NOG Announces Second Quarter 2023 Results, Including Record Quarterly Production
SECOND QUARTER HIGHLIGHTS
-
Record quarterly production of 90,878 Boe per day (
60% oil), increases of4% from the first quarter of 2023 and25% from the second quarter of 2022 -
Net income of
and Adjusted EBITDA of$167.8 million . See “Non-GAAP Financial Measures” below$315.5 million -
Cash flow from operations of
. Excluding changes in net working capital, cash flow from operations was$307.8 million , an increase of$280.4 million 11% from the second quarter of 2022 -
Generated
of Free Cash Flow. See “Non-GAAP Financial Measures” below.$47.6 million -
Closed on the acquisition of a
30% undivided stake in the Forge assets for$167.9 million -
Entered into a joint acquisition agreement for a
33.33% undivided stake in the Novo assets for with an anticipated closing date of August 15, 2023$500.0 million -
Issued
of$500 million 8.75% Senior Notes with a maturity date of June 2031 -
Completed underwritten public offering of 7,647,500 shares of common stock raising
in net proceeds$224.7 million -
Paid
per share common dividend for the second quarter of 2023, an increase of$0.37 9% from the first quarter of 2023, and declared per share common dividend for the third quarter of 2023$0.38
MANAGEMENT COMMENTS
“NOG made meaningful strides in expanding its exposure to high-quality, low-breakeven acreage in the second quarter by executing on two highly accretive large-scale acquisitions with Forge and Novo. It was also a banner quarter for the Ground Game, completing 13 transactions that are expected to add over 16 net wells to production over the next several years,” commented Nick O’Grady, NOG’s Chief Executive Officer. “For the remainder of the year, we see potential for record levels of production and elevated cash flow from operations and free cash flow, as we begin to harvest our first half investments.”
SECOND QUARTER FINANCIAL RESULTS
Oil and natural gas sales for the second quarter were
PRODUCTION
Second quarter production was 90,878 Boe per day, an increase of
PRICING
During the second quarter, NYMEX West Texas Intermediate (“WTI”) crude oil averaged
OPERATING COSTS
Lease operating costs were
CAPITAL EXPENDITURES AND ACQUISITIONS
Capital expenditures for the second quarter were
NOG’s Permian Basin spending was
As previously announced, on June 30, 2023, NOG completed its Forge acquisition with a
LIQUIDITY AND CAPITAL RESOURCES
NOG had total liquidity of
In May 2023, NOG completed an upsized offering of
In May 2023, NOG completed an underwritten public offering of its common stock for net proceeds of
On August 2, 2023, NOG completed its semi-annual redetermination of its Revolving Credit Facility. The Borrowing Base will increase to
As of June 30, 2023, NOG had total debt of
SHAREHOLDER RETURNS
In May 2023, NOG’s Board of Directors declared a regular quarterly cash dividend for NOG’s common stock of
On August 1, 2023, NOG’s Board of Directors declared a regular quarterly cash dividend for NOG’s common stock of
2023 ANNUAL GUIDANCE*
On July 25, 2023, NOG issued a press release containing updated 2023 guidance to reflect recent acquisitions and other matters, as set forth in the table below.
|
|
Current |
Annual Production (Boe per day) |
|
96,000 - 100,000 |
Q3 2023 Production (Boe per day) |
|
99,000 - 103,000 |
Oil as a Percentage of Production |
|
|
Total Budgeted Capital Expenditures (in millions) |
|
|
Net Wells Turned-in-Line (“TIL”) |
|
75 - 78 |
|
|
|
Operating Expenses and Differentials: |
|
|
Production Expenses (per Boe) |
|
|
Production Taxes (as a percentage of Oil & Gas Sales) |
|
|
DD&A Rate (per Boe) |
|
|
Average Differential to NYMEX WTI (per Bbl) |
|
( |
Average Realization as a Percentage of NYMEX Henry Hub (per Mcf) |
|
|
|
|
|
General and Administrative Expense (per Boe): |
|
|
Non-Cash |
|
|
Cash (excluding transaction costs on non-budgeted acquisitions) |
|
|
________________ |
*All forecasts are provided on a 2-stream production basis. Assumes 8/15/2023 closing date for Novo acquisition. |
SECOND QUARTER 2023 RESULTS
The following tables set forth selected operating and financial data for the periods indicated.
|
Three Months Ended June 30, |
||||||||
|
2023 |
|
2022 |
|
% Change |
||||
Net Production: |
|
|
|
|
|
||||
Oil (Bbl) |
|
4,981,162 |
|
|
3,801,663 |
|
|
31 |
% |
Natural Gas and NGLs (Mcf) |
|
19,732,243 |
|
|
16,878,481 |
|
|
17 |
% |
Total (Boe) |
|
8,269,869 |
|
|
6,614,743 |
|
|
25 |
% |
|
|
|
|
|
|
||||
Average Daily Production: |
|
|
|
|
|
||||
Oil (Bbl) |
|
54,738 |
|
|
41,777 |
|
|
31 |
% |
Natural Gas and NGLs (Mcf) |
|
216,838 |
|
|
185,478 |
|
|
17 |
% |
Total (Boe) |
|
90,878 |
|
|
72,689 |
|
|
25 |
% |
|
|
|
|
|
|
||||
Average Sales Prices: |
|
|
|
|
|
||||
Oil (per Bbl) |
$ |
71.03 |
|
$ |
106.26 |
|
|
(33 |
)% |
Effect of Gain (Loss) on Settled Oil Derivatives on Average Price (per Bbl) |
|
1.31 |
|
|
(32.53 |
) |
|
|
|
Oil Net of Settled Oil Derivatives (per Bbl) |
|
72.34 |
|
|
73.73 |
|
|
(2 |
)% |
|
|
|
|
|
|
||||
Natural Gas and NGLs (per Mcf) |
|
3.18 |
|
|
8.63 |
|
|
(63 |
)% |
Effect of Gain (Loss) on Settled Natural Gas Derivatives on Average Price (per Mcf) |
|
1.05 |
|
|
(2.29 |
) |
|
|
|
Natural Gas and NGLs Net of Settled Natural Gas Derivatives (per Mcf) |
|
4.23 |
|
|
6.34 |
|
|
(33 |
)% |
|
|
|
|
|
|
||||
Realized Price on a Boe Basis Excluding Settled Commodity Derivatives |
|
50.36 |
|
|
83.09 |
|
|
(39 |
)% |
Effect of Gain (Loss) on Settled Commodity Derivatives on Average Price (per Boe) |
|
3.30 |
|
|
(24.54 |
) |
|
|
|
Realized Price on a Boe Basis Including Settled Commodity Derivatives |
|
53.66 |
|
|
58.55 |
|
|
(8 |
)% |
|
|
|
|
|
|
||||
Costs and Expenses (per Boe): |
|
|
|
|
|
||||
Production Expenses |
$ |
10.20 |
|
$ |
9.77 |
|
|
4 |
% |
Production Taxes |
|
4.49 |
|
|
6.63 |
|
|
(32 |
)% |
General and Administrative Expenses |
|
1.50 |
|
|
1.22 |
|
|
23 |
% |
Depletion, Depreciation, Amortization and Accretion |
|
12.87 |
|
|
8.28 |
|
|
55 |
% |
|
|
|
|
|
|
||||
Net Producing Wells at Period End |
|
872.8 |
|
|
735.0 |
|
|
19 |
% |
HEDGING
NOG hedges portions of its expected production volumes to increase the predictability of its cash flow and to help maintain a strong financial position. The following table summarizes NOG’s open crude oil commodity derivative swap contracts scheduled to settle after June 30, 2023.
|
|
Crude Oil Commodity Derivative Swaps(1) |
|
Crude Oil Commodity Derivative Collars |
|||||||||||
Contract Period |
|
Volume (Bbls/Day) |
|
Weighted Average Price ($/Bbl) |
|
Collar Call Volume (Bbls) |
|
Collar Put Volume (Bbls) |
|
Weighted Average Ceiling Price ($/Bbl) |
|
Weighted Average Floor Price ($/Bbl) |
|||
2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Q3 |
|
20,870 |
|
$ |
76.73 |
|
1,823,989 |
|
1,441,613 |
|
$ |
86.38 |
|
$ |
71.57 |
Q4 |
|
20,224 |
|
|
75.67 |
|
1,969,252 |
|
1,577,676 |
|
|
85.53 |
|
|
71.44 |
2024: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Q1 |
|
10,497 |
|
$ |
76.02 |
|
1,945,397 |
|
1,292,178 |
|
$ |
84.84 |
|
$ |
69.82 |
Q2 |
|
10,583 |
|
|
75.10 |
|
1,946,387 |
|
1,306,267 |
|
|
84.61 |
|
|
69.12 |
Q3 |
|
11,451 |
|
|
73.60 |
|
782,056 |
|
630,256 |
|
|
80.43 |
|
|
68.15 |
Q4 |
|
7,299 |
|
|
70.42 |
|
723,749 |
|
549,800 |
|
|
81.80 |
|
|
68.15 |
2025: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Q1 |
|
1,308 |
|
$ |
67.92 |
|
323,286 |
|
224,849 |
|
$ |
78.69 |
|
$ |
66.98 |
Q2 |
|
1,089 |
|
|
68.01 |
|
273,171 |
|
199,233 |
|
|
75.49 |
|
|
67.63 |
Q3 |
|
1,004 |
|
|
67.94 |
|
234,994 |
|
161,970 |
|
|
75.76 |
|
|
67.88 |
Q4 |
|
966 |
|
|
67.81 |
|
208,511 |
|
135,487 |
|
|
76.87 |
|
|
67.63 |
2026: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Q1 |
|
430 |
|
$ |
63.25 |
|
43,226 |
|
39,289 |
|
$ |
70.25 |
|
$ |
62.50 |
Q2 |
|
430 |
|
|
62.74 |
|
43,707 |
|
39,727 |
|
|
70.25 |
|
|
62.50 |
Q3 |
|
430 |
|
|
62.28 |
|
44,187 |
|
40,163 |
|
|
70.25 |
|
|
62.50 |
Q4 |
|
430 |
|
|
61.70 |
|
44,187 |
|
40,163 |
|
|
70.25 |
|
|
62.50 |
_____________ |
|
(1) |
Includes derivative contracts entered into through July 31, 2023. This table does not include volumes subject to swaptions and call options, which are crude oil derivative contracts NOG has entered into which may increase swapped volumes at the option of NOG’s counterparties. This table also does not include basis swaps. For additional information, see Note 11 to our financial statements included in our Form 10-Q filed with the SEC for the quarter ended June 30, 2023. |
The following table summarizes NOG’s open natural gas commodity derivative swap contracts scheduled to settle after June 30, 2023.
|
|
Natural Gas Commodity Derivative Swaps(1) |
|
Natural Gas Commodity Derivative Collars |
|||||||||||
Contract Period |
|
Volume (MMBTU/Day) |
|
Weighted Average Price ($/MMBTU) |
|
Collar Call Volume (MMBTU) |
|
Collar Put Volume (MMBTU) |
|
Weighted Average Ceiling Price ($/MMBTU) |
|
Weighted Average Floor Price ($/MMBTU) |
|||
2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Q3 |
|
105,678 |
|
$ |
3.86 |
|
5,060,000 |
|
5,060,000 |
|
$ |
6.67 |
|
$ |
4.18 |
Q4 |
|
105,619 |
|
|
3.82 |
|
6,285,000 |
|
6,285,000 |
|
|
6.90 |
|
|
4.13 |
2024: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Q1 |
|
103,974 |
|
$ |
3.61 |
|
2,502,500 |
|
2,502,500 |
|
$ |
6.50 |
|
$ |
3.64 |
Q2 |
|
104,350 |
|
|
3.49 |
|
1,137,500 |
|
1,137,500 |
|
|
4.95 |
|
|
3.20 |
Q3 |
|
103,048 |
|
|
3.49 |
|
1,530,000 |
|
1,530,000 |
|
|
4.61 |
|
|
3.00 |
Q4 |
|
68,945 |
|
|
3.48 |
|
1,840,000 |
|
1,840,000 |
|
|
4.76 |
|
|
3.00 |
2025: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Q1 |
|
11,500 |
|
$ |
3.79 |
|
4,620,734 |
|
4,620,734 |
|
$ |
6.28 |
|
$ |
3.14 |
Q2 |
|
5,055 |
|
|
4.00 |
|
3,859,216 |
|
3,859,216 |
|
|
5.51 |
|
|
3.14 |
Q3 |
|
5,000 |
|
|
4.00 |
|
3,336,781 |
|
3,336,781 |
|
|
5.63 |
|
|
3.15 |
Q4 |
|
3,315 |
|
|
4.00 |
|
3,368,797 |
|
3,368,797 |
|
|
5.87 |
|
|
3.14 |
2026: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Q1 |
|
— |
|
|
— |
|
3,193,735 |
|
3,193,735 |
|
$ |
5.85 |
|
$ |
3.14 |
Q2 |
|
— |
|
|
— |
|
3,229,220 |
|
3,229,220 |
|
|
5.85 |
|
|
3.14 |
Q3 |
|
— |
|
|
— |
|
3,264,706 |
|
3,264,706 |
|
|
5.85 |
|
|
3.14 |
Q4 |
|
— |
|
|
— |
|
3,264,706 |
|
3,264,706 |
|
|
5.85 |
|
|
3.14 |
____________ |
|
(1) |
Includes derivative contracts entered into through July 31, 2023. This table does not include basis swaps. For additional information, see Note 11 to our financial statements included in our Form 10-Q filed with the SEC for the quarter ended June 30, 2023. |
The following table presents NOG’s settlements on commodity derivative instruments and unsettled gains and losses on open commodity derivative instruments for the periods presented, which is included in the revenue section of NOG’s statement of operations:
|
Three Months Ended June 30, |
|||||
(In thousands) |
2023 |
|
2022 |
|||
Cash Received (Paid) on Settled Derivatives |
$ |
27,265 |
|
$ |
(162,314 |
) |
Non-Cash Mark-to-Market Gain (Loss) on Derivatives |
|
30,503 |
|
|
54,117 |
|
Gain (Loss) on Commodity Derivatives, Net |
$ |
57,769 |
|
$ |
(108,197 |
) |
CAPITAL EXPENDITURES & DRILLING ACTIVITY
(In millions, except for net well data) |
|
Three Months Ended
|
|
Capital Expenditures Incurred: |
|
|
|
Organic Drilling and Development Capital Expenditures |
|
$ |
184.8 |
Ground Game Drilling and Development Capital Expenditures |
|
$ |
25.2 |
Ground Game Acquisition Capital Expenditures |
|
$ |
20.2 |
Other |
|
$ |
2.5 |
Non-Budgeted Acquisitions |
|
$ |
173.8 |
|
|
|
|
Net Wells Added to Production |
|
|
13.8 |
|
|
|
|
Net Producing Wells (Period-End) |
|
|
872.8 |
|
|
|
|
Net Wells in Process (Period-End) |
|
|
68.0 |
Increase in Wells in Process over Prior Period |
|
|
8.7 |
|
|
|
|
Weighted Average Gross AFE for Wells Elected to |
|
$ |
9.0 |
SECOND QUARTER 2023 EARNINGS RELEASE CONFERENCE CALL
In conjunction with NOG’s release of its financial and operating results, investors, analysts and other interested parties are invited to listen to a conference call with management on Thursday, August 3, 2023 at 7:30 a.m. Central Time.
Those wishing to listen to the conference call may do so via webcast or phone as follows:
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=flNDUuSD
Dial-In Number: (866) 373-3407 (US/
Conference ID: 13740011 - NOG Second Quarter 2023 Earnings Call
Replay Dial-In Number: (877) 660-6853 (US/
Replay Access Code: 13740011 - Replay will be available through August 17, 2023
ABOUT NORTHERN OIL AND GAS
NOG 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
SAFE HARBOR
This press release contains forward-looking statements regarding future events and NOG’s future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release are forward-looking statements, including, but not limited to, statements regarding NOG’s dividend plans and practices, financial position, operating and financial performance, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance. When used in this press 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, sales, market size, collaborations, cash flows, 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 crude oil and natural gas prices, the pace of drilling and completions activity on NOG’s current properties and properties pending acquisition; infrastructure constraints and related factors affecting NOG’s properties; cost inflation or supply chain disruptions; ongoing legal disputes over, and potential shutdown of, the Dakota Access Pipeline; NOG’s ability to acquire additional development opportunities, potential or pending acquisition transactions, 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; disruption to NOG’s business due to acquisitions and other significant transactions; general economic or industry conditions, nationally and/or in the communities in which NOG conducts business; changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets; risks associated with NOG’s
NOG has based any forward-looking statements on its current expectations and assumptions about future events. While NOG’s 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. Accordingly, results actually achieved may differ materially from expected results described in these statements. Forward-looking statements speak only as of the date they are made. You should consider carefully the statements under the heading “Risk Factors” in NOG’s Annual Report on Form 10-K for the year ended December 31, 2022, as updated by subsequent reports NOG files with the SEC. 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, other than as may be required by applicable law or regulation.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) |
|||||||
|
Three Months Ended June 30, |
||||||
(In thousands, except share and per share data) |
2023 |
|
2022 |
||||
Revenues |
|
|
|
||||
Oil and Gas Sales |
$ |
416,491 |
|
|
$ |
549,643 |
|
Gain (Loss) on Commodity Derivatives, Net |
|
57,769 |
|
|
|
(108,197 |
) |
Other Revenues |
|
2,294 |
|
|
|
— |
|
Total Revenues |
|
476,554 |
|
|
|
441,446 |
|
|
|
|
|
||||
Operating Expenses |
|
|
|
||||
Production Expenses |
|
84,350 |
|
|
|
64,642 |
|
Production Taxes |
|
37,138 |
|
|
|
43,840 |
|
General and Administrative Expenses |
|
12,402 |
|
|
|
8,064 |
|
Depletion, Depreciation, Amortization and Accretion |
|
106,427 |
|
|
|
54,796 |
|
Other Expenses |
|
1,446 |
|
|
|
— |
|
Total Operating Expenses |
|
241,763 |
|
|
|
171,342 |
|
|
|
|
|
||||
Income From Operations |
|
234,791 |
|
|
|
270,104 |
|
|
|
|
|
||||
Other Income (Expense) |
|
|
|
||||
Interest Expense, Net of Capitalization |
|
(31,968 |
) |
|
|
(18,410 |
) |
Gain (Loss) on Unsettled Interest Rate Derivatives, Net |
|
— |
|
|
|
524 |
|
Gain on Extinguishment of Debt, Net |
|
— |
|
|
|
236 |
|
Contingent Consideration Gain |
|
3,931 |
|
|
|
— |
|
Other Income (Expense) |
|
72 |
|
|
|
(185 |
) |
Total Other Income (Expense) |
|
(27,965 |
) |
|
|
(17,835 |
) |
|
|
|
|
||||
Income Before Income Taxes |
|
206,826 |
|
|
|
252,269 |
|
|
|
|
|
||||
Income Tax Provision |
|
39,012 |
|
|
|
1,006 |
|
|
|
|
|
||||
Net Income |
$ |
167,815 |
|
|
$ |
251,264 |
|
|
|
|
|
||||
Cumulative Preferred Stock Dividend |
|
— |
|
|
|
(2,810 |
) |
|
|
|
|
||||
Premium on Repurchase of Preferred Stock |
|
— |
|
|
|
(10,363 |
) |
|
|
|
|
||||
Net Income Attributable to Common Stockholders |
$ |
167,815 |
|
|
$ |
238,091 |
|
|
|
|
|
||||
Net Income Per Common Share – Basic |
$ |
1.89 |
|
|
$ |
3.08 |
|
Net Income Per Common Share – Diluted |
$ |
1.88 |
|
|
$ |
2.74 |
|
Weighted Average Common Shares Outstanding – Basic |
|
88,800,994 |
|
|
|
77,366,704 |
|
Weighted Average Common Shares Outstanding – Diluted |
|
89,108,519 |
|
|
|
86,788,465 |
|
CONDENSED BALANCE SHEETS |
|||||||
(In thousands, except par value and share data) |
June 30, 2023 |
|
December 31, 2022 |
||||
Assets |
(Unaudited) |
|
|
||||
Current Assets: |
|
|
|
||||
Cash and Cash Equivalents |
$ |
14,805 |
|
|
$ |
2,528 |
|
Accounts Receivable, Net |
|
265,042 |
|
|
|
271,336 |
|
Advances to Operators |
|
34,249 |
|
|
|
8,976 |
|
Prepaid Expenses and Other |
|
2,488 |
|
|
|
2,014 |
|
Derivative Instruments |
|
68,674 |
|
|
|
35,293 |
|
Income Tax Receivable |
|
495 |
|
|
|
338 |
|
Total Current Assets |
|
385,753 |
|
|
|
320,485 |
|
|
|
|
|
||||
Property and Equipment: |
|
|
|
||||
Oil and Natural Gas Properties, Full Cost Method of Accounting |
|
|
|
||||
Proved |
|
7,422,732 |
|
|
|
6,492,683 |
|
Unproved |
|
44,977 |
|
|
|
41,565 |
|
Other Property and Equipment |
|
7,360 |
|
|
|
6,858 |
|
Total Property and Equipment |
|
7,475,069 |
|
|
|
6,541,106 |
|
Less – Accumulated Depreciation, Depletion and Impairment |
|
(4,258,089 |
) |
|
|
(4,058,180 |
) |
Total Property and Equipment, Net |
|
3,216,981 |
|
|
|
2,482,926 |
|
|
|
|
|
||||
Derivative Instruments |
|
8,857 |
|
|
|
12,547 |
|
Acquisition Deposit |
|
37,500 |
|
|
|
43,000 |
|
Other Noncurrent Assets, Net |
|
15,658 |
|
|
|
16,220 |
|
|
|
|
|
||||
Total Assets |
$ |
3,664,749 |
|
|
$ |
2,875,178 |
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity |
|||||||
Current Liabilities: |
|
|
|
||||
Accounts Payable |
$ |
154,020 |
|
|
$ |
128,582 |
|
Accrued Liabilities |
|
178,783 |
|
|
|
121,737 |
|
Accrued Interest |
|
28,925 |
|
|
|
24,347 |
|
Derivative Instruments |
|
15,144 |
|
|
|
58,418 |
|
Contingent Consideration |
|
— |
|
|
|
10,107 |
|
Other Current Liabilities |
|
1,879 |
|
|
|
1,781 |
|
Total Current Liabilities |
|
378,751 |
|
|
|
344,972 |
|
|
|
|
|
||||
Long-term Debt, Net |
|
1,672,551 |
|
|
|
1,525,413 |
|
Deferred Tax Liability |
|
30,528 |
|
|
|
— |
|
Derivative Instruments |
|
129,398 |
|
|
|
225,905 |
|
Asset Retirement Obligations |
|
34,780 |
|
|
|
31,582 |
|
Other Noncurrent Liabilities |
|
2,944 |
|
|
|
2,045 |
|
|
|
|
|
||||
Total Liabilities |
$ |
2,248,952 |
|
|
$ |
2,129,917 |
|
|
|
|
|
||||
Commitments and Contingencies |
|
|
|
||||
|
|
|
|
||||
Stockholders’ Equity |
|
|
|
||||
Common Stock, Par Value 93,022,758 Shares Outstanding at 6/30/2023 85,165,807 Shares Outstanding at 12/31/2022 |
|
495 |
|
|
|
487 |
|
Additional Paid-In Capital |
|
1,908,055 |
|
|
|
1,745,532 |
|
Retained Deficit |
|
(492,753 |
) |
|
|
(1,000,759 |
) |
Total Stockholders’ Equity |
|
1,415,797 |
|
|
|
745,260 |
|
Total Liabilities and Stockholders’ Equity |
$ |
3,664,749 |
|
|
$ |
2,875,178 |
|
Non-GAAP Financial Measures
Adjusted Net Income, Adjusted EBITDA and Free Cash Flow are non-GAAP measures. NOG defines Adjusted Net Income (Loss) as income (loss) before income taxes, excluding (i) (gain) loss on unsettled commodity derivatives, net of tax, (ii) (gain) loss on extinguishment of debt, net of tax, (iii) contingent consideration (gain) loss, net of tax, (iv) acquisition transaction costs, net of tax, and (v) (gain) on unsettled interest rate derivatives, net of tax. NOG defines Adjusted EBITDA as net income (loss) before (i) interest expense, (ii) income taxes, (iii) depreciation, depletion, amortization and accretion, (iv) non-cash stock-based compensation expense, (v) (gain) loss on extinguishment of debt, (vi) contingent consideration (gain) loss, (vii) acquisition transaction costs, (viii) (gain) loss on unsettled interest rate derivatives, and (ix) (gain) loss on unsettled commodity derivatives. NOG defines Free Cash Flow as cash flows from operations before changes in working capital and other items, less (i) capital expenditures, excluding non-budgeted acquisitions and changes in accrued capital expenditures and other items. A reconciliation of each of these measures to the most directly comparable GAAP measure is included below.
Management believes the use of these non-GAAP financial measures provides useful information to investors to gain an overall understanding of current financial performance. Management believes Adjusted Net Income and Adjusted EBITDA provide useful information to both management and investors by excluding certain expenses and unrealized commodity gains and losses that management believes are not indicative of NOG’s core operating results. Management believes that Free Cash Flow is useful to investors as a measure of a company’s ability to internally fund its budgeted capital expenditures, to service or incur additional debt, and to measure success in creating stockholder value. In addition, these non-GAAP financial measures are used by management for budgeting and forecasting as well as subsequently measuring NOG’s performance, and management believes it is providing investors with financial measures that most closely align to its internal measurement processes. The non-GAAP financial measures included herein may be defined differently than similar measures used by other companies and should not be considered an alternative to, or more meaningful than, the comparable GAAP measures. From time to time NOG provides forward-looking Free Cash Flow estimates or targets; however, NOG is unable to provide a quantitative reconciliation of the forward looking non-GAAP measure to its most directly comparable forward looking GAAP measure because management cannot reliably quantify certain of the necessary components of such forward looking GAAP measure. The reconciling items in future periods could be significant.
Reconciliation of Adjusted Net Income |
|||||||
|
Three Months Ended June 30, |
||||||
(In thousands, except share and per share data) |
2023 |
|
2022 |
||||
Income Before Income Taxes |
$ |
206,826 |
|
|
$ |
252,269 |
|
Add: |
|
|
|
||||
Impact of Selected Items: |
|
|
|
||||
Gain on Unsettled Commodity Derivatives |
|
(30,503 |
) |
|
|
(54,117 |
) |
Gain on Extinguishment of Debt |
|
— |
|
|
|
(236 |
) |
Contingent Consideration Gain |
|
(3,931 |
) |
|
|
— |
|
Acquisition Transaction Costs |
|
3,612 |
|
|
|
514 |
|
Gain on Unsettled Interest Rate Derivatives |
|
— |
|
|
|
(524 |
) |
Adjusted Income Before Adjusted Income Tax Expense |
|
176,004 |
|
|
|
197,907 |
|
|
|
|
|
||||
Adjusted Income Tax Expense |
|
(43,121 |
) |
|
|
(48,487 |
) |
|
|
|
|
||||
Adjusted Net Income (non-GAAP) |
$ |
132,883 |
|
|
$ |
149,420 |
|
|
|
|
|
||||
Weighted Average Shares Outstanding – Basic |
|
88,800,994 |
|
|
|
77,366,704 |
|
Weighted Average Shares Outstanding – Diluted |
|
89,108,519 |
|
|
|
86,788,465 |
|
|
|
|
|
||||
Income Before Income Taxes Per Common Share – Basic |
$ |
2.33 |
|
|
$ |
3.26 |
|
Add: |
|
|
|
||||
Impact of Selected Items |
|
(0.35 |
) |
|
|
(0.70 |
) |
Impact of Income Tax |
|
(0.48 |
) |
|
|
(0.63 |
) |
Adjusted Net Income Per Common Share – Basic |
$ |
1.50 |
|
|
$ |
1.93 |
|
|
|
|
|
||||
Income Before Income Taxes Per Common Share – Diluted |
$ |
2.32 |
|
|
$ |
2.91 |
|
Add: |
|
|
|
||||
Impact of Selected Items |
|
(0.35 |
) |
|
|
(0.63 |
) |
Impact of Income Tax |
|
(0.48 |
) |
|
|
(0.56 |
) |
Adjusted Net Income Per Common Share – Diluted |
$ |
1.49 |
|
|
$ |
1.72 |
|
______________ |
|
(1) |
For the three months ended June 30, 2023 and June 30, 2022, this represents a tax impact using an estimated tax rate of |
Reconciliation of Adjusted EBITDA |
|||||||
|
Three Months Ended June 30, |
||||||
(In thousands) |
2023 |
|
2022 |
||||
Net Income |
$ |
167,815 |
|
|
$ |
251,264 |
|
Add: |
|
|
|
||||
Interest Expense |
|
31,968 |
|
|
|
18,410 |
|
Income Tax Provision |
|
39,012 |
|
|
|
1,006 |
|
Depreciation, Depletion, Amortization and Accretion |
|
106,427 |
|
|
|
54,796 |
|
Non-Cash Stock-Based Compensation |
|
1,151 |
|
|
|
1,421 |
|
Gain on Extinguishment of Debt |
|
— |
|
|
|
(236 |
) |
Contingent Consideration Gain |
|
(3,931 |
) |
|
|
— |
|
Acquisition Transaction Costs |
|
3,612 |
|
|
|
514 |
|
Gain on Unsettled Interest Rate Derivatives |
|
— |
|
|
|
(524 |
) |
Gain on Unsettled Commodity Derivatives |
|
(30,503 |
) |
|
|
(54,117 |
) |
Adjusted EBITDA |
$ |
315,549 |
|
|
$ |
272,534 |
|
Reconciliation of Free Cash Flow |
|||
|
Three Months Ended June 30, |
||
(In thousands) |
2023 |
||
Net Cash Provided by Operating Activities |
$ |
307,786 |
|
Exclude: Changes in Working Capital and Other Items |
|
(27,410 |
) |
Less: Capital Expenditures (1) |
|
(232,801 |
) |
Free Cash Flow |
$ |
47,575 |
|
_______________ |
|
(1) |
Capital expenditures are calculated as follows: |
|
Three Months Ended June 30, |
||
(In thousands) |
2023 |
||
Cash Paid for Capital Expenditures |
$ |
409,895 |
|
Less: Non-Budgeted Acquisitions |
|
(211,319 |
) |
Plus: Change in Accrued Capital Expenditures and Other |
|
34,225 |
|
Capital Expenditures |
$ |
232,801 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230802253810/en/
Evelyn Infurna
Vice President of Investor Relations
952-476-9800
ir@northernoil.com
Source: Northern Oil and Gas, Inc.