NOG Announces Investment In Core Midland Basin Development Project -- October 19, 2022

 Link here.

• NOG enters into agreement to acquire a 36.7% working interest in a stacked pay, six-zone development project (the “Mascot Project”) in the core of the Midland Basin for $330 million
• Acquisition includes producing properties and associated midstream assets, plus 62 gross in-process and future wells in Midland County, Texas, with sub-$40 per barrel average breakevens
• Average production of 6,450 Boe per day (2-stream, ~80% oil) expected for 2023
• Clear line of sight to significant free cash flow generation with 22.8 net undeveloped and in-process locations, all scheduled to be developed over the next two years
  • ~$150 million of expected 2023 unhedged cash flow from operations at strip pricing as of October 13, 2022 (~2.2x transaction multiple)
  • ~$300 million of unlevered free cash flow expected through 2025 (inclusive of cash flows received from effective date but prior to closing)
• Transaction expected to be significantly accretive to key financial metrics
• Future wells will be developed under a joint operating agreement with defined controls and governance, providing strong alignment
• NOG has hedged a substantial portion of the expected production
• Acquisition to be financed with cash 

Comments:

• Devon is the fastest growing oil company (operator).
• one wonders if NOG might be the fastest growing oil company (non-operator).
• $330 million / 6,450 boepd = $50,000 / flowing boepd; but incredibly more expensive if NOG is only getting 36.7% of that