Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Q3 2018 Earnings Presentation
30 slides from Northern Oil And Gas's earnings presentation, Nov 8, 2018
Slide 1: November 2018
NOVEMBER 2018 NYSE American: NOG 1
Slide 2: 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 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). All statements other than statements of
Slide 3: Northern's Business Strategy – Ahead of Plan
NORTHERN’S BUSINESS STRATEGY – AHEAD OF PLAN 1) STRATEGY REVIEW & THIRD QUARTER HIGHLIGHTS 2) FINANCIAL RESULTS & GUIDANCE 3) ACQUISITIONS 4) KEY TAKEAWAYS 3
Slide 4: A Returns Focused Strategy for All Cycles
Organic Activity Acquisitions Market Conditions Capital Allocation A Returns Focused Strategy for All Cycles Refinance Debt Return Capital to Stakeholders 4
Slide 5: Growth – Organic and Acquisitions Ahead of Plan
GROWTH – Organic and Acquisitions Ahead of Plan Driving – Production Growth = 74% year-over-year Driving – Adjusted EBITDA up 174% year-over-year Driving – Cash Flow and reactivating stock buy-back plan Balance Sheet Transactions & Debt Metrics Improvements Capital Allocation Moving to Returning Cap
Slide 6: Quarterly Comparison 3Q 2017 vs 3Q 2018
Quarterly Comparison 3Q 2017 3Q 2018 1 GREW PRODUCTION (Boe/d) 15,321 26,708 ~74% ~174% INCREASED ADJUSTED 2 EBITDA(1) ($MM) $97.9 $35.7 ~33% DIFFERENTIALS 3 DECREASED ($/Bbl) $6.22 $4.16 4 REDUCED CASH OPERATING COSTS PER UNIT (2) ($/Boe) $15.55 $14.20 ~9% (1) (2) Please see page 31 for a reconcili
Slide 7: Committing Capital to the Highest Return Wells
Committing Capital to the Highest Return Wells Well costs stable over the last 6 quarters 70% Weighted Average IRR $10.0 Weighted Average AFE Costs $9.0 60% 58% $8.1 $8.1 55% $7.8 $7.9 $7.9 $8.0 $7.6 $7.6 50% $6.8 $7.0 43% $6.6 $6.0 40% 37% 37% 36% 37% 35% $MM 32% $5.0 30% $4.0 20% $3.0 $2.0 10% $1.
Slide 8: Quarterly Activity
Consistently Funding Attractive AFEs… …Generates Consistent Production Growth 30.0 35,500 75% CAGR (Est) 25.0 9.3 Net Organic Wells Added to PDP Quarterly Activity 5.8 7.0 7.1 26,708 8.1 59% CAGR 20.0 3.6 4.3 21,046 2.0 15.0 17,995 16,742 15,321 13,299 13,794 10.0 19.2 18.3 19.0 19.0 16.1 18.0 16.4
Slide 9: Higher Recoveries + Stable Costs = Improved Capital Efficiency
Higher Recoveries + Stable Costs = Improved Capital Efficiency 2018 vintage wells better 2015 Cum (1) (1) 2016 Cum than ever 280,000 2017 Cum (1) (1) 2018 Cum 700 Mboe Type Curve 2018 wells tracking over a 240,000 800 Mboe Type Curve 900 Mboe Type Curve 1,000 MBoe EUR Type Curve 200,000 1,000 Mb
Slide 10: NOG Leasehold and Three Forks Wells
1 Liberty 45-1311H 2 Gabriel 1-36-25H 3 Wold Federal 44-7-4XH 4 Shorty 4-9F 3H 5 Wiley 8-25H EOG (IP: August 2018) Slawson (IP: July 2018) Whiting (IP: August 2018) Equinor (IP: April 2018) Continental (IP: June 2018) Peak 30: 1,568 Boepd Peak 30: 1,376 Boepd Peak 30: 2,036 Boepd Peak 30: 1,132 Boep
Slide 11: Northern's Business Strategy – Ahead of Plan
NORTHERN’S BUSINESS STRATEGY – AHEAD OF PLAN 1) STRATEGY REVIEW & THIRD QUARTER HIGHLIGHTS 2) FINANCIAL RESULTS & GUIDANCE 3) ACQUISITIONS 4) KEY TAKEAWAYS 11
Slide 12: 2018 Results Versus Plan
1Q 2018 2Q 2018 3Q 2018 4Q 2018 Est PRODUCTION (Boed) 1 2018: 28 - 31 Net Well Additions 35,500 Well Performance 21,046 26,708 16,742 D&C List Supportive of ‘19 Plans OPERATING EXPENSES (per Boe) $9.29 2 Better Than Plan: $8.61 $8.67 Production Expenses & Cash G&A ANNUALIZED QUARTERLY ADJU
Slide 13: Production, Adjusted EPS and Adjusted EBITDA
Adjusted Earnings Per Share Three Months Ended Measure September 30th, $0.17 2018 2017 % Production (MMBoe/d) 26,708 15,321 74% $0.11 $0.10 $0.09 Realized Price per BOE $53.96 $40.90 32% Adjusted EPS $0.11 $0.04 175% $0.04 Adjusted EBITDA $97.9 $35.7 174% $0.00 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Notes: A
Slide 14: Field-Level Costs Declining; Cash G&A per BOE
Field-Level Costs Declining Increasing Productivity at the Home Office $3.02 $8.94 $8.65 $7.71 $7.60 $7.39 LOE per BOE Cash G&A per BOE $1.58 $1.45 $1.28 $1.01 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 14
Slide 15: Debt-Adjusted Cash Flow and Production per Share
Debt-Adjusted Cash Flow per Share Debt-Adjusted Production per MM Shares (Boe) 5,546 $0.20 4,080 3,409 $0.11 $0.07 1,592 1,105 $0.02 $0.02 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Notes: Debt-adjusted share count calcuations based upon average stock price over period, assuming equitization
Slide 16: Debt, Liquidity and Credit Metrics
As of As of As of 2019E (In $ millions) 6/30/18 9/30/18 11/05/18 Targets Debt: Cash $200.9 $112.8 $16.8 Total Debt $853.2 807.0 $870.1 Lower Net Debt $652.3 $694.2 $853.3 Liquidity: Drawn $360.0 $360.0 $175.0 Available $40.0 $40.0 $250.0 Liquidity $240.9 $142.8 $266.8 Credit Metrics: LQA Adjusted EB
Slide 17: Protecting Liquidity and Cash Flows
Protecting Liquidity and Cash Flows Crude Oil Derivative Basis Swaps (1) Contract Period Volumes (Bbls) Weighted Average Price ($/Bbl) 2019 Q4 3,650,000 -$2.41 Crude Oil Derivative Price Swaps Contract Period Volumes (Bbls) Weighted Average Price ($/Bbl) 2018: Q4 1,855,300 $63.66 2019: Q1 1,775,700
Slide 18: Full Year 2018 Guidance Summary
FULL YEAR 2018 GUIDANCE SUMMARY COMMENTARY 2017 Actuals 2018 Guidance Range 2018 - Northern anticipates that organic net well additions will increase to 28 – 31 from 16.9 in 2017 Production Avg. Daily Prod. (Boed) 14,800 25,240 – 25,500 2018 - M&A and increased activity is expected to drive a 71
Slide 19: Free Cash Flow Yield, Leverage and Valuation vs Peers
Northern Has Amongst the Highest Expected FCF Yields… Ranking 17% 17% 14% 11% 10% 6% 1) NOG Free Cash Flow Yield 3% 2% 2% CRC NOG WLL MGY DNR CLR OAS QEP LONE HK 2) MGY 2019E 3) WLL -32% 4) CRC With a Much Better Balance Sheet... 3.6 x 3.6 x 4) CLR 3.3 x Net Debt / EBITDA 2.4 x 2.5 x 1.9 x 4) LONE 2
Slide 20: Northern's Business Strategy – Ahead of Plan
NORTHERN’S BUSINESS STRATEGY – AHEAD OF PLAN 1) STRATEGY REVIEW & THIRD QUARTER HIGHLIGHTS 2) FINANCIAL RESULTS & GUIDANCE 3) ACQUISITIONS 4) KEY TAKEAWAYS 20
Slide 21: NOG Leasehold and Acquired Leasehold
NOG Leasehold Acquired Leasehold 21
Slide 22: Greater inventory of projects with attractive economics
Greater inventory of projects with attractive economics Increased reserve base Increased value Stronger foundation for continued growth NOG Acreage Acquired Acreage (1) Based on Strip Pricing as of 06/29/2018. 22
Slide 23: Acquisition Criteria
Salt Creek, Pivotal and Acquisition Criteria W Energy Transactions Strengthens NOG’s Position as the “Go-To” Buyer of Non-Op Interests in the Williston Basin Leverages Expertise of In-House Technical Team and Proprietary Database Increases Drilling Locations and Inventory Accretive to Per-Share Metr
Slide 24: Pro Forma 3P Inventory Locations and 1P Reserves
Pro Forma 3P Inventory Locations(1) Pro Forma 1P Reserves (MMBoe)(1) 800 140 51.9 741.8 700 679.3 8.2 2.4 120 115.2 600 19.5 100 6.6 8.3 500 80.8 80 400 60 300 40 200 100 20 0 0 Pre-Acquisitions Salt Creek Pivotal W Energy Post-Acquisition Pre-Acquisitions Salt Creek Pivotal W Energy Post-Acquisitio
Slide 25: Northern's Business Strategy – Ahead of Plan
NORTHERN’S BUSINESS STRATEGY – AHEAD OF PLAN 1) STRATEGY REVIEW & THIRD QUARTER HIGHLIGHTS 2) FINANCIAL RESULTS & GUIDANCE 3) ACQUISITIONS 4) KEY TAKEAWAYS 25
Slide 26: Capital Allocation
Basin Activity Increasing Organic Activity Activity on Northern’s acreage is increasing Ground game utilizes scale to increase additional working interest Accretive acquisitions in the core of the play Acquisitions Capital Accretive to cash flow Accretive to future core drilling location
Slide 27: Q&A
Q&A 27
Slide 28: Appendix
APPENDIX 28
Slide 29: Historical Operating Information
Historical Operating Information Year Ended December 31, 2013 2014 2015 2016 2017 Production Oil (MBbls) 4,046.7 5,150.9 5,168.7 4,325.9 4,537.3 Natural Gas and NGLs (Mmcf) 2,572.3 3,682.8 4,651.6 4,026.9 5,187.9 Total Production (Mboe) 4,475.4 5,764.7 5,944.0 4,997.1 5,402.0 Revenue Realized Oil Pr
Slide 30: Adjusted EBITDA Reconciliation
Adjusted EBITDA by Year (in thousands) 2013 2014 2015 2016 2017 Net Income (Loss) $ 53,067 $ 163,746 $ (975,355) $ (293,494) $ (9,194) Add: Interest Expense 32,709 42,106 58,360 64,486 70,286 Income Tax Provision (Benefit) 31,768 99,367 (202,424) (1,402) (1,570) Depreciation, Depletion, Amortization