Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Merger or Acquisition (February 2021)
29 slides from Northern Oil And Gas's merger presentation, Feb 3, 2021
Slide 1: Strategic Acquisition of Reliance Appalachia Assets
NYSE American: NOG Strategic Acquisition of Reliance Appalachia Assets FEBRUARY 3, 2021 NYSE American: NOG
Slide 2: Forward Looking Statements and Additional Disclosures
FORWARD LOOKING STATEMENTS AND ADDITIONAL DISCLOSURES 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 “Securit
Slide 3: Transaction Highlights
NYSE American: NOG TRANSACTION HIGHLIGHTS THE NEW NORTHERN OIL AND GAS APPENDIX
Slide 4: Reliance Appalachia Transaction Overview
RELIANCE APPALACHIA TRANSACTION OVERVIEW NYSE American: NOG Northern agreed to acquire a non-operated interest in Appalachia natural gas assets from Reliance Marcellus, LLC Transaction (“Reliance”) for an unadjusted cash purchase price of $175MM plus equity warrants issued to Reliance upon closing
Slide 5: Entry into Attractive Basin with a Leading Low Cost Operator – EQT
ENTRY INTO ATTRACTIVE BASIN WITH A LEADING LOW COST OPERATOR – EQT NYSE American: NOG • Non-operated interests in the Reliance / EQT Participation and Development Agreement (“PDA”) and Reliance / EQT Joint Development Agreement (“JDA”) • Average, blended working interest of ~27% across the two joint
Slide 6: Attractive Implied Valuation Metrics Anchored by PDP + Work-in-Progress Wells
ATTRACTIVE IMPLIED VALUATION METRICS ANCHORED BY PDP + WORK-IN-PROGRESS WELLS NYSE American: NOG TV / Current Production NTM Strip ($/Mcfe/d) ($/MMBtu) $3,500 $3.50 $3,000 $3.00 $2,500 $2.50 $2,000 $2.00 $1,500 $1.50 $1,000 $1.00 $500 $0.50 $0 $0.00 Transaction compares favorably to other recent App
Slide 7: PV20 Deal with Meaningful Upside
PV20 DEAL WITH MEANINGFUL UPSIDE NYSE American: NOG In addition to operational improvements and capital efficiencies future performance is expected to benefit from operational expertise from EQT >$250MM in Potential Value Upside >$425MM $175MM Cash Purchase Price PDP + WIP PV10 G&A Savings Capex R
Slide 8: Reliance Appalachia: Asset-Level Projection Detail
RELIANCE APPALACHIA: ASSET-LEVEL PROJECTION DETAIL NYSE American: NOG Projections assume PDP and WIP completions and no further development of new wells (strip pricing as of 1/20/21) Production (MMcfe/d) Cash Flow From Operations ($MM) 180 $100 0 $0 2021 2022 2023 2024 2021 2022 2023 2024 ROCE(1)
Slide 9: Highly Economic WIP Wells Warrant Near Term Completion Activity
HIGHLY ECONOMIC WIP WELLS WARRANT NEAR TERM COMPLETION ACTIVITY NYSE American: NOG WIP locations are highly economic to complete with a mean IRR of 50% WIP Location IRR Breakdown WIP Location Map 40 Mean IRR: 50% 30 26 Location Count 25 2 19 20 1 15 26 23 10 18 6 11 3 3 0 3 3 4 <30% 30% - 40% 40%
Slide 10: EQT Expected to Drive Material Improvements in Operational Performance and Cost Leadership
EQT EXPECTED TO DRIVE MATERIAL IMPROVEMENTS IN OPERATIONAL PERFORMANCE AND COST LEADERSHIP NYSE American: NOG EQT expected to deliver better operating results with lower costs and will benefit from economies of scale and application of best practices EQT vs CVX Production Performance PA Marcellus
Slide 11: Deep Undeveloped Inventory with Attractive Returns
DEEP UNDEVELOPED INVENTORY WITH ATTRACTIVE RETURNS NYSE American: NOG Delineated inventory of over 1,200 drilling locations with average IRRs of 40% Undeveloped Location IRR Breakdown 700 612 Mean IRR: 40% 481 6 350 451 475 16 98 145 21 77 0 <40% 40% - 60% >60% PDA Marcellus JDA Marcellus SWPA Uti
Slide 12: The New Northern Oil and Gas
NYSE American: NOG TRANSACTION HIGHLIGHTS THE NEW NORTHERN OIL AND GAS APPENDIX
Slide 13: New Northern: Diversified and Balanced Portfolio Across High Return Plays
NEW NORTHERN: DIVERSIFIED AND BALANCED PORTFOLIO ACROSS HIGH RETURN PLAYS NYSE American: NOG The transaction 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 al
Slide 14: The New Northern Oil and Gas
THE NEW NORTHERN OIL AND GAS NYSE American: NOG Northern is the pre-eminent and only 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 (~70% production) and Diversified Asset Base With Appala
Slide 15: "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 BUT, WHY? skyrocketed, bu
Slide 16: 2020 Ground Game Advantage – Active & Profitable
2020 GROUND GAME ADVANTAGE – ACTIVE & PROFITABLE NYSE American: NOG Highly Accretive Full Cycle Return Opportunities 2020 Ground Game Wells in Process Acquisitions Free Cash Flow Derivation ($MM) 2020 2021 2022 2023 80 Net Wells Turned-in-Line 1.5 9.4 0.5 0.9 60 54.7 46.8 Forecasted Production (boe/
Slide 17: Natural Gas Diversity Welcomed
NATURAL GAS DIVERSITY WELCOMED NYSE American: NOG • Rapid decline in oil-directed activity materially reduces associated gas Rig Counts 450 supply 400 • U.S. rigs down ~51% reducing well inventory and affecting future gas supply 350 300 • Appalachia and Haynesville rig counts are well below maintena
Slide 18: Majority of Production Hedged Through 2021
MAJORITY OF PRODUCTION HEDGED THROUGH 2021 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 Northern will begin hedging expected PDP volumes commensurat
Slide 19: NOG Standalone – Q4 20 Highlights and Updated 2021 Guidance
NOG STANDALONE – Q4 20 HIGHLIGHTS AND UPDATED 2021 GUIDANCE NYSE American: NOG 2021 Standalone Production With increased pricing through the fourth quarter, Northern saw Q420 Production Guidance acceleration of deferred development and completion activity in the fourth quarter 35.5 – 35.9 MBoe/d 3
Slide 20: 2021 Reliance Assets Full Year Guidance
2021 RELIANCE ASSETS FULL YEAR GUIDANCE NYSE American: NOG Estimates are for full year 2021 with closing expected in April 2021 All cash flows from July 1, 2020 through expected closing date will be realized in the closing price adjustment Annual Production Production and Marketing Expenses 100
Slide 21: The New Northern Highlights
THE NEW NORTHERN HIGHLIGHTS NYSE American: NOG National non-op franchise established – principled ROCE leader diversified by commodity and geography Asset base with exposure to leading E&P operators Attractive Marcellus entry point: PDP + WIP PV20 with considerable upside Meaningfully improved balan
Slide 22: Appendix
NYSE American: NOG TRANSACTION HIGHLIGHTS THE NEW NORTHERN OIL AND GAS APPENDIX
Slide 23: NOG and Reliance Reserves
NOG AND RELIANCE RESERVES NYSE American: NOG Northern Oil & Gas SEC Pricing Strip Pricing Oil (MBbls) Gas (MMcf) Total (MBoe) PV10 ($MM) Oil (MBbls) Gas (MMcf) Total (MBoe) PV10 ($MM) PDP 53,839 97,690 70,121 $512 59,341 108,949 77,499 $799 PDPNP 11,296 16,370 14,024 101 11,994 18,054 15,003 164 PUD
Slide 24: Historical Operating & Financial Information
HISTORICAL OPERATING & FINANCIAL INFORMATION NYSE American: NOG HISTORICAL OPERATING INFORMATION YEAR ENDED DECEMBER 31, THREE MONTHS ENDED, 2014 2015 2016 2017 2018 2019 September 30, 2019 September 30, 2020 PRODUCTION Oil (MBbls) 5,150.9 5,168.7 4,325.9 4,537.3 7,790.2 11,325.4 3,002.8 2,054.9 Nat
Slide 25: Non-GAAP Reconciliations: EBITDA & Other
NON-GAAP RECONCILIATIONS: EBITDA & OTHER ADJUSTED EBITDA BY YEAR (IN THOUSANDS) Net Income (Loss) 2015 $ (975,355) 2016 $ (293,494) 2017 $ (9,194) 2018 $ 143,689 2019 $ (76,318) NYSE American: NOG Add: Interest Expense 58,360 64,486 70,286 86,005 79,229 Income Tax Provision (Benefit) (202,424) (1,40
Slide 26: Non-GAAP Reconciliations: ROCE & Recycle Ratio
NON-GAAP RECONCILIATIONS: ROCE & RECYCLE RATIO NYSE American: NOG 2019 Return on Capital Employed (ROCE) • EBIT: $244MM • + Adj. EBITDA: $454MM Capital • - DD&A: $210MM EBIT ÷ Employed = 16.4% • Capital Employed: $1,487 MM (2018-19 Avg.) • + Total Assets: $1,705MM (Avg.) • - Current Liabilities: $21
Slide 27: Hedging Disclosures
HEDGING DISCLOSURES NYSE American: NOG Further Detail about Swap Transaction and Swaption Volumes 1. The Company has entered into certain crude oil derivative contracts for 2022 and 2023 volumes that give counterparties the option to extend such derivative contracts for additional three month, six-m
Slide 28: Well Positioned to Weather Regulatory Headwinds
WELL POSITIONED TO WEATHER REGULATORY HEADWINDS NYSE American: NOG Federal Land Policy Risk Northern has minimal exposure to federal lands with ~8% of total leasehold position subject to the federal regulation Across the ~14,500 of undeveloped net acres on federal land there is currently a backl
Slide 29: Access to Midstream Infrastructure with Laurel Mountain Midstream
ACCESS TO MIDSTREAM INFRASTRUCTURE WITH LAUREL MOUNTAIN MIDSTREAM NYSE American: NOG Direct access and available capacity for current gas production and to support development across the assets Laurel Mountain Midstream Summary • Laurel Mountain Midstream is owned by EQT (non-operator 31%) and The
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