SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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.
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.
In accordance with the PSA and the Cooperation Agreement, the Company paid closing consideration to Reliance in respect of the Acquired Assets consisting of $120.9 million in cash (which includes a $17.5 million cash deposit previously paid by the Company upon the execution of the PSA and held in escrow in accordance with the terms of the PSA) and 3,250,000 Warrants. The cash portion of the consideration is net of preliminary and customary purchase price adjustments and remains subject to final post-closing settlement between the Company and Reliance. The Company funded the cash portion of the closing payment with borrowings under its revolving credit facility.
The material terms of the PSA were previously disclosed in Item 1.01 of the Company’s Current Report on Form 8-K filed on February 3, 2021, which is incorporated herein by reference. The description of the PSA included or incorporated by reference in this Current Report on Form 8-K is qualified in its entirety by reference to the full text of the PSA, which is filed as Exhibit 2.1 hereto, and is incorporated herein by reference.
|Item 3.02.|| |
Unregistered Sales of Equity Securities.
The description set forth under Item 1.01 above of the issuance of Warrants and the terms thereof is incorporated herein by reference. The Warrants were issued in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof to a single “accredited investor” as defined in Rule 501 of Regulation D promulgated by the Securities and Exchange Commission without the use of any general solicitation or advertising to market or otherwise offer the securities for sale. The information contained in this Current Report on Form 8-K is not an offer to sell or the solicitation of an offer to buy any securities of the Company.
|Item 7.01.|| |
Regulation FD Disclosure.
On April 6, 2021, the Company issued a press release regarding the consummation of the Reliance Acquisition. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
|Item 9.01.|| |
Financial Statements and Exhibits.
Financial Statements of Businesses Acquired.
The Company intends to file the financial statements required to be filed pursuant to Item 9.01(a) of Form 8-K by amendment to this report not later than 71 calendar days after the date this report is required to be filed.
Pro Forma Financial Information.
The Company intends to file any pro forma financial information required by Item 9.01(b) of Form 8-K by amendment to this report not later than 71 calendar days after the date this report is required to be filed.
|2.1||Purchase and Sale Agreement between Northern Oil and Gas, Inc. and Reliance Marcellus, LLC, dated February 3, 2021 (incorporated by reference to Exhibit 2.1 to the Northern Oil & Gas, Inc.’s Current Report on Form 8-K filed with the SEC on February 3, 2021).*|
|4.1||Warrants to Purchase Common Shares, dated as of April 1, 2021, by and between Northern Oil & Gas, Inc. and Reliance Marcellus, LLC.|
|10.1||Registration Rights Agreement, dated April 1, 2021, by and between Northern Oil and Gas, Inc. and Reliance Marcellus, LLC.|
|99.1||Press Release of Northern Oil and Gas, Inc., dated April 6, 2021.|
|104||The cover page from this Current Report on Form 8-K, formatted in Inline XBRL.|
Certain schedules and exhibits have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
|Date: April 6, 2021||NORTHERN OIL AND GAS, INC.|
Erik J. Romslo
Chief Legal Officer and Secretary