Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Permian Acquisitions Conference Call (June 2021)
36 slides from Northern Oil And Gas's conference presentation, Jun 16, 2021
Slide 1: June 2021 Permian Acquisitions
NYSE American: NOG JUNE 2021 PERMIAN ACQUISITIONS NYSE American: NOG
Slide 2: Disclaimer
DISCLAIMER NYSE American: NOG 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 o
Slide 3: Disclaimer (Cont.)
DISCLAIMER (Cont.) NYSE American: NOG 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 t
Slide 4: Permian Acquisition Summary; Northern Value Proposition; Appendix
NYSE American: NOG I. PERMIAN ACQUISITION SUMMARY II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO Northern Oil & Gas, Inc. - November 2020 4
Slide 5: Northern Establishes Scale in the Permian Basin
NORTHERN ESTABLISHES SCALE IN THE PERMIAN BASIN NYSE American: NOG Acquisition Highlights Summary Transaction Stats Total Purchase Price: $102.2 Million Continues to establish Northern as the premier multi-basin Net Acreage: ~2,900 Permian acres in Reeves, Lea and Eddy Counties non-operator Pr
Slide 6: Permian Transaction Overview
PERMIAN TRANSACTION OVERVIEW NYSE American: NOG Agreement to acquire non-operated interests in the core of the Permian Basin for a cash purchase price of $102.2MM (the “Permian Transaction transaction”) Summary Effective date for majority of the Permian transaction value is April 1, 2021 with ex
Slide 7: Highly Economic Inventory Underpinned by Established Production Base and High Quality Operators
HIGHLY ECONOMIC INVENTORY UNDERPINNED BY AN ESTABLISHED PRODUCTON BASE AND HIGH QUALITY OPERATORS NYSE American: NOG Inventory of 23.1 net undrilled locations with highly attractive returns North Eddy Stats(3) • $33.97 B/E WTI(2) Gross Undeveloped Upside Inventory by IRR (1) • 7 active rigs(4) Lea
Slide 8: Permian Basin Continues to Lead the Recovery
PERMIAN BASIN CONTINUES TO LEAD THE RECOVERY NYSE American: NOG Permian Basin is leading U.S. Shale into the recovery while oil supply growth is expected to remain muted across the rest of the Lower 48 Permian Completion Activity Outpacing Other Basins U.S. Lower 48 Oil Production 700 6,000 Foreca
Slide 9: Attractive Implied Valuation Metrics
ATTRACTIVE IMPLIED VALUATION METRICS NYSE American: NOG Production Operating Cash Flow & Cum. Free Cash Flow >$40MM >$100MM Production 2,200 Boe/d 3,700 Boe/d 6,500 Boe/d Forecasted Forecasted (Boe/d) Operating CF NTM Operating Cum. FCF FCF Through May 2021 (1) H2 2021E (1) Potential ($MM) ($MM) Cas
Slide 10: Setting the Stage for Future Consolidation
SETTING THE STAGE FOR FUTURE CONSOLIDATION NYSE American: NOG Northern is the natural consolidator of non-operated working interest across the Lower 48 Have executed on over $1.3 billion in accretive acquisitions since 2018 Believe we can continue to create shareholder value through accretive
Slide 11: 2021 Guidance Adjustments – Decrease to Base Capex
2021 GUIDANCE ADJUSTMENTS – DECREASE TO BASE CAPEX NYSE American: NOG ~$35MM of CapEx expected on the acquired Permian assets through the remainder of 2021 Capex on Northern’s legacy assets reduced $15-20 MM due to improved capital efficiencies Northern will not be adding any substantive reocc
Slide 12: Ongoing Leverage Reduction Will Drive a Higher Dividend
ONGOING LEVERAGE REDUCTION WILL DRIVE A HIGHER DIVIDEND NYSE American: NOG Northern is committed and well positioned to return capital to shareholders via dividend growth Our dividend growth strategy is correlated to our corporate deleveraging strategy Corporate hedging targets protect future
Slide 13: Q1 Takeaways and Guidance; Northern Value Proposition
NYSE American: NOG I. Q1 TAKEAWAYS AND GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO 13
Slide 14: New Northern: Diversified High Return Non-Op E&P Franchise
NEW NORTHERN: DIVERSIFIED HIGH RETURN NON-OP E&P FRANCHISE NYSE American: NOG Northern’s Marcellus acquisition creates a national non-op franchise, with a significantly larger base footprint and production diversified across three leading shale plays, high return reinvestment opportunities across
Slide 15: The Northern Investment Proposition
THE NORTHERN INVESTMENT PROPOSITION NYSE American: NOG National non-op franchise – principled ROCE (1) leader (>25.4% in Q1:21) diversified by commodity and geography Strong expected Free Cash Flow(2): >$150MM in 2021 and >$800MM through 2025 Committed to returning capital to shareholders - NOG’s 1s
Slide 16: The New Northern Oil and Gas
THE NEW NORTHERN OIL AND GAS NYSE American: NOG Northern is the pre-eminent E&P with focus on non-operated model offering superior returns and free cash flow generation Exposure to set of leading operators in Williston and Permian (~75% production) and Diversified Asset Base With Appalachia (~25
Slide 17: “Shale 3.0” Paradigm Ideal for Active Non-Op Model
“SHALE 3.0” PARADIGM IDEAL FOR ACTIVE NON-OP MODEL NYSE American: NOG Capital Constrained E&P’s reassessing their Non-Op Positions SHALE 3.0 Operators commit to CAPEX levels no more than 70-80% of cash flow. A growth-driven shale strategy simply hasn’t worked. US production skyrocketed, but oil pric
Slide 18: Benefits of Northern’s Non-Operator Model
BENEFITS OF NORTHERN’S NON-OPERATOR MODEL NYSE American: NOG HIGH RETURN WAY TO PLAY E&P SPACE Peer leading cost structure & Corporate ROCE Unit G&A costs >50% less than operating peers Scalable Model: NOG has only 26 employees SHALE 3.0 BENIFICIARY LEVERAGING EXPERIENCE Northern is capitalizing on
Slide 19: Returns Metrics Continue to Lead the Pack
RETURNS METRICS CONTINUE TO LEAD THE PACK NYSE American: NOG High Return Business Driven by Low G&A Burden Peer-Leading ROCE (2021)… Raymond James E&P Research Coverage 35% 30% 25% Non-operator model allows us to 20% 15% run a lean cost structure and cash 10% efficient business, generating 5% indust
Slide 20: Ground Game – Differentiated High Return Opportunities
GROUND GAME – DIFFERENTIATED HIGH RETURN OPPORTUNTIES NYSE American: NOG Another Year of Highly Accretive Full Cycle Return Opportunities 2021 Ground Game Wells in Process Acquisitions Free Cash Flow Derivation ($MM) 2021 2022 2023 2024 10 Net Wells Turned-in-Line 1.1 0.2 0.0 0.0 5 Forecasted Produc
Slide 21: Northern Committed to Good Governance
NORTHERN COMMITTED TO GOOD GOVERNANCE NYSE American: NOG ENVIRONMENTAL SOCIAL GOVERNANCE • Operators are selected for • Northern employees • Separate CEO and Chairman environmental and safety provided free health care roles records and paid family leave • Significant shareholder • North Dakota has b
Slide 22: Diversified Base & Partnered with Basin Leaders
DIVERSIFIED BASE & PARTNERED WITH BASIN LEADERS NYSE American: NOG Leverage to some of the best performing operators in multiple basins % OF NET PRODUCING WELLS BY OPERATOR OTHERS (<3%) Key Takeaways Q1:21 production of 38,417 boepd is 16% 23% comprised of 45+ different operators >60% of Q1 20
Slide 23: Top-Tier Bakken; Early Permian Results Impress
TOP-TIER BAKKEN; EARLY PERMIAN RESULTS IMPRESS NYSE American: NOG High-grading of well locations has led to improved well recoveries across both basins Consistent Williston Basin Productivity Permian Basin Productivity 300,000 300,000 (1) 2017 Cum (1) 2020 Cum (1) 2018 Cum (1) 2021 Cum 250,000 201
Slide 24: Non-Op of Scale with Improving Cost Structure
NON-OP OF SCALE WITH IMPROVING COST STRUCTURE NYSE American: NOG Participation in high quality wells with stable AFE costs generates consistent production & higher IRRs Organic Net Wells added to Production Production (mBoe/d) Wells In Process @ Period End Material, but measured Consistent well hi
Slide 25: Current Bakken Snapshot
CURRENT BAKKEN SNAPSHOT NYSE American: NOG Portfolio of high-quality acreage in the heart of the basin with interests in over 7,000 gross Bakken/Three Forks oil wells NET ACREAGE SUMMARY 9% 9% 8% 182,610 NET ACRES 91% 91% 92% North Dakota Montana HBP 1 % Non-HBP ND % HBP 1 ND % Non-HBP 91% HELD BY
Slide 26: Strong Bakken Inventory Drives NAV Upside
STRONG BAKKEN INVENTORY DRIVES NAV UPSIDE NYSE American: NOG Undeveloped Locations By Operator Undeveloped Locations By Reservoir OTHERS 111.8 155.1 TF3 41.6 86.2 TF2 25.6 113.6 28.6 BKKN 32.3 320.5 78.4 46.2 TF1 73.5 280.0 56.9 61.1 Undeveloped Locations By County Key Takeaways Over 60% of 756 fu
Slide 27: 2020 PUD Wells Exceeding Reserve Auditor Expectations
2020 PUD WELLS EXCEEDING RESERVE AUDITOR EXPECTATIONS NYSE American: NOG 220 220 2020 Internal Type Curve 200 200 180 180 160 160 Cumulative Oil Production (mbbls) 140 140 Well Count 120 Performance of wells 120 classified as PUD at YE20 that 100 are now online Audited Type Curve 100 80 2020 Interna
Slide 28: Q1:21 Financial & Operating Highlights
Q1:21 FINANCIAL & OPERATING HIGHLIGHTS NYSE American: NOG Q1:21 Earnings Highlights Q1 Free Cash Flow(1) Dividend Established • Strong Free Cash Flow from Another High Return Quarter • Free Cash Flow +43% QoQ. Capex decreased 22% sequentially, while $41.7MM $0.03/share CFFO increased 2%. Annualized
Slide 29: Accelerating Deleveraging While Maintaining Liquidity
ACCELERATING DELEVERAGING WHILE MAINTAING LIQUIDITY NYSE American: NOG ($ in millions) $950 million of funded debt (100% of Weighted Avg. Maturity: 2.4 years total) due by 2024 BB Capacity: $128 million Q4’20 Net Debt / LTM EBITDA: 2.7x 12/31/20 $128 $532 $288 $65 $65 2021 2022 2023 2024 2025
Slide 30: Appendix: Supplemental Info
NYSE American: NOG I. Q1 TAKEAWAYS AND GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO 30
Slide 31: Northern’s Senior Management Team
NORTHERN’S SENIOR MANAGEMENT TEAM NYSE American: NOG Nicholas O’Grady: Chief Executive Officer 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 32: Hedge Profile
HEDGE PROFILE NYSE American: NOG 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 SWAPS Total Hedged Contract T
Slide 33: Historical Operating & Financial Information
HISTORICAL OPERATING & FINANCIAL INFORMATION NYSE American: NOG HISTORICAL OPERATING INFORMATION YEAR ENDED DECEMBER 31, THREE MONTHS ENDED, 2015 2016 2017 2018 2019 2020 March 31, 2020 March 31, 2021 PRODUCTION Oil (MBbls) 5,168.7 4,325.9 4,537.3 7,790.2 11,325.4 9,361.1 3,138.4 2,630.2 Natural Gas
Slide 34: Non-GAAP Reconciliations: Adjusted EBITDA & Other
NON-GAAP RECONCILIATIONS: ADJUSTED EBITDA & OTHER NYSE American: NOG Adjusted EBITDA by Year (in thousands) 2015 2016 2017 2018 2019 2020 Net Income (Loss) $ (975,355) $ (293,494) $ (9,194) $ 143,689 $ (76,318) $ (906,041) Add: Interest Expense 58,360 64,486 70,286 86,005 79,229 58,503 Income Tax Pr
Slide 35: Non-GAAP Reconciliations: ROCE & Recycle Ratio
NON-GAAP RECONCILIATIONS: ROCE & RECYCLE RATIO NYSE American: NOG Q1:21 Return on Capital Employed (ROCE) • EBIT: $270.2MM (Q1:21 annualized) • + Adj. EBITDA: $98.77MM Capital • - DD&A: $31.22MM EBIT ÷ Employed = 25.4% • Capital Employed: $1,063MM (Avg. of Q1:20/21) • + Total Assets: $1,258MM (Avg.)
Slide 36: Non-GAAP Reconciliations: Free Cash Flow
NON-GAAP RECONCILIATIONS: FREE CASH FLOW NYSE American: NOG Q1:21 Free Cash Flow (FCF) (in thousands) 1Q21 Net Cash Provided by Operating Activities $ 62,766 Exclude: Changes in Working Capital and Other Items 20,814 Less: Capital Expenditures (1) (38,085) Less: Series A Preferred Dividends (3,830)
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