Hedge fund Angelo Gordon & Co. on May 26 bought $33 million worth of Northern Oil & Gas Inc.'s debt and said it was planning to push for deals that would increase the shale producer's cash reserves.
Angelo, which is already the second-largest owner of Northern with a nearly 10% equity stake, said a potential transaction could include an exchange of equity or debt securities of the company.
Northern has been trying to cut its debt load of more than $1 billion for months by using a so-called "debt-for-equity" swap among other things. In January, Northern gave Angelo Gordon 387,695 preferred shares in exchange for around $35.8 million of its notes owned by the fund.
Lockdowns imposed to arrest the spread of the coronavirus have sent the oil and gas market into one of its worst downturns ever, with U.S. crude oil prices turning negative for the first time in history last month.
The downturn has pushed oil companies to revamp their strategies, including slashing spending and production to save cash and cutting shareholder returns.
Their debt is also trading for pennies on the dollar, giving hedge funds an opportunity to load up on their bonds.
Texas billionaire Robert Rowling, who owns the Omni Hotels and Gold's Gym businesses, has also been boosting his stake in Northern. He owned a 22.7% stake in the shale producer, according to a filing by his TRT Holdings funds in March.
Recommended Reading
Veriten’s Arjun Murti: Oil, Gas Prospectors Need to Step Up—Again
2024-02-08 - Arjun Murti, a partner in investment and advisory firm Veriten, says U.S. shale provided 90% of global supply growth—but the industry needs to reinvent itself, again.
Vitol: Oil Demand Peaks in 2030s, Saudis to Quit Supply Cut This Year
2024-01-18 - Vitol executive Ben Marshall told oil and gas producers at IPAA’s Private Capital Conference that Saudi Arabia is losing patience. Also, the energy transition will take longer than expected.
Sempra Targets Summer 2025 for Commercial Start of ECA LNG Phase 1
2024-03-06 - Sempra is targeting the summer of 2025 as the commercial operations date for its 3.25 mtpa (0.43 Bcf/d) nameplate capacity Energía Costa Azul LNG Phase 1 project, located in Ensenada in Baja California, Mexico.
4Q Deal-Making Was $144B; What’s Next?
2024-01-23 - U.S. takeout targets are few now. Operators may go abroad to add reserves, according to Enverus. Private E&Ps may pick up offshoots from portfolio pruning.
Kimmeridge Activates on SilverBow: A Battle for South Texas Gas
2024-03-01 - Investment firm Kimmeridge is looking for more natural gas production for its own E&P to participate in the Gulf Coast LNG market. SilverBow Resources has gas.