HIGHLIGHTS

• Bolt-on acquisition of core non-operated working interest properties in the Northern Delaware Basin for an initial purchase price of $157.5 million
• Average production of ~3,000 to 3,500 Boe per day (68% oil, 2-stream) expected for 2023, generating an estimated $46.5 to $54.3 million of unhedged  cash flow in 2023 at strip pricing as of September 28, 2022
• ~2,800 net acres located in Lea and Eddy counties, NM and Loving County, TX with significant Tier-1 inventory (sub-$40 per barrel average breakevens)
• Strong growth and free cash flow profile with ~$32 million average annual capital spending expected on the assets over the next three years, delivering expected production of over 4,000 Boe per day in 2024 and 2025
• Transaction expected to be accretive to key financial metrics in 2023
• Acquisition to be financed with cash on hand, operating free cash flow and borrowings under NOG’s revolving credit facility

DELAWARE BASIN ACQUISITION

NOG has entered into a definitive agreement to acquire certain non-operated interests in the Delaware Basin from Alpha Energy Partners for  an initial purchase price of $157.5 million in cash, subject to typical closing adjustments. NOG expects to fund the acquisition with cash on hand, operating free cash flow and borrowings under NOG’s revolving credit facility.

NOG may deliver the Seller additional cash consideration depending on average front month NYMEX WTI pricing during the first six months of 2023. The  amount will be determined on a sliding scale from zero additional consideration if such pricing is below $75.00 per barrel, up to $22.5 million of additional  consideration if such pricing is at least $87.85 per barrel. The additional consideration, if any, would be paid in the third quarter of 2023.

The acquired assets are located in Lea and Eddy counties, NM and Loving County, TX, and include approximately 2,800 acres, 9.6 net producing wells, 2.8  net AFEs and wells-in-process and approximately 21.2 net undeveloped locations. The primary operator of the assets is Mewbourne Oil, one of the most  cost efficient and active operators in the Northern Delaware Basin. Other operators include Conoco and EOG.

The effective date for the transaction is September 1, 2022, and NOG expects to close the transaction in December 2022. 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.

“NOG continues to execute on creating shareholder value as a proven, reliable and disciplined consolidator of working interests,” commented Nick O’Grady, NOG’s Chief Executive Officer. “These assets are squarely in our core focus area and are poised to deliver substantial growth over the coming years, while delivering significant cash flow to bolster shareholder returns.”

“The Northern Delaware Basin continues to be a key target for our consolidation efforts,” commented Adam Dirlam, NOG’s President. “This asset has some of the highest quality, lowest-cost inventory we have acquired, and is leveraged to NOG’s top operator in the Permian.”