Infinity, NOG adjust Ohio Utica acquisition split, close deal

Infinity Natural Resources and Northern Oil and Gas (NOG) announced last week that they had agreed to adjust the ownership split of their pending acquisition of Utica shale assets in Ohio from Antero Resources and Antero Midstream. This week, this was followed by an announcement from the companies saying they had closed the acquisition.

Infinity said on February 19 that it had agreed to increase its stake in the $1.2bn Utica acquisition to 60%, compared with 51% previously. This came after the company secured $350mn in equity investment from energy-focused private capital investors Quantum Capital Group and Carnelian Energy Capital Management. The investment involved Series A convertible preferred stock, which Infinity said would “significantly” reduce its leverage while boosting its liquidity.

According to the Quantum bought $275mn of the preferred stock, while Carnelian purchased $75mn worth of it. The preferred shares carry an 8% per year dividend for the first five years, rising to 12% thereafter, and can later be converted to Class A common stock.

Only a portion of the proceeds from this investment will be used to increase Infinity’s stake in the Utica acquisition. The remainder is set to be used for general corporate purposes, including the repayment of borrowings under Infinity’s senior secured revolving credit facility.

NOG, for its part, said it would now acquire a 40% interest in the assets being bought from Antero, compared with 49% previously. In a separate February 19 announcement, NOG said its share of the purchase price would be reduced to $480mn from $588mn as a result of the ownership adjustment. The purchase price remained on the same pro rata economic terms as originally announced, NOG noted.

“By adjusting the sizing of our interest, NOG also optimises and increases its financial flexibility to allow for further participation in inorganic and organic growth opportunities as they emerge in the coming year,” stated NOG’s CEO, Nick O’Grady.

On February 23, the companies followed up with separate announcements saying they had closed the Utica acquisition.

“This transformational acquisition represents a hand-in-glove fit with our existing Ohio operations and further solidifies our compelling long-term growth platform,” stated Infinity’s president and CEO, Zack Arnold. “We are acquiring a position we know very well that provides us with the opportunity to demonstrate our capabilities to deliver shareholder value through our best-in-class operations and focused development of the area. The combination of high-quality acreage, extensive drilling inventory, and integrated midstream infrastructure augments our capital efficiency and returns while positioning us to capitalise on the significant development opportunities in the Ohio Utica core.”