Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — 25th Annual IPAA Oil and Gas Investment Symposium (OGIS) 2019
44 slides from Northern Oil And Gas's conference presentation, April 2019
Slide 1: 25th Annual IPAA OGIS
NYSE: NOG 25th Annual IPAA OGIS APRIL 2019 NYSE: NOG
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS NYSE: 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 Act”).All
Slide 3: Northern Oil & Gas: Dominant Non-Operator Franchise in the Williston Basin
NORTHERN OIL & GAS NYSE: NOG DOMINANT NON-OPERATOR FRANCHISE IN THE WILLISTON BASIN Focused on disciplined growth, free cash flow generation and sustainable shareholder returns BY THE NUMBERS1 SCALE ACTIVITY CASH FLOW NYSE: NOG (US$)2 Shares 157,083 36,258 $500mm Outstanding: 377.0 mm NET ACRES 4Q18
Slide 4: Northern Oil & Gas – Why Northern's Better
NORTHERN OIL & GAS – WHY NORTHERN’S BETTER NYSE: NOG RETURNS FOCUS Changing the way the market thinks about E&P BETTER BETTER BUSINESS BASIN MODEL BETTER BETTER LT CAPITAL GROWTH ALLOCATION POTENTIAL Northern Oil & Gas Investor Presentation - April 2019 4
Slide 5: A Better Business Model
NYSE: NOG NYSE: NOG A BETTER BUSINESS MODEL
Slide 6: Differentiated E&P Platform
DIFFERENTIATED E&P PLATFORM NYSE: NOG OIL-LEVERED VISIBLE LONG-TERM DISCIPLINED CAPITAL PROACTIVELY MANAGED WILLISTON PRODUCER GROWTH POTENTIAL ALLOCATION BALANCE SHEET Diverse operator group Multi-year well inventory Selective capex allocation Broad hedging program Bakken & Three Forks
Slide 7: 2019 Capital Allocation Strategy
2019 CAPITAL ALLOCATION STRATEGY NYSE: NOG FREE CASH FLOW STREAM REINVEST CAPITAL Scale of capital reinvestment ORGANIC ACTIVITY dependent on market conditions for a ACQUISITIONS returns-focused strategy for all cycles PAY DOWN DEBT STOCK BUYBACKS DIVIDENDS Capital allocation ensures strategic manag
Slide 8: The Non-Operator Model: What We Do
THE NON-OPERATOR MODEL: WHAT WE DO NYSE: NOG A flexible and moderated approach to E&P, offering capital discipline, cost control & protection from downside exposure We do not drill wells or We acquire minority working operate rigs interests in drilling units & wells Ability to control capital ‘Sma
Slide 9: The Non-Operator Model: Consent Process
THE NON-OPERATOR MODEL: CONSENT PROCESS NYSE: NOG Northern's land & engineering teams review every well AFE to determine participation or non-consent WELL PROPOSAL AFE REVIEW ANALYSIS DECISION GO! Operator must Minority partners Use proprietary data to Consent to only those Drill well and turn sen
Slide 10: The Non-Operator Model: Capital Benefits
THE NON-OPERATOR MODEL: CAPITAL BENEFITS NYSE: NOG CAPEX CONTROL Ability to increase and decrease capital quickly • No rig or drilling contracts, no embedded personnel at the field level • Non-consent process allows us to cut drilling expenditures as returns dictate • Decision to drill, given our si
Slide 11: The Non-Operator Model: Cost Benefits
THE NON-OPERATOR MODEL: COST BENEFITS NYSE: NOG SCALABILITY Only 22 full-time employees • Virtually unchanged despite doubling of production base in 2018 COST & MARGIN Peer leading cost structure • $0.92/Boe cash G&A(1) cost in 4Q 2018 – among the best in the industry • Majority of acquisitions requ
Slide 12: The Non-Operator Model: NOG Advantage
THE NON-OPERATOR MODEL: NOG ADVANTAGE NYSE: NOG LEVERAGING EXPERIENCE Proprietary Northern database, built from participation in over 5,000 wells, 30%+ of all Bakken and Three Forks wells drilled play to date • 300+ internally generated type curves by operator, by field, by formation − More accurate
Slide 13: Williston Basin – A Better Basin
NYSE: NOG NYSE: NOG WILLISTON BASIN – A BETTER BASIN
Slide 14: Focused Williston Basin Core Footprint
FOCUSED WILLISTON BASIN CORE FOOTPRINT NYSE: NOG Portfolio of high-quality acreage in the heart of the basin with interests in over 5,000 gross Bakken/Three Forks oil wells NET ACREAGE SUMMARY 7% 10% 6% 157,083 NET ACRES 90% 93% 94% North Dakota Montana HBP 1 % Non-HBP ND % HBP 1 ND % Non-HBP 93%
Slide 15: Participating in the Highest-Quality Wells
PARTICIPATING IN THE HIGHEST-QUALITY WELLS… NYSE: NOG No requirement for contiguous acreage allows Northern to participate in prime drilling opportunities across the region Periot 44-20HU Kaitlin Federal 5693 41-28B Moen 41-2-5H SC-5WX-152-99-0310H-2 Missouri 152-103-4-2-3H 1 Whiting (IP: October
Slide 16: With Leading, Technically Strong Operators
…WITH LEADING, TECHNICALLY STRONG OPERATORS NYSE: NOG Deep operating partner relationships facilitate both organic and acquisition-based production growth opportunities % NET PRODUCING WELLS BY OPERATOR OTHERS (<3%) DEEP, LASTING RELATIONSHIPS 20% 15% ACROSS THE BASIN… …WITH THE HIGHEST-EFFICIENCY
Slide 17: Williston Basin: Northern's Home Field
WILLISTON BASIN: NORTHERN’S HOME FIELD NYSE: NOG Northern is a pure-play Williston Basin company, with long-term relationships with premier operators and land owners Presence in basin since Northern’s inception in 2006 7.4 15k Participated in >5,000 wells, ~30% of every well ever drilled in th
Slide 18: The Bakken: The Williston's Sweet Spot
THE BAKKEN: THE WILLISTON’S SWEET SPOT NYSE: NOG Bakken shale meets the optimal criteria for profitable returns in the current fundamental climate Oil cut and high BTU gas Drilling efficiency is helps enhance overall SIGNIFICANT OIL MANAGED DRILLING & offsetting increased returns PRODUCTION CUT CO
Slide 19: Better Capital Allocation
NYSE: NOG NYSE: NOG BETTER CAPITAL ALLOCATION
Slide 20: 2019 Capital Allocation Strategy
2019 CAPITAL ALLOCATION STRATEGY NYSE: NOG 2019 capital allocation hierarchy ensures strategic management of balance sheet through disciplined approach FREE CASH FLOW STREAM REINVEST CAPITAL Allocation in 2019 will be value-centric, focused on the sustainability of Northern’s business, and ORGANIC
Slide 21: Enhanced Returns with Disciplined Capital Allocation
ENHANCED RETURNS WITH DISCIPLINED CAPITAL ALLOCATION NYSE: NOG Participation in the highest quality wells with stable AFE costs generates consistent production growth & higher IRRs CONSISTENTLY FUNDING ATTRACTIVE WELLS… …GENERATES CONSISTENT PRODUCTION GROWTH Wells In Process @ Period End Organic
Slide 22: Yielding YoY Improvements in Well Recovery
…YIELDING YOY IMPROVEMENTS IN WELL RECOVERY NYSE: NOG Completions technology and high-grading of well locations has led to improved well recovery across the basin INCREASING WELL PRODUCTIVITY 2015 Cum (1) HIGHER RECOVERIES + STABLE COSTS = 2016 Cum (1) +81% 280,000 (1) 2017 Cum (1) IMPROVED CAPITA
Slide 23: Reserves Underpin Value Proposition
RESERVES UNDERPIN VALUE PROPOSITION NYSE: NOG Participation in highest-quality wells ensures optimal exposure to high-volume regional reservoirs Growing reserves across portfolio Proved reserve growth of 79% YoY Working Interest acquisitions provide incremental reserve access opportunities P
Slide 24: Better Long-Term Growth Potential
NYSE: NOG NYSE: NOG BETTER LONG-TERM GROWTH POTENTIAL
Slide 25: Core Growth Thesis Is Sustainable
CORE GROWTH THESIS IS SUSTAINABLE NYSE: NOG As a non-operator, NOG can be both opportunistic and strategic in its acquisition of additional acreage BACKDROP OPPORTUNITIES FORCED AFE burdens lead to SELLERS undercapitalization 1. “Ground Game” working interest PROACTIVE Opportunistic acquisitions a
Slide 26: Position Enhanced Through Accretive Acquisitions
POSITION ENHANCED THROUGH ACCRETIVE ACQUISITIONS NYSE: NOG Directing cash flow to acquisitions consistently grows Northern's position while diversifying opportunities Broadening inventory position in the core of the basin: Greater inventory of projects with attractive economics Increased reser
Slide 27: Organic Growth & Acquisitions Drive Opportunity Set
ORGANIC GROWTH & ACQUISITIONS DRIVE OPPORTUNITY SET NYSE: NOG Northern adds to its acreage position and well inventory in multiple ways Northern’s goal is to leverage its strong financial position to counter-cyclically invest in acreage and drilling opportunities across the Williston Basin during
Slide 28: Proactively Managed Balance Sheet
NYSE: NOG NYSE: NOG PROACTIVELY MANAGED BALANCE SHEET
Slide 29: Continued Balance Sheet Improvement
CONTINUED BALANCE SHEET IMPROVEMENT NYSE: NOG Northern’s balance sheet continues to offer robust protection against market volatility As of As of As of Long Term (In $ millions) 6/30/18 9/30/18 12/31/18 Targets DEBT: Cash $200.9 $112.8 $2.4 Cash position deployed towards TOTAL DEBT $834.8 $789.5 $
Slide 30: Holding Leverage Below 2.0x
HOLDING LEVERAGE BELOW 2.0x… NYSE: NOG Actively working to further reduce debt and continue generating free cash flow Net Debt/Annualized Adjusted EBITDA LEVERAGE 4.6x EXPECT YE2019 LEVERAGE TO 4.1x REMAIN <2.0X (64)% Year on Year METRIC WILL CONTINUE TO 2.3x FALL THROUGH 2022 1.8x 1.7x EVEN IF OI
Slide 31: Through Closely Managed Debt Maturity
…THROUGH CLOSELY MANAGED DEBT MATURITY NYSE: NOG Enhancing cash flow to leverage liquidity position to pay down debt LIQUIDITY PROFILE1 DEBT MATURITY SCHEDULE • $287 million of liquidity2 • Favorable schedule • Plan to live within Free Cash Flow • $695 million 8.5% Senior Secured 2L Notes due 2023
Slide 32: Proactive Hedging Program to Protect Cash Flow
PROACTIVE HEDGING PROGRAM TO PROTECT CASH FLOW NYSE: NOG Hedging production actively safeguards against exposure to commodity price downdrafts Contract Weighted Average Volumes (Bbls) Period Price ($/Bbl) DEEP HEDGING PROGRAM PROVIDES CASH FLOW CRUDE OIL DERIVATIVE BASIS SWAPS1 PROTECTION AGAINST
Slide 33: Generating Better Performance
NYSE: NOG NYSE: NOG GENERATING BETTER PERFORMANCE
Slide 34: 2018 Delivered Beyond Our Plan
2018 DELIVERED BEYOND OUR PLAN NYSE: NOG Execution of strategic priorities through 2018 and into 2019 supported by unique non-operator flexibility STRATEGY FY2018 STATUS Participated in more wells than prior year 1 CAPTURE OPPORTUNITIES Organic and acquisition growth expectations achieved Producti
Slide 35: 4Q & YE 2018: Business Update
4Q & YE 2018: BUSINESS UPDATE NYSE: NOG Non-operated model continues to demonstrate measured growth with improving capital discipline to drive returns mbbl/d $MM GROWING PRODUCTION ENHANCING EBITDA Production ramping across Northern acreage Adjusted EBITDA growing with production1 +117% 36.3 +157%
Slide 36: Aligned with the Shareholder Like No Other E&P
ALIGNED WITH THE SHAREHOLDER LIKE NO OTHER E&P NYSE: NOG Northern is focused on what it means to be accountable to the shareholder TYPICAL E&P PEER NORTHERN • $3.00 Cash G&A per Barrel <$1.00 Cash G&A in 4Q2018 • Insider & Management Ownership of ~5.0% Insider and Management Ownership of 27.6%
Slide 37: Outperforming Guidance
OUTPERFORMING GUIDANCE NYSE: NOG 2018 was another year executing on our disciplined plan to meet guidance 2018 GUIDANCE 2018 ACTUALS 2019 GUIDANCE RANGE PRODUCTION ACHIEVED 2018 GUIDANCE Avg. Daily Prod. (Boepd) 23,650 - 24,250 25,555 34,500 - 35,500 ACROSS KEY METRICS % Oil 84% 84% ~ 83% % Nat Ga
Slide 38: Compelling Undervalued Opportunity
COMPELLING UNDERVALUED OPPORTUNITY NYSE: NOG Northern trades at an attractive valuation point below peers, yet has leading free cash flow metrics 2019E FREE CASH FLOW YIELD 2019E EV / EBITDA 11.0x 21% 21% 9.4x 14% 12% 6.7x 7.2x 7.9x 6% 3% 2% 2% 5.7x 6.4x 4.2x 4.4x 4.5x 4.6x 4.7x 4.8x 3.1x A B NOG
Slide 39: Why Northern Oil & Gas?
WHY NORTHERN OIL & GAS? NYSE: NOG NON-OPERATOR Unique model provides capital flexibility & discipline, levers FLEXIBILITY Northern’s experience and relationships in the region GROWING ORGANIC Basin and Northern acreage activity robust, growing scale ACTIVITY increases exposure to working interes
Slide 40: Differentiated E&P Platform
DIFFERENTIATED E&P PLATFORM NYSE: NOG OIL-LEVERED WILLISTON DISCIPLINED CAPITAL BASIN PRODUCER ALLOCATION & RETURNS PROACTIVELY MANAGED VISIBLE LONG-TERM BALANCE SHEET GROWTH POTENTIAL Northern Oil & Gas Investor Presentation - April 2019 40
Slide 41: Appendix
Northern Oil & Gas, Inc. NYSE: NOG APPENDIX
Slide 42: Historical Operating & Financial Information
HISTORICAL OPERATING & FINANCIAL INFORMATION NYSE: NOG HISTORICAL OPERATING INFORMATION YEAR ENDED DECEMBER 31, 2013 2014 2015 2016 2017 2018 PRODUCTION Oil (MBbls) 4,046.7 5,150.9 5,168.7 4,325.9 4,537.3 7,790.2 Natural Gas and NGLs (Mmcf) 2,572.3 3,682.8 4,651.6 4,026.9 5,187.9 9,224.8 Total Produ
Slide 43: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS NYSE: NOG ADJUSTED EBITDA BY YEAR (IN THOUSANDS) 2014 2015 2016 2017 2018 Net Income (Loss) $ 163,746 $ (975,355) $ (293,494) $ (9,194) $ 143,689 Add: Interest Expense 42,106 58,360 64,486 70,286 86,005 Income Tax Provision (Benefit) 99,367 (202,424) (1,402) (1,570) (55) Dep
Slide 44: Northern Oil & Gas, Inc.
Northern Oil & Gas, Inc.
Northern Oil and Gas — 25th Annual IPAA Oil and Gas Investment Symposium (OGIS) 2019 on 6ix