FOURTH QUARTER HIGHLIGHTS
- Production of 114,363 Boe per day (60.2% oil), a 45% increase
from the fourth quarter of the prior year
- GAAP cash flow from operations of $342.4 million. Excluding
changes in net working capital, cash flow from operations was
$365.9 million, an increase of 56% from the fourth quarter of the
prior year
- Capital expenditures of $260.0 million, excluding
previously-announced non-budgeted acquisitions and other items
- Increased Free Cash Flow (non-GAAP) by 19% to $103.6 million
from the fourth quarter of the prior year. See “Non-GAAP Financial
Measures” below
- Announced and subsequently closed Utica and Northern Delaware
acquisitions
- Raised $290.6 million in net proceeds from a Common Stock
offering in October 2023
- Declared $0.40 per share common dividend for the first quarter
of 2024, an increase of 18% from the first quarter of 2023
- Providing detailed 2024 production, capital spending and
line-item cost guidance
Northern Oil and Gas, Inc. (NYSE: NOG) (“NOG”) today announced
the company’s fourth quarter and full year 2023 results and
provided 2024 guidance.
MANAGEMENT COMMENTS
“NOG closed out 2023 in record fashion,” commented Nick O’Grady,
NOG’s Chief Executive Officer. “Our oil and total volumes grew to
all-time highs and we generated record cash flow from operations,
while we saw our leverage levels decline meaningfully year over
year, even in a year of lower commodity prices.”
Mr. O’Grady continued, “As we look out to 2024, our plan
delivers standout 20% production growth and significant cash
generation that will provide flexibility to further enhance
returns. We have great options to deliver additional shareholder
returns, growth and other value enhancing measures, all with the
goal of delivering another year of superior relative and absolute
return. ”
FINANCIAL RESULTS
Oil and natural gas sales for the fourth quarter were $543.4
million, an increase of 22% over the prior year period. Fourth
quarter GAAP net income was $388.9 million or $3.90 per diluted
share. Fourth quarter Adjusted Net Income was $160.7 million or
$1.61 per adjusted diluted share, an increase of $38.2 million or
$0.18 per adjusted diluted share over the prior year period.
Adjusted EBITDA in the fourth quarter was $401.7 million, an
increase of 52% over the prior year period. (See “Non-GAAP
Financial Measures” below.)
Oil and natural gas sales for full year 2023 were $1.9 billion.
Full year 2023 GAAP net income was $923.0 million or $10.03 per
diluted share. Full year 2023 Adjusted Net Income was $604.7
million or $6.58 per adjusted diluted share. Full year 2023
Adjusted EBITDA was $1.4 billion, an increase of 31% over the prior
year. (See “Non-GAAP Financial Measures” below.)
PRODUCTION
Fourth quarter production was 114,363 Boe per day, a 45%
increase from the prior year period. Oil production grew over 5,300
Bbl per day, or 8% sequentially and represented 60.2% of production
in the fourth quarter. NOG had 27.6 net wells turned in line during
the fourth quarter, compared to 22.6 net wells turned in line in
the third quarter of 2023. NOG’s fourth quarter benefited from a
full contribution of the Novo acquisition and an increase in
turn-in-line activity, offset by planned shut-ins at the Mascot
Project from offset frac operations. Full year 2023 production was
98,822 Boe per day, a 31% increase from the prior year.
PRICING
During the fourth quarter, NYMEX West Texas Intermediate (“WTI”)
crude oil averaged $78.53 per Bbl, and NYMEX natural gas at Henry
Hub averaged $2.92 per Mcf. NOG’s unhedged net realized oil price
in the fourth quarter was $74.51 per Bbl, representing a $4.02
differential to WTI prices. NOG’s fourth quarter unhedged net
realized gas price was $2.84 per Mcf, representing approximately
97% realizations compared with Henry Hub pricing. In the fourth
quarter, Williston Basin oil differentials widened significantly,
and the Company saw modest widening of oil differentials in the
Permian as well. Natural gas realizations benefited from a slight
quarter over quarter improvement in pricing and a seasonal uplift
in NGL prices due to winter demand. The Company also benefited from
seasonally stronger natural gas differentials in Appalachia.
For full year 2023, NOG’s realized oil price differential was
$2.83 per Bbl. NOG’s full year unhedged net realized gas price was
$2.98 per Mcf, representing approximately 112% realizations
compared with Henry Hub pricing.
OPERATING COSTS
Lease operating costs were $102.1 million in the fourth quarter
of 2023, or $9.70 per Boe, an increase of 10.7% on a per unit basis
compared to the third quarter. The increase in unit costs was
primarily driven by a return to more normalized levels of expensed
workover activity versus the third quarter as well as some fixed
cost absorption from shut-ins at the Mascot project. Fourth quarter
operating costs also included approximately $4.0 million in firm
transport charges for the Appalachian properties, reflecting a
refinement in NOG’s quarterly accrual process as compared to its
prior practice. The first quarter accrual is expected to be
approximately $2.3 million and, based on current gas prices, lower
on a quarterly basis thereafter. The Company expects the firm
transport charges to sunset by mid-2025.
Fourth quarter general and administrative (“G&A”) costs
totaled $9.6 million, which includes non-cash stock-based
compensation. Cash G&A costs totaled $8.4 million or $0.80 per
Boe in the fourth quarter. Excluding approximately $0.8 million of
transaction costs, remaining cash G&A was $7.6 million, or
$0.72 per Boe, a decline of 29% or $0.29 per Boe compared to the
fourth quarter of 2022.
CAPITAL EXPENDITURES
Capital spending for the fourth quarter, excluding non-budgeted
acquisitions and other items, was $260.0 million. This was
comprised of $154.1 million of organic drilling and completion
(“D&C”) capital and $105.9 million of total acquisition
spending, inclusive of ground game D&C spending. NOG had 27.6
net wells turned in line in the fourth quarter. Wells in process
totaled 66.5 net wells as of December 31, 2023. Total 2023 capital
expenditures, excluding non-budgeted acquisitions were $917.1
million, above expectations driven by significant ground game
opportunities executed and an acceleration of completion activity
in the third and fourth quarters.
LIQUIDITY, CAPITAL RESOURCES AND RECENT ACQUISITIONS
As of December 31, 2023, NOG had $8.2 million in cash and $161.0
million of borrowings outstanding on its revolving credit facility.
NOG had total liquidity of $1,097.2 million as of December 31,
2023, consisting of cash and committed borrowing availability under
the revolving credit facility. Additionally, NOG had a $17.1
million acquisition deposit in an escrow account as of December 31,
2023, for an acquisition that closed during the first quarter of
2024.
In October 2023, NOG completed an underwritten public offering
of 7,475,000 shares of its common stock resulting in proceeds of
$290.6 million, before offering expenses. Proceeds from the
offering were used to reduce the outstanding balance on the
Company’s Revolving Credit Facility and for general corporate
purposes.
On February 1, 2024, NOG announced the closings of its November
2023 acquisitions of non-operated assets in the Utica and Northern
Delaware Basins. At closing, NOG acquired approximately 3,000 net
acres in the Delaware Basin as well as producing and in-process
properties in both the Delaware and Utica Basins. The initial
closing settlements totaled $162.2 million in cash plus a $17.1
million deposit paid at signing in November 2023.
SHAREHOLDER RETURNS
In February 2024, NOG’s Board of Directors declared a regular
quarterly cash dividend for NOG’s common stock of $0.40 per share
for stockholders of record as of March 28, 2024, which will be paid
on April 30, 2024. This represented a 18% increase from the first
quarter of 2023.
In October 2023, NOG’s Board of Directors declared a regular
quarterly cash dividend for NOG’s common stock of $0.40 per share
for stockholders of record as of December 28, 2023, which was paid
on January 31, 2024. This represented a 33% increase from the
fourth quarter of 2022.
2024 ANNUAL GUIDANCE
NOG anticipates approximately 115,000 - 120,000 Boe per day of
production in 2024, an increase of approximately 20% at the
midpoint from 2023 levels. NOG currently expects total capital
spending in the range of $825 - $900 million for 2024 with
approximately 50% of its 2024 budget to be spent on the Permian,
35% on the Williston, and 1% on the Appalachian. The remainder of
the budget is for Ground Game capital and increased workover and
other items.
2024 Guidance
Annual Production (Boe per day)
115,000 - 120,000
Annual Oil Production (Bbls per day)
70,000 - 73,000
Total Capital Expenditures ($ in
millions)
$825 - $900
Net Wells Turned-in-Line
87.5 - 92.5
Net Wells Spud
67.5 - 72.5
Operating Expenses and
Differentials
Production Expenses (per Boe)
$9.25 - $10.00
Production Taxes (as a percentage of Oil
& Gas Sales)
9.0% - 10.0%
Average Differential to NYMEX WTI (per
Bbl)
($4.00) - ($4.50)
Average Realization as a Percentage of
NYMEX Henry Hub (per Mcf)
80% - 85%
DD&A (per Boe)
$15.50 - $17.50
General and Administrative Expense (per
Boe):
Non-Cash
$0.25 - $0.30
Cash (excluding transaction costs on
non-budgeted acquisitions)
$0.75 - $0.85
PROVED RESERVES AS OF DECEMBER 31, 2023
Total proved reserves at December 31, 2023, increased 3% from
year-end 2022 to 339.7 million barrels of oil equivalent (69%
proved developed) with an associated pre-tax PV-10 value of $5.0
billion (80% proved developed) at SEC Pricing. The reserves are
calculated under SEC guidelines relating to both commodity price
assumptions and a maximum five year drill schedule. See “Non-GAAP
Financial Measures” below regarding PV-10 value.
SEC Pricing Proved
Reserves(1)
Reserve Volumes
PV-10(3)
Reserve Category
Oil
(MBbls)
Natural Gas
(MMcf)
Total
(MBoe)(2)
%
Amount
(In thousands)
%
PDP Properties
118,634
662,079
228,981
67
$
3,899,733
78
PDNP Properties
3,230
15,899
5,880
2
113,577
2
PUD Properties
48,477
338,138
104,833
31
990,772
20
Total
170,341
1,016,116
339,694
100
$
5,004,082
100
________________
(1)
The SEC Pricing Proved Reserves table
above values oil and natural gas reserve quantities and related
discounted future net cash flows as of December 31, 2023, based on
average prices of $78.22 per barrel of oil and $2.64 per MMbtu of
natural gas. Under SEC guidelines, these prices represent the
average prices per barrel of oil and per MMbtu of natural gas at
the beginning of each month in the 12-month period prior to the end
of the reporting period. The average resulting price used as of
December 31, 2023, after adjustment to reflect applicable
transportation and quality differentials, was $75.51 per barrel of
oil and $3.10 per Mcf of natural gas.
(2)
Boe are computed based on a conversion
ratio of one Boe for each barrel of oil and one Boe for every 6,000
cubic feet (i.e., 6 Mcf) of natural gas.
(3)
Pre-tax PV10%, or “PV-10,” may be
considered a non-GAAP financial measure as defined by the SEC. See
“Non-GAAP Financial Measures” below.
FOURTH QUARTER 2023
RESULTS
The following table sets forth selected
operating and financial data for the periods indicated.
Three Months Ended
December 31,
2023
2022
% Change
Net Production:
Oil (Bbl)
6,336,158
4,314,547
47
%
Natural Gas and NGLs (Mcf)
25,111,394
17,640,202
42
%
Total (Boe)
10,521,390
7,254,581
45
%
Average Daily Production:
Oil (Bbl)
68,871
46,897
47
%
Natural Gas and NGL (Mcf)
272,950
191,741
42
%
Total (Boe)
114,363
78,854
45
%
Average Sales Prices:
Oil (per Bbl)
$
74.51
$
80.23
(7
)%
Effect of Loss on Settled Derivatives on
Average Price (per Bbl)
(0.85
)
(12.03
)
Oil Net of Settled Derivatives (per
Bbl)
73.66
68.20
8
%
Natural Gas and NGLs (per Mcf)
$
2.84
$
5.64
(50
)%
Effect of Gain (Loss) on Settled
Derivatives on Average Price (per Mcf)
0.68
(0.63
)
Natural Gas Net of Settled Derivatives
(per Mcf)
3.52
5.01
(30
)%
Realized Price on a Boe Basis Excluding
Settled Commodity Derivatives
$
51.65
$
61.43
(16
)%
Effect of Gain (Loss) on Settled Commodity
Derivatives on Average Price (per Boe)
1.12
(8.69
)
Realized Price on a Boe Basis Including
Settled Commodity Derivatives
52.77
52.74
—
%
Costs and Expenses (per Boe):
Production Expenses
$
9.70
$
10.06
(4
)%
Production Taxes
4.36
5.16
(16
)%
General and Administrative Expense
0.91
2.07
(56
)%
Depletion, Depreciation, Amortization and
Accretion
14.37
10.66
35
%
Net Producing Wells at Period
End
951.6
799.3
19
%
FULL YEAR 2023 RESULTS
The following table sets forth selected
operating and financial data for the periods indicated.
Years Ended December
31,
2023
2022
% Change
Net Production:
Oil (Bbl)
22,012,986
16,090,072
37
%
Natural Gas and NGLs (Mcf)
84,341,858
68,829,142
23
%
Total (Boe)
36,069,962
27,561,596
31
%
Average Daily Production:
Oil (Bbl)
60,310
44,082
37
%
Natural Gas and NGL (Mcf)
231,074
188,573
23
%
Total (Boe)
98,822
75,511
31
%
Average Sales Prices:
Oil (per Bbl)
$
74.78
$
91.65
(18
) %
Effect of Loss on Settled Oil Derivatives
on Average Price (per Bbl)
(0.90
)
(21.48
)
Oil Net of Settled Oil Derivatives (per
Bbl)
73.88
70.17
5
%
Natural Gas and NGLs (per Mcf)
2.98
7.43
(60
) %
Effect of Gain (Loss) on Settled Natural
Gas Derivatives on Average Price (per Mcf)
0.92
(1.60
)
Natural Gas and NGLs Net of Settled
Natural Gas Derivatives (per Mcf)
3.90
5.83
(33
) %
Realized Price on a Boe Basis Excluding
Settled Commodity Derivatives
52.61
72.05
(27
) %
Effect of Gain (Loss) on Settled Commodity
Derivatives on Average Price (per Boe)
1.61
(16.52
)
Realized Price on a Boe Basis Including
Settled Commodity Derivatives
54.22
55.53
(2
Costs and Expenses (per Boe):
Production Expenses
$
9.62
$
9.46
2
%
Production Taxes
4.44
5.74
(23
) %
General and Administrative Expenses
1.30
1.71
(24
) %
Depletion, Depreciation, Amortization and
Accretion
13.47
9.12
48
%
Net Producing Wells at
Period-End
951.6
799.3
19
%
HEDGING
NOG hedges portions of its expected
production volumes to increase the predictability of its cash flow
and to help maintain a strong financial position. The following
table summarizes NOG’s open crude oil commodity derivative swap
contracts scheduled to settle after December 31, 2023.
Crude Oil Commodity
Derivative Swaps(1)
Crude Oil Commodity Derivative
Collars and Puts
Contract
Period
Volume
(Bbls/Day)
Weighted
Average Price
($/Bbl)
Collar Call
Volume
(Bbls/Day)
Weighted
Average Collar
Call Prices
($/Bbl)
Collar Put
Volume
(Bbls/Day)
Weighted
Average Collar
Put Prices
($/Bbl)
2024:
Q1
23,417
$75.31
26,628
$84.43
20,972
$70.65
Q2
25,503
$75.15
28,139
$83.84
21,083
$70.23
Q3
24,621
$74.18
18,751
$80.90
17,101
$71.23
Q4
24,469
$73.40
15,617
$81.58
13,726
$70.84
2025:
Q1
15,808
$73.80
4,592
$79.20
3,498
$67.84
Q2
15,589
$73.89
3,002
$75.49
2,189
$67.63
Q3
6,004
$71.75
2,554
$75.76
1,761
$67.88
Q4
5,966
$71.75
2,266
$76.87
1,473
$67.63
2026:
Q1
2,930
69.05
480
$70.25
437
$62.50
Q2
2,930
68.98
480
$70.25
437
$62.50
Q3
2,930
68.91
480
$70.25
437
$62.50
Q4
2,930
68.83
480
$70.25
437
$62.50
________________
(1)
Includes derivative contracts entered into
through February 22, 2024. This table does not include volumes
subject to swaptions and call options, which are crude oil
derivative contracts NOG has entered into which may increase
swapped volumes at the option of NOG’s counterparties. This table
also does not include basis swaps. For additional information, see
Note 11 to our financial statements included in our Form 10-K filed
with the SEC for the year ended December 31, 2023.
The following table summarizes NOG’s open
natural gas commodity derivative swap contracts scheduled to settle
after December 31, 2023.
Natural Gas Commodity
Derivative Swaps(1)
Natural Gas Commodity
Derivative Collars
Contract
Period
Volume
(MMBTU/Day)
Weighted
Average Price
($/MMBTU)
Collar Call
Volume
(MMBTU/Day)
Weighted
Average Collar
Call Prices
($/MMBTU)
Collar Put
Volume
(MMBTU/Day)
Weighted
Average Collar
Put Prices
($/MMBTU)
2024:
Q1
117,161
$3.57
65,330
$4.85
65,330
$3.23
Q2
119,514
$3.45
75,852
$4.21
75,852
$3.04
Q3
118,048
$3.49
80,000
$4.41
80,000
$3.05
Q4
83,890
$3.49
88,876
$4.76
88,876
$3.08
2025:
Q1
16,500
$3.61
102,182
$5.13
102,182
$3.13
Q2
10,110
$3.60
96,388
$4.84
96,388
$3.13
Q3
10,000
$3.60
91,387
$4.88
91,387
$3.13
Q4
8,261
$3.52
82,812
$4.97
82,812
$3.12
2026:
Q1
5,000
$3.20
64,758
$5.06
64,758
$3.09
Q2
5,055
$3.20
66,206
$5.06
66,206
$3.09
Q3
5,000
$3.20
65,486
$5.06
65,486
$3.09
Q4
4,946
$3.20
46,790
$4.97
46,790
$3.09
________________
(1)
Includes derivative contracts entered into
through February 22, 2024. This table does not include volumes
subject to swaptions and call options, which are natural gas
derivative contracts NOG has entered into which may increase
swapped volumes at the option of NOG’s counterparties. This table
also does not include basis swaps. For additional information, see
Note 11 to our financial statements included in our Form 10-K filed
with the SEC for the year ended December 31, 2023.
The following table presents NOG’s
settlements on commodity derivative instruments and unsettled gains
and losses on open commodity derivative instruments for the periods
presented, which is included in the revenue section of NOG’s
statement of operations:
Three Months Ended
December 31,
Twelve Months Ended
December 31,
(In thousands)
2023
2022
2023
2022
Cash Received (Paid) on Settled
Derivatives
$
11,820
$
(63,064
)
$
57,919
$
(455,450
)
Non-Cash Mark-to-Market Gain (Loss) on
Derivatives
235,553
(12,203
)
201,331
40,187
Gain (Loss) on Commodity Derivatives,
Net
$
247,373
$
(75,268
)
$
259,250
$
(415,262
)
CAPITAL EXPENDITURES & DRILLING
ACTIVITY
(In millions, except for net well
data)
Three Months Ended
December 31, 2023
Year Ended
December 31, 2023
Capital Expenditures Incurred:
Organic Drilling and Development Capital
Expenditures
$154.1
$639.2
Ground Game Drilling and Development
Capital Expenditures
$98.5
$204.5
Ground Game Acquisition Capital
Expenditures
$7.3
$73.4
Other
$2.3
$9.4
Non-Budgeted Acquisitions
$30.5
$1,004.5
Net Wells Turned In Line
27.6
76.6
Net Producing Wells (Period-End)
951.6
Net Wells in Process (Period-End)
66.5
Change in Wells in Process over Prior
Period
(7.6)
11.1
Weighted Average AFE for Wells Elected
to
$9.7
$9.5
Capitalized costs are a function of the number of net well
additions during the period, and changes in wells in process from
the prior year-end. Capital expenditures attributable to the
increase of 11.1 in net wells in process during the year ended
December 31, 2023 are reflected in the annual amounts incurred for
drilling and development capital expenditures.
ACREAGE
As of December 31, 2023, NOG controlled leasehold of
approximately 272,251 net acres in the Williston, Permian and
Appalachian Basins in the United States, and approximately 91% of
this total acreage position was developed, held by production, or
held by operations.
FOURTH QUARTER 2023 EARNINGS RELEASE CONFERENCE CALL
In conjunction with NOG’s release of its financial and operating
results, investors, analysts and other interested parties are
invited to listen to a conference call with management on Friday,
February 23, 2024 at 8:00 a.m. Central Time.
Those wishing to listen to the conference call may do so via the
company’s website, www.noginc.com, or by phone as follows:
Webcast:
https://events.q4inc.com/attendee/329042393 Dial-In Number: (888) 340-5044 (US/Canada) and
(646) 960-0363 (International) Conference
ID: 9661789 - Fourth Quarter and Year-End 2023 Earnings
Conference Call Replay Dial-In Number:
(800) 770-2030 (US/Canada) and (609) 800-9909 (International)
Replay Access Code: 9661789 - Replay
will be available through March 8, 2024
ABOUT NORTHERN OIL AND GAS
NOG is a real asset company with a primary strategy of acquiring
and investing in non-operated minority working and mineral
interests in the premier hydrocarbon producing basins within the
contiguous United States. More information about NOG can be found
at www.noginc.com.
SAFE HARBOR
This press release contains forward-looking statements regarding
future events and future results that are subject to the safe
harbors created under the Securities Act of 1933 (the “Securities
Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”).
All statements other than statements of historical facts included
in this release regarding NOG’s financial position, operating and
financial performance, business strategy, dividend plans and
practices, plans and objectives of management for future
operations, industry conditions, and indebtedness covenant
compliance are forward-looking statements. When used in this
release, forward-looking statements are generally accompanied by
terms or phrases such as “estimate,” “project,” “predict,”
“believe,” “expect,” “continue,” “anticipate,” “target,” “could,”
“plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other
words and similar expressions that convey the uncertainty of future
events or outcomes. Items contemplating or making assumptions about
actual or potential future production and sales, market size,
collaborations, and trends or operating results also constitute
such forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties, and important factors (many of which are beyond
NOG’s control) that could cause actual results to differ materially
from those set forth in the forward-looking statements, including
the following: changes in crude oil and natural gas prices, the
pace of drilling and completions activity on NOG’s current
properties and properties pending acquisition, infrastructure
constraints and related factors affecting NOG’s properties; cost
inflation or supply chain disruptions, ongoing legal disputes over
and potential shutdown of the Dakota Access Pipeline; NOG’s ability
to acquire additional development opportunities, potential or
pending acquisition transactions, the projected capital efficiency
savings and other operating efficiencies and synergies resulting
from NOG’s acquisition transactions, integration and benefits of
property acquisitions, or the effects of such acquisitions on NOG’s
cash position and levels of indebtedness; changes in NOG’s reserves
estimates or the value thereof, disruption to NOG’s business due to
acquisitions and other significant transactions; general economic
or industry conditions, nationally and/or in the communities in
which NOG conducts business; changes in the interest rate
environment, legislation or regulatory requirements; conditions of
the securities markets; risks associated with NOG’s Convertible
Notes, including the potential impact that the Convertible Notes
may have NOG’s financial position and liquidity, potential
dilution, and that provisions of the Convertible Notes could delay
or prevent a beneficial takeover of NOG; the potential impact of
the capped call transaction undertaken in tandem with the
Convertible Notes issuance, including counterparty risk; increasing
attention to environmental, social and governance matters; NOG’s
ability to consummate any pending acquisition transactions; other
risks and uncertainties related to the closing of pending
acquisition transactions; NOG’s ability to raise or access capital;
cyber-incidents could have a material adverse effect NOG’s
business, financial condition or results of operations; changes in
accounting principles, policies or guidelines; events beyond NOG’s
control, including a global or domestic health crisis, acts of
terrorism, political or economic instability or armed conflict in
oil and gas producing regions; and other economic, competitive,
governmental, regulatory and technical factors affecting NOG’s
operations, products and prices. Additional information concerning
potential factors that could affect future results is included in
the section entitled “Item 1A. Risk Factors” and other sections of
NOG’s more recent Annual Report on Form 10-K and Quarterly Report
on Form 10-Q, as updated from time to time in amendments and
subsequent reports filed with the SEC, which describe factors that
could cause NOG’s actual results to differ from those set forth in
the forward-looking statements.
NOG has based these forward-looking statements on its current
expectations and assumptions about future events. While management
considers these expectations and assumptions to be reasonable, they
are inherently subject to significant business, economic,
competitive, regulatory and other risks, contingencies and
uncertainties, most of which are difficult to predict and many of
which are beyond NOG’s control. NOG does not undertake any duty to
update or revise any forward-looking statements, except as may be
required by the federal securities laws.
NORTHERN OIL AND GAS, INC.
STATEMENTS OF OPERATIONS
Three Months Ended
December 31,
Year Ended
December 31,
(In thousands, except share and per
share data)
2023
2022
2023
2022
Revenues
Oil and Gas Sales
$
543,403
$
445,647
$
1,897,779
$
1,985,798
Gain (Loss) on Commodity Derivatives,
Net
247,373
(75,268
)
259,250
(415,262
)
Other Revenue
2,741
—
9,230
—
Total Revenues
793,517
370,379
2,166,259
1,570,535
Operating Expenses
Production Expenses
102,061
73,017
347,006
260,676
Production Taxes
45,903
37,465
160,118
158,194
General and Administrative Expenses
9,553
15,045
46,801
47,201
Depletion, Depreciation, Amortization and
Accretion
151,188
77,317
486,024
251,272
Other Expenses
768
—
4,448
—
Total Operating Expenses
309,473
202,844
1,044,397
717,343
Income From Operations
484,044
167,535
1,121,862
853,192
Other Income (Expense)
Interest Expense, Net of
Capitalization
(36,513
)
(23,808
)
(135,664
)
(80,331
)
Gain (Loss) on Interest Rate Derivatives,
Net
—
(779
)
(1,017
)
993
Gain on the Extinguishment of Debt,
Net
—
235
659
810
Contingent Consideration Gain
—
1,859
10,107
1,859
Other Income (Expense)
83
—
4,795
(185
)
Total Other Income (Expense)
(36,430
)
(22,493
)
(121,120
)
(76,854
)
Income Before Income Taxes
447,614
145,042
1,000,742
776,338
Income Tax Expense (Benefit)
58,761
(27
)
77,773
3,101
Net Income
388,853
145,068
922,969
$
773,237
Cumulative Preferred Stock
Dividend
—
(1,367
)
—
(9,803
)
Premium on Repurchase of Preferred
Stock
—
(10,411
)
—
(35,731
)
Net Income Attributable to Common
Shareholders
$
388,853
$
133,291
$
922,969
$
727,703
Net Income Per Common Share – Basic
$
3.92
$
1.64
$
10.09
$
9.26
Net Income Per Common Share – Diluted
$
3.90
$
1.63
$
10.03
$
8.92
Weighted Average Common Shares Outstanding
– Basic
99,278,050
81,301,477
91,483,687
78,557,216
Weighted Average Common Shares Outstanding
– Diluted
99,814,411
81,857,034
92,060,947
86,675,365
NORTHERN OIL AND GAS, INC.
BALANCE SHEETS
(In thousands, except par value and
share data)
December 31,
2023
December 31,
2022
Assets
Current Assets:
Cash and Cash Equivalents
$
8,195
$
2,528
Accounts Receivable, Net
370,531
271,336
Advances to Operators
49,210
8,976
Prepaid Expenses and Other
2,489
2,014
Derivative Instruments
75,733
35,293
Income Tax Receivable
3,249
338
Total Current Assets
509,407
320,485
Property and Equipment:
Oil and Natural Gas Properties, Full Cost
Method of Accounting
Proved
8,428,518
6,492,683
Unproved
36,785
41,565
Other Property and Equipment
8,069
6,858
Total Property and Equipment
8,473,372
6,541,106
Less – Accumulated Depreciation, Depletion
and Impairment
(4,541,808
)
(4,058,180
)
Total Property and Equipment, Net
3,931,563
2,482,926
Derivative Instruments
10,725
12,547
Acquisition Deposit
17,094
43,000
Other Noncurrent Assets, Net
15,466
16,220
Total Assets
$
4,484,255
$
2,875,178
Liabilities and Stockholders’
Equity
Current Liabilities:
Accounts Payable
$
192,672
$
128,582
Accrued Liabilities
147,943
121,737
Accrued Interest
26,219
24,347
Derivative Instruments
16,797
58,418
Contingent Consideration
—
10,107
Other Current Liabilities
2,130
1,781
Total Current Liabilities
385,761
344,972
Long-term Debt, Net
1,835,554
1,525,413
Derivative Instruments
105,831
225,905
Deferred Tax Liability
68,488
—
Asset Retirement Obligations
38,203
31,582
Other Noncurrent Liabilities
2,741
2,045
Total Liabilities
$
2,436,578
$
2,129,917
Commitments and Contingencies
Stockholders’ Equity
Common Stock, Par Value $0.001;
135,000,000 Authorized;
100,761,148 Shares Outstanding at
12/31/2023
85,165,807 Shares Outstanding at
12/31/2022
503
487
Additional Paid-In Capital
2,124,963
1,745,532
Retained Deficit
(77,790
)
(1,000,759
)
Total Stockholders’ Equity
2,047,676
745,260
Total Liabilities and Stockholders’
Equity
$
4,484,255
$
2,875,178
Non-GAAP Financial Measures
Adjusted Net Income, Adjusted EBITDA and Free Cash Flow are
non-GAAP measures. Net income (loss) is the most directly
comparable GAAP measure for both Adjusted Net Income and Adjusted
EBITDA. Cash flows from operations is the most directly comparable
GAAP measure for Free Cash Flow. NOG defines Adjusted Net Income
(Loss) as net income (loss) excluding (i) (gain) loss on unsettled
commodity derivatives, net of tax, (ii) (gain) loss on the
extinguishment of debt, net of tax, (iii) (gain) loss on unsettled
interest rate derivatives, net of tax, (iv) contingent
consideration (gain) loss, net of tax, and (v) acquisition
transaction costs, net of tax. NOG defines Adjusted EBITDA as net
income (loss) before (i) interest expense, (ii) income taxes, (iii)
depreciation, depletion, amortization, and accretion, (iv) non-cash
stock based compensation expense, (v) (gain) loss on the
extinguishment of debt, (vi) contingent consideration (gain) loss,
(vii) acquisition transaction expense, (viii) (gain) loss on
unsettled interest rate derivatives, and (ix)(gain) loss on
unsettled commodity derivatives. NOG defines Free Cash Flow as cash
flows from operations before changes in working capital and other
items, less (i) capital expenditures, excluding non-budgeted
acquisitions and (ii) preferred stock dividends. A reconciliation
of each of these measures to the most directly comparable GAAP
measure is included below.
A reconciliation of each of these measures to the most directly
comparable GAAP measure is included below. Management believes the
use of these non-GAAP financial measures provides useful
information to investors to gain an overall understanding of
current financial performance. Specifically, management believes
the non-GAAP financial measures included herein provide useful
information to both management and investors by excluding certain
items that management believes are not indicative of NOG’s core
operating results. In addition, these non-GAAP financial measures
are used by management for budgeting and forecasting as well as
subsequently measuring NOG’s performance, and management believes
it is providing investors with financial measures that most closely
align to its internal measurement processes.
Pre-tax PV10%, or PV-10, may be considered a non-GAAP financial
measure as defined by the SEC and is derived from the standardized
measure of discounted future net cash flows, which is the most
directly comparable GAAP measure for proved reserves calculated
using SEC pricing. PV-10 is a computation of the Standardized
Measure of discounted future net cash flows on a pre-tax basis.
PV-10 is equal to the Standardized Measure of discounted future net
cash flows at the applicable date, before deducting future income
taxes, discounted at 10 percent. Management believes that the
presentation of PV-10 is relevant and useful to investors because
it presents the discounted future net cash flows attributable to
NOG’s estimated net proved reserves prior to taking into account
future corporate income taxes, and it is a useful measure for
evaluating the relative monetary significance of NOG’s oil and
natural gas properties. Further, investors may utilize the measure
as a basis for comparison of the relative size and value of NOG’s
reserves to other companies. Management uses this measure when
assessing the potential return on investment related to NOG’s oil
and natural gas properties. PV-10, however, is not a substitute for
the Standardized Measure of discounted future net cash flows. A
reconciliation of PV-10 to the Standardized Measure is included
below.
Reconciliation of Adjusted Net
Income
Three Months Ended
December 31,
Year Ended
December 31,
(In thousands, except share and per
share data)
2023
2022
2023
2022
Income Before Taxes
$
447,614
$
145,068
$
1,000,742
$
776,338
Add:
Impact of Selected Items:
(Gain) Loss on Unsettled Commodity
Derivatives
(235,553
)
12,203
(201,331
)
(40,187
)
Gain on the Extinguishment of Debt
—
(235
)
(659
)
(810
)
(Gain) Loss on Unsettled Interest Rate
Derivatives
—
779
1,017
(993
)
Contingent Consideration Gain
—
(1,859
)
(10,107
)
(1,859
)
Acquisition Transaction Costs
765
6,299
11,243
16,593
Adjusted Income Before Adjusted Income Tax
Expense
212,827
162,229
800,905
749,082
Adjusted Income Tax Expense (1)
(52,143
)
(39,746
)
(196,222
)
(183,525
)
Adjusted Net Income (non-GAAP)
$
160,684
$
122,483
$
604,683
$
565,557
Weighted Average Shares Outstanding –
Basic
99,278,050
81,301,477
91,483,687
78,557,216
Weighted Average Shares Outstanding –
Diluted
99,814,411
85,545,405
92,060,947
86,675,365
Less:
Dilutive Effect of Convertible Notes
(2)
—
—
108,564
—
Weighted Average Shares Outstanding –
Adjusted Diluted
99,814,411
85,545,405
91,952,383
86,675,365
Income Before Income Taxes Per Common
Share – Basic
$
4.51
$
1.78
$
10.94
$
9.88
Add:
Impact of Selected Items
(2.36
)
0.21
(2.18
)
(0.35
)
Impact of Income Tax
(0.53
)
(0.48
)
(2.15
)
(2.33
)
Adjusted Net Income Per Common Share –
Basic
$
1.62
$
1.51
$
6.61
$
7.20
Income Before Income Taxes Per Common
Share – Adjusted Diluted
$
4.48
$
1.70
$
10.88
$
8.96
Add:
Impact of Selected Items
(2.35
)
0.20
(2.17
)
(0.31
)
Impact of Income Tax
(0.52
)
(0.47
)
(2.13
)
(2.12
)
Adjusted Net Income Per Common Share –
Adjusted Diluted
$
1.61
$
1.43
$
6.58
$
6.53
________________
(1)
For the 2023 columns, this represents a
tax impact using an estimated tax rate of 24.5% for the three and
twelve months ended December 31, 2023. For the 2022 columns, this
represents a tax impact using an estimated tax rate of 24.5% for
the three and twelve months ended December 31, 2022.
(2)
Weighted average shares outstanding -
diluted, on a GAAP basis, includes diluted shares attributable to
the Company’s Convertible Notes due 2029. However, the offsetting
impact of the capped call transactions that the Company entered
into in connection therewith is not recognized on a GAAP basis. As
a result, for purposes of this calculation, the Company excludes
the dilutive shares to the extent they would be offset by the
capped calls.
Reconciliation of Adjusted
EBITDA
Three Months Ended
December 31,
Year Ended
December 31,
(In thousands)
2023
2022
2023
2022
Net Income
$
388,853
$
145,068
$
922,969
$
773,237
Add:
Interest Expense
36,513
23,808
135,664
80,331
Income Tax Provision (Benefit)
58,761
(27
)
77,773
3,101
Depreciation, Depletion, Amortization and
Accretion
151,188
77,317
486,024
251,272
Non-Cash Stock-Based Compensation
1,181
1,447
5,660
5,656
Gain on the Extinguishment of Debt
—
(235
)
(659
)
(810
)
Contingent Consideration Gain
—
(1,859
)
(10,107
)
(1,859
)
Acquisition Transaction Costs
765
6,299
11,243
16,593
(Gain) Loss on Unsettled Interest Rate
Derivatives
—
779
1,017
(993
)
(Gain) Loss on Unsettled Commodity
Derivatives
(235,553
)
12,203
(201,331
)
(40,187
)
Adjusted EBITDA
$
401,708
$
264,800
$
1,428,254
$
1,086,341
Reconciliation of Free Cash
Flow
Three Months Ended
December 31,
(In thousands)
2023
Net Cash Provided by Operating
Activities
$
342,362
Exclude: Changes in Working Capital and
Other Items
23,549
Less: Capital Expenditures (1)
(262,277
)
Free Cash Flow
$
103,634
________________
(1)
Capital expenditures are calculated as
follows:
Three Months Ended
December 31,
(In thousands)
2023
Cash Paid for Capital Expenditures
$
377,495
Less: Non-Budgeted Acquisitions
(47,643
)
Plus: Change in Accrued Capital
Expenditures and Other
(67,575
)
Capital Expenditures
$
262,277
Reconciliation of PV-10
The following table reconciles the pre-tax
PV10% value of our SEC Pricing Proved Reserves as of December 31,
2023 to the Standardized Measure of discounted future net cash
flows.
SEC Pricing Proved
Reserves
(In thousands)
Standardized
Measure Reconciliation
Pre-Tax Present Value of Estimated Future
Net Revenues (Pre-Tax PV10%)
$
5,004,082
Future Income Taxes, Discounted at
10%(1)
(847,845
)
Standardized Measure of Discounted Future
Net Cash Flows
$
4,156,237
________________
(1)
The expected tax benefits to be realized
from utilization of the net operating loss and tax credit
carryforwards are used in the computation of future income tax cash
flows. As a result of available net operating loss carryforwards
and the remaining tax basis of our assets at December 31, 2023, our
future income taxes were significantly reduced.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222148219/en/
Evelyn Infurna Vice President of Investor Relations 952-476-9800
ir@northernoil.com
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