Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Q3 2021 Earnings Presentation
32 slides from Northern Oil And Gas's earnings presentation, Nov 5, 2021
Slide 1: Q3:21 Earnings Presentation
NYSE American: NOG Q3:21 EARNINGS PRESENTATION NYSE American: NOG
Slide 2: Q3 Highlights and Guidance; Northern Value Proposition; Appendix
NYSE American: NOG I. Q3 HIGHLIGHTS AND GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO Northern Oil & Gas, Inc. - November 2020 2
Slide 3: Q3:21 Financial & Operating Highlights
Q3:21 FINANCIAL & OPERATING HIGHLIGHTS NYSE American: NOG Q3 Free Cash Flow(1) + Dividend Momentum Q3:21 Earnings Highlights • Record Free Cash Flow and Strong Margins and Returns $55.4MM 50% Increase • Free Cash Flow. Free cash flow hit a record $55.4MM in Q3. NOG’s Annualized Q3 FCF Yield stands a
Slide 4: Updated 2021 Guidance
UPDATED 2021 GUIDANCE NYSE American: NOG Net/Net: Production Up; CAPEX down; Differentials Improved; Cost Structure Trending Lower PRIOR ADJUSTED Midpoint Δ Annual Production (Boe per day) 49,500 - 54,250 51,750 – 53,750 875* Oil % 63 - 64% 63 - 64% - Total Capital Expenditures ($MM) $215 - $260 $21
Slide 5: Q3:21 Production & Capex Breakdown
Q3:21 PRODUCTION & CAPEX BREAKDOWN NYSE American: NOG Northern’s Commodity, Capital Expenditures and Production Mix Continue to Become More Diversified and Balanced Q3 2021 – PRODUCTION BY REGION Q3 2021 – PRODUCTION BY COMMODITY 20% 21% Region Commodity Type 10% 4% Marcellus 41% Williston Oil Gas 5
Slide 6: Exceptional 2021 Performance Continues
EXCEPTIONAL 2021 PERFORMANCE CONTINUES NYSE American: NOG 250 500 225 2020 Internal Type Curve 450 200 400 Performance of wells classified as PUD at YE20 that Cumulative Oil Production (mbbls) 175 350 are now online 150 300 Daily Production Well Count 125 250 100 Audited Type Curve 200 Daily Product
Slide 7: Balance Sheet & Liquidity Enhancement Continues
BALANCE SHEET & LIQUIDITY ENHANCEMENT CONTINUES NYSE American: NOG • Ample liquidity post closing of Comstock transaction • Company continues to generate record Free Cash Flow • Borrowing Base Expansion: NOG’s borrowing base has grown substantially year-to-date • Williston acquisition will be additi
Slide 8: Leverage Reduction Drives a Higher Dividend
LEVERAGE REDUCTION DRIVES A HIGHER DIVIDEND NYSE American: NOG Ø Northern is committed and well positioned to return capital to shareholders via dividend growth Ø Our dividend growth strategy is correlated to our corporate deleveraging strategy Ø Corporate hedging targets protect future cash flows a
Slide 9: Northern Value Proposition
NYSE American: NOG I. Q3 HIGHLIGHTS AND GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO 9
Slide 10: The Northern Investment Proposition
THE NORTHERN INVESTMENT PROPOSITION NYSE American: NOG National non-op franchise – principled ROCE leader diversified by commodity and geography Strong expected Free Cash Flow(2): >$175 MM in 2021 and >$1B through 2025 Committed to returning capital – inaugural Q2 dividend already set for 100% incre
Slide 11: 2021 Northern: Diversified High Return Non-Op E&P Franchise
2021 NORTHERN: DIVERSIFIED HIGH RETURN NON-OP E&P FRANCHISE NYSE American: NOG Ø Northern’s Marcellus and Permian acquisitions create a national non-op franchise, with a significantly larger base footprint and production diversified across three leading shale plays, high return reinvestment opportun
Slide 12: Three Major Acquisitions Inked in 2021
THREE MAJOR ACQUISITIONS INKED IN 2021 NYSE American: NOG Ø Northern has gained substantial scale through acquisitions in 2021 while improving its balance sheet Ø LQA Net Leverage(1) has been reduced from 2.5x at 12/31/2020 to 1.6x at 9/30/2021 Transformational Marcellus Entry Core Permian Bolt-On A
Slide 13: Comstock Acquisition Provides Strong Cash Flow
COMSTOCK ACQUISITION PROVIDES STRONG CASH FLOW NYSE American: NOG Acquisition Highlights – November anticipated close Summary Transaction Stats ü Purchase Price: $154 million, expected to close November 2021 Continues to establish Northern as the natural consolidator of ü 1H 2021 annualized asset le
Slide 14: Scale Established in the Permian
SCALE ESTABLISHED IN THE PERMIAN NYSE American: NOG Acquisition Highlights - Deals closed on or before 8/2/21 Summary Transaction Stats ü Unadjusted Purchase Price: $102.2 Million (Aggregate of 3 deals) (2) Core Delaware Basin position operated by some of the industry’s most active operators ü NTM O
Slide 15: Marcellus Entry Adds Stable Gas Asset
MARCELLUS ENTRY ADDS STABLE GAS ASSET NYSE American: NOG Acquisition Highlights - Deal closed on 4/1/21 Summary Transaction Stats ü Cash Purchase Price: $109.7 Million (1) Attractive valuation – PDP + wells-in-progress PV-10 implies a PV- ü PDP + wells-in-process PV-10: $238 MM(2) 22 transaction ü N
Slide 16: Ground Game – A High Return NOG Exclusive
GROUND GAME – A HIGH RETURN NOG EXCLUSIVE NYSE American: NOG Another Year of Highly Accretive Full Cycle Return Opportunities 2021 Ground Game Wells in Process Acquisitions Free Cash Flow Derivation ($MM) 2021 2022 2023 2024 125 Net Wells Turned-in-Line 5.1 4.0 1.2 0.0 100 75 Forecasted Production (
Slide 17: The New Northern Oil and Gas
THE NEW NORTHERN OIL AND GAS NYSE American: NOG Ø Northern’s non-operated E&P model offers superior returns and free cash flow generation ü Exposure to set of leading operators with estimated 2021 exiting production split as follows: Diversified Asset Base With Williston (~71% production), Permian (
Slide 18: Appendix: Supplemental Info
NYSE American: NOG I. Q3 HIGHLIGHTS AND GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO 18
Slide 19: Benefits of Northern's Non-Operated Model
BENEFITS OF NORTHERN’S NON-OPERATED 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 20: "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 21: 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 multiple basins % OF NET PRODUCTION WELLS BY OPERATOR Key Takeaways OTHERS (<3%) ü Q3:21 production of 57,647 boepd is 21% comprised of 45+ different operators 25% ü >60% of Q3 2
Slide 22: Non-Op of Scale with Improving Cost Structure
NON-OP OF SCALE WITH IMPROVING COST STRUCTURE NYSE American: NOG Ø Participation in the highest quality wells with stable AFE costs generates consistent production & higher IRRs STEADY DEVELOPMENT ACTIVITY… …WHILE PRODUCTION CONTINUES TO RAMP Organic Net Wells added to Production Production (mBoe/d)
Slide 23: 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 24: NOG Committed to Good Governance
NOG COMMITTED TO GOOD GOVERNANCE NYSE American: NOG ENVIRONMENTAL SOCIAL GOVERNANCE • Separate CEO and Chairman • NOG employees provided roles free health care and paid • Operators are selected for family leave • Significant shareholder environmental and safety representation on Board records • Nort
Slide 25: Hedge Profile
HEDGE PROFILE 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 SWAPS Total Hedged Contract T
Slide 26: Historical Operating & Financial Information
HISTORICAL OPERATING & FINANCIAL INFORMATION NYSE American: NOG Historical Operating Information Years Ended December 31, 2017 2018 2019 2020 3Q20 3Q21 Production Oil (MBbls) 4,537.3 7,790.2 11,325.4 9,361.1 2,054.8 3,131.2 Natural Gas and NGLs (Mmcf) 5,187.9 9,224.8 16,590.8 16,473.3 3,706.9 13,034
Slide 27: Non-GAAP Reconciliations: Adjusted EBITDA & Other
NON-GAAP RECONCILIATIONS: ADJUSTED EBITDA & OTHER NYSE American: NOG Adjusted EBITDA by Year (in thousands) 2017 2018 2019 2020 Net Income (Loss) $ (9,194) $ 143,689 $ (76,318) $ (906,041) Add: Interest Expense 70,286 86,005 79,229 58,503 Income Tax Provision (Benefit) (1,570) (55) - (166) Depreciat
Slide 28: Non-GAAP Reconciliations: ROCE & Recycle Ratio
NON-GAAP RECONCILIATIONS: ROCE & RECYCLE RATIO NYSE American: NOG Q3:21 Return on Capital Employed (ROCE) • EBIT: $400.8MM (Q3:21 annualized) • + Adj. EBITDA: $136.1MM • - DD&A: $35.9MM Capital EBIT ÷ Employed = 46.0% • Capital Employed: $872.0MM (Avg. of Q3:20/21) • + Total Assets: $1,134.8MM (Avg.
Slide 29: Non-GAAP Reconciliations: Free Cash Flow
NON-GAAP RECONCILIATIONS: FREE CASH FLOW NYSE American: NOG Free Cash Flow (FCF) (in thousands) 1Q21 2Q21 3Q21 YTD21 Net Cash Provided by Operating Activities $ 62,766 $ 106,186 $ 94,413 $ 263,365 Exclude: Changes in Working Capital and Other Items 20,814 12,204 27,888 60,906 Less: Capital Expenditu
Slide 30: The New Northern: Diversified Asset Base of Scale
THE NEW NORTHERN: DIVERSIFIED ASSET BASE OF SCALE NYSE American: NOG Ø The New Northern offers diversity and balanced commodity mix and strong presence in Williston, Permian and Appalachia Pre-Tax PV10 ($MM) Resource Category Total Gross Locations Oil (MMBbl) Gas (Bcf) Toal Reserves (MMBoe) 10/1/21
Slide 31: 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 32: 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