Earthstone Energy, a US-based oil and gas exploration and production company, has announced plans to acquire Novo Oil & Gas Holdings, a privately-held E&P company focused on the Delaware Basin, for $1.5bn. The acquisition is expected to significantly increase Earthstone’s production levels, with the company projecting that near-term production levels will surpass 135,000 barrels of oil equivalent per day. This would be a significant boost for the company, which produced an average of 14,000 barrels of oil equivalent per day in Q2 2021.
The acquisition is also expected to improve free cash flow and extend inventory life by over a decade. Earthstone plans to finance the acquisition through a combination of cash on hand, borrowings under its existing credit facility, and the issuance of equity and/or debt securities.
Concurrently, Northern Oil and Gas will purchase working interests equal to a pro-rata 33 percent of the oil and gas assets of Novo for $0.5bn from Earthstone, resulting in a $1.0bn purchase price net to Earthstone for the retained 66⅔ percent interest. Northern Oil and Gas, an exploration and production company focused on the Williston Basin, will gain exposure to the Delaware Basin through this transaction.
The deal is slated to close in Q3 2023, subject to regulatory approval. The acquisition of Novo Oil & Gas Holdings is a significant step for Earthstone Energy as it seeks to expand its presence in the Delaware Basin and increase its production levels.
For more information visit www.earthstoneenergy.com
