Northern Oil & Gas, Inc. is a publicly held oil and gas company headquartered in Wayzata, Minn. Founded in 2006 by fourth-generation land-developer and oilman Michael Reger, Northern Oil focuses on acquiring oil leases and exploring, developing and producing oil and natural gas reserves. The company now holds leases on more than 100,000 net mineral acres, most of which lie in the Williston Basin of Montana and North Dakota. In 2008, Northern Oil was associated with over 60 new wells that were drilled with a 100% success rate. The company, whose stock trades on the NYSE/AMEX, reported revenue of more than $4.3 million in 2008.
- 面临的难题
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Northern Oil was formed in 2006 and began aggressively acquiring lease acreage just as drilling in Montana and North Dakota became very active. Northern Oil has leased more than 65,000 acres in the Bakken resource formation, believed by many petrochemical industry experts to be the most important onshore oil and gas discovery made in the Continental U.S. in three decades. Included are large parcels in Mountrail County, N.D., where the Bakken formation has proven to be the most productive.
Despite a widespread economic slowdown and a steep decline in commodity prices in 2008, Northern Oil delivered solid operational and financial results for its shareholders, customers and partners. On the heels of such a good year, the company prepared to move forward on an ambitious exploration, development and production plan for 2009 and beyond.
Northern Oil explored several options for raising the capital needed for its 2009 development program. A financial advisor encouraged management to consider establishing a line of credit to fund their growth aspirations – provided they could find a financial services partner willing to lend money to a company with a strong, but relatively short, track record.
- 解决方案
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In December 2008, Northern Oil’s financial advisor contacted CIT Energy on the company’s behalf. Part of CIT’s Corporate Finance business, CIT Energy develops custom financing solutions for energy, electric power and natural resources companies. As part of its long-term commitment to the energy industry, CIT has built a strong and experienced team of financing experts who are familiar with all phases of oil and gas production. The team includes an in-house petroleum engineer who evaluates clients’ assets, development plans and recovery projects.
Asked to prepare a financial proposal on an accelerated timeline, the CIT Energy team set right to work evaluating Northern Oil’s lease holdings, track record, business approach and development plan. Team members were impressed with the company’s low-cost operating model and management’s proven ability to acquire leases in prime resource fields.
U.S. financial markets were in disarray as 2008 drew to the close. Many financial institutions had stopped lending altogether. Oil prices had fallen dramatically over the course of several months. But CIT Energy still was able to create a custom financial solution that met all of Northern Oil’s needs.
- 结果
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Less than a week after initial discussions on Dec. 10, 2008, CIT Energy submitted a preliminary proposal to Northern Oil management on a highly flexible, three-year revolving credit facility with a maximum principal amount of $25 million. On Dec. 23, Northern Oil management approved the preliminary terms and asked for a final proposal by the end of the year, which CIT provided. The deal was closed on Feb. 27, 2009.
The agreement made $11 million immediately available as working capital to fund exploration and production operations. The remaining $14 million will become available in the future after specific oil and gas reserve addition milestones are achieved.
Despite severe weather and a difficult pricing environment, Northern Oil reported a fifth consecutive quarter of increased production in the first quarter of 2009. As oil prices began to recover in the second quarter, Northern Oil moved forward with its aggressive 2009 development program.
