Vital Energy (VTLE) Update - May 16

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dan_s
Posts: 34807
Joined: Fri Apr 23, 2010 8:22 am

Vital Energy (VTLE) Update - May 16

Post by dan_s »

Vital Energy AND Northern Oil & Gas join forces to acquire oil prone asset package in the Delaware Basin

Vital Energy Expands Permian Footprint with Delaware Basin Acquisition
May 12, 2023
Accretive transaction strengthens Free Cash Flow outlook and adds ~100 high-value oil-weighted locations

TULSA, OK, May 12, 2023 (GLOBE NEWSWIRE) -- Vital Energy, Inc. (NYSE: VTLE) ("Vital Energy" or the "Company") today announced the signing
of a definitive joint purchase and sale agreement to acquire the assets of Forge Energy II Delaware, LLC ("Forge"), an EnCap portfolio company,
further expanding the Company’s Permian Basin focus and establishing a core operating position in the Delaware Basin.

The agreement was signed in partnership with a third party (Sweet 16 member Northern Oil & Gas (NOG)), with the companies jointly agreeing to acquire Forge’s assets in an all-cash transaction for total consideration of $540 million. Vital Energy agreed to acquire 70% of the assets for $378 million and will operate the asset, with the third party acquiring the remaining 30% for $162 million. Vital Energy plans to fund the acquisition through the use of its credit facility.

The transaction is expected to close in late second-quarter 2023 with an effective date of March 1, 2023, subject to customary closing conditions.

"This accretive acquisition is attractively priced and significantly expands Vital Energy’s Permian focus, adding a core operating area in the Delaware
Basin," stated Jason Pigott, President and Chief Executive Officer. "We have a proven track record of building value through our disciplined acquisition
strategy. Today’s deal significantly enhances our outlook for Free Cash Flow generation which we will use to pay down debt and strengthen our
balance sheet."

Highlights:

Expands Permian Basin focus:
Transaction will expand Vital Energy’s Permian Basin leasehold to ~198,000 net acres and establish core operating
positions in Pecos, Reeves and Ward counties. The Company has a track record of successfully integrating acquired assets and enhancing
profitability through application of its proven processes and proprietary technologies.

Extends high-value, oil-weighted inventory: Transaction to add approximately 100 gross high-value oil locations in the 2nd and 3rd Bone Spring and Wolfcamp A with an average breakeven oil price of approximately $50 NYMEX WTI, with potential upside in additional stacked formations.

Increases scale: Adds nearly 42,000 gross acres (24,000 net) and current production of approximately 9.5 thousand barrels of oil equivalent per day, 65% oil, net to Vital Energy. The Company plans to operate one rig on the acquired properties, increasing the Company’s total Permian Basin rig count to three rigs.

Attractive acquisition price, immediately accretive, leverage neutral: Transaction valued at ~2.5x next 12 months Consolidated EBITDAX
(based on strip pricing as of April 28, 2023), in line with recent transaction valuations in the basin and estimated to be 20% accretive to next 12 months

Free Cash Flow and Free Cash Flow per share. The purchase is projected to be leverage neutral within 18 months at $75 NYMEX WTI.

Disciplined development: Upon closing, Vital Energy plans to operate one rig on the acquired leasehold, reduced from two rigs operated by the
current owner. This disciplined approach will keep production levels on the asset relatively flat while maximizing Free Cash Flow. Additional details
outlining development plans for the asset and impact to full-year 2023 guidance will be provided upon closing of the transaction.

About Vital Energy
Vital Energy, Inc. is an independent energy company with headquarters in Tulsa, Oklahoma. Vital's business strategy is focused on the acquisition,
exploration and development of oil and natural gas properties in the Permian Basin of West Texas.

Additional information about Vital may be found on its website at www.vitalenergy.com.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34807
Joined: Fri Apr 23, 2010 8:22 am

Re: Vital Energy (VTLE) Update - May 16

Post by dan_s »

Slide Presentation from NOG website
https://www.northernoil.com/investors/presentations

NOG's Press Release:

NOG Announces Joint Acquisition of Forge Energy Assets in the Permian Basin

Transaction Accretive to Key Financial Metrics, Adds Over 10,000 Net Acres to Delaware Basin Portfolio

HIGHLIGHTS

> Joint acquisition with Vital Energy, Inc. ("Vital") of certain assets (the "Forge Assets") of Forge Energy II Delaware, LLC, an EnCap portfolio company ("Forge"). Vital Energy will operate the properties.

NOG purchasing a 30% undivided stake in the Forge Assets (the "Acquired Assets") for $162 million in cash

The Acquired Assets include ~3,400 Boe per day (excluding NGLs, 79% oil) of recent production and ~10,200 net acres, located primarily in Ward and Reeves Counties, TX

Cash flow from operations on the Acquired Assets expected to be >$65 million in the next twelve months (starting 7/1/2023), based on recent strip prices, representing a transaction multiple of < 2.5x

Strong free cash flow profile with ~$38 million expected capital spend in the next twelve months

Executed hedges for a significant portion of the production associated with the transaction through 2026

MINNEAPOLIS, May 15, 2023--(BUSINESS WIRE)--Northern Oil and Gas, Inc. (NYSE: NOG) (the "Company" or "NOG") today announced that it has entered into a definitive agreement to acquire a 30% undivided stake in the Forge Assets in the Delaware Basin, in partnership with Vital Energy, Inc., for a purchase price net to NOG of $162.0 million in cash, subject to typical closing adjustments.

The Acquired Assets are primarily located in Ward and Reeves Counties, Texas and include approximately 10,200 net acres, 30.5 net producing wells, 2.3 net wells-in-process and ~20 low-breakeven net undeveloped locations. Upon closing, the operator of the assets will be Vital, with NOG participating in development pursuant to cooperation and joint operating agreements entered into with Vital in connection with the acquisition.

Recent production on the Acquired Assets was approximately 3,400 Boe per day (2-stream, 79% oil). For the second half of 2023, NOG expects average production of >3,750 Boe per day (2-stream, 79% oil) and approximately $17 million of capital expenditures.

The effective date for the transaction is March 1, 2023, and NOG expects to close the transaction at the end of June 2023. The obligations of the parties to complete the transactions contemplated by the purchase agreement are subject to the satisfaction or waiver of customary closing conditions.

MANAGEMENT COMMENTS

"This transaction crystallizes NOG’s position as a reliable and consistent partner for the purchase and development of high-quality properties," commented Nick O’Grady, NOG’s Chief Executive Officer. "We are excited to work alongside our partners at Vital to develop the Forge Assets with strong alignment and cooperation."

"As we enter into this joint acquisition, we are taking NOG’s capabilities and opportunity set to the next level, adding yet another arrow to our M&A quiver," commented Adam Dirlam, NOG’s President. "The Forge Assets are high-quality with the opportunity for clear and concise development to deliver the consistent performance our investors have come to expect."

ABOUT NOG

NOG is a company with a primary strategy of investing in non-operated minority working and mineral interests in oil & gas properties, with focus on the premier hydrocarbon producing basins within the contiguous United States. More information about NOG can be found at www.northernoil.com.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34807
Joined: Fri Apr 23, 2010 8:22 am

Re: Vital Energy (VTLE) Update - May 16

Post by dan_s »

I will be updating the VTLE and NOG forecast/valuation models tomorrow.

I like the deal for Vital Energy because they need more "running room" and the current production will give them a nice 2H 2023 revenue boost.

I like NOG's involvement because they have a team with lots of experience evaluating asset packages.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34807
Joined: Fri Apr 23, 2010 8:22 am

Re: Vital Energy (VTLE) Update - May 16

Post by dan_s »

MINNEAPOLIS--(BUSINESS WIRE)-- Northern Oil and Gas, Inc. (NYSE: NOG) (the “Company” or “NOG”) announced today an underwritten public offering of 6,650,000 shares of its common stock (the “Offering”). Additionally, the Company has granted the underwriters a 30-day option to purchase up to an additional 997,500 shares from the Company.

The Company intends to use the net proceeds from the Offering (i) to fund the cash purchase price of the Company’s recently announced pending acquisition of certain oil and gas properties, interests and related assets located in the Delaware Basin (the “Forge Acquisition”) and (ii) for general corporate purposes, which may include the repayment of a portion of the outstanding borrowings under its revolving credit facility. Pending the use of proceeds to fund the cash purchase price of the Forge Acquisition, the Company may temporarily apply such portion of the net proceeds from the Offering to repay outstanding borrowings under its revolving credit facility. The consummation of the Offering is not conditioned upon the completion of the Forge Acquisition and the consummation of the Offering is not a condition to the completion of the Forge Acquisition. If the Forge Acquisition is not consummated, the Company intends to use the net proceeds of the Offering for general corporate purposes, which may include the repayment of outstanding indebtedness.
Dan Steffens
Energy Prospectus Group
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