Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Q2 2024 Earnings Presentation
37 slides from Northern Oil And Gas's earnings presentation, Jul 31, 2024
Slide 1: Q2 2024 Earnings Presentation
Q2 2024 Earnings Presentation July 30, 2024 Q2 2024 Earnings Presentation | 1
Slide 2: Contents
Contents I. Q2 2024 Highlights II. Operations & Investment Activity Updates III. Guidance IV. Value Proposition V. Appendix: Supplemental Information Q2 2024 Earnings Presentation | 2
Slide 3: Q2 2024 Financial & Operating Highlights
Q2 2024 Financial & Operating Highlights Production Outperformance Laying Ground for Financial Free Cash Flow(1) Shareholder Returns Outperformance, Shareholder Returns and Debt Reduction Strong Financial Results Benefit from Production Outperformance, D&C $133.7MM >$75MM Conversion and In-Line Cap-
Slide 4: Operations & Investment Activity Updates
PART II Operations & Investment Activity Updates Q2 2024 Earnings Presentation | 4
Slide 5: Q2 2024 Operations Highlights
Q2 2024 Operations Highlights Accelerating turn-in-lines and growing AFE activity AFEs Wells in Process Well Completions • $2.1B (gross) in AFEs • Drilling & Completions list • Completion activity was • Over 220 wells evaluated ended the quarter with 41 ahead of schedule in Q2, net wells in process
Slide 6: Well Performance Continues to Impress
Well Performance Continues to Impress Williston Basin continues to trend toward the best performance ever as longer laterals and improved methods shine. 2024 Permian showing consistent results and remains on trend. Williston Basin Productivity Permian Basin Productivity 450,000 (1) 450,000 2022 Cum
Slide 7: D&C List has Returned to Normal Levels After a Surge in Late 2023
D&C List has Returned to Normal Levels After a Surge in Late 2023 Early completion of some planned 3Q activity in late June led to a modest decline in what would have otherwise been a flattening of the D&C activity QoQ. D&C activity should build in H2 reflecting addition of Point and XCL. Q2 2024 Ea
Slide 8: Investment Activity Update
Investment Activity Update Bolt-On High quality bolt-on opportunities emerging. Ground Game becoming more active as year progresses. Opportunity Set Ground Game Bolt-On • M&A landscape remains • Evaluated over 280 ground • Announced new JV variable, focused on quality game opportunities YTD acquisit
Slide 9: XCL Is NOG's Largest & Most Accretive Acquisition To Date
XCL Is NOG’s Largest & Most Accretive Acquisition To Date XCL Asset Locator Map & Key Stats Key Financial Statistics • Agreement to purchase 20% undivided interest in XCL assets for $510 MM WY • Gross NRI: ~80%, net operated WI ~18% NV UT CO UTAH • 95% HBP (78% fee, 16% tribal, 5% state, 1% federal)
Slide 10: Uinta Stacked Pay | Opportunity Rich Asset Play
Uinta Stacked Pay | Opportunity Rich Asset Play More zones across a thicker column translates into significant future organic development opportunities UINTA BASIN (30-40 WELLS PER MILE) DELAWARE BASIN (24-36 WELLS PER MILE) WILLISTON BASIN (10-12 WELLS PER MILE) 5-6 wells/mile per bench ~350 ft 4-6
Slide 11: Consistent Expansion in the Permian
Consistent Expansion in the Permian NOG continues to methodically expand its presence in the Permian. NOG has more than doubled its Permian acreage since year-end 2022 augmented by its recent Northern Delaware acquisition, which closed in Q1 2024. NOG’s position will expand by approximately 4,000 ne
Slide 12: Expanding the Footprint — Adding Scale to NOG and Vital's Positions
Expanding the Footprint — Adding Scale to NOG and Vital's Positions NOG and Vital Central & Southern Delaware Basin Map Key Financial Statistics • Joint acquisition with Vital Energy of certain assets of Point Energy Partners, LLC for $1.1 billion. NOG to purchase an undivided 20% interest for $220
Slide 13: Q2 2024 Production by Basin
Q2 2024 Production by Basin NOG saw increased oil and even greater increase in gas production in Q2. Stronger gas prices and realizations in Q2 helped boost cash flow. • Significant uptick in Permian production +5.8% quarter over quarter driven by 15% well outperformance, reduced shut-in activity an
Slide 14: Q2 2024 Production and Revenue by Commodity
Q2 2024 Production and Revenue by Commodity Oil production of ~70,000 Bbl / day, in-line with expectations for Q2. Production mix in the Williston was unchanged with the Permian seeing incremental gains as shut-ins eased. The Company is raising oil production for 2024, reflecting contributions from
Slide 15: Q2 2024 Production by Commodity and Basin (% Boe)
Q2 2024 Production by Commodity and Basin (% Boe) Oil production of ~70,000 Bbl / day. Appalachian TILs increased gas contribution to commodity mix. The Company expects mix to be weighted more towards oil in H2-24. Williston 30% Appalachia 70% 43% Oil Gas 57% 100% Permian Gas 36% 64% Commodity Type
Slide 16: Q2 2024 CapEx by Basin
Q2 2024 CapEx by Basin Cap-Ex on plan through the first half of the year 4% • 30.2 turn-in-lines (TILs) topped expectations driven by a pull-forward in Permian development activity • In line with conversions, the D&C list is trending to more normalized 36% levels • TIL activity expected to trend mod
Slide 17: Enhanced Liquidity Position
Enhanced Liquidity Position NOG has methodically managed its debt structure and maturity wall. At end of 2Q had less than $200 million drawn on revolver. Additionally, NOG has ~$8mm of cash and $25.5mm Restricted Deposit for XCL. • Consistent reduction in debt multiples since 2018 • No debt maturiti
Slide 18: Guidance
PART III Guidance Q2 2024 Earnings Presentation | 18
Slide 19: 2024 Annual Guidance and Capital Budget
2024 Annual Guidance and Capital Budget Providing revised guidance reflecting the impact of XCL and Point Acquisitions(1) UNDERLYING ASSUMPTIONS Prior Guidance Revised Guidance PRODUCTION: Annual Production (2-stream, Boe/day) 115,000 – 120,000 120,000 – 124,000 • Production updated with the assumpt
Slide 20: NOG Value Proposition
PART IV NOG Value Proposition Q2 2024 Earnings Presentation | 20
Slide 21: The NOG Investment Proposition
The NOG Investment Proposition 1 2 3 4 5 National Non-Op Franchise – offering scale and diversification by Cash Generation - ~$420MM Free Cash Flow1 in last twelve Return of Capital Commitment: Growing Dividend and Shareholder Strong Balance Sheet with Organic Path to Long Term Target of <1.0x Net D
Slide 22: Benefits of NOG's Non-Operated Model
Benefits of NOG’s Non-Operated Model Efficient Operations Enhance Return Profile Leveraging Data and Experience • Peer leading cost structure & Corporate ROCE • Proprietary database, built from participation in over 10,000 wells • Unit G&A costs are 50% less than • Enables well-informed and experien
Slide 23: Leading Non-Op Upstream Franchise
Leading Non-Op Upstream Franchise • NOG’s acquisitions have created a high-return, national Q2-24 PRODUCTION BY REGION (BOE) non-op franchise that is benefitting from economies of scale Appalachia Williston • NOG is positioned to continue to capitalize on increased 15% 39% Region non-operated opport
Slide 24: Focus on the Highest-Quality Areas
Focus on the Highest-Quality Areas No requirement for contiguous acreage allows NOG to participate in prime drilling opportunities across basins or regions. Williston Basin: ~179,400 Net Acres Permian Basin: ~39,880 Net Acres Appalachian Basin: ~53,000 Net Acres NOG NOG NOG Wells in Progress Wells i
Slide 25: A Differentiated Upstream Investment Growth Platform
A Differentiated Upstream Investment Growth Platform Operating leverage at work: NOG had record high volumes and record low Adjusted Cash G&A per Boe(1) in 2023. PRODUCTION CONTINUES TO RAMP… WHILE MAINTAINING PEER-LEADING LOW CASH G&A(1) Reducing overhead unit cash G&A costs, with ability to reduce
Slide 26: NOG's Drakkar System Empowers our Data Driven Investment Process
NOG’s Drakkar System Empowers our Data Driven Investment Process Drakkar is an internal, proprietary data science system developed in partnership with technology industry leaders. The system enables us to optimize daily operations and informs our investment management decisions. Inputs Outputs Lan
Slide 27: Sustainability Framework Meaningfully Improved
Sustainability Framework Meaningfully Improved NOG made significant strides in its environmental, social and governance1 framework and is setting the standard for publicly-traded non-operating E&P companies. Our 2022 ESG report was completed using various sustainability reporting frameworks and two
Slide 28: Appendix: Supplemental Info
PART V Appendix: Supplemental Info Q2 2024 Earnings Presentation | 28
Slide 29: Historical Operating & Financial Information
Historical Operating Information Historical Operating & 2021 2022 2023 2Q23 2Q24 Production Oil (MBbls) 12,288.4 16,090.1 22,013.0 4,981.2 6,337.7 Financial Information Natural Gas and NGLs (Mmcf) 44,073.9 68,829.1 84,341.9 19,732.2 29,318.6 Total Production (Mboe) 19,634.1 27,561.6 36,070.0 8,269.9
Slide 30: NON-GAAP Reconciliations: Adjusted EBITDA & Other
NON-GAAP Reconciliations: Adjusted EBITDA & Other Adjusted EBITDA by Quarter (in thousands) 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 Net Income (Loss) $ 340,191 $ 167,815 $ 26,111 $ 388,853 $ 11,606 $ 138,556 Add: Interest Expense 30,143 31,968 37,040 36,513 37,925 37,696 Income Tax Provision (Benefit) 692 39,
Slide 31: NON-GAAP Reconciliations: ROCE & Recycle Ratio
NON-GAAP Reconciliations: ROCE & Recycle Ratio Q2-24 Return on Capital Employed (ROCE) • Adj. EBIT: $945.8MM (Q2 24 annualized) • + Adj. EBITDA: $413.1MM (Q2 2024) Capital • - DD&A: $176.6MM (Q2 2024) EBIT ÷ Employed = 25.1% • Capital Employed: $3,772.5MM (Avg. of Q2/23 and Q2/24) • + Total Assets:
Slide 32: NON-GAAP Reconciliations: Free Cash Flow
NON-GAAP Reconciliations: Free Cash Flow FREE CASH FLOW (FCF) (in thousands) 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 Net Cash Provided by Operating Activities $ 269,308 $ 307,786 $ 263,865 $ 342,362 $ 392,147 $ 340,477 Exclude: Changes in Working Capital and Other Items 26,864 (27,410) 83,131 23,549 (39,665)
Slide 33: Hedge Profile—COLLARS and PUTS
Hedge Profile—COLLARS and PUTS NOG continues to execute a strategy built around the safeguard of returns during a commodity down-cycle, while retaining flexibility to capture the opportunistic upside CRUDE OIL DERIVATIVE COLLARS & PUTS NATURAL GAS DERIVATIVE COLLARS & PUTS Floor Million Total Floor
Slide 34: Hedge Profile—SWAPS
Hedge Profile—SWAPS NOG continues to execute a strategy built around the safeguard of returns during a commodity down-cycle, while retaining flexibility to capture the opportunistic upside CRUDE OIL DERIVATIVE SWAPS NATURAL GAS DERIVATIVE SWAPS Total Hedged Weighted Contract Barrels per Total Hedged
Slide 35: Hedge Profile—Basis SWAPS
Hedge Profile—Basis SWAPS NOG continues to execute a strategy built around the safeguard of returns during a commodity down-cycle, while retaining flexibility to capture the opportunistic upside MIDLAND-CUSHING BASIS SWAP WAHA BASIS SWAP Barrels per Day Total Hedged Weighted Average Contract Million
Slide 36: Important Disclosures
Important Disclosures Forward Looking Statements This presentation contains forward-looking statements regarding future events and future results that are subject to the safe harbors created under the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934,
Slide 37: Important Disclosures
Important Disclosures Industry and Marketing Data Although all information and opinions expressed in this presentation, including market data and other statistical information (including estimates and projections relating to addressable markets), were obtained from sources believed to be reliable an