Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Q3 2023 Earnings Presentation
32 slides from Northern Oil And Gas's earnings presentation, Nov 2, 2023
Slide 1: Q3 2023 Earnings Presentation
Q3 2023 Earnings Presentation November 1, 2023 Q3 2023 Earnings Presentation | 1
Slide 2: Contents
Contents I. Q3 2023 Highlights II. Operations & Investment Activity Updates III. Guidance IV. Value Proposition V. Appendix Q3 2023 Earnings Presentation | 2
Slide 3: Q3 2023 Financial & Operating Highlights
Q3 2023 Financial & Operating Highlights Record Production & EBITDA; Positioned for 2024 Growth Q3 Free Cash Flow(1) Dividend Growth Active Ground Game in Q3, D&C List Reaches New Record • Adjusted EBITDA $385.5MM in Q3, +22% QoQ • Q3 net production per day +12.6% QoQ, +29.3% YoY $127.8MM +52% • Net
Slide 4: Q3 Operations Highlights
Q3 23 Operations Highlights Organic activity up 16% year to date vs. the same period of 2022. Scale driving organic growth. AFEs Wells in Process Well Completions • $1.8B (gross) in AFEs • Drilling & Completions list • Organic completion activity grew nearly 34% vs YE22 was higher vs. Q3 22 as • Ove
Slide 5: D&C List Surging – Momentum Building for 2024
D&C List Surging – Momentum Building for 2024 NOG’s oil-weighted wells-in-process (D&C) list is at record levels, and the Company’s recent investment cycle is poised to convert into production and cash flow over time. Diversity of regions remains important. Q3 2023 Earnings Presentation | 5
Slide 6: Investment Activity Update
Investment Activity Update Bolt-On High quality bolt-on plays starting to emerge while capitalizing on larger ground game opportunities in the interim. Opportunity Set Ground Game Bolt-On • M&A landscape still • Evaluated over 400 • Closed Novo acquisition variable but quality ground game opportunit
Slide 7: Permian Presence Doubles Year-to-Date in 2023
Permian Presence Doubles Year-to-Date in 2023 Since 2021, NOG has methodically expanded its presence in the Permian. With the addition of Forge and Novo, NOG has doubled its Permian acreage through two unique joint operating structures. Year-End 2021 ~3,400 Net Acres Year-End 2022 ~17,600 Net Acres
Slide 8: Novo Closed - Adds Scale and High Quality, Low Breakeven Acreage
Novo Closed - Adds Scale and High Quality, Low Breakeven Acreage KEY STATISTICS • Purchased 33.33% undivided stake in Novo Assets for $468MM • Gross NRI: ~77% (~78% Eddy, ~75% Culberson), net WI: ~29% • Effective date May 1, 2023, closed August 15, 2023 • Eddy County assets represent ~80% of allocat
Slide 9: Q3 2023 Production by Basin
Q3 2023 Production by Basin NOG’s production mix continues to become more diversified and balanced. Permian gaining production share with contributions from MPDC, Forge and Novo. 10% • Flat Williston production quarter over quarter • Significant uptick in Permian production driven in part by the clo
Slide 10: Q3 2023 Production by Commodity and Basin (% Boe)
Q3 2023 Production by Commodity and Basin (% Boe) Oil cut for the quarter was up materially to 62.1%, with the Williston and Permian both seeing increases. Overall, the Company continues to expect a 62.0% - 63.0% oil cut for 2023. Williston 29% Appalachia 71% 38% Oil Gas 100% 62% Permian Gas 33% 67%
Slide 11: Q3 2023 CapEx by Basin
Q3 2023 CapEx by Basin Capital Expenditures were weighted toward the Permian Basin in Q3, with the Permian expected to lead the charge into year-end. 1% • Turn-in-lines (TILs) up 64% vs. Q2 23 30% • Despite strong TIL activity, the D&C list grew nearly 10% over the prior quarter and is up nearly 35%
Slide 12: 2023 Year-to-Date CapEx
2023 Year-to-Date CapEx Q3-23 saw an active ~$34MM in Ground Game opportunities and an uptick in AFE activity which accelerated CapEx spend. Full year CapEx revised to reflect year to date activity levels. $1,000 $790 - $820 $800 $657 $600 $400 $230 $217 $210 $200 $148 $0 Q1-23A Q2-23A Q3-23A Q4-23E
Slide 13: A Track Record of Dividend Growth
A Track Record of Dividend Growth NOG has established a conservative through-cycle dividend level with potential upside. ACTUAL DIVIDENDS COMPARED WITH INITIAL 2021 DIVIDEND PLAN RECOMMENDATIONS 0.45 1 $0.40 (1) 0.4 $0.38 $0.37 0.35 $0.34 $0.33 Dividend per Common Share $0.30 $0.30 0.3 $0.27 $0.25 0
Slide 14: Asset Sales Cycle Driving Growth
Asset Sales Cycle Driving Growth Consolidation is afoot in the upstream industry, providing episodic access to high quality, low break-even growth assets. NOG has been selectively participating in this cycle by "flexing leverage" in the short term while working toward its stated leverage target over
Slide 15: Enhanced Liquidity Position – Pro Forma for Recent Capital Raise
Enhanced Liquidity Position – Pro Forma for Recent Capital Raise NOG has methodically managed its debt structure and maturity wall. High quality asset base has driven increases to credit facility as well as attracting new members to the syndicate. • Issued Common Stock in October 2023, raising $290.
Slide 16: 2023 Guidance and Capital Budget
2023 Guidance and Capital Budget The Company remains on track, with improvements to differentials and G&A unit costs. Activity ramping into 2024. 2023 Guidance Prior Current COMMENTARY Annual Production (2-stream, Boe/day) 96,000 - 100,000 97,000 – 99,000 • Tightening annual production range for exp
Slide 17: NOG Value Proposition
PART 2 NOG Value Proposition Q3 2023 Earnings Presentation | 17
Slide 18: The NOG Investment Proposition
The NOG Investment Proposition 1 2 3 4 5 National Non-Op Franchise – offering scale and diversification by ~$128MM Free Cash Flow1 in Q3 2023 Return of Capital Commitment: Growing Dividend and Shareholder Strong Balance Sheet with Organic De-Levering to Target of <1.0x Net Dominant Data & Technical
Slide 19: 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 9,000 wells • Unit G&A costs are 50% less than • Enables well-informed and experienc
Slide 20: Leading Non-Op Upstream Franchise
Leading Non-Op Upstream Franchise • NOG’s acquisitions have created a high-return, national Q3-23 PRODUCTION BY REGION (BOE) non-op franchise that is benefitting from economies of scale; ~18,800 net acres were added to Permian footprint from Q1-23 through Q3-23 Appalachia 10% Region • NOG is positio
Slide 21: 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: ~179,600 Net Acres Permian Basin: ~36,400 Net Acres Appalachian Basin: ~56,200 Net Acres NOG NOG NOG Wells in Progress Wel
Slide 22: A Differentiated Upstream Investment Growth Platform
A Differentiated Upstream Investment Growth Platform Operating Leverage at Work: NOG saw a 16% drop in adjusted per unit Q3 Cash G&A while production increased 12.5% sequentially. PRODUCTION CONTINUES TO RAMP… WHILE MAINTAINING PEER-LEADING LOW CASH G&A (1) Reducing overhead unit cash G&A costs, des
Slide 23: Appendix: Supplemental Info
PART 3 Appendix: Supplemental Info Q3 2023 Earnings Presentation | 23
Slide 24: Historical Operating & Financial Information
Historical Operating & Historical Operating Information 2020 2021 2022 3Q22 3Q23 Production Financial Information Oil (MBbls) 9,361.1 12,288.4 16,090.1 4,149.8 5,847.9 Natural Gas and NGLs (Mmcf) 16,473.3 44,073.9 68,829.1 18,776.8 21,397.0 Total Production (Mboe) 12,106.7 19,634.1 27,561.6 7,279.3
Slide 25: 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 26: NON-GAAP Reconciliations: ROCE & Recycle Ratio
NON-GAAP Reconciliations: ROCE & Recycle Ratio Q3-23 Return on Capital Employed (ROCE) • EBIT: $1,006.9MM (Q3 23 annualized) • + Adj. EBITDA: $385.5MM • - DD&A: $133.8MM Capital EBIT ÷ Employed = 34.8% • Capital Employed: $2,896.0MM (Avg. of Q3 22/23) • + Total Assets: $3,388.1MM (Avg. of Q3 22/23)
Slide 27: NON-GAAP Reconciliations: Free Cash Flow
NON-GAAP Reconciliations: Free Cash Flow FREE CASH-FLOW (FCF) (in thousands) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 Net Cash Provided by Operating Activities $ 154,034 $ 210,239 $ 276,766 $ 287,379 $ 269,308 $ 307,786 $ 263,865 Exclude: Changes in Working Capital and Other Items 80,985 41,948 (7,505) (5
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 SWAPS NATURAL GAS DERIVATIVE SWAPS Million British Total Hedged Weighted Average Contrac
Slide 29: Hedge Profile—COLLARS and PUTS
Hedge Profile—COLLARS and PUTS 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 & PUTS NATURAL GAS DERIVATIVE COLLARS & PUTS Weighted Weighted Total C
Slide 30: Hedge Profile— BASIS SWAPS
Hedge Profile— BASIS 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. MIDLAND-CUSHING BASIS SWAP WAHA BASIS SWAP Million British Contract Total Hedged Weighted Average Contr
Slide 31: 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 32: 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