Earthstone Energy has completed the $1.5bn acquisition of the US-based privately owned energy company Novo Oil & Gas Holdings (Novo).

The acquisition was made in partnership with Northern Oil and Gas (NOG), which acquired a 33.3% stake in Novo’s assets for $500m.

Novo, which was a portfolio company of EnCap Investments, owns 17,000 net acres in the Northern Delaware Basin, a section of the larger Permian Basin in New Mexico.

The Northern Delaware Basin is believed to hold high-quality, liquids-rich, stacked pay zones.

As per the terms of the agreement, Earthstone Energy will become the operator of all the Novo assets.

Agreements for cooperation and joint operations, which include a multi-year development strategy for the Novo assets, were also signed by NOG and Earthstone Energy in connection with the deal.

NOG made a $468.4m cash payment at closure, which was financed in part by a $37.5m deposit made in June 2023 at the time of signing.

Earthstone president and CEO Robert Anderson said: “Adding the Novo assets further shifts our focus on the prolific northern Delaware Basin. We expect most of our capital activity to be dedicated to this area in the future, with four of our five rigs focused on the northern Delaware Basin.

“Novo significantly enhances our scale and operational synergies with Earthstone’s estimated production profile for the fourth quarter to be over 130,000 boepd. Novo will add over 200 high-return, de-risked low breakeven drilling locations, deepening our inventory and increasing our inventory life to 13 years.”

Last June, Earthstone agreed to buy Titus Oil & Gas’ assets in New Mexico in a deal valued at $627m.