MINNEAPOLIS - Northern Oil and Gas, Inc. (NYSE: NOG), an investor in non-operated minority working and mineral interests, has finalized the acquisition of assets in the Uinta Basin from XCL Resources, LLC. The deal, which also includes assets from Altamont Energy, LLC, was completed on October 1, 2024, expanding NOG's footprint by approximately 15,800 net acres and adding around 116 net undeveloped locations with potential for further exploration.
The strategic move partners NOG with SM Energy (NYSE:SM), Inc., which will operate the majority of the newly acquired assets. Both companies have entered into cooperation and joint development agreements to manage the assets effectively.
NOG's payment for the acquisition totaled $511.2 million in cash, which includes a $25.5 million deposit made in June 2024. The final settlement reflects preliminary and customary price adjustments and is subject to post-closing settlements.
This acquisition is part of NOG's continued strategy to invest in key hydrocarbon-producing basins in the United States. The company has previously communicated details of the acquisition process in press releases dated June 27, 2024, and August 7, 2024.
The press release includes forward-looking statements about NOG's plans and potential outcomes of the acquisition, emphasizing that these are projections and subject to various risks and uncertainties. Factors such as changes in oil and gas prices, drilling activity, and broader economic conditions could affect the anticipated benefits of the transaction.
Investors are reminded that forward-looking statements should be considered with caution, as actual results may differ from those projected. The information in this article is based on a press release statement from Northern Oil and Gas, Inc.
In other recent news, Northern Oil and Gas exhibited a robust performance in its second quarter 2024 earnings call. The company reported a 31% year-over-year increase in adjusted EBITDA and a 52% rise compared to two years ago. Cash flow from operations grew by 33%, and the return on capital was approximately 25%, surpassing industry peers.
Northern Oil and Gas also marked its biggest transaction to date, co-purchasing SCO Resources Uinta Basin assets. This move led to a surge in production to over 123,000 barrels of oil equivalent (BOE) per day, attributed to activities in key regions and recent acquisitions. Despite expectations of a decline in natural gas production for the remainder of the year, the company anticipates per-share growth through 2025 and has proposed a midyear dividend increase.
Mizuho Securities initiated coverage of Northern Oil and Gas with an Outperform rating, emphasizing the company's unique non-operating exploration and production model. The firm highlighted the company's strong track record in mergers and acquisitions and its ability to generate attractive cash returns. Mizuho Securities also suggested that Northern Oil and Gas could be particularly appealing to small to mid-cap generalist investors. These are the latest developments for Northern Oil and Gas.
InvestingPro Insights
Northern Oil and Gas's recent acquisition in the Uinta Basin aligns with its strategy of expanding its portfolio in key hydrocarbon-producing regions. This move is reflected in the company's financial metrics and market performance, as revealed by InvestingPro data.
NOG's revenue growth of 17.65% over the last twelve months and a quarterly growth of 35.1% in Q2 2024 indicate a robust expansion trajectory. This growth is particularly noteworthy given the company's impressive gross profit margin of 80.17%, suggesting efficient operations even as it scales up.
The company's financial health is further underscored by its attractive valuation metrics. With a P/E ratio of 6.34, NOG appears undervalued compared to industry peers. This could present an opportunity for investors, especially considering the company's strong return over the last five years, as highlighted by an InvestingPro Tip.
Another InvestingPro Tip notes that NOG has raised its dividend for 3 consecutive years, with a current dividend yield of 4.62%. This consistent dividend growth, coupled with a 13.51% increase in the last twelve months, may appeal to income-focused investors.
It's worth noting that InvestingPro offers additional tips and insights for NOG, which could provide further context for investors evaluating the company's prospects following this acquisition.
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