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Tuesday, June 7, 2022

NOG: Williston Basin Bolt-On Acquisition; Increased 2022 Activity; Shareholder Return Update -- June 7, 2022

Link here for today's news.

NOG is tracked here.

Bolt-on acquisition:

  • $170 million "initial" purchase price from private party
    • seller may earn an additional $5 million in contingent payments in 2023 if WTI exceeds $92.50 on December 30, 2022
  • average production over next twelve months: 2,500 boepd, 2-stream; ~ 83% oil)
  • 17.5 net undeveloped locations
  • includes 2.6 net wells in process
  • 3,500 net acres
  • acquired assets in Dunn, McKenzie, and Williams counties
  • assets operated primarily by MRO, CLR, and COP
  • back-of-the-envelope:
    • flowing price:
    • $170  million / 2,500 boepd = $65,000 per flowing boepd
    • $170 million / 3,500 net acres = $50,000 / acre
  • unhedged cash flow, forward one year; around $75 million
  • strong free cash flow with about $25 million annual sustaining capital expenditures to maintain produciton
  • $6 million + to drill / complete a Bakken well; with inflation, maybe $8 million

On-going operations (2022):

  • spud wells to grow to 65 net wells, a 10-well increase compared to original forecast
  • average wellhead IRR expected to exceed 100%
  • annual production: 77K on high end, up from 76K on high end
  • total CAPEX: $470 million on high end, up from $415 million on high end
  • net wells turned-in-line: 56.5 on high end, up from 52 on high end

Shareholder returns:

  • purchasing preferred stock has reduced annualized dividend payments by $3.6 million per year

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