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Northern Spends $102m On 3000 acres In Texas, New Mexico

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Northern Oil and Gas has entered into three agreements to acquire non-operated interests across approximately 2,900 net acres located in the heart of Reeves County, Texas and Lea and Eddy Counties, New Mexico for a combined purchase price of $102.2m.

May 2021 production on the assets was approximately 2,200 bo/e per day (2-stream, 66% oil) and Northern expects average production of 3,700 bo/e per day in the second half of 2021, assuming an August 1 closing. The estimated development plan on the properties over the next several years is expected to grow production to approximately 6,500 bo/e per day, assuming current strip prices. Under this development scenario, Northern forecasts the assets to generate over $100m of cumulative free cash flow through 2025.

The assets include 5.3 net producing wells, 5.0 net wells in process and an additional 23.1 net undrilled locations ascribed to the core zones including the Wolfcamp A, Wolfcamp B and 1st through 3rd Bone Springs. The assets are operated primarily by Mewbourne Oil Company, Colgate Energy, ConocoPhillips and EOG Resources.

Northern consummated the acquisition of a portion of the assets in June and expects to close on the acquisition of the remaining assets in the third quarter of 2021. Northern estimates approximately $35m of capital expenditures on the combined properties to be incurred in 2021, inclusive of estimated purchase price adjustments at closing of the acquisitions.

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