Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Q2 2021 Earnings Presentation
31 slides from Northern Oil And Gas's earnings presentation, Aug 5, 2021
Slide 1: Q2:21 Earnings Presentation
NYSE American: NOG Q2:21 EARNINGS PRESENTATION 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: Q2 Highlights and Guidance
NYSE American: NOG I. Q2 HIGHLIGHTS AND GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO Northern Oil & Gas, Inc. - November 2020 4
Slide 5: Q2:21 Financial & Operating Highlights
Q2:21 FINANCIAL & OPERATING HIGHLIGHTS NYSE American: NOG Q2:21 Earnings Highlights Q2 Free Cash Flow(1) + Dividend Momentum • Record Free Cash Flow Returns • Free Cash Flow. Free cash flow hit a record $46.2MM in Q2. NOG’s $46.2MM 50% Increase • Annualized Q2 FCF Yield stands at a compelling 16.9%(
Slide 6: Updated 2021 Guidance Post Permian Acquisitions
UPDATED 2021 GUIDANCE POST PERMIAN ACQUISTIONS NYSE American: NOG Net/Net: Production Up; CAPEX Down; Cost Structure Trending Lower PRIOR ADJUSTED Annual Production (Boe per day) 47,167 - 53,424* 49,500 - 54,250 Oil % 62 - 64%* 63 - 64% Total Capital Expenditures ($MM) $215 - $270 $215 - $260 Net We
Slide 7: 2021 Wells Driving Exceptional Results
2021 WELLS DRIVING EXCEPTIONAL RESULTS NYSE American: NOG 220 2020 YE Internal Type Curve 220 200 200 180 180 160 160 Cumulative Oil Production (mbbls) 140 Daily Production 140 Well Count 120 Performance of wells 120 2020 YE Audited Type Curve classified as PDNP or PUD at 100 YE20 that are now onlin
Slide 8: Ground Game – A High Return NOG Exclusive
GROUND GAME – A HIGH RETURN NOG EXCLUSIVE NYSE American: NOG Another Year of Highly Accretive Full Cycle Return Opportunities 2021 Ground Game Wells in Process Acquisitions Free Cash Flow Derivation ($MM) 2021 2022 2023 2024 50 Net Wells Turned-in-Line 3.9 3.0 1.2 0.0 40 30 Forecasted Production (bo
Slide 9: Scaling the Business ~4x and Reducing Leverage
SCALING THE BUSINESS ~4X AND REDUCING LEVERAGE NYSE American: NOG 8.0 x 60.0 54.6 7.0 x 6.8 x 50.0 6.0 x Production (Mboepd) 40.0 Total Debt / Adj. EBITDA 5.0 x 38.4 38.6 33.1 4.0 x 30.0 25.6 3.0 x 2.7 x 2.5 x 20.0 2.4 x 2.1 x 2.0 x 14.8 1.5 x 10.0 1.0 x 0.0 x - 2017 2018 2019 2020 Q1 2021 (1) Q2 20
Slide 10: Major Balance Sheet Upgrade Achieved
MAJOR BALANCE SHEET UPGRADE ACHIEVED NYSE American: NOG ($ in millions) $950 million of funded debt (100% of total) due by 2024 12/31/20 $128 $532 $288 $65 $65 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Revolver (Drawn) Revolver (Undrawn) Senior Secured Second Lien Notes VEN Bakken Notes ($ i
Slide 11: Leverage Reduction Drives a Higher Dividend
LEVERAGE REDUCTION DRIVES 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 cash flows a
Slide 12: Northern Establishes Scale in the Permian Basin
NORTHERN ESTABLISHES SCALE IN THE PERMIAN BASIN NYSE American: NOG Acquisition Highlights- Deal Announced on 6/16 Summary Transaction Stats ▪ Unadjusted Purchase Price: $102.2 Million Continues to establish Northern as the premier multi-basin ▪ Net Acreage: ~2,900 Permian acres in Reeves, Lea and Ed
Slide 13: Permian - Highly Economic Inventory and Quality Operators
PERMIAN - 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 r
Slide 14: Permian - Attractive Implied Valuation Metrics
PERMIAN - 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)
Slide 15: Northern Value Proposition
NYSE American: NOG I. Q2 HIGHLIGHTS AND GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO 15
Slide 16: The Northern Investment Proposition
THE NORTHERN INVESTMENT PROPOSITION NYSE American: NOG National non-op franchise – principled ROCE (1) leader (>40% in Q2:21) diversified by commodity and geography Strong expected Free Cash Flow(2): >$160MM in 2021 and >$900MM through 2025 Committed to returning capital to shareholders – NOG’s inau
Slide 17: 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 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 opportuni
Slide 18: 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 with 2021 exiting with Williston (~70% production), Diversified Asset Base With Permian (~
Slide 19: "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 20: 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 21: 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 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 PRODUCION WELLS BY OPERATOR OTHERS (<3%) Key Takeaways ✓ Q2:21 production of 54,623 boepd is 19% 21% comprised of 45+ different operators ✓ >60% of Q2 20
Slide 23: NOG Committed to Good Governance
NOG COMMITTED TO GOOD GOVERNANCE NYSE American: NOG ENVIRONMENTAL SOCIAL GOVERNANCE • Operators are selected for • Separate CEO and Chairman environmental and safety • NOG employees provided roles records free health care and paid family leave • Significant shareholder • North Dakota has been a repr
Slide 24: Non-Op of Scale with Improving Cost Structure
NON-OP OF SCALE WITH IMPROVING COST STRUCTURE NYSE American: NOG ➢ 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 25: Appendix: Supplemental Info
NYSE American: NOG I. Q2 HIGHLIGHTS AND GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO 25
Slide 26: 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 27: 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 28: Historical Operating & Financial Information
HISTORICAL OPERATING & FINANCIAL INFORMATION NYSE American: NOG 2017 2018 2019 2020 June 30, 2020 June 30, 2021 PRODUCTION Oil (MBbls) 4,537.3 7,790.2 11,325.4 9,361.1 1,659.3 3,034.4 Natural Gas and NGLs (Mmcf) 5,187.9 9,224.8 16,590.8 16,473.3 3,041.4 11,617.3 Total Production (Mboe) 5,402.0 9,327
Slide 29: 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 30: Non-GAAP Reconciliations: ROCE & Recycle Ratio
NON-GAAP RECONCILIATIONS: ROCE & RECYCLE RATIO NYSE American: NOG Q2:21 Return on Capital Employed (ROCE) • EBIT: $407.74MM (Q2:21 annualized) • + Adj. EBITDA: $132.84MM • - DD&A: $30.91MM Capital EBIT ÷ Employed = 43.5% • Capital Employed: $937.5MM (Avg. of Q2:20/21) • + Total Assets: $1,177.5MM (A
Slide 31: Non-GAAP Reconciliations: Free Cash Flow
NON-GAAP RECONCILIATIONS: FREE CASH FLOW NYSE American: NOG Free Cash Flow (FCF) (in thousands) 1Q21 2Q21 Net Cash Provided by Operating Activities $ 62,766 $ 106,186 Exclude: Changes in Working Capital and Other Items 20,814 12,204 Less: Capital Expenditures (1) (38,085) (68,445) Less: Series A Pre