Entering the Uinta Basin with the Largest Transaction in Company History; Highly Accretive to Key Financial Metrics

Highlights

• SM Energy (“SM”), with NOG as its non-operated partner, purchasing the Uinta Basin assets (the “XCL Assets”) of XCL Resources, LLC, an EnCap Portfolio Company, for a combined unadjusted purchase price of $2.55 billion in cash
• NOG to acquire a 20% undivided stake in the XCL Assets (the “Acquired Assets”) for $510.0 million in cash (all data below is net to NOG)
• Current production of >10,500 Boe per day (2-stream, excluding NGLs, >85% oil)
• ~9,300 net acres, located primarily in Duchesne and Uintah Counties, Utah
• Over a decade of Tier 1 drilling with 97.6 net underwritten undeveloped locations, with significant future upside from additional zones and infill development
• Next twelve months unhedged cash flow from operations, post-closing (assuming 10/1/24 start date) expected to be >$170 million, based on recent strip prices, representing a transaction multiple of <3.0x
• Strong free cash flow profile with >$85 million expected over the next twelve months (assuming 10/1/24 start date)
• NOG to fund transaction with cash flow from operations, cash on hand and borrowings under NOG’s Senior Secured Revolving Credit Facility

Northern Oil and Gas has entered into a definitive agreement to acquire a 20% undivided stake in the XCL Assets in partnership with SM Energy Company for a purchase price, net to NOG, of $510.0 million in cash, subject to customary closing adjustments.

The Acquired Assets are located primarily in Uintah and Duchesne Counties, Utah and include approximately 9,300 net acres and 97.6 underwritten net undeveloped locations, normalized for 10,000 foot laterals. Significant additional upside locations remain in the Deep and Upper Cube. The prospective development plan is based on conservative and widened spacing from the current operator. The Company sees substantial return upside from increased lateral lengths (extending to 3-miles) and cost savings from an integrated co-owned sand mine facility scheduled to come online within twelve months.

Upon closing and transition of services, the operator of substantially all of the assets will be SM, with NOG participating in development pursuant to cooperation and joint development agreements entered into in connection with the acquisition.

Recent production on the Acquired Assets was >10,500 Boe per day (2-stream, >85% oil). Post-closing in 2024, NOG expects average production of >10,000 Boe per day (2-stream, >85% oil) and approximately $45 million of capital expenditures. Long term, NOG expects SM to turn in line an average of approximately 7 – 9 wells annually net to NOG, which is expected to sustain production at >10,000 Boe per day (2-stream, >85% oil).

The effective date for the transaction is May 1, 2024, and SM and NOG expect to close the transaction in late Q3 or early Q4 2024. As part of the transaction, NOG has placed a $25.5 million deposit in escrow prior to closing. The obligations of the parties to complete the acquisition are subject to the satisfaction or waiver of customary closing conditions.

MANAGEMENT COMMENTS

“NOG continues to further define itself as the preeminent national, non-operated franchise, with low leverage, growing cash returns, diversified by both region and commodity mix. The XCL acquisition is consistent with our strategy of investing in the highest quality assets, with significant upside and long-dated inventory, developed and run by leading operators,” commented Nick O’Grady, NOG’s Chief Executive Officer. “The Uinta Basin has emerged as one of the best and fastest growing oil resources in the United States, and SM has a track record as one of our best and most responsible operators. We look forward to working with them for many years to come. We believe this transaction will be the most accretive in our history, benefiting per share net profit and free cash flow both immediately and over time.”

“With XCL, we are acquiring a multi-stacked pay acreage position with significant long-term upside,” commented Adam Dirlam, NOG’s President. “These assets are exemplary of our returns-focused strategy: delivering immediately while offering significant exploration potential further enhancing NOG’s optionality. Much like our prior joint development transactions, we have devised an aligned, conservative development and governance plan with a proven E&P company. We continue to be the partner of choice for our operators as the largest, best capitalized and most reliable working interest owner in the United States.”

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