover of Granite Ridge would also give Northern a presence in the Eagle Ford, Haynesville, and Denver-Julesburg basins.