- Total proved reserves as of June 30, 2021, increased 106% from
year-end 2020 to 252.3 million barrels of oil equivalent (“MMBoe”),
with an associated PV-10 value of $1.69 billion at SEC Pricing, 87%
of which is proved developed
- Using Strip Pricing as of June 30, 2021, total PV-10 value was
approximately $2.4 billion
- The midyear reserves exclude Northern's recently announced
Permian acquisition expected to close in August
- SEC Pricing as of June 30, 2021, was $49.78 per barrel of oil
and $2.428 per MMbtu of natural gas
- PDP PV-10 value alone exceeds Q1 2021 total debt by 1.5x and
2.0x at SEC Pricing and Strip Pricing, respectively
- Proved undeveloped reserves included 61.4 net drilling
locations, reflecting an average of only 12.3 net organic wells per
year over the five-year drill schedule limitation, compared to
current guidance of 35.5-37.8 net wells that Northern expects to
add to production during 2021
Northern Oil and Gas, Inc. (NYSE American: NOG) today announced
its total proved reserves at June 30, 2021, increased 106% from
year-end 2020 to 252.3 million barrels of oil equivalent with an
associated PV-10 value of $1.69 billion at SEC Pricing. These
amounts are calculated under SEC guidelines relating to both
commodity price assumptions and a maximum five year drill
schedule.
“This reserve report highlights the strength of Northern’s
assets, as proved reserves grew 106% before any contribution from
our Permian acquisition that is expected to close in August,”
commented Northern’s EVP and Chief Engineer, Jim Evans. “As a
non-operator, we book limited future PUD locations, and our reserve
report does not take into account our active management and
anticipated ground game activity. We believe this makes our reserve
report significantly conservative relative to our development plan
over the coming years. Despite this, at Strip Pricing, Northern’s
proved PV-10 value alone exceeds our current enterprise value in
the market.”
Table 1: Proved Reserves and PV-10 at SEC Pricing (as of June
30, 2021)
June 30, 2021 - SEC
Pricing(1)
Reserve Volumes
PV-10(3)
Reserve Category
Oil (MBbls)
Natural Gas (MMcf)
Total (MBoe)(2)
%
Amount (In thousands)
%
PDP Properties
72,484
412,918
141,303
56
%
$
1,244,088
74
%
PDNP Properties
9,934
380,418
73,338
29
229,876
13
PUD Properties(4)
30,039
45,703
37,656
15
217,683
13
Total Proved
112,457
839,039
252,297
100
%
$
1,691,647
100
%
_____ ___________
(1)
Based on average prices of $49.78 per
barrel of oil and $2.428 per MMbtu of natural gas. Under SEC
guidelines, these prices represent the average prices at the
beginning of each month in the 12-month period prior to the end of
the reporting period. The average resulting price used as of June
30, 2021, after adjustment to reflect applicable transportation and
quality differentials, was $45.31 per barrel of oil and $1.78 per
Mcf of natural gas.
(2)
Boe are computed based on a conversion
ratio of one Boe for each barrel of oil and one Boe for every 6,000
cubic feet (i.e., 6 Mcf) of natural gas.
(3)
The pre-tax present value discounted at
10%, or "PV-10," may be considered a non-GAAP financial measure.
See “PV-10 Values” below for additional information.
(4)
SEC guidelines only allow for five years
of total future drilling inventory.
Table 2: Proved Reserves and PV-10 at Strip Pricing (as of
June 30, 2021)
To illustrate the effects of commodity price fluctuations on
estimated reserve quantities and present values, Northern is also
providing an alternative summary of proved reserves, calculated in
accordance with SEC rules, with the exception of using Strip
Pricing as of June 30, 2021.
June 30, 2021 - Strip
Pricing(1)
Reserve Volumes
PV-10(3)
Reserve Category
Oil (MBbls)
Natural Gas (MMcf)
Total (MBoe)(2)
%
Amount (In thousands)
%
PDP Properties
74,796
418,756
144,589
56
%
$
1,703,267
71
%
PDNP Properties
10,077
380,757
76,536
28
350,825
15
PUD Properties(4)
33,831
49,499
42,081
16
343,478
14
Total Proved
118,704
849,012
260,206
100
%
$
2,397,570
100
%
________________
(1)
Based on current and forward
prices as of June 30, 2021. The average resulting price used as of
June 30, 2021, after adjustment to reflect applicable
transportation and quality differentials, was $52.89 per barrel of
oil and $2.13 per Mcf of natural gas.
(2)
Boe are computed based on a
conversion ratio of one Boe for each barrel of oil and one Boe for
every 6,000 cubic feet (i.e., 6 Mcf) of natural gas.
(3)
The pre-tax present value
discounted at 10%, or "PV-10," may be considered a non-GAAP
financial measure. See “PV-10 Values” below for additional
information.
(4)
SEC guidelines only allow for
five years of total future drilling inventory.
Oil & Gas Reserves
Reserve engineering is a process of estimating underground
accumulations of oil and natural gas that cannot be measured in an
exact way. The accuracy of any reserve estimate depends on the
quality of available data, the interpretation of such data and
price and cost assumptions made by reservoir engineers. In
addition, the results of drilling, testing and production
activities may justify revisions of estimates that were made
previously. If significant, such revisions would change the
schedule of any further production and development drilling. The
reserves and PV-10 estimates shown herein are based on an internal
reserves report prepared by Northern as of June 30, 2021, based on
either “SEC Pricing” (the unweighted first day of the month
arithmetic average price of oil and natural gas over the 12 months
prior to the determination date) or “Strip Pricing” (commodity
prices based on NYMEX, Henry Hub and WTI futures prices) as of June
30, 2021. These estimates do not take into account any derivatives
contracts we have entered into to hedge future commodity prices. We
believe that the use of Strip Pricing provides useful information
about our reserves, as the forward prices are based on the market’s
forward looking expectations of oil and natural gas prices as of a
certain date. Strip prices are not necessarily a projection of
future oil and natural gas prices, and should be carefully
considered in addition to, and not as a substitute for, SEC
Pricing, when considering Northern’s reserves estimates.
PV-10 Values
The pre-tax present value discounted at 10%, or "PV-10," may be
considered a non-GAAP financial measure. The GAAP financial measure
most directly comparable to PV-10 is the standardized measure of
discounted future net cash flows ("Standardized Measure"). PV-10 is
a computation of the Standardized Measure on a pre-tax basis. PV-10
is equal to the Standardized Measure of discounted future net cash
flows at the applicable date, before deducting future income taxes,
discounted at 10 percent. We believe that the presentation of PV-10
is relevant and useful to investors because it presents the
discounted future net cash flows attributable to our estimated net
proved reserves prior to taking into account future corporate
income taxes, and it is a useful measure for evaluating the
relative monetary significance of our oil and natural gas
properties. Further, investors may utilize the measure as a basis
for comparison of the relative size and value of our reserves to
other companies. We use this measure when assessing the potential
return on investment related to our oil and natural gas properties.
PV-10, however, is not a substitute for the Standardized Measure of
discounted future net cash flows. Neither PV-10 nor the
Standardized Measure purport to represent the fair value of our oil
and natural gas reserves.
With respect to PV-10 calculated as of an interim date (i.e.
other than year-end), it is not practical to calculate the taxes
for the related interim period because GAAP does not provide for
disclosure of Standardized Measure on an interim basis. As a
result, it is not practicable for us to reconcile the PV-10 of our
SEC Pricing proved reserves as of June 30, 2021. In addition, GAAP
does not provide a measure of estimated future net cash flows for
reserves calculated using prices other than SEC Pricing. As a
result, it is not practicable for us to reconcile the PV-10 of our
Strip Pricing proved reserves as of June 30, 2021.
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
premier basins within the United States. 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, operating
and financial performance, business strategy, plans and objectives
of management for future operations, industry conditions, and
indebtedness covenant compliance 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 production and 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; Northern’s ability
to acquire additional development opportunities; potential or
pending acquisition transactions; Northern’s ability to consummate
pending acquisitions, and the anticipated timing of such
consummation; changes in Northern’s reserves estimates or the value
thereof; disruptions to Northern’s business due to acquisitions and
other significant transactions; infrastructure constraints and
related factors affecting Northern’s properties; ongoing legal
disputes over and potential shutdown of the Dakota Access Pipeline;
the COVID-19 pandemic and its related economic repercussions and
effect on the oil and natural gas industry; 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 raise or access
capital; changes in accounting principles, policies or guidelines;
and financial or political instability, health-related epidemics,
acts of war or terrorism, and other economic, competitive,
governmental, regulatory and technical factors affecting Northern’s
operations, products 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/20210729006140/en/
Mike Kelly, CFA Chief Strategy Officer 952-476-9800
ir@northernoil.com
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