HIGHLIGHTS
- 1-for-10 reverse stock split completed and common stock begins
trading today on a split-adjusted basis
- Investment pipeline at record levels
- Majority hedged through 2021 at prices ranging from $54-58 per
barrel
Northern Oil and Gas, Inc. (NYSE American: NOG) (“Northern” or
the “Company”) today announced the completion of its reverse stock
split and other business updates.
REVERSE STOCK SPLIT
Northern completed the previously announced 1-for-10 reverse
split of its common stock. This process has been designed to reduce
costs for ownership, improve Northern’s ability to participate in
broad market indices, and to better represent its financial health
to prospective and existing investors. The reverse split became
effective at 11:59pm on September 18, 2020 and Northern’s common
stock will start trading on a split-adjusted basis today.
STRATEGIC OUTLOOK
Northern’s unique non-operated model affords the Company the
ability to be highly selective in its capital allocation process,
both on its existing organic footprint and throughout a multitude
of day to day Ground Game acquisition opportunities.
With capital becoming increasingly scarce across the E&P
industry, operators and non-operators alike are turning to external
parties to solve their non-operated working interest budget needs.
Given this environment, Northern has a superior opportunity set to
deploy capital in high return prospective projects. The pipeline of
visible investment opportunities currently stands in the hundreds
of millions of dollars, both in the Williston Basin as well as the
Permian Basin, where Northern announced its initial acquisition on
September 10th. In addition, Northern continues to expect to end
2020 with approximately 30 net wells in process.
Management remains focused on investing in assets that are in
preeminent oil and gas basins, operated by best-in-class teams, and
projected to meet stringent economic thresholds. To this point, any
investment currently under consideration is required to be
accretive to Northern’s peer leading 2019 return on capital
employed (ROCE).
Armed with a growing opportunity set and a rigorous investment
methodology, Northern continues to execute on its multi-year path
to generate free cash flow, reduce debt, improve margins, and grow
the business in a responsible manner.
RISK MITIGATION AND HEDGING UPDATE
Northern has amongst the best hedging programs in the industry.
The Company remains hedged on the majority of its oil production
through 2021 at attractive oil prices. Specifically, Northern has
hedged an average of 24,787 barrels of oil per day for the fourth
quarter of 2020 at approximately $58 per barrel and 21,393 barrels
per day in 2021 at approximately $55 per barrel. This hedge profile
supports management’s confidence in the Company’s ability to
generate free cash flow in 2020 and beyond, underpinned by a
sustaining capital program and not just a reduction of spending
below maintenance levels.
With its surplus cash, Northern plans to continue to reduce
outstanding borrowings. Year-to-date Northern has aggressively
reduced its highest cost debt, the Senior Secured Notes, by
approximately $130.0 million through exchanges and open market
repurchases. As previously announced, management does not
anticipate additional debt-for-equity exchanges in 2020, instead
debt reduction will be driven from the Company’s cash flow.
Additionally, Northern expects steady reductions to its revolver
borrowings at year-end 2020 and continuing throughout 2021,
inclusive of scheduled maturities.
OPERATIONS REVIEW
As previously announced on September 10th, Northern’s operations
continue to improve. Northern raised its production guidance for
the third quarter of 2020, with production steadily returning to
sales. Pricing differentials have improved, and lease operating
unit costs are expected to be down substantially since the peak of
the coronavirus crisis in the second quarter of 2020. Consistent
with previous guidance, Northern expects cash flow from operations
to exceed that of total capital expenditures in both the third
quarter and fourth quarter, as well as for the entirety of 2021.
Northern’s conservative budgeting for 2020 has allowed for capital
to be deployed to bolt-on acquisitions which will serve to increase
cash flows and production in 2021 and beyond at high returns on
capital employed.
MANAGEMENT COMMENTS
“As a company we are well aware of the challenges for energy
equities,” commented Mike Kelly, EVP of Finance. “But Northern’s
unique, high return business model, visible free cash flow profile,
strong hedge protection, and an incredible investment opportunity
set is at odds with our current equity valuation by the
markets.”
“Furthermore, with a record number of high-quality wells in
process we continue to position the Company for a strong recovery
that can be measured through reduced indebtedness, sustained
high-levels of free cash flow, and measured growth when appropriate
over a multi-year period.”
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 Basin Bakken and Three Forks play in North Dakota and
Montana.
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, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200921005201/en/
Mike Kelly EVP, Finance (952) 476-9800 ir@northernoil.com
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