Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Q1 2023 Earnings Presentation
30 slides from Northern Oil And Gas's earnings presentation, May 5, 2023
Slide 1: Q1 2023 Earnings Presentation
Q1 2023 Earnings Presentation May 4, 2023 Q1 2023 Earnings Presentation | 1
Slide 2: Contents
Contents I. Q1 2023 Highlights II. Financial Results III. Value Proposition IV. Appendix Q1 2023 Earnings Presentation | 2
Slide 3: Q1-23 Financial & Operating Highlights
Q1-23 Financial & Operating Highlights Strong Execution, Continuing Momentum from Q4-22 Q1 Free Cash Flow1 Dividend Growth • Growth in production and smooth integration drives outperformance • Completed MPDC Mascot acquisition in Q1 for a $320MM initial closing ~$84MM +143% settlement • Adjusted EBI
Slide 4: FCF Generation and Shareholder Return
FCF Generation and Shareholder Return NOG continues a balanced approach to shareholder returns including buybacks of common stock and highest cost of capital securities, the reduction of outstanding revolving credit facility debt and a ramping dividend yield • ~$50 million of net debt reduction, pos
Slide 5: A Track Record of Dividend Growth
A Track Record of Dividend Growth NOG has consistently exceeded and accelerated its dividend growth ACTUAL DIVIDENDS COMPARED WITH INITIAL 2021 DIVIDEND PLAN RECOMMENDATIONS $0.40 1 $0.37 $0.35 $0.34 $0.30 Dividend Per Common Share $0.30 $0.27 $0.25 $0.25 $0.24 $0.21 $0.20 $0.19 $0.18 $0.15 $0.15 $0
Slide 6: Q1 Operations Highlights
Q1 23 Operations Highlights Organic activity up 30% year over year, continuing momentum from 2022 AFEs Wells in Process Well Completions • $1.8B (gross) in AFEs • Drilling & Completing list • Organic completion grew nearly 30% vs YE22 activity was up ~30% vs • 95% consent rate, in line Q1-22 with hi
Slide 7: Investment Activity Update
Investment Activity Update Bolt-On NOG’s opportunity set continues to expand. Ground game success in Q1 adds incremental production and inventory Opportunity Set Ground Game Bolt-On • Over $6B of opportunities • Completed 10 ground • Closed MPDC acquisition game deals for $11.5MM • Actively evaluati
Slide 8: MPDC Mascot Update
MPDC Mascot Update NORTHERN DELAWARE BASIN LOCATOR MAP KEY STATISTICS RECENT DEVELOPMENTS • Acquisition closed on January 5, 2023 • Wells outperforming internal forecasts, by approximately • Purchased a 39.958% Non-Op Interest in the Mascot 10% in Q1 Project, Midland County, TX • Next wave of develo
Slide 9: Q1 2023 Production by Basin
Q1 2023 Production by Basin NOG’s Production Mix Continues to Become More Diversified and Balanced with the Permian Leading the Charge 13% • Permian production was record in total, and as a percentage of NOG’s production mix (35%) • Strong, near-record Williston production, with 52% growth projected
Slide 10: Q1 2023 Production by Commodity and Basin (% Boe)
Q1 2023 Production by Commodity and Basin (% Boe) Production was heavily weighted toward oil in Q1 and is expected to grow given higher productivity in the Williston and as MPDC volumes come online Williston 27% Marcellus 73% 38% Oil Gas 100% 62% Permian Gas 31% 69% Commodity Type Oil Gas Oil Gas Q1
Slide 11: Q1 2023 Cap Ex by Basin
Q1 2023 Cap Ex by Basin Capital Expenditures were weighted toward the Williston Basin in Q1 with emphasis balanced between the Williston and Permian for the remainder of the year 1% • Seasonally strong activity as TILs were up ~30% vs. Q1 22 33% • Expecting TIL activity to ramp into the summer as we
Slide 12: 2023 Year-to-Date Cap Ex
2023 Year-to-Date Cap Ex Q1-23 saw ~$11.5MM in Ground Game opportunities. Continue to Expect 60% First Half Weighting for Capital Budget $737 - $778 $800 $700 $600 $500 Estimated 60% of total budget $400 $300 $200 $100 $212 $0 Q1-23A Q2 - 23E Q3 - 23E Q4 - 23E YTD Actual Guidance Assumptions • Compa
Slide 13: Q1 Debt Outstanding
Q1 23 Debt Outstanding Change in Net Debt Reflects MPDC Acquisition and Opportunistic Debt Reduction $277.0 $(26.4) $(19.1) $1,756.9 $1,525.4 Total Debt Outstanding 12/31/2022 MPDC Acquisition Revolver Paydown Notes Repurchased Total Debt Outstanding 03/31/2023 Source: Company financial reports. In
Slide 14: Reaffirming 2023 Guidance and Capital Budget
Reaffirming 2023 Guidance and Capital Budget 2023 Budget Represents a Year of Over 23% Production Growth at the Midpoint and Significant Cash Flow Growth at the Strip 2023E Underlying Assumptions Annual Production (2-stream, Boe/day) 91,000 - 96,000 • Budgeting for moderate well cost inflation, thou
Slide 15: NOG Value Proposition
PART 2 NOG Value Proposition Q1 2023 Earnings Q1 2023 Earnings Presentation Presentation | 15
Slide 16: The NOG Investment Proposition
The NOG Investment Proposition 1 2 3 4 5 National Non-Op Franchise – offering scale and diversification by ~$84MM Free Cash Flow1 in Q1 2023 Return of Capital Commitment: Growing Dividend, Equity Buybacks Strong Balance Sheet with Organic De-Levering to Target of <1.0x Net Dominant Data & Technical
Slide 17: 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 9,400 wells • Unit G&A costs are 50% less than • Enables well-informed and experienc
Slide 18: Leading Non-Op E&P Franchise
Leading Non-Op E&P Franchise • NOG’s acquisitions have created a high return, national Q1-23 PRODUCTION BY REGION (BOE) non-op franchise that is benefitting from economies of scale; ~8,000 net acres were added to Permian footprint in Q4-22 & Q1-23 Marcellus 13% Region • NOG is positioned to continue
Slide 19: And Focus on the Highest-Quality Areas
And 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: ~181,200 Net Acres Permian Basin: ~20,000 Net Acres Marcellus Acres: ~59,200 Net Acres NOG Northern Northern NOG NOG Wells
Slide 20: A Differentiated E&P Growth Platform
A Differentiated E&P Growth Platform NOG continues to build scale as the largest dedicated public non-operated working interest company PRODUCTION CONTINUES TO RAMP… WHILE MAINTAINING PEER-LEADING LOW CASH G&A1 Material increases driven by organic Reducing overhead unit cash G&A costs, growth + accr
Slide 21: Well Laddered Debt Maturity Schedule
Well Laddered Debt Maturity Schedule Company maintains ample liquidity and careful timing of debt maturities • Borrowing Base Expanded in November 22: NOG’s borrowing base has grown substantially from standalone and acquired assets year-to-date - Borrowing base of $1.6 billion (up from $1.3 billion)
Slide 22: Appendix: Supplemental Info
PART 3 Appendix: Supplemental Info Q1 2023 Earnings Q1 2023 Earnings Presentation Presentation | 22
Slide 23: Historical Operating & Financial Information
Historical Operating & Historical Operating Information Production 2020 2021 2022 Q1 22 Q1 23 Financial Information Oil (MBbls) Natural Gas and NGLs (Mmcf) Total Production (Mboe) 9,361.1 16,473.3 12,106.7 12,288.4 44,073.9 19,634.1 16,090.1 68,829.1 27,561.6 3,824.0 15,533.6 6,412.9 4,847.8 18,101.
Slide 24: NON-GAAP Reconciliations: Adjusted EBITDA
Adjusted EBITDA by Year (in thousands) NON-GAAP 2020 2021 2022 Net Income (Loss) $ (906,041) $ 6,361 $ 773,237 Add: Reconciliations: Interest Expense 58,503 59,020 80,331 Income Tax Provision (Benefit) (166) 233 3,101 Depreciation, Depletion, Amortization and Accretion 162,120 140,828 251,272 Adjust
Slide 25: NON-GAAP Reconciliations: ROCE & Recycle Ratio
NON-GAAP Reconciliations: ROCE & Recycle Ratio Q1-23 Return on Capital Employed (ROCE) • EBIT: $923.4MM (Q1 23 annualized) • + Adj. EBITDA: $325.5MM • - DD&A: $94.6MM Capital EBIT ÷ Employed = 42.0% • Capital Employed: $2,198.3MM (Avg. of Q1 22/23) • + Total Assets: $2,683.7MM (Avg. of Q1 22/23) • -
Slide 26: NON-GAAP Reconciliations: Free Cash Flow
NON-GAAP Reconciliations: Free Cash Flow FREE CASH-FLOW (FCF) (in thousands) Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Net Cash Provided by Operating Activities $ 154,034 $ 210,239 $ 276,766 $ 287,379 $ 269,308 Exclude: Changes in Working Capital and Other Items 80,985 41,948 (7,505) (53,029) 26,864 Less: Capit
Slide 27: Hedge Profile—COLLARS
Hedge Profile—COLLARS 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 NATURAL GAS DERIVATIVE COLLARS Million British Million Contract Barrels Per Day
Slide 28: 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 PRICE SWAPS - NYMEX NATURAL GAS DERIVATIVE PRICE SWAPS - NYMEX Million British Weighted Ba
Slide 29: 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 30: 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