Northern Oil and Gas in bid to acquire smaller rival Granite Ridge, sources say

Northern Oil and Gas

20/12/2024 18:43

(Adds share price reaction in paragraphs 4, 5, and 8)
    By David French
       Dec 20 (Reuters) - Northern Oil and Gas  NOG.N  has made
an acquisition offer for Granite Ridge Resources  GRNT.N , a
smaller U.S. producer with operations in basins including the
Permian and Eagle Ford, according to people familiar with the
matter.
    Minneapolis, Minnesota-based Northern has submitted at least
two offers for Granite Ridge, the sources said, adding the
latest bid, made in recent weeks, was at a roughly 20% premium
to the target's share price.
    While Granite Ridge's management has rebuffed the overtures
so far, Northern remains interested in a deal and could sweeten
its offer next year, the sources said, requesting anonymity as
the discussions are confidential.
    Granite Ridge's shares jumped more than 12% on the news on
Friday, giving the company a market value of nearly $800
million. It also had debt net of cash of about $136 million as
of the end of September, according to data from LSEG. 
        Northern, which has a market capitalization of about
$3.6 billion, reversed marginal gains and was trading 1.1%
lower. 
  
    Granite Ridge declined comment. Northern did not respond to
a request for comment.
    Granite Ridge is majority-owned by entities controlled by
private equity firm Grey Rock Investment Partners, which was
founded by Matt Miller and Griffin Perry, who also serve as
co-chairmen of the Dallas-based company. The other co-founder of
Grey Rock, Kirk Lazarine, also sits on the board.
    The company's shares, which have been trading in New York
since its 2022 merger with a blank-check acquisition firm backed
by former speaker of the U.S. House of Representatives Paul
Ryan, had lost more than 40% of their value from the time of
listing until Thursday's close. 
    Both Northern and Granite Ridge specialize in so-called
non-op production, which means they contribute a share of the
drilling costs and other expenses to get a share of the revenue
from the sale of hydrocarbons, while another producer is in
charge of the day-to-day operations of the oil and gas wells.
    Northern is one of the largest non-op producers in the U.S.
shale patch, and has grown in recent times through a variety of
smaller acquisitions, partnerships and joint ventures.
    If it succeeds in clinching a deal for Granite Ridge, it
would rank as Northern's largest ever acquisition.
    Northern and Granite Ridge operate across multiple shale
basins, including the Permian basin located in Texas and New
Mexico, and the Williston formation in North Dakota. A takeover
of Granite Ridge would also give Northern a presence in the
Eagle Ford, Haynesville, and Denver-Julesburg basins.

 (Reporting by David French in New York; Editing by David
Gregorio)
 ((davidj.french@thomsonreuters.com;))