Hi, everyone. This is Mike Kelly from Northern Oil, I'm here with our CEO, Nick O'Grady, to update you all on another exciting value creating acquisition for NOG that we just announced. If you haven't already, please check out our press release and investor presentation regarding our Permian bolt on acquisitions that we posted on our website today, June 16. I'll hand the call over to Nick in a moment, and he will refer to a few of the slides from the presentation during his commentary. But before I do that, let me cover our safe harbor language.
Be advised that our remarks today may include forward looking statements within the meaning of the Private Securities Litigation Reform Act. These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these forward looking statements. Those risks include, among others, matters that we have described in our press releases, investor presentations and filings with the SEC, including our Form 10 ks and Form 10 Q filings. Disclaim any obligation to update these forward looking statements. During this conference call, we may discuss certain non GAAP financial measures.
Additional information about these measures, including reconciliations to the closest GAAP measures, can be found in our press releases and investor presentations that are available on our website. With that taken care of, I will now hand the call over to Northern CEO, Nick O'Grady.
Thanks, Mike, and thanks, everyone, for taking the time to listen in today. Today, we've announced a group of bolt acquisitions in the core of the Permian Basin for approximately $102,200,000 Substantially, all of the value here was directly negotiated in off market transactions, and the value should speak for itself. With our recent Marcellus acquisition and now these Permian deals, we continue to establish ourselves as a diversified national non op player with increasing scale. Despite our growing business, our approach has not changed one bit. We are driven by a disciplined focus on asset level returns, which when done correctly drives both immediate and long term benefits to our shareholders.
On Slide five of today's presentation, you'll see the highlights. We're acquiring approximately 2,900 acres with meaningful inventory in the core of Delaware Basin in key areas in Lee, Eddy and Reeves Counties. The assets come with over 2,000 BOE per day of production and over five net wells in process that should drive meaningful production growth over the coming months and quarters. At this point, we expect production of 3,700 BOE per day in the second half of twenty twenty one. And with significant future inventory, we expect production to reach 6,500 BOEs per day within a few years' time.
We also expect extremely strong free cash flow from the assets. At the current strip, we project greater than $100,000,000 of free cash by 2025. As noted in our press release, our purchase price equates to approximately 2.5x forward cash flow at the Strip and will be accretive across all relevant metrics, including EV to EBITDA, debt to EBITDA, cash flow per share and free cash flow per share. Based on our proposed financing, we are doing two great things: one, adding per share value across the board and two, at the same time, deleveraging meaningfully. We expected today's prices to end the year at less than 1.7x levered and can foresee ending 2022 at 1x levered.
Finally, with the pro form a improvements to our cash flow and leverage, we plan to recommend a 50% increase to our common stock dividend upon the deal closing. Moving to Slide six in the presentation, this highlights a few points that I just covered, but there are a couple of key points to go over in more detail. We start by focusing on deal economics and deal economics alone, But these transactions have the added benefit of continuing to broaden our portfolio and doing so with assets that have returns that compete with anything in our existing inventory. The Permian has been a area of focus for us for over two years through a ground up building strategy that has resulted in numerous high return ground game acquisitions. This transaction meaningfully builds up that scale and will be a linchpin to our continued expansion in the area.
We are very bullish on NOG's role in the Permian. Asset valuations or the entry price have receded from the frenzy of a few years ago, and well control from steady development gives risk assurance to performance. When we look to acquire properties, our focus is not just the quality of the rock, but also on the quality and the performance of the operators of the asset. In this transaction, we scored big on both fronts. To put it simply, this is core of core rock with highly economic prospects, and they are operated by some of the best companies in the Permian with EOG, Mewburn, Conoco and Colgate.
Slide seven dives deeper into the quality of the inventory, and I'll highlight the following. First, we estimate that over 75% of the 184 gross undeveloped wells have IRRs that exceed 50% at the strip. And second, a key tenet of a successful non op is to focus on areas that are resilient in any price environment, ones that the operator will focus on in good times and in bad. These assets are just those. Slide eight covers the Permian Basin outlook.
As the most active region in The U. S. With over 200 rigs today, we expect it to gain market share in the total development in The U. S. Over the next several years.
Thus, it is naturally a key area of focus for us. Slide nine covers value. Those who follow us understand that we are very focused on cost of entry, not chasing the latest trend, but full cycle economics. This discipline cuts down the number of transactions we execute on, but waiting for the right opportunity at the right price is the path to success in our business. We believe our discipline paid off transactions.
We think paying 2.5 times the next twelve months cash flow for an asset of this quality that is expected to have production triple over the next few years and simultaneously generating over $100,000,000 in free cash flow is quite frankly very, very exciting. If you look at the multiple we paid on the basis of second half twenty twenty one production, we think we just inked one of the most attractive Permian deals in recent history. On the M and A front, Slide 10 highlights that Northern is uniquely positioned to capitalize on what has become a very attractive M and A market for non op assets. Higher commodity prices have led many companies testing the A and B market this year. We bid on many of these properties, and we are very optimistic about the non op market consolidation theme taking place over the next couple of years.
With that said, it also has to be on our terms and at our value. We continue to grind away on small scale acquisitions, and larger scale transactions have to meet a very high bar. The proposed financing for this transaction will continue to improve our balance sheet to a degree that it also sets the stage for future consolidation. The next slide covers capital expenditures. With five net wells in process on the properties to be acquired, we expect approximately $35,000,000 of development capital through the remainder of the year assets.
At the same time, our existing business has been performing very well. Q1 production was ahead of our internal expectations on lower CapEx, and we've seen these trends continue during April and May. Simply put, we have been doing more with less. We're confident to reduce our 2021 CapEx guidance on our legacy business by about 15,000,000 to $20,000,000 We'll update our holistic guidance post closing on these transactions, but I'll highlight the fact that these Permian assets could drive most, if not all, our relevant unit costs lower from LOE to realized differentials. Slide 12 really formalizes what we've previously spoken about with regards to our dividend policy, which is that it is directly tied to our overall reduction in leverage, something this transaction will do immediately.
As we reach these targets, we hope to steadily raise our dividend payout to levels before ultimately approaching our onethree doctrine. As we've discussed, we will first focus on building a solid base dividend with a variable component likely used to help offset the volatility of commodities and protect investors for the long term. Slide 14 highlights the New Northern, a company diversified by geography and commodity with the ability to allocate capital to the best returns with a nimbleness not enjoyed by our operating peers. We focus on the simple tenets of driving return on our capital employed, and it's translating into industry leading free cash flow that could equate to nearly twothree of our market cap over the next few years and has given us the ability to put a dividend in place with room to grow. And we're doing it in a disciplined fashion to continue to lower our leverage.
I'll just cover one more slide before wrapping up, which is Slide 13, talking about Shale three point zero. As I've said, Northern is a primary beneficiary of the changes to the industry with a consolidation of operators bringing better returns for our assets and more opportunities to help our operators focus on the divestment of their non op properties. For a quick ops update, we're coming off a robust first quarter with rising production, strong free cash flow and consistent and disciplined spending. In addition, as we highlighted in today's press release, our production continues to increase in the second quarter, averaging over 31,750 barrels per day of oil alone in May and April, up nearly 2,000 barrels per day from the first quarter. As our gas production is tabulated, we expect a similar trajectory.
I'll stop there and close out by thanking you again for your time and interest. We continue to work tirelessly to create value for our stakeholders, improve the company's prospects and deliver a more profitable, higher dividend paying investment proposition in the golden age of non op. We are a company run by investors for investors. And as this deal should prove, we are focused on value creating opportunities. Thanks, everyone.