Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Q1 2022 Earnings Presentation
29 slides from Northern Oil And Gas's earnings presentation, May 6, 2022
Slide 1: Q1:22 Earnings Presentation
NYSE: NOG Q1:22 EARNINGS PRESENTATION NYSE: NOG
Slide 2: Q1 Highlights and 2022 Guidance; Northern Value Proposition
NYSE: NOG I. Q1 HIGHLIGHTS AND 2022 GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO Northern Oil & Gas, Inc. - November 2020 2
Slide 3: Q1:22 Financial & Operating Highlights
Q1:22 FINANCIAL & OPERATING HIGHLIGHTS NYSE: NOG Q1:22 Earnings Highlights • Record Free Cash Flow, Strong Growth, Exceptional Returns Q1 Free Cash Flow(1) Dividend Growth • Record Free Cash Flow. $146MM in Q1, +107% QoQ $146MM +35% Increase • Growth that’s Macro Friendly. Q1 net production +85% YoY
Slide 4: Q1:22 FCF and Shareholder Returns at a Glance
Q1:22 FCF AND SHAREHOLDER RETURNS AT A GLANCE NYSE: NOG NOG Continues a Balanced Approach – Reduce Debt, Pay Rich Dividends, Reduce Highest Cost of Capital Securities $160 Q1:22 Free Cash Flow - $146 million ✓ Significant Preferred Stock retirement, reduced the $140 diluted share count by 1.6 millio
Slide 5: Q1:22 Production & Capex Breakdown
Q1:22 PRODUCTION & CAPEX BREAKDOWN NYSE: NOG Northern’s Commodity, Capital Expenditures and Production Mix Continue to Become More Diversified and Balanced Q1 2022 – PRODUCTION BY REGION Q1 2022 – PRODUCTION BY COMMODITY 16% Region Commodity Type 10% Marcellus 40% Williston Oil Gas 20% Permian 60% 6
Slide 6: Updated 2022 Guidance
UPDATED 2022 GUIDANCE NYSE: NOG Annual Production Guidance Raised; Oil Pricing Differentials Improved Annual Production (2-stream, Boe per day) 71,000 - 76,000 Oil Weighting (as a % of Production) 59.5 – 61.5% Total Capital Expenditures ($MM) $350 - $415 Net Wells Added to Production 48 – 52 Product
Slide 7: Northern Value Proposition
NYSE: NOG I. Q1 HIGHLIGHTS AND 2022 GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO 7
Slide 8: The NOG Investment Proposition
THE NOG INVESTMENT PROPOSITION NYSE: NOG National non-op franchise – principled ROCE(1) leader (36.5% in Q1:22) diversified by commodity and geography Strong expected Free Cash Flow (2): >$425 MM in 2022 and >$1.7 Bn through 2025 Return of capital commitment: +23% QoQ dividend growth through 2023; $
Slide 9: A Diversified High Return Non-Op E&P Franchise
A DIVERSIFIED HIGH RETURN NON-OP E&P FRANCHISE NYSE: NOG ➢ NOG’s 2021 Permian and Marcellus acquisitions have created a high return national non-op franchise that is benefitting from economies of scale ➢ Going forward, NOG is positioned to continue to capitalize on increased non-operated opportuniti
Slide 10: A Differentiated E&P Growth Platform
A DIFFERENTIATED E&P GROWTH PLATFORM NYSE: NOG ➢ 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&A(1) Material growth driven by organic growth + Reducing overhead cash G&A accr
Slide 11: NOG's Updated Base Dividend Growth Plan
NOG’S UPDATED BASE DIVIDEND GROWTH PLAN NYSE: NOG Superior Investment Proposition: The S&P 500 Has a Current Dividend Yield of 1.4% with a 3-Year Trailing Annual Dividend Growth Rate of 2.8%(1) NOG declared a $0.19 dividend on May 3, 2022, recommending to Board to increase Q3 dividend to $0.25, 14%
Slide 12: Four Major Acquisitions Announced in 2021
FOUR MAJOR ACQUISITIONS ANNOUNCED IN 2021 NYSE: NOG ➢ NOG has gained substantial scale through > $800 million of acquisitions announced in 2021 ➢ Material increased commodity prices since closing have materially increased their reserve values and cash flow impact to NOG Marcellus Entry Core Permian
Slide 13: Balance Sheet & Liquidity Enhancement Continues
BALANCE SHEET & LIQUIDITY ENHANCEMENT CONTINUES NYSE: NOG • Ample liquidity post closing of Comstock and Veritas transactions • Company continues to generate record Free Cash Flow • Borrowing Base Expansion: NOG’s borrowing base redetermination is in process • NOG expects a significant increase to t
Slide 14: Appendix: Supplemental Info
NYSE: NOG I. Q1 HIGHLIGHTS AND 2022 GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO 14
Slide 15: Best-in-Class Bakken; Permian Results Impress
BEST-IN-CLASS BAKKEN; PERMIAN RESULTS IMPRESS NYSE: NOG ➢ High-grading of well locations has led to improved well recoveries across both basins Consistent Williston Basin Productivity Permian Basin Productivity 350,000 2017 Cum (1) 400,000 (1) 325,000 (1) 2020 Cum 2021 Cum (1) 2022 Cum (1) 2018 Cum
Slide 16: NOG Remade: Diversified Asset Base of Scale
NOG REMADE: DIVERSIFIED ASSET BASE OF SCALE NYSE: NOG ➢ The New Northern offers diversity and balanced commodity mix and strong presence in Williston, Permian and Appalachian Pre-Tax PV10 ($MM) Resource Category Total Gross Locations Oil (MMBbls) Gas (Bcf) Total Reserves (MMBoe) April 29, 2022 Strip
Slide 17: Ground Game – A High Return NOG Exclusive
GROUND GAME – A HIGH RETURN NOG EXCLUSIVE NYSE: 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 200 Net Wells Turned-in-Line 5.1 12.9 1.8 0.0 175 150 Forecasted Production (boe/d)
Slide 18: Benefits of Northern's Non-Operated Model
BENEFITS OF NORTHERN’S NON-OPERATED MODEL NYSE: 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 just ~30 employees SHALE 3.0 BENIFICIARY LEVERAGING EXPERIENCE Northern is capitalizing on industry
Slide 19: "Shale 3.0" Paradigm Ideal for Active Non-Op Model
“SHALE 3.0” PARADIGM IDEAL FOR ACTIVE NON-OP MODEL NYSE: 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 prices and E&
Slide 20: NOG Committed to Good Governance
NOG COMMITTED TO GOOD GOVERNANCE NYSE: NOG ENVIRONMENTAL SOCIAL GOVERNANCE • Operators are selected for • NOG employees provided • Separate CEO and Chairman environmental and safety free health care and paid roles records family leave • NOG’s largest operator • Significant shareholder by volume, EQT
Slide 21: Hedge Profile
HEDGE PROFILE NYSE: 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 NATURAL GAS DERIVATIVE PRICE SWAPS - CRUDE OIL DERIVATIVE PRICE SWAPS - NYMEX NYMEX Total Hedged Con
Slide 22: Hedge Profile
HEDGE PROFILE NYSE: 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 NATURAL GAS DERIVATIVE PRICE SWAPS – WAHA Million British Thermal Units Per Day Total Hedged Volumes
Slide 23: Hedge Profile
HEDGE PROFILE NYSE: 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 NATURAL GAS DERIVATIVE COLLARS – NG-OPT-LD Weighted Average Price Contract MMBTU Per Day Total Hedge
Slide 24: Historical Operating & Financial Information
HISTORICAL OPERATING & FINANCIAL INFORMATION NYSE: NOG Historical Operating Information Years Ended December 31, 2019 2020 2021 1Q21 1Q22 Production Oil (MBbls) 11,325.4 9,361.1 12,288.4 2,630.1 3,824.0 Natural Gas and NGLs (Mmcf) 16,590.8 16,473.3 44,073.9 4,964.2 15,533.6 Total Production (Mboe) 1
Slide 25: Non-GAAP Reconciliations: Adjusted EBITDA & Other
NON-GAAP RECONCILIATIONS: ADJUSTED EBITDA & OTHER NYSE: NOG Adjusted EBITDA by Year (in thousands) 2019 2020 2021 Net Income (Loss) $ (76,318) $ (906,041) $ 6,361 Add: Interest Expense 79,229 58,503 59,020 Income Tax Provision (Benefit) - (166) 233 Depreciation, Depletion, Amortization and Accretion
Slide 26: Non-GAAP Reconciliations: ROCE & Recycle Ratio
NON-GAAP RECONCILIATIONS: ROCE & RECYCLE RATIO NYSE: NOG Q1:22 Return on Capital Employed (ROCE) • EBIT: $813.8MM (Q1:22 annualized) • + Adj. EBITDA: $256.6MM • - DD&A: $53.2MM Capital EBIT ÷ Employed = 76.9% • Capital Employed: $1,058.1MM (Avg. of Q1:21/22) • + Total Assets: $1,448.9MM (Avg.) • - C
Slide 27: Non-GAAP Reconciliations: Free Cash Flow
NON-GAAP RECONCILIATIONS: FREE CASH FLOW NYSE: NOG Free Cash Flow (FCF) (in thousands) 1Q21 2Q21 3Q21 4Q21 1Q22 Net Cash Provided by Operating Activities $ 62,766 $ 106,186 $ 94,413 $ 133,102 $ 154,034 Exclude: Changes in Working Capital and Other Items 20,814 12,204 27,888 24,906 80,985 Less: Capit
Slide 28: Disclaimer
DISCLAIMER NYSE: 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 of 1934, a
Slide 29: Disclaimer (Cont.)
DISCLAIMER (Cont.) NYSE: 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 to be reli