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Northern Oil and Gas Acquiring W Energy Partners in Largest Deal in Company History

The deal, announced simultaneously with better-than-expected Quarter 2 estimates, involves $100 million in cash, plus shares and land.

Northern Oil and Gas Acquiring W Energy Partners in Largest Deal in Company History
In the largest deal of its kind in the company’s history, Northern Oil and Gas will acquire W Energy Partners for $100 million in cash and 56.37 million stock shares. Northern Oil will gain about 6,750 barrels of oil equivalent (Boe) per day of production, and 10,600 net acres in the Williston Basin.
 
“The W Energy acquisition will add robust drilling inventory under some of the best acreage in the Williston Basin,” said Mike Reger, Northern’s co-founder and president, in a statement.
 
The deal comes just after another acquisition – of Pivotal, a Texas-based oil and gas company. Reger said the two acquisitions are “highly complementary” and fit well with the existing core leasehold and drilling inventory of the Minnetonka-based Northern Oil.
 
The acquisition of W Energy, a property of the New York-based private equity firm Crestview Partners, is expected to generate $95 million in cash flow in 2019 for Northern Oil.
 
The company also announced its second quarter 2018 production estimates. Northern is on track to exceed expectations, with a 52 percent year-over-year increase and an anticipated average of 21,045 Boe per day.
 
“Based on our preliminary estimates, production from our existing assets in the second quarter exceeded our expectations, driven primarily by outstanding organic well performance and a little less than a month of contribution from our recently closed Salt Creek acquisition,” said Brandon Elliot, Northern’s CEO, in prepared remarks.
 
These triumphs for Northern follow a time of turmoil, as Northern’s co-founder, Ryan Gilbertson was indicted on wire fraud charges in 2017 – primarily related to activities with his other company Dakota Plains Holdings – and the federal investigation around the charges also led to Reger being terminated as CEO of Northern.
 
Reger was never charged, though, instead reaching a settlement with the Securities and Exchange Commission. He rejoined Northern Oil earlier this year – first as CEO, then following an executive shuffle, he switched over to his current role as president.
 
The acquisitions signal an eye to a positive future.
 
“With significant excess cash flow from these acquisitions,” said Reger, “we are in a position to further our strategy as the natural consolidator of non-operated working interests in the Williston Basin.”
 
The W Energy acquisition is expected to close in about 60 days. Faegre Baker Daniels LLP, RBC Richardson Barr and Vinson & Elkins LLP oversaw the deal.
 
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