Earthstone Energy Inc. and Northern Oil and Gas Inc. (NOG) are joining forces in the Permian Basin to acquire privately held Novo Oil & Gas Holdings LLC for $1.5 billion.

Novo, an exploration and production (E&P) firm backed by EnCap Investments LP, operates in the northern portion of the Permian’s Delaware sub-basin. Earthstone has been advancing an acquisition spree in both the Delaware and Midland sub-basins.

The latest tie-up, slated to close during the third quarter, would see Earthstone take a 66.66% operating stake in the Novo assets, with NOG controlling the remaining 33.33%. Minneapolis-based NOG specializes in acquiring minority, non-operated stakes in Lower 48 onshore E&P assets. 

The Novo transaction would be the largest in NOG’s history, said CEO Nick...