HIGHLIGHTS
- Reaffirms mid-point of Q4 2020 production guidance and narrows
range to 34,000 – 36,000 Boe per day
- Reiterates 2021 $40+ WTI base case outlook
- $178 million of debt reduction in 2020
- Retired $65 million, or 50%, of the Unsecured VEN Bakken Note
on January 4, 2021
- $8.4 million of high return Ground Game acquisitions in Q4,
including four Permian transactions
- 20,609 average barrels of oil per day hedged for full year 2021
at an average price of $55.09 per barrel
- 8,000 average barrels of oil per day hedged for Q1 2022 at an
average price of $50.81 per barrel
- 4,798 average barrels of oil per day hedged for full year 2022
at an average price of $50.17 per barrel
Northern Oil and Gas, Inc. (NYSE American: NOG) (“Northern”)
today announced a business and operations update.
OPERATIONS UPDATE
Northern has seen steady and continued improvement in operations
throughout the fourth quarter of 2020. Operators have continued to
return shut-in and curtailed production to sales at a steady rate.
Northern has also seen increased development and completion
activity due in part to improved pricing. Northern’s wells in
process inventory remains at or near all-time highs, with 28.1 net
wells as of December 31, 2020. Given improved pricing and activity
levels in November and December, Northern is narrowing its Q4 2020
production guidance from 30,000 – 40,000 Boe per day to 34,000 –
36,000 Boe per day. Additionally, with higher propane and natural
gas prices, Northern expects steady improvements to its natural gas
realizations, as higher prices absorb fixed gathering and
processing fees.
GROUND GAME UPDATE
Northern has seen an increased backlog of acquisition
opportunities, from individual wellbores to large asset packages.
As of January 2021, Northern’s backlog of acquisition opportunities
exceeds $1 billion in potential deal value. Northern retains its
strict hurdle rates and any potential transactions must meet its
high standards regarding asset quality and total returns. Northern
executed on $8.4 million in acquisitions in the fourth quarter,
inclusive of $1.8 million in equity-based consideration which was
previously disclosed. This resulted in the acquisition of 1.0 net
producing well, 3.6 net wells in process, 655 net acres, and 373
net royalty acres (standardized to a 1/8 royalty interest). Across
the 11 transactions, four targeted the Permian Basin and accounted
for 1.1 net wells in process, 219 net acres and 0.6 net undrilled
locations. The table below summarizes Northern’s expectations for
these acquisitions as a whole:
2020 Q4 Ground Game
Acquisitions
Q4 2020
2021
2022
2023
Net Wells Turned-in-Line
1.5
3.0
0.2
0.5
Forecasted Production (Boe/d)
427
1,641
1,179
865
Cash Flow From Operations (millions)
$1.1
$17.0
$11.3
$8.1
Development Capital Expenditures
(millions)
$10.0
$16.8
$1.8
$2.4
Acquisition Cost (millions)
$8.4
$0.0
$0.0
$0.0
Expected ROCE
3%
32%
24%
18%
BALANCE SHEET UPDATE
Northern reduced its total debt outstanding in 2020 by
approximately $178 million, including the retirement of $130.0
million of its Senior Secured Notes. The balance on Northern’s
Revolving Credit Facility as of December 31, 2020 was $532 million,
down $39 million from the third quarter of 2020. Northern exited
2020 with approximately $130 million of liquidity. On January 4,
2021, Northern retired $65 million, or 50%, of its Unsecured VEN
Bakken Note with available liquidity and cash on hand. With
additional significant free cash flow expected in 2021, Northern
anticipates a steady reduction in debt balances and increased
liquidity over time.
MANAGEMENT COMMENTS
“Our team quietly executed throughout even the most challenging
periods of 2020, adding high quality inventory and development with
strong upfront returns and convexity to better pricing, one small
deal at a time. Our work should pay off in 2021, as the positive
trajectory throughout Q4 was encouraging and provides strong
momentum. We expect even greater free cash flow, growing volumes
and stellar capital productivity on the horizon,” commented Nick
O’Grady, Chief Executive Officer of Northern.
“With the ‘Shale 3.0’ model taking hold for operators, we are
seeing enormous opportunities to step into projects as non-operated
capital availability remains scarce. These Ground Game
opportunities continue to have full-cycle returns well north of our
already strong return on capital employed metrics,” commented Adam
Dirlam, Chief Operating Officer of Northern.
PRELIMINARY INFORMATION
The preliminary unaudited financial and operating information
and estimates included in this press release, including with
respect to production, debt levels and other matters, is based on
estimates and subject to completion of Northern’s financial closing
procedures and audit processes. Such information has been prepared
by management solely on the basis of currently available
information. The preliminary information does not represent and is
not a substitute for a comprehensive statement of financial and
operating results, and Northern’s actual results may differ
materially from these estimates because of final adjustments, the
completion of Northern’s financial closing procedures, and other
developments after the date of this release.
ABOUT NORTHERN OIL AND GAS
Northern Oil and Gas, Inc. is a company with a primary strategy
of investing in non-operated minority working and mineral interests
in oil & gas properties, with a core area of focus in the
Williston and Permian Basins.
More information about Northern Oil and Gas, Inc. can be found
at www.NorthernOil.com.
SAFE HARBOR
This press release 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 Act”).
All statements other than statements of historical facts included
in this release regarding Northern’s financial position, business
strategy, plans and objectives of management for future operations
and industry conditions are forward-looking statements. When used
in this release, forward-looking statements are generally
accompanied by terms or phrases such as “estimate,” “project,”
“predict,” “believe,” “expect,” “continue,” “anticipate,” “target,”
“could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may”
or other words and similar expressions that convey the uncertainty
of future events or outcomes. Items contemplating or making
assumptions about actual or potential future sales, market size,
collaborations, and trends or operating results also constitute
such forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties, and important factors (many of which are beyond
Northern’s control) that could cause actual results to differ
materially from those set forth in the forward-looking statements,
including the following: changes in crude oil and natural gas
prices, the pace of drilling and completions activity on Northern’s
properties and properties pending acquisition, the effects of the
COVID-19 pandemic and related economic slowdown, Northern’s ability
to acquire additional development opportunities, changes in
Northern’s reserves estimates or the value thereof, general
economic or industry conditions, nationally and/or in the
communities in which Northern conducts business, changes in the
interest rate environment, legislation or regulatory requirements,
conditions of the securities markets, Northern’s ability to
consummate any pending acquisition transactions, other risks and
uncertainties related to the closing of pending acquisition
transactions, Northern’s ability to raise or access capital,
changes in accounting principles, policies or guidelines, financial
or political instability, acts of war or terrorism, and other
economic, competitive, governmental, regulatory and technical
factors affecting Northern’s operations, products, services and
prices.
Northern has based these forward-looking statements on its
current expectations and assumptions about future events. While
management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties, most of which are difficult to predict and many
of which are beyond Northern’s control. Northern does not undertake
any duty to update or revise any forward-looking statements, except
as may be required by the federal securities laws.
Source: Northern Oil and Gas, Inc.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210107005870/en/
Mike Kelly, CFA EVP, Finance (952) 476-9800
ir@northernoil.com
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