HIGHLIGHTS
- NOG makes strategic entry into Canada with inventory-rich light oil acquisition in the Duvernay Shale for a CA$350 million (~US$259 million) initial unadjusted purchase price
- Operated ‘buy-down’ acquisition of a 25% non-operated stake in light oil producing properties with significant undeveloped inventory in Alberta, Canada in the Duvernay East Shale Basin operated by Parallax Energy Operating Inc. (the “Assets”), a portfolio company of investment funds managed by Carnelian Energy Capital Management, L.P.
- Sellers to receive NOG common stock at closing as a portion of the consideration, with ~CA$113 million (~US$83.5 million) paid in NOG common stock and the remainder paid in cash
- ~4,000 Boe per day of production expected in full year 2027 (2-stream, ~80% light oil)
- 75,000 net acres with ~20 years of inventory and average breakevens below $50 WTI; ~ 500 gross locations, an estimated ~US$0.6 million per net location
- Entered into long-term Joint Development Agreement inclusive of Area-of-Mutual-Interest
- Self-funding asset with significant free cash flow, expected to be leverage neutral, leverage accretive long term
- Purchase price transaction multiple of expected NTM (as of Effective Date) unhedged cash flow from operations of <3.0x
- Accretive to material valuation metrics, including TEV / EBITDA, earnings per share, free cash flow and cash flow per share over a multi-year period
- Company providing updated 2026 Annual Guidance
Northern Oil and Gas ('NOG') has agreed to purchase an undivided 25% interest in the Light-Oil Duvernay Assets owned and operated by Parallax Energy Operating Inc.
MANAGEMENT COMMENTS
'Quality oil inventory is becoming increasingly scarce, and NOG's scaled non-operated model positions us to access opportunities that most in our sector cannot. Our ability to structure creative, accretive transactions with best-in-class operators is what sets NOG apart. The Duvernay is one of North America's premier light oil resources - high-quality, low-cost, long-life inventory with meaningful upside that remains largely untapped. Parallax is led by a team with a demonstrated track record of developing Duvernay assets, backed by Carnelian Energy Capital, one of North America’s leading energy investors. The decision to incorporate equity consideration aligns mutual interests while enhancing our per-share metrics and balance sheet. This transaction is the result of disciplined evaluation of the meaningful opportunities we see in Canada, and a direct reflection of our ability to identify and convert high-quality assets into long-term value for shareholders.'
LIGHT-OIL DUVERNAY ACQUISITION
The Assets are comprised of an undivided non-operated interest which includes, net to NOG, ~4,000 Boe per day of production and ~75,000 acres in the Light-Oil Duvernay Shale at an initial unadjusted purchase price of CA$350 million (~US$259 million), subject to typical closing adjustments. The initial unadjusted purchase price will be funded with CA$113 million (~US$83.5) million of NOG common stock issued to the Seller at closing, with the remaining consideration sourced from cash on hand, operating free cash flow and borrowings under NOG’s revolving credit facility.
In addition, NOG has agreed to additional contingent consideration of CA$25 million (~US$18.5 million), payable in cash or common stock (at NOG’s election) in the first quarter of 2028 if certain average oil prices are achieved through the end of 2027.
The acquired Assets include over 500 gross high-quality, low breakeven locations. Substantially all the Assets are operated by Parallax, with NOG participating in development pursuant to a long-term Joint Development Agreement with multi-year drilling commitments entered into in connection with the acquisition.
NOG expects average production for the properties for full year 2027 of ~4,000 Boe per day (2-stream, ~80% oil). Operating costs are expected to be less than $7.50 per Boe/d, below NOG’s corporate average. NOG expects to incur up to US$40 - $45 million in capital expenditures on the assets post-closing in 2026, and US$45 - $50 million in 2027.
In connection with the transaction, NOG intends to enter into derivatives transactions to hedge currency fluctuations related to operating costs on a multi-year basis. Depending on market conditions, NOG may also repurchase a portion of the stock consideration in the open market.
The effective date for the transaction is April 1, 2026, and NOG expects to close the transaction late in the second quarter of 2026. As part of the transaction, NOG has formed a wholly-owned Canadian subsidiary, NOG Energy Canada, Ltd.
ADVISORS
Citigroup Global Markets acted as exclusive advisor to NOG on the transaction. Kirkland & Ellis LLP and Blakes, Cassels & Graydon LLP are serving as Northern’s legal advisors.
National Bank Capital Markets and RBC Capital Markets acted as financial advisors to Parallax on the transaction. Stikeman Elliot LLP served as Parallax's legal advisor.
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Source: Northern Oil and Gas
