Introductory Note
On April 1, 2021 (the “Closing Date”), Northern Oil and Gas, Inc. (the “Company”) completed its previously announced acquisition (the “Reliance Acquisition”) of certain oil and gas properties, interests and related assets pursuant to that certain purchase and sale agreement (the “PSA”), dated as of February 3, 2021, by and between the Company and Reliance Marcellus, LLC (“Reliance”).
| Item 1.01 | Entry into a Material Definitive Agreement. |
Warrant Agreement
On the Closing Date, as partial consideration for the Acquired Assets (as defined below), the Company issued to Reliance 3,250,000 warrants (the “Warrants”) to purchase shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), at an exercise price equal to $14.00 per share (subject to certain customary purchase price adjustments). The Warrants will be exercisable by Reliance or its permitted transferees, in whole or in part, for the shares of Common Stock underlying the Warrants (such shares, the “Warrant Shares”) at any time beginning 90 days following the Closing Date and ending on April 1, 2028; provided that the Company shall not be required to issue Common Stock upon the exercise of any Warrants unless such issuance is pursuant to a valid exemption from the registration requirements of the Securities Act of 1933, as amended, and the exercising holder provides evidence of the availability of such exemption reasonably satisfactory to the Company.
The foregoing description of the Warrants does not purport to be complete and is subject to, and qualified by, the full text of the Warrants, which is filed as Exhibit 4.1 hereto and incorporated herein by reference.
Registration Rights Agreement
On the Closing Date, in accordance with the PSA, the Company entered into a registration rights agreement with Reliance (the “Registration Rights Agreement”) pursuant to which the Company has agreed to prepare and file a registration statement covering the resale of the Warrants and the Warrant Shares and to seek and maintain effectiveness of the same. The Company has agreed, among other things, to indemnify Reliance and its permitted transferees with respect to certain liabilities and to pay all fees and expenses incident to the Company’s obligations under the Registration Rights Agreement.
The foregoing description of the Registration Rights Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified by, the full text of the Registration Rights Agreement, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
The description of the Reliance Acquisition set forth under “Introductory Note” above is incorporated herein by reference.
In connection with the entry into the PSA, 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 assigned an undivided 30% interest in and to the PSA, including the right to acquire an equivalent share of all 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, on the Closing Date, the Company acquired an undivided 70% interest in the assets transferred under the PSA.
At closing of the Reliance Acquisition, the assets acquired by the Company (the “Acquired Assets”) consisted of approximately 95.3 net producing wells and 21.6 net wells in progress, as well as approximately 61,712 net acres in Pennsylvania, which the Company estimates will generate approximately 229.4 net undrilled locations.
