NOG Spends $67MM on Midland Bolt-On, Ground Game M&A

Non-operated specialist Northern Oil & Gas (NOG) is growing in the Permian with a $40 million bolt-on acquisition.

NOG agreed to acquire assets in Upton County, Texas, from an existing private operating partner for $40 million in cash, the company announced in a Feb. 12 investor update.

The Midland Basin acquisition, signed on Feb. 11, includes approximately 2,275 net acres. NOG has entered a multi-year development joint venture for the acquired properties and expects to close the transaction in the second quarter.

NOG had around 43,000 net acres across the Permian Basin as of the fourth quarter, according to investor materials.

Of the company’s roughly 1,000 net (10,000 gross) wells across the Lower 48, 46% are within the Permian Basin.

During the fourth quarter, NOG closed 14 additional leasehold and ground game transactions totaling approximately $27 million.

The deals were spread across the company’s multi-basin footprint and are expected to add 0.7 net producing wells, 3.2 net in-process wells and around 2,274 net acres.

In 2024, NOG’s 37 ground game deals added approximately 10.7 net producing or in-process wells and 7,013 net acres.

“In the fourth quarter, NOG took advantage of the seasonal weakness in the A&D market,” NOG President Adam Dirlam said.

NOG has engaged in several large-scale M&A deals as a third party, minority interest buyer. NOG teamed up with SM Energy last year to acquire Uinta Basin E&P XCL Resources for a combined $2.6 billion.

NOG has twice partnered with Vital Energy on Permian Basin transactions, most recently on a $1.1 billion deal for 20% of Point Energy Partners in the Delaware Basin.

The two companies previously partnered to acquire Delaware Basin producer Forge Energy II for $540 million.

RELATED

Non-op Rising: NOG’s O’Grady, Dirlam See Momentum in Co-purchase M&A

Fourth quarter updates

Production is estimated to have averaged between 131,000 boe/d and 132,000 boe/d in the fourth quarter.

Oil volumes are estimated at 78,500 bbl/d and 78,900 bbl/d, up 11% over the third quarter.

Oil production was disrupted by several factors in the fourth quarter, NOG said, including:

• Forest fires;
• Curtailments and deferrals of completed wells from “price-sensitive” private Williston Basin operators; and
• Downtime from third-party crude takeaway from the Uinta Basin.

Despite issues in the Williston and Uinta basins, Permian volumes grew 12% quarter over quarter to record oil and total volumes.

NOG in December announced entering a joint development program with an unnamed Appalachian operator.

The program, which covers drilling activities in calendar year 2025, requires a capital commitment from NOG that isn’t expected to exceed $160 million for a 15% working interest, the company said. The working interests have an average net revenue interest of 84%.

RELATED

NOG Commits Up to $160MM to Appalachian Basin Joint Venture

Gas rising

NOG expects to see increased natural gas drilling activity this year, driven in part by its Appalachia JV program.

The natural gas price environment is improving as LNG demand ramps up on the U.S. Gulf Coast.

Venture Global’s Plaquemines plant in Louisiana began liquefaction in late December and is currently exporting around 1.5 Bcf/d.

Around 5.6 Bcf/d of incremental gas demand is coming online within the next 12 months to fuel three new LNG projects on the Gulf Coast, according to Expand Energy CFO Mohit Singh: Venture Global’s Plaquemines plant, Cheniere Energy’s expansion at Corpus Christi, Texas, and Exxon Mobil’s long-awaited Golden Pass LNG plant.

NOG said its fourth-quarter natural gas price realizations were up as regional pricing improved. Realizations are estimated to be 80% to 81% of average NYMEX Henry Hub prices for the fourth quarter.

In 2025, natural gas completions are forecasted to account for between 8 to 10 net well completions, a “significant increase” over 2024 levels, NOG said.

NOG expects 2025 production volumes to average between 130,000 boe/d and 135,000 boe/d. Oil output is expected to average 75,000 bbl/d to 79,000 bbl/d.

Total 2025 spending is forecasted at between $1.05 billion and $1.2 billion.

Certain operators are considering increasing gas-directed drilling efforts as commodity prices improve.

BP’s U.S. shale segment, BPX Energy, is considering adding drilling rigs in gas basins, BP CEO Murray Auchincloss said in fourth-quarter earnings this week.

RELATED

Expand CFO: ‘Durable’ LNG, Not AI, to Drive US NatGas Demand