| Item 1.01 | Entry into a Material Definitive Agreement. |
Reliance Purchase and Sale Agreement and Cooperation Agreement
On February 3, 2021, Northern Oil and Gas, Inc. (the “Company”) entered into a purchase and sale agreement (the “PSA”) with Reliance Marcellus, LLC (“Reliance”) pursuant to which the Company agreed to acquire (the “Reliance Acquisition”) certain oil and gas properties, interests and related assets (the “PSA Assets”) for an unadjusted aggregate purchase price of $250.0 million, plus 3,250,000 warrants (the “Warrants”) to purchase shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at an exercise price equal to $14.00 per share, subject to certain customary purchase price adjustments. The Warrants will be exercisable in whole or in part for the Common Stock underlying the Warrants by Reliance at any time beginning 90 days following the date of issuance and ending seven years from the date of issuance. The PSA contains customary representations and warranties, covenants and indemnification provisions and has an effective date of July 1, 2020.
Certain of the PSA Assets to be purchased in connection with the Reliance Acquisition are subject to both preferential purchase and consent rights, which, if exercised or not obtained within certain periods of time designated in the PSA after closing of the Reliance Acquisition, would result in the exclusion of such assets from the Reliance Acquisition.
In connection with the Reliance Acquisition, on February 3, 2021, the Company entered into a cooperation agreement (the “Cooperation Agreement”) with an unaffiliated third party, Arch Investment Partners, LLC (“Arch”). Pursuant to the Cooperation Agreement, the Company expects to assign an undivided 30% interest in and to the PSA, including the right to acquire an equivalent share of the PSA Assets transferred under the PSA, to Arch, with Arch assuming the obligation to fund 30% of the aggregate cash purchase price payable to Reliance under the PSA. As a result, assuming all of the PSA Assets are transferred at closing, the Company will acquire an undivided 70% interest in the PSA Assets (such portion of the PSA Assets, the “Reliance Assets”) for an unadjusted aggregate purchase price payable by us comprised of $175.0 million in cash and the Warrants.
The obligations of the parties to complete the transactions contemplated by the PSA are subject to the satisfaction or waiver of customary closing conditions set forth in the PSA. Upon termination of the PSA under specified circumstances, generally relating to a failure by the Company to close or fulfill in any material respect any of its obligations under the PSA, the Company and the counterparty to the Cooperation Agreement would be required to forfeit to Reliance the cash deposit thereunder.
The foregoing description of the PSA and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified by, the full text of the PSA, which is filed as Exhibit 2.1 hereto and incorporated herein by reference.
The PSA has been included with this Current Report on Form 8-K (this “Report”) to provide investors and security holders with information regarding the terms of the transactions contemplated therein. It is not intended to provide any other factual information about the Company, Reliance or the Reliance Assets. The representations, warranties, covenants and agreements contained in the PSA, which are made only for purposes of the PSA and as of specific dates, are solely for the benefit of the parties to the PSA, may be subject to limitations agreed upon by the parties (including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the PSA instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and security holders. Company security holders should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Reliance, or the Reliance Assets. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the PSA, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
