Northern Oil and Gas announced that it has agreed to acquire a 25% undivided non-operated interest in light-oil producing assets in Alberta’s Duvernay East Shale Basin from Parallax Energy Operating Inc. for an initial unadjusted purchase price of CA$350 million, approximately US$259 million.
The transaction marks NOG’s strategic entry into Canada and significantly expands the company’s inventory of long-life, low-breakeven oil assets. The acquired portfolio includes approximately 75,000 net acres and more than 500 gross undeveloped drilling locations in the Duvernay formation, which NOG described as one of North America’s premier light oil resource plays.
Under the terms of the agreement, approximately CA$113 million, or US$83.5 million, of the purchase price will be paid in NOG common stock issued to the seller at closing, with the remaining consideration funded through cash on hand, operating free cash flow, and borrowings under the company’s revolving credit facility.
The acquisition also includes a long-term Joint Development Agreement and Area-of-Mutual-Interest arrangement with Parallax, which will continue operating substantially all of the assets. Parallax is backed by investment funds managed by Carnelian Energy Capital Management.
NOG expects the assets to generate approximately 4,000 Boe per day during full-year 2027 production, with about 80% consisting of light oil. Operating costs are projected to remain below $7.50 per Boe, which is below NOG’s current corporate average.
The company said the acquisition is expected to be leverage neutral initially and leverage accretive over the long term, while also improving key valuation metrics including TEV-to-EBITDA, earnings per share, free cash flow, and cash flow per share.
In addition to the upfront consideration, NOG agreed to provide contingent consideration of CA$25 million, approximately US$18.5 million, payable in either cash or common stock in the first quarter of 2028 if specified average oil price thresholds are achieved through the end of 2027.
NOG expects to invest between US$40 million and US$45 million in capital expenditures related to the assets following closing in 2026, with projected 2027 capital expenditures ranging from US$45 million to US$50 million.
The transaction has an effective date of April 1, 2026, and is expected to close late in the second quarter of 2026. In conjunction with the acquisition, the company formed a wholly owned subsidiary, NOG Energy Canada, Ltd.
The company also announced updated 2026 annual guidance reflecting the pending acquisition and stronger operational performance. Revised guidance calls for annual production between 143,000 and 148,000 Boe per day, compared with prior guidance of 139,000 to 143,000 Boe per day. Oil production guidance increased to 71,500 to 73,500 barrels per day, while capital expenditure guidance remained unchanged at $850 million to $900 million.
NOG said the revised outlook reflects stronger well performance, improved timing, lower operating expense expectations, and improved oil differentials driven primarily by stronger Williston Basin pricing.
Citigroup Global Markets served as exclusive financial advisor to NOG on the transaction, while Kirkland & Ellis LLP and Blakes, Cassels & Graydon LLP acted as legal advisors. National Bank Capital Markets and RBC Capital Markets advised Parallax on the transaction, with Stikeman Elliott LLP serving as legal counsel.
KEY QUOTES:
“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.”
Northern Oil and Gas Management
