Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Q4 2021 Earnings Presentation
29 slides from Northern Oil And Gas's earnings presentation, Feb 25, 2022
Slide 1: Q4:21 Earnings Presentation
NYSE: NOG Q4:21 EARNINGS PRESENTATION NYSE: NOG
Slide 2: Q4 Highlights and 2022 Guidance; Northern Value Proposition; Appendix
NYSE: NOG I. Q4 HIGHLIGHTS AND 2022 GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO Northern Oil & Gas, Inc. - November 2020 2
Slide 3: Q4:21 Financial & Operating Highlights
Q4:21 FINANCIAL & OPERATING HIGHLIGHTS NYSE: NOG Q4:21 Earnings Highlights Q4 Free Cash Flow(1) Dividend Growth • Record Free Cash Flow and Strong Margins and Returns • Free Cash Flow. Free cash flow hit a record $70.7MM in Q4, +28% QoQ $70.7MM +78% Increase • Standout margins and returns(1). NOG’s
Slide 4: 2022 Guidance
2022 GUIDANCE NYSE: NOG >30% growth expected in 2022 following an active M&A campaign in 2021 Annual Production (2-stream, Boe per day) 70,000 - 75,000 Oil Weighting (as a % of Production) 59.5 – 61.5% Total Capital Expenditures ($MM) $350 - $415 Net Wells Added to Production 48 – 52 Production Expe
Slide 5: Exceptional 2021 Well Performance
EXCEPTIONAL 2021 WELL PERFORMANCE NYSE: NOG 250 500 225 2020 Internal Type Curve 450 Performance of wells 200 classified as PUD at YE20 that 400 are now online Cumulative Oil Production (mbbls) 175 350 150 Daily Production 300 Well Count 125 250 Audited Type Curve 100 200 75 150 Daily Production 202
Slide 6: Northern Value Proposition
NYSE: NOG I. Q4 HIGHLIGHTS AND 2022 GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO 6
Slide 7: The Northern Investment Proposition
THE NORTHERN INVESTMENT PROPOSITION NYSE: NOG National non-op franchise – principled ROCE(1) leader (24.2% in Q4:21) diversified by commodity and geography Strong expected Free Cash Flow (2): >$375 MM in 2022 and >$1.3 Bn through 2025 Return of capital commitment: +20% QoQ dividend growth through 20
Slide 8: 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 9: 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 Reducing overhead cash G&A by accretive M&A cost 64
Slide 10: Four Major Acquisitions Announced in 2021
FOUR MAJOR ACQUISITIONS ANNOUNCED IN 2021 NYSE: NOG ➢ Northern has gained substantial scale through > $800 million of acquisitions announced in 2021 while improving its balance sheet ➢ LQA Net Leverage (1) has been reduced from 2.5x at 12/31/2020 to 1.1x at 12/31/2021 Marcellus Entry Core Permian Bo
Slide 11: Ground Game – A High Return NOG Exclusive
GROUND GAME – A HIGH RETURN NOG EXCLUSIVE NYSE: NOG Another Year of Highly Accretive Full Cycle Return Opportunities 2021 Ground Game Wells in Process Acquisitions Free Cash Flow Derivation ($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 12: NOG's Base Dividend Growth Plan
NOG’S BASE DIVIDEND GROWTH PLAN NYSE: NOG Superior Investment Proposition: The S&P 500 Has a Current Dividend Yield of 1.3% with a 3-Year Trailing Annual Dividend Growth Rate of 3.9%(1) NOG plans, assuming $50 WTI prices or higher, to raise its common dividend by an average of 20+% quarter through Y
Slide 13: Visualization of Dividend Structure- Significant Upside Remains
VISUALIZATION OF DIVIDEND STRUCTURE- SIGNIFICANT UPSIDE REMAINS NYSE: NOG Structure Provides Strong Cash Returns with Upside Growth Potential WTI Oil Price ($/Bbl) $100 ✓ Accelerate Increases to Base Dividend $90 ✓ Accelerate Reduction of Bank Borrowings Current Strip Through 2023 (1) $80 ✓ Term Deb
Slide 14: 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 grew substantially in 2021 • Williston and Veritas acquisition will be
Slide 15: Appendix: Supplemental Info
NYSE: NOG I. Q4 HIGHLIGHTS AND 2022 GUIDANCE II. NORTHERN VALUE PROPOSITION III. APPENDIX: SUPPLEMENTAL INFO 15
Slide 16: 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 (1) 350,000 (1) 2017 Cum 2020 Cum 325,000 (1) 325,000 (1) 2018 Cum 2021 Cum 300,0
Slide 17: The New Northern: Diversified Asset Base of Scale
THE NEW NORTHERN: DIVERSIFIED ASSET BASE OF SCALE NYSE: NOG ➢ The New Northern offers diversity and balanced commodity mix and strong presence in Williston, Permian and Appalachian ➢ Veritas’s year-end 2021 proved PV-10 value was $428 million, bringing NOG’s proforma PV-10 to $3.8 billion (Veritas a
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 under 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 • NOG employees provided free health care and paid • Separate CEO and Chairman • Operators are selected for family leave roles environmental and safety records • Northern donates to several • Significant shareholder local cha
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 Total Hedged Volumes Contract Period Million British Therm
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, 2018 2019 2020 2021 4Q20 4Q21 Production Oil (MBbls) 7,790.2 11,325.4 9,361.1 12,288.4 2,508.6 3,492.6 Natural Gas and NGLs (Mmcf) 9,224.8 16,590.8 16,473.3 44,073.9 4,675.9 14,458.1 Tota
Slide 25: Non-GAAP Reconciliations: Adjusted EBITDA & Other
NON-GAAP RECONCILIATIONS: ADJUSTED EBITDA & OTHER NYSE: NOG Adjusted EBITDA by Year (in thousands) 2018 2019 2020 2021 Net Income (Loss) $ 143,689 $ (76,318) $ (906,041) $ 6,361 Add: Interest Expense 86,005 79,229 58,503 59,020 Income Tax Provision (Benefit) (55) - (166) 233 Depreciation, Depletion,
Slide 26: Non-GAAP Reconciliations: ROCE & Recycle Ratio
NON-GAAP RECONCILIATIONS: ROCE & RECYCLE RATIO NYSE: NOG Q4:21 Return on Capital Employed (ROCE) • EBIT: $529.8MM (Q4:21 annualized) • + Adj. EBITDA: $175.3MM • - DD&A: $42.8MM Capital EBIT ÷ Employed = 56.2% • Capital Employed: $942.5MM (Avg. of Q4:20/21) • + Total Assets: $1,197.5MM (Avg.) • - Cur
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 2021 Net Cash Provided by Operating Activities $ 62,766 $ 106,186 $ 94,413 $ 133,102 $ 396,467 Exclude: Changes in Working Capital and Other Items 20,814 12,204 27,888 24,906 $ 85,813 Less: Cap
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