Northern Oil And Gas, Inc. · NYSE:NOG
Northern Oil And Gas — Q2 2019 Earnings Presentation
32 slides from Northern Oil And Gas's earnings presentation, Aug 2, 2019
Slide 1: Q2 2019 Supplemental Earnings Presentation
NYSE American: NOG Q2 2019 Supplemental Earnings Presentation AUGUST 2019 NYSE American: NOG
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS NYSE American: NOG 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 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange A
Slide 3: Northern Oil & Gas: Dominant Non-Operator Franchise in the Williston Basin
NORTHERN OIL & GAS NYSE American: NOG DOMINANT NON-OPERATOR FRANCHISE IN THE WILLISTON BASIN Focused on disciplined growth, free cash flow generation and sustainable shareholder returns BY THE NUMBERS 1 SCALE ACTIVITY CASH FLOW NYSE: NOG (US$) 2 Shares ~164k 35.0 $111 mm Outstanding: 386 mm NET ACRE
Slide 4: 2Q19: Business Update
2Q19: BUSINESS UPDATE NYSE American: NOG Non-operated model continues to demonstrate measured growth with improving capital discipline to drive returns mboe/d $MM GROWING PRODUCTION ENHANCING EBITDA Production ramping across Northern acreage Adjusted EBITDA growing with production 1 +67% 36.3 35.0
Slide 5: Northern Oil & Gas – Why Northern's Better
NORTHERN OIL & GAS – WHY NORTHERN’S BETTER NYSE American: NOG RETURNS FOCUS Changing the way the market thinks about E&P BETTER BETTER BUSINESS BASIN MODEL BETTER BETTER LT CAPITAL GROWTH ALLOCATION POTENTIAL Northern Oil & Gas 2nd Quarter 2019 Presentation - August 2019 5
Slide 6: The Non-Operator Model: What We Do
THE NON-OPERATOR MODEL: WHAT WE DO NYSE American: NOG A flexible and moderated approach to E&P, offering capital discipline, cost control & protection from downside exposure We do not drill wells or We acquire minority working operate rigs interests in drilling units & wells Ability to control cap
Slide 7: Differentiated E&P Platform
DIFFERENTIATED E&P PLATFORM NYSE American: NOG OIL-LEVERED VISIBLE LONG-TERM DISCIPLINED CAPITAL PROACTIVELY MANAGED WILLISTON PRODUCER GROWTH POTENTIAL ALLOCATION BALANCE SHEET Diverse operator group Multi-year well inventory Selective capex allocation Broad hedging program Bakken & Three
Slide 8: Northern's Long Term Vision
NORTHERN’S LONG TERM VISION NYSE American: NOG Aspirational goals for the next five years FIVE YEAR EBITDA TARGETS COMBINING ORGANIC GROWTH Adjusted EBITDA WITH STRATEGIC GROUND GAME $mm $750 mm INVESTMENT DRIVES SUSTAINABLE SHAREHOLDER RETURNS $443 mm SOURCES CORE TENETS BOLT-ON ORGANIC ACQUISITI
Slide 9: Updating 2019 Guidance
UPDATING 2019 GUIDANCE NYSE American: NOG Northern outperformed in 2018. In 2019, we continue the same exciting progress and update our guidance accordingly 2018 ACTUALS 2019 PREVIOUS 2019 GUIDANCE UPDATE PRODUCTION Avg. Daily Prod. (Boe) 25,555 35,000 - 36,000 38,650 - 39,150 UPDATING GUIDANCE AC
Slide 10: Capex Allocation Update
CAPEX ALLOCATION UPDATE NYSE American: NOG Discrete, strategic acquisitions drive opportunities at a time when operators are reducing near-term commitments 2019 CAPEX ALLOCATION Organic D&C Capital Expected Ground Game Contributions by 2020 NORTHERN HAS COMMITTED TO OR Discretionary Ground Game Ca
Slide 11: Industry Leading Margins at Low G&A Costs
INDUSTRY LEADING MARGINS AT LOW G&A COSTS NYSE American: NOG Northern actively works to minimize its G&A costs, ensuring one of the lowest $/boe in the Williston basin GROSS INCOME MARGIN vs. G&A/BOE (FY 2018) Our position as a non-operator gives us the flexibility to work with the Partnering on
Slide 12: Aligned with the Shareholder Like No Other E&P
ALIGNED WITH THE SHAREHOLDER LIKE NO OTHER E&P NYSE American: NOG Northern is focused on what it means to be accountable to the shareholder TYPICAL E&P PEER NORTHERN • $3.00 Cash G&A per Barrel $1.13 Cash G&A in 2Q ‘19 • Insider & Management Ownership of ~5.0% Insider and Management Ownership
Slide 13: 2019 Capital Allocation Strategy
2019 CAPITAL ALLOCATION STRATEGY NYSE American: NOG 2019 capital allocation hierarchy ensures strategic management of balance sheet through disciplined approach FREE CASH FLOW STREAM REINVEST CAPITAL Allocation in 2H19 will continue to be value- ORGANIC ACTIVITY centric, focused on disciplined org
Slide 14: Focused Williston Basin Core Footprint
FOCUSED WILLISTON BASIN CORE FOOTPRINT NYSE American: NOG Portfolio of high-quality acreage in the heart of the basin with interests in over 5,000 gross Bakken/Three Forks oil wells NET ACREAGE SUMMARY 10% 10% 9% 163,558 NET ACRES 90% 90% 91% North Dakota Montana HBP 1 % Non-HBP ND % HBP 1 ND % No
Slide 15: Participating in the Highest-Quality Wells
PARTICIPATING IN THE HIGHEST-QUALITY WELLS… NYSE American: NOG No requirement for contiguous acreage allows Northern to participate in prime drilling opportunities across the region Putnam 7-25H Dam State 44-9-6H EN-Jeffrey-155-94-2215H-9 Little Muddy 1H Roxy 21X-06AXD 1 Continental (IP: May 2019)
Slide 16: With Leading, Technically Strong Operators
…WITH LEADING, TECHNICALLY STRONG OPERATORS… NYSE American: NOG Deep operating partner relationships facilitate both organic and acquisition-based production growth opportunities % NET PRODUCING WELLS BY OPERATOR OTHERS (<3%) DEEP, LASTING RELATIONSHIPS 19% 16% ACROSS THE BASIN… …WITH THE HIGHEST-
Slide 17: Yielding YoY Improvements in Well Recovery
…YIELDING YOY IMPROVEMENTS IN WELL RECOVERY NYSE American: NOG Completions technology and high-grading of well locations has led to improved well recovery across the basin INCREASING WELL PRODUCTIVITY 2015 Cum (1) HIGHER RECOVERIES + STABLE COSTS = 2016 Cum (1) +80% 280,000 2017 Cum (1) IMPROVED C
Slide 18: Core Growth Thesis Is Sustainable
CORE GROWTH THESIS IS SUSTAINABLE NYSE American: NOG As a non-operator, Northern can be both opportunistic and strategic in its acquisition of additional acreage BACKDROP OPPORTUNITIES FORCED AFE burdens lead to SELLERS undercapitalization 1. Ground Game working interest PROACTIVE Opportunistic ac
Slide 19: Position Enhanced Through Accretive Acquisitions
POSITION ENHANCED THROUGH ACCRETIVE ACQUISITIONS NYSE American: NOG Directing cash flow to acquisitions consistently grows Northern's position while diversifying opportunities Broadening inventory position in the core of the basin: Greater inventory of projects with attractive economics Increa
Slide 20: Enhanced Returns with Disciplined Capital Allocation
ENHANCED RETURNS WITH DISCIPLINED CAPITAL ALLOCATION NYSE American: NOG Participation in the highest quality wells with stable AFE costs generates consistent production growth & higher IRRs CONSISTENTLY FUNDING ATTRACTIVE WELLS… …GENERATES CONSISTENT PRODUCTION GROWTH Wells In Process @ Period End
Slide 21: Reserves Underpin Value Proposition
RESERVES UNDERPIN VALUE PROPOSITION NYSE American: NOG Participation in highest-quality wells ensures optimal exposure to high-volume regional reservoirs Growing reserves across portfolio Proved reserve growth of 79% YoY Working Interest acquisitions provide incremental reserve access opport
Slide 22: Organic Growth & Acquisitions Drive Opportunity Set
ORGANIC GROWTH & ACQUISITIONS DRIVE OPPORTUNITY SET NYSE American: NOG Northern adds to its acreage position and well inventory in multiple ways Northern’s goal is to leverage its strong financial position to counter-cyclically invest in acreage and drilling opportunities across the Williston Basi
Slide 23: Continued Balance Sheet Improvement
CONTINUED BALANCE SHEET IMPROVEMENT NYSE American: NOG Northern’s actively managed balance sheet continues to offer robust protection against market volatility Three months ending (In $ millions) 6/30/18 9/30/18 12/31/18 3/31/19 6/30/19 DEBT: Cash position deployed towards Cash & Deposit $200.9 $1
Slide 24: Holding Leverage at 2.0x or Better
HOLDING LEVERAGE AT 2.0x OR BETTER… NYSE American: NOG Actively working to further reduce debt and continue generating free cash flow Net Debt/Annualized Adjusted EBITDA LEVERAGE 4.1x EXPECT YE 2019 LEVERAGE (54)% TO REMAIN <2.0x 2.3x METRIC WILL CONTINUE TO 1.8x 1.7x 2.0x 1.9x FALL THROUGH 2022 E
Slide 25: Through Closely Managed Debt Maturity
…THROUGH CLOSELY MANAGED DEBT MATURITY NYSE American: NOG Enhancing cash flow to leverage liquidity position to pay down debt Northern repurchased $10.1 million in principal amount of its Senior Notes in 2Q 2019 LIQUIDITY PROFILE 1 DEBT MATURITY SCHEDULE • $255 million of liquidity as of 6/30/19 2
Slide 26: Ongoing Policy of Risk Management
ONGOING POLICY OF RISK MANAGEMENT NYSE American: NOG Northern continues to execute a strategy designed to safeguard returns during a commodity downcycle CRUDE OIL DERIVATIVE BASIS SWAPS (1) Contract Period Barrels Per Day Volumes (Bbls) Weighted Average Price ($/Bbl) 2019 Q3-Q4 10,000 1,840,000 ($
Slide 27: 1H19 As Planned, Continuing Priorities into 2H19
1H19 AS PLANNED, CONTINUING PRIORITIES INTO 2H19 NYSE American: NOG Execution of strategic priorities into 2H 2019 supported by unique non-operator flexibility STRATEGY 2Q 2019 STATUS Continuing to ramp organic well activity every quarter 1 CAPTURE OPPORTUNITIES Adding growth opportunities through
Slide 28: Why Northern Oil & Gas?
WHY NORTHERN OIL & GAS? NYSE American: NOG NON-OPERATOR Unique model provides capital flexibility & discipline, levers FLEXIBILITY Northern’s experience and relationships in the region GROWING ORGANIC Basin and Northern acreage activity robust, growing scale ACTIVITY increases exposure to workin
Slide 29: Differentiated E&P Platform
DIFFERENTIATED E&P PLATFORM NYSE American: NOG OIL-LEVERED WILLISTON DISCIPLINED CAPITAL BASIN PRODUCER ALLOCATION & RETURNS PROACTIVELY MANAGED VISIBLE LONG-TERM BALANCE SHEET GROWTH POTENTIAL Northern Oil & Gas 2nd Quarter 2019 Presentation - August 2019 29
Slide 30: 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 June 30, 2018 June 30, 2019 PRODUCTION Oil (MBbls) 5,150.9 5,168.7 4,325.9 4,537.3 7,790.2 1,625.8 2,562.5 Natural Gas and NGLs (Mmcf)
Slide 31: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS NYSE American: NOG ADJUSTED EBITDA BY YEAR (IN THOUSANDS) 2015 2016 2017 2018 Net Income (Loss) $ (975,355) $ (293,494) $ (9,194) $ 143,689 Add: Interest Expense 58,360 64,486 70,286 86,005 Income Tax Provision (Benefit) (202,424) (1,402) (1,570) (55) Depreciation, Depletion
Slide 32: NYSE American: NOG
Northern Oil & Gas, Inc.