HIGHLIGHTS
- Strong organic and Ground Game activity driving additional
development
- Q3 Ground Game transactions expected to add 5.7 net in-process
and future drilling locations, and approximately 514 net acres
- Year-to-date NOG has closed 31 Ground Game transactions,
expected to add 24.9 net in-process and future drilling locations,
and approximately 1,823 net acres
- Well proposals accelerated in late Q3 driven by improved
commodity prices
- Gross consents were up over 35% sequentially in Q3 compared to
Q2, and up over 15% in the first nine months of 2023 compared to
the same period of 2022
- Expect Q3 capital expenditures in the range of $215 to $218
million, driven primarily by Ground Game success and pull-forwards
of organic development
- Providing update on realized and mark-to-market hedge changes
for the third quarter and select other operational items
Northern Oil and Gas, Inc. (NYSE: NOG) (the “Company” or “NOG”)
today announced an update on Ground Game acquisitions and certain
other financial and operational items for the third quarter of
2023.
GROUND GAME AND ACTIVITY UPDATE
The Company closed on eight Ground Game transactions during the
third quarter of 2023, concentrated in the Permian Basin. The
transactions are expected to add 5.7 net in-process and future
drilling locations and approximately 514 net acres. The majority of
the wells from these transactions have already spud by the end of
the third quarter and are expected to turn in-line in 2024.
Year-to-date, NOG’s Ground Game has added an estimated 24.9 net
in-process and future drilling locations, along with approximately
1,823 net acres across 31 transactions with attractive full cycle
returns.
NOG also experienced accelerated well proposal activity in the
third quarter, driven by improved commodity prices. Gross consents
were up over 35% sequentially in the third quarter compared to the
second quarter, and up over 15% in the first nine months of 2023
compared to the same period of 2022.
The Company turned in-line an estimated 22.6 net wells during
the third quarter compared to 13.8 net wells in the second quarter,
a 64% sequential increase. NOG estimates that its D&C list, or
wells in process, increased to a new record of 74.2 net wells, up
6.2 net wells from the end of the second quarter. Changes to the
D&C list, combined with the levels of completion on those
wells-in-process (“WIPs”), can significantly impact capital
expenditures in any given quarter. Higher capital expenditures in
the third quarter were in part driven by both atypically higher
completion status for the WIPs combined with the D&C list
increasing by over 9% during the quarter.
Ground Game success and the increase in development activity are
expected to result in capital expenditures in the range of $215 to
$218 million for the third quarter, excluding non-budgeted
acquisitions and other, lower than the second quarter, but higher
than previously expected. The increased capital spending in the
third quarter, both organic and Ground Game, was primarily focused
on 2024 turn-in-line activity.
THIRD QUARTER FINANCIAL UPDATE
For the third quarter, the DD&A rate is expected to be
$14.20 - $14.25 per Boe. The increase to the DD&A rate versus
the second quarter is primarily driven by the closing of the Novo
acquisition in the third quarter, and is in line with prior
expectations.
The Company enters into derivative agreements to hedge a portion
of its commodity pricing exposure and makes mark-to-market fair
value adjustments each quarter to the unrealized value of its
unsettled commodity derivative portfolio. For the third quarter of
2023, mark-to-market losses on unsettled commodity derivatives are
estimated to be approximately $205 million. Total net gains on
settled commodity derivatives for the third quarter are estimated
to be approximately $5.0 million.
Since its second quarter earnings release, NOG has added hedges
for approximately 2.4 MMBoe of oil and 10.9 MMBtu of natural gas in
the form of puts, costless collars and swaps for Q4-2023 through
2026, in addition to region-specific basis hedges.
MANAGEMENT COMMENTS
“As we enter the fourth quarter, we continue to focus capital on
growth opportunities for next year and beyond,” commented Nick
O’Grady, NOG’s CEO. “Our singular focus remains on executing on
high return opportunities. In keeping with our practice, we have
used recent commodity price strength to layer in additional oil and
natural gas hedges, along with additional basis hedges, to protect
our underwritten returns as we deploy capital.”
“We had significant, counter-seasonal success in the Ground
Game, especially early in the third quarter when oil prices were
significantly lower,” commented Adam Dirlam, NOG’s President.
“These projects should, at today’s pricing, deliver significantly
higher returns than we originally underwrote. Additionally, we’ve
seen notable increases in our Permian well proposal activity as
commodity prices have improved. All of this points to increased
growth prospects for 2024 and beyond.”
ABOUT NOG
NOG is a real asset company with a primary strategy of acquiring
and investing in non-operated minority working and mineral
interests in the premier hydrocarbon producing basins within the
contiguous United States. More information about NOG can be found
at www.northernoil.com.
PRELIMINARY INFORMATION
The third quarter financial and operating information included
in this press release is preliminary in nature. Such information is
based on estimates and subject to completion of NOG’s financial
closing procedures and audit processes. Such information has been
prepared by management solely based on currently available
information. The preliminary information does not represent and is
not a substitute for a comprehensive statement of financial and
operating results, and NOG’s actual results may differ materially
from these estimates because of final adjustments, the completion
of NOG’s financial closing procedures, and other developments after
the date of this release.
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, as amended (the
“Securities Act”), and the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). All statements other than statements
of historical facts included or referenced in this press release
regarding NOG’s dividend plans and practices (including timing,
amounts and relative performance), financial position, business
strategy, plans and objectives for future operations, industry
conditions, cash flow, and borrowings are forward- looking
statements. When used in this presentation, 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
NOG’s control) that could cause actual results to differ materially
from those set forth in the forward-looking statements, including
the following: changes in NOG’s capitalization, changes in crude
oil and natural gas prices; the pace of drilling and completions
activity on NOG’s properties and properties pending acquisition;
NOG’s ability to acquire additional development opportunities; the
projected capital efficiency savings and other operating
efficiencies and synergies resulting from NOG’s acquisition
transactions; integration and benefits of property acquisitions, or
the effects of such acquisitions on NOG’s cash position and levels
of indebtedness; changes in NOG’s reserves estimates or the value
thereof; general economic or industry conditions, nationally and/or
in the communities in which NOG conducts business; changes in the
interest rate environment or market dividend practices, legislation
or regulatory requirements; conditions of the securities markets;
NOG's ability to consummate any pending acquisition transactions;
other risks and uncertainties related to the closing of pending
acquisition transactions; NOG’s ability to raise or access capital;
changes in accounting principles, policies or guidelines; and
financial or political instability, acts of war or terrorism, and
other economic, competitive, governmental, regulatory and technical
factors affecting NOG’s operations, products, services and prices.
Additional information concerning potential factors that could
affect future plans and results is included in the section entitled
“Item 1A. Risk Factors” and other sections of NOG’s most recent
Annual Report on Form 10-K and subsequent Quarterly Reports on Form
10-Q, as updated from time to time in amendments and subsequent
reports filed with the SEC, which describe factors that could cause
NOG’s actual results to differ from those set forth in the
forward-looking statements.
NOG 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 NOG’s control. You are urged not to place undue
reliance on these forward-looking statements, which speak only as
of the date they are made. Except as may be required by applicable
law or regulation, NOG does not undertake, and specifically
disclaims, any obligation to update any forward-looking statements
to reflect events or circumstances occurring after the date of such
statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20231025919500/en/
Evelyn Leon Infurna Vice President of Investor Relations (952)
476-9800 ir@northernoil.com
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