NOG Enters Canada with Duvernay Acquisition from Parallax

This article was first published on Rigzone here

Northern Oil and Gas Inc (NOG) has signed a deal to buy a 25 percent stake in light-oil assets in the Duvernay shale from Parallax Energy LP for an initial price of CAD 350 million ($259 million), marking its entry into Canada.

"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", the Minnetonka, Minnesota-based producer said in a press release.

"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.

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"NOG expects average production for the properties for full year 2027 of ~4,000 Boe per day (2-stream, ~80 percent 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 parties expect to complete the transaction this quarter.

New York listed-NOG added it has now formed a wholly-owned Canadian subsidiary, NOG Energy Canada Ltd.

As a result of the acquisition, NOG revised its 2026 production guidance from 139,000-143,000 barrels of oil equivalent per day (boepd) to 143,000-148,000 boepd, with projected oil production adjusted from 68,000-72,000 bpd to 71,500-73,500 bpd.

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