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Northern Oil and Gas to Acquire Assets in Williston Basin

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Northern Oil and Gas Inc. (NOG - Free Report) will purchase the Williston Basin properties from VEN Bakken LLC for $165 million in cash, a $130-million 6% three-year senior unsecured note due 2022 and 5.6-million Northern Oil and Gas common shares.

VEN Bakken LLC is a wholly-owned subsidiary of Flywheel Bakken, part of the Kayne Private Energy Income Funds. The assets to be purchased include around 18,000 net acres of 86.9 net producing wells, 2.7 net wells in process and 47.5 net undrilled locations across the core of the Williston Basin.

These divested assets are estimated to produce 6,600 barrels of oil equivalent per day (boe/d) in the second half of 2019 and generate $44.9 million in cash flow from operations. Capital expenditure budget in the second half of the year is projected at $15.6 million.

Per the company, the assets are anticipated to be accretive to earnings and strengthen its free cash flow profile.

In October 2018, the acquisition of Williston basin assets from W Energy Partners was closed. This marked the largest buyout undertaken by the company. Prior to the transaction, Northern Oil and Gas announced plans to buy a North Dakota asset from Tailwater Capital LLC-backed Pivotal Petroleum Partners as well as two bolt-on Williston basin acquisitions in June.

At the end of 2018, the company had interest in more than 5,000 gross wells across its 157,000-acre position in the Williston basin.As reported in March, the company boosted production by 73% over the prior year, with an average record of 25,555 boe/d.

The transaction is anticipated to close and be effective on July 1. The cash and note portions of the consideration are subject to closing and post-closing adjustments.

Zacks Rank & Key Picks

Currently, Northern Oil and Gas carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Cabot Oil & Gas Corporation , CrossAmerica Partners L.P. (CAPL - Free Report) and SEACOR Holdings, Inc . While Cabot Oil & Gas and CrossAmerica Partners sport a Zacks Rank #1 (Strong Buy), SEACOR Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Houston, TX, Cabot Oil & Gas is an independent oil and gas exploration company with producing properties mainly in the continental U.S. The top and the bottom line for 2019 are expected to increase 8.2% and 64.7% year over year, respectively.

CrossAmerica Partners is involved in the wholesale distribution of motor fuels, comprising gasoline and diesel fuel. The partnership delivered an average positive earnings surprise of 452.2% in the last four quarters.

SEACOR Holdings is a diversified holding company, mainly focused on domestic and international transportation, logistics as well as risk management consultancy. The bottom line for 2019 is expected to inch up 1.7% year over year. The company delivered average positive earnings surprise of 20.5% in the trailing four quarters.

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