Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Q2 2020 Earnings Presentation
25 slides from Northern Oil And Gas's earnings presentation, Aug 7, 2020
Slide 1: Q2:20 Earnings Presentation
NYSE American: NOG Q2:20 EARNINGS PRESENTATION NYSE American: NOG
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS NYSE American: NOG 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 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange A
Slide 3: Q2 Takeaways and Key Points
NYSE American: NOG I. Q2 TAKEAWAYS AND KEY POINTS II. COMPANY OVERVIEW III. APPENDIX: SUPPLEMENTAL INFO
Slide 4: The NOG Investment Proposition
THE NOG INVESTMENT PROPOSITION NYSE American: NOG Ø Northern has prepared to face the environment seen today • Best in Class ROCE in E&P space: 16.4% in 2019 1 SUPERIOR RETURNS & FCF • Industry Leading Free Cash Flow Yield SUPERIOR DATA SET & CAPITAL • NOG has participated in >40% Bakken wells (>6.5
Slide 5: Q2:20 Financial & Operating Highlights
Q2:20 FINANCIAL & OPERATING HIGHLIGHTS NYSE American: NOG CFFO(1) Recycle Ratio(2) Q2:20 Highlights • Cash Flow (1) > CAPEX: $53.1 million vs. capital $53.1MM 1.8X expenditures of $34.5 million Cash Margin DD&A • Strong Realized Hedge Gains: $77.4 million in Q2 > Q2 Capex of 34.5mm $30.49/boe $16.97
Slide 6: 2020 Ground Game Advantage – Active & Profitable
2020 GROUND GAME ADVANTAGE – ACTIVE & PROFITABLE NYSE American: NOG Highly Accretive Full Cycle Return Opportunities 200+ ground game deals executed since 2018 Only targeting deals that raised our already industry leading ROCE (16.4% in 2019) Ability to throttle activity levels up/down to fit with o
Slide 7: Our Well Performance Remains Consistently Strong
OUR WELL PERFORMANCE REMAINS CONSISTENTLY STRONG NYSE American: NOG Ø Completion technology and high-grading of well locations has led to improved well recovery across the basin NOG’s INCREASING WELL PRODUCTIVITY 2015 Cum (1) HIGHER RECOVERIES + STABLE COSTS = 280,000 2016 Cum (1) +80% IMPROVED CAPI
Slide 8: Returns Metrics Continue to Lead the Pack
RETURNS METRICS CONTINUE TO LEAD THE PACK NYSE American: NOG High Return Business Driven by Low G&A Burden Peer-Leading ROCE (2019)… 18% 16% 14% 12% Non-operator model allows us to 10% run a lean cost structure and cash 8% 6% efficient business, generating 4% industry-leading ROCE 2% 0% R RO PE N SN
Slide 9: 2020 Wells in Process Are in Strong Areas
2020 WELLS IN PROCESS ARE IN STRONG AREAS NYSE American: NOG Ø The 2020 program is defined and focused in core areas Williston Basin Core NOG’S DATA ADVANTAGE NORTHERN HAS 40% PARTICIPATED IN ~40% OF WELLS EVER DRILLED IN THE WILLISTON BASIN HIGHLIGHTS ü Positive reserve performance adjustments in 4
Slide 10: Majority of Production Hedged Through 2021
MAJORITY OF PRODUCTION HEDGED THROUGH 2021 NYSE American: NOG Ø Northern continues to execute a strategy built around the safeguard of returns during a commodity down-cycle, while retaining flexibility to capture the opportunistic upside CRUDE OIL DERIVATIVE PRICE SWAPS NATURAL GAS DERIVATIVE PRICE
Slide 11: Positive 2020 Balance Sheet Moves
POSITIVE 2020 BALANCE SHEET MOVES NYSE American: NOG Balance Sheet Improvement Maturity Schedule ($MM) 12/31/19 6/30/20 $1,200 $92 Total Debt Total Debt Key Takeaways: $1,000 ($132MM) ü $132MM of debt retired YTD $1,127MM $995MM $568 ü $11 MM of annualized interest rate $800 savings 8.5% 2L Notes 8.
Slide 12: Company Overview
NYSE American: NOG I. Q2 TAKEAWAYS AND KEY POINTS II. COMPANY OVERVIEW III. APPENDIX: SUPPLEMENTAL INFO
Slide 13: Northern 1-Pager
NORTHERN 1-PAGER NYSE American: NOG Non-Operator Model — Benefits Williston Basin Core—182,899 net acres ü A superior return on capital (16.4% ROCE (1) in 2019) ü A Lean structure—only 24 full-time employees ü Capital allocation flexibility—46 partners across 761K gross acres—easy to say “no thanks”
Slide 14: Current NOG Asset Snapshot
CURRENT NOG ASSET SNAPSHOT NYSE American: NOG Ø Portfolio of high-quality acreage in the heart of the basin with interests in over 6,500 gross Bakken/Three Forks oil wells NET ACREAGE SUMMARY 9% 10% 8% 182,899 NET ACRES 91% 90% 92% North Dakota Montana HBP 1 % Non-HBP ND % HBP1 ND % Non-HBP 90% HELD
Slide 15: Fixing the Balance Sheet & Achieving Scale
FIXING THE BALANCE SHEET & ACHIEVING SCALE NYSE American: NOG Ø Participation in the highest quality wells with stable AFE costs generates consistent production growth & higher IRRs CONSISTENTLY FUNDING ATTRACTIVE WELLS… …GENERATES CONSISTENT PRODUCTION GROWTH Organic Net Wells added to Production P
Slide 16: Northern's Senior Management Team
NORTHERN’S SENIOR MANAGEMENT TEAM NYSE American: NOG Nicholas O’Grady: Chief Executive Officer Ø Nicholas O’Grady has served as Chief Executive Officer since January 2020, following ~18 months as the Company’s Chief Financial Officer. Mr. O’Grady leads the Northern team in all respects of the busine
Slide 17: Benefits of Northern's Non-Operator Model
BENEFITS OF NORTHERN’S NON-OPERATOR MODEL NYSE American: NOG LEVERAGING EXPERIENCE Proprietary Northern database, built from participation in over 6,500 wells, 40%+ of all Bakken and Three Forks wells drilled play to data CAPEX CONTROL Ability to increase and CAPITAL FLEXIBILITY decrease capital qui
Slide 18: The Non-Operator Model
THE NON-OPERATOR MODEL NYSE American: NOG CAPITAL BENEFITS COST BENEFITS Ability to increase and decrease capital quickly Only 24 full-time employees ü No rig or drilling contracts, no embedded personnel at the field level ü Virtually unchanged despite doubling of ü Non-consent process allows us to
Slide 19: Diversified Base & Partnered with Basin Leaders
DIVERSIFIED BASE & PARTNERED WITH BASIN LEADERS NYSE American: NOG Ø Leverage to some of the best performing operators in the Williston Basin % OF NET PRODUCING WELLS BY OPERATOR OTHERS (<3%) Key Takeaways 14% ü Q2:20 production of 23,804 boepd is 23% comprised of 40+ different operators ü 56% of Q2
Slide 20: Strong Undeveloped Inventory Drives NAV Upside
STRONG UNDEVELOPED INVENTORY DRIVES NAV UPSIDE NYSE American: NOG Undeveloped Locations By Operator Undeveloped Locations By Reservoir TF3 OTHERS 114.5 41.7 155.5 TF2 115.1 26.4 88.0 BKKN 28.1 329.0 32.2 83.3 TF1 47.1 285.6 60.7 74.1 61.5 Undeveloped Locations By County Key Takeaways ü Over 60% of 7
Slide 21: Appendix: Supplemental Info
NYSE American: NOG I. Q2 TAKEAWAYS AND KEY POINTS II. COMPANY OVERVIEW III. APPENDIX: SUPPLEMENTAL INFO
Slide 22: Historical Operating & Financial Information
HISTORICAL OPERATING & FINANCIAL INFORMATION NYSE American: NOG HISTORICAL OPERATING INFORMATION YEAR ENDED DECEMBER 31, THREE MONTHS ENDED, 2014 2015 2016 2017 2018 2019 June 30, 2019 June 30, 2020 PRODUCTION Oil (MBbls) 5,150.9 5,168.7 4,325.9 4,537.3 7,790.2 11,325.4 2,562.5 1,659.3 Natural Gas a
Slide 23: Non-GAAP Reconciliations: EBITDA & Other
NON-GAAP RECONCILIATIONS: EBITDA & OTHER ADJUSTED EBITDA BY YEAR (IN THOUSANDS) 2015 2016 2017 2018 2019 NYSE American: NOG Net Income (Loss) $ (975,355) $ (293,494) $ (9,194) $ 143,689 $ (76,318) Add: Interest Expense 58,360 64,486 70,286 86,005 79,229 Income Tax Provision (Benefit) (202,424) (1,40
Slide 24: Non-GAAP Reconciliations: ROCE & Recycle Ratio
NON-GAAP RECONCILIATIONS: ROCE & RECYCLE RATIO NYSE American: NOG Q2:20 Return on Capital Employed (ROCE) • EBIT: $117MM (Q2:20 annualized) • + Adj. EBITDA: $264MM Capital EBIT ÷ Employed = 10% • - DD&A: $147MM • Capital Employed: $1,173MM (Avg. of Q2:19/20) • + Total Assets: $1,379MM (Avg.) • - Cur
Slide 25: Hedging Disclosures
HEDGING DISCLOSURES NYSE American: NOG Further Detail about Swap Transaction and Swaption Volumes 1. The Company has entered into certain crude oil derivative contracts for 2021, 2022, and 2023 volumes that give counterparties the option to extend such derivative contracts for additional six-month a