Recent acquisition
On February 3rd, 2021, Northern Oil and Gas (NOG) announced the acquisition in the Marcellus Shale agreeing to acquire a non-operated interest in Appalachia natural gas assets from Reliance Marcellus LLC. According to the company, the acquisition is expected to generate $125 million of free cash flow over the next four years with an average 18% FCF yield on the investment. The additional cash flow will help to improve the net-debt/EBITDA ratio that is expected to get lower than 2.0x by year-end 2021. The acquisition cash purchase price of $175 million will be funded through a combination of equity and debt. From a strategic point of view, the acquisition will further diversify the company with the “new” Northern Oil and Gas’ production coming from the Williston and Permian (70%) and from the Appalachia (30%).