Vital Energy (VTLE) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition expands operational scale and footprint in the Delaware Basin, adding high-quality, oil-weighted inventory and 68 gross (49 net) high-return locations, enhancing core operating areas and capital efficiency.

• Inventory acquired has an average breakeven of $47 per barrel WTI, supporting long-term growth and improved portfolio economics.

• Strengthens position in the Permian, with Delaware assets soon representing over one-third of daily production and increasing the Delaware Basin position by 25% to 84,000 net acres.

• Adds over five years of high-value development opportunities and supports near-term deleveraging.

Financial terms and conditions

• Total transaction value is $1.1 billion, with Vital Energy's share at $880 million and NOG at $220 million; net purchase price after adjustments is $820 million for Vital Energy, funded via an expanded $1.5 billion credit facility.

• Transaction priced at 2.4x next 12 months Consolidated EBITDAX, below recent Delaware Basin deals and at a discount to current company valuation.

• 92% of the purchase price is supported by PDP reserves and work-in-process wells, with a third-party engineer estimating PDP reserves with a PV-10 value of $742 million plus $71 million for work-in-process wells.

• High-value inventory acquired at an average of $1.4 million per net location.

• Plan to delever from 1.5x to 1.3x within 12 months using free cash flow.

Synergies and expected cost savings

• Larger operational scale and optimized development plans are expected to drive down costs through supply chain efficiencies, increased purchasing power, and proven operating practices.

• Owned water infrastructure, centralized facilities, and robust infrastructure support lower LOE and operational improvements.

• Projected to drive over 30% increase in expected NTM Adjusted Free Cash Flow at closing.