form8k_05222009.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington
D.C. 20549
Form
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): May 22,
2009
NORTHERN
OIL AND GAS, INC.
(Name of
small business issuer in its charter)
Nevada
|
000-33999
|
95-3848122
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
315
Manitoba Avenue – Suite 200
Wayzata,
Minnesota 55391
|
55391
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (952)
476-9800
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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SECTION
1 - REGISTRANTS BUSINESS AND OPERATIONS
Item 2.01 – Completion of Acquisition or Disposition of
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Slawson Exploration Company Exploration and Development
Agreement
On
May 22, 2009, Northern Oil and Gas, Inc. (the “Company”) entered into an
Exploration and Development Agreement (the “Agreement”) with Slawson Exploration
Company, Inc. (“Slawson”) pursuant to which the Company acquired certain North Dakota Bakken assets (the “Properties”)
from Windsor Bakken LLC as part of a syndicate led by privately owned
Slawson. Pursuant to the Agreement,
the Company purchased a five percent (5.0%) interest in oil and gas rights
covering approximately 60,000 undeveloped net acres. The Company also acquired fourteen
percent (14%) of the existing 59 gross Bakken and Three Forks producing well
bores s in <?xml:namespace
prefix = st1 ns =
"urn:schemas-microsoft-com:office:smarttags" />North Dakota including approximately 1,200
barrels of oil production per day. In the transaction the Company purchased
approximately 300,000 barrels of proven producing reserves as well as
approximately 3,000 net undeveloped acres for a total cost of $7,300,000. The acreage includes several high-rate
Parshall Field wells that the Company believes offer significant infill drilling
potential. All consideration was
paid in cash using additional borrowing made available under the Company’s
credit facility with CIT Capital USA Inc. (“CIT”), as more fully described
below.
Under the Agreement, the Company and Slawson agreed to
share pro-rata in the costs associated with Slawson’s acquisition of the
Properties from Windsor Bakken LLC and certain continuing obligations and
commitments in connection with future drilling activities on the subject
Properties. The Company may be
subject to forfeiture of certain portions of the Properties in the event it does
not elect to participate in drilling wells on the Properties, as fully described
in the Agreement. Slawson will be
responsible for all operations concerning the Properties, and is expected to
drill up to 45 gross Bakken wells on the newly acquired acreage through
2010. The Company currently expects
drilling to be focused on approximately 23,000 acres in the core Bakken
prospects located in Mountrail County, encompassing a significant portion
of the Company’s existing core Bakken acreage. The acquisition of production and
reserves at what the Company believes to be a very compelling value represents
the types of opportunities the Company has been targeting in the current market
environment.
A
copy of the Agreement is included as Exhibit 2.1 to this Form 8-K. The foregoing description of the
material terms of the Agreement are qualified in their entirety by reference to
the Agreement filed herewith.
Item 2.03 – Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance sheet Arrangement of a
Registrant.
Amendment to CIT Capital USA Inc.
Financing
In February 2009, the Company completed the closing of a
revolving credit facility with CIT that provides up to a maximum principal
amount of $25 million of working capital for exploration and production
operations. The borrowing base of funds available under the facility
will be redetermined semi-annually based upon the net present value, discounted
at 10% per annum, of the future net revenues expected to accrue from our
interests in proved reserves estimated to be produced from our oil and gas
properties. Under this facility, $11 million of financing was
initially made available to the Company. In conjunction with the
acquisition described above, CIT agreed to credit the Company with the reserves
attributable to the acreage being acquired and immediately increase the current
borrowing available under the facility to $16 million.
On
May 22, 2009, the Company entered into a First Amendment (the “Amendment”) to
Credit Agreement with CIT amending certain terms and provisions of its February
2009 Credit Agreement, including the increase
in the current borrowing available under the facility to $16 million. The Amendment was executed in connection
with the Company’s purchase of certain leasehold interests from Slawson
described above. The Company is
obligated to provide CIT reserve reports and other due diligence information
relating to the properties acquired from Slawson, as well as the Company’s
revised development plan,
within
30 days of May 22, 2009 as a condition to the Amendment. The Company may use the additional funds
available as a result of the Amendment solely to fund the acquisition of
properties from Slawson and other associated costs, expenses and fees, unless
otherwise agreed to by CIT. The
Company expects to redetermine its
borrowing base as of June 30, 2009.
Given recent production growth and increases in commodity prices, the
Company believes it is likely the borrowing base available under the facility
may be increased at that time. The Amendment
did not alter any other material terms of the original Credit Agreement. The facility terminates on February 27,
2012.
A
copy of the Amendment is included as Exhibit 10.1 to this Form 8-K. The foregoing description of the
material terms of the Amendment are qualified in their entirety by reference to
the Amendment filed herewith.
A copy of the press release which the Company
issued reporting the foregoing information
is attached as Exhibit 99.1.
SECTION
9 - FINANCIAL STATEMENTS AND EXHIBITS
Item
9.01 – Financial Statements and Exhibits
(d)
Exhibits
Exhibit
Number
|
|
Description
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2.1
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Exploration
and Development Agreement dated effective as of the 1st
day of April 2009 by and between Slawson Exploration Company, Inc. and
Northern Oil and Gas, Inc.
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10.1
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First
Amendment to Credit Agreement dated as of May 22, 2009 among Northern Oil
and Gas, Inc., as Borrower, CIT Capital USA Inc., as Administrative Agent,
and The Lenders Party Hereto
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99.1
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Press
Release dated May 29, 2009
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SIGNATURES
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.
NORTHERN OIL AND GAS, INC.
Date: May
29,
2009 By
/s/ Michael L.
Reger
Michael L. Reger, Chief Executive Officer