MINNEAPOLIS--(BUSINESS WIRE)--Northern Oil and Gas, Inc. (NYSE: NOG) ("NOG" or "Company") today announced the Company's third quarter results.
MANAGEMENT COMMENTS
"During the third quarter we generated record oil volumes and free cash flow despite limited completion activity and a period of weaker commodity prices. Importantly, we notched multiple achievements on the business front executing on acquisitions of two high-quality growth assets," commented Nick O'Grady, NOG's Chief Executive Officer. "We closed our $220 million Point transaction on time and on schedule, yet our net debt changed by only approximately $50 million during the quarter, a testament to the power of our cash generation and the strength of our asset base. On October 1, we closed on XCL, our largest and most accretive acquisition to date. With these two assets now closed and D&C activity building, we look forward to continuing to generate differentiated returns and growth for our investors."
THIRD QUARTER FINANCIAL RESULTS
Oil and natural gas sales for the third quarter were $513.5 million. Third quarter GAAP net income was $298.4 million or $2.96 per diluted share. Third quarter Adjusted Net Income was $141.1 million or $1.40 per adjusted diluted share. Adjusted EBITDA in the third quarter was $412.4 million, a 7% increase from the third quarter of 2023. See "Non-GAAP Financial Measures" below.
PRODUCTION
Third quarter production was 121,815 Boe per day, a decrease of 1% from the second quarter of 2024 and an increase of 19% from the third quarter of 2023. Oil represented 58% of total production in the third quarter with 70,913 Bbls per day, an increase of 2% from the second quarter of 2024 and an increase of 12% from the third quarter of 2023. NOG had 9.5 net wells turned in-line during the third quarter, compared to 30.1 net wells turned in-line in the second quarter of 2024. Strong well performance drove volume growth in both the Williston and Permian Basins, despite lower well completions versus the prior quarter. Natural gas volumes were lower driven by a decline in Appalachian gas activity.
PRICING
During the third quarter, NYMEX West Texas Intermediate ("WTI") crude oil averaged $75.27 per Bbl, and NYMEX natural gas at Henry Hub averaged $2.23 per Mcf. NOG's unhedged net realized oil price in the third quarter was $71.82, representing a $3.45 differential to WTI prices, a slight improvement compared to the second quarter. NOG's unhedged net realized gas price in the third quarter was $1.60 per Mcf, representing a 72% realization compared with Henry Hub pricing. Natural gas realizations were lower than prior periods in the Appalachian, Permian and Williston Basins, driven by lower benchmark prices, wider regional basis differentials and lower NGL prices.
OPERATING COSTS
Lease operating costs were $106.9 million in the third quarter of 2024, or $9.54 per Boe, 6% higher on a per unit basis compared to the second quarter of 2024. LOE costs increased primarily due to increased workover and water disposal costs. Production taxes were $14.7 million in the third quarter of 2024, compared to $48.6 million in the second quarter of 2024, a decrease due to an immaterial out-of-period accounting adjustment. Third quarter general and administrative ("G&A") costs totaled $10.0 million or $0.89 per Boe, as compared to $1.21 per Boe in the second quarter of 2024. NOG's adjusted cash G&A costs, which excludes non-cash and acquisition costs amounts of $3.0 million and a credit of $1.9 million, respectively, totaled $8.9 million or $0.79 per Boe in the third quarter, up $0.04 per Boe compared to the second quarter of 2024.
CAPITAL EXPENDITURES AND ACQUISITIONS
Capital expenditures for the third quarter were $198.0 million (excluding non-budgeted acquisitions and other). This was comprised of $187.0 million of total drilling and completion ("D&C") capital on organic and Ground Game assets, and $11.1 million of Ground Game activity inclusive of pre-closing development costs. D&C spending was largely as expected during the quarter, with significant spud activity and healthy growth to the D&C list, despite a lower number of turn-in-lines. NOG's weighted average gross authorization for expenditure (or AFE) elected to in the third quarter was $9.1 million, which was lower compared with the second quarter of 2024.
NOG's Permian Basin spending was 56% of the capital expenditures for the third quarter, the Williston was 41%, and the Appalachian was 3%. On the Ground Game acquisition front, NOG closed on six transactions acquired through various structures during the third quarter totaling 1,259 net acres and 0.1 net current and future development wells.
LIQUIDITY AND CAPITAL RESOURCES
NOG had total liquidity in excess of $1.3 billion as of September 30, 2024, consisting of $1.2 billion of committed borrowing availability under its Revolving Credit Facility and $59.9 million in total cash in the form of $34.4 million of unrestricted cash and $25.5 million in the form of a restricted cash deposit for the pending XCL acquisition.
SHAREHOLDER RETURNS
In the third quarter of 2024, the Company repurchased 397,301 shares of common stock at an average price, inclusive of commissions, of $36.38 per share in the open market. Year-to-date, the Company has repurchased 1,841,733 shares at an average price, inclusive of commissions, of $37.64. In July 2024, the Company's board of directors terminated the prior stock repurchase program, which was substantially depleted, and approved a new stock repurchase program to acquire up to $150.0 million of the Company's outstanding common stock.
In August 2024, NOG's Board of Directors declared a regular quarterly cash dividend for NOG's common stock of $0.42 per share for stockholders of record as of September 27, 2024, which was paid on October 31, 2024, a 5% increase from prior levels.
2024 ANNUAL GUIDANCE(1)
NOG is reiterating capital expenditure and production guidance and adjusting certain line items. Production taxes are being adjusted to reflect current expectations for the remainder of the year. Natural gas realizations and oil differentials are being adjusted to reflect results experienced year-to-date. Per unit cash G&A is being lowered as the Company has reduced certain external expenses and continues to benefit from increasing production volumes.
Prior Guidance | Revised Guidance | |||
Annual Production (Boe per day) | 120,000 - 124,000 | 120,000 - 124,000 | ||
Annual Oil Production (Bbls per day) | 73,000 - 76,000 | 73,000 - 76,000 | ||
Total Capital Expenditures ($ in millions) | $890 - $970 | $890 - $970 | ||
Net Wells Turned-in-Line ("TIL") | 93.0 - 98.0 | 93.0 - 98.0 | ||
Net Wells Spud | 73.0 - 78.0 | 73.0 - 78.0 | ||
Operating Expenses and Differentials: | ||||
Production Expenses (per Boe) | $9.15 - $9.40 | $9.15 - $9.40 | ||
Production Taxes (as a percentage of Oil & Gas Sales) | 9.0% - 9.5% | 8.5% - 9.0%(2) | ||
Average Differential to NYMEX WTI (per Bbl) | ($4.00) - ($4.85) | ($4.00) - ($4.50) | ||
Average Realization as a Percentage of NYMEX Henry Hub (per Mcf) | 87.5% - 92.5% | 90.0% - 95.0% | ||
DD&A Rate (per Boe) | $16.50 - $17.50 | $16.50 - $17.50 | ||
General and Administrative Expense (per Boe): | ||||
Non-Cash | $0.25 - $0.27 | $0.25 - $0.27 | ||
Cash (excluding transaction costs on non-budgeted acquisitions) | $0.74 - $0.80 | $0.72 - $0.77 |
________________ | ||
(1) | All forecasts are provided on a 2-stream production basis. | |
(2) | Represents expected fourth quarter rate. Actual annual production tax rate is expected to be lower, due to an out-of-period adjustment made in the third quarter. | |
THIRD QUARTER 2024 RESULTS
The following tables set forth selected operating and financial data for the periods indicated.
Three Months Ended September 30, | |||||||||
2024 | 2023 | % Change | |||||||
Net Production (in thousands): | |||||||||
Oil (MBbl) | 6,524 | 5,848 | 12 | % | |||||
Natural Gas (MMcf) | 28,098 | 21,397 | 31 | % | |||||
Total (MBoe) | 11,207 | 9,414 | 19 | % | |||||
Average Daily Production: | |||||||||
Oil (Bbl) | 70,913 | 63,564 | 12 | % | |||||
Natural Gas (Mcf) | 305,413 | 232,576 | 31 | % | |||||
Total (Boe) | 121,815 | 102,327 | 19 | % | |||||
Average Sales Prices: | |||||||||
Oil (per Bbl) | $ | 71.82 | $ | 79.48 | (10 | )% | |||
Effect of Gain (Loss) on Settled Oil Derivatives on Average Price (per Bbl) | 0.20 | (2.58 | ) | ||||||
Oil Net of Settled Oil Derivatives (per Bbl) | 72.02 | 76.90 | (6 | )% | |||||
Natural Gas and NGLs (per Mcf) | 1.60 | 2.19 | (27 | )% | |||||
Effect of Gain on Settled Natural Gas Derivatives on Average Price (per Mcf) | 1.01 | 0.95 | |||||||
Natural Gas and NGLs Net of Settled Natural Gas Derivatives (per Mcf) | 2.61 | 3.14 | (17 | )% | |||||
Realized Price on a Boe Basis Excluding Settled Commodity Derivatives | 45.82 | 54.35 | (16 | )% | |||||
Effect of Gain on Settled Commodity Derivatives on Average Price (per Boe) | 2.65 | 0.55 | |||||||
Realized Price on a Boe Basis Including Settled Commodity Derivatives | 48.47 | 54.90 | (12 | )% | |||||
Costs and Expenses (per Boe): | |||||||||
Production Expenses | $ | 9.54 | $ | 8.76 | 9 | % | |||
Production Taxes | 1.31 | 4.48 | (71 | )% | |||||
General and Administrative Expenses | 0.89 | 1.26 | (29 | )% | |||||
Depletion, Depreciation, Amortization and Accretion | 16.57 | 14.21 | 17 | % | |||||
Net Producing Wells at Period End | 1,049.8 | 923.7 | 14 | % | |||||
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 September 30, 2024.
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) | |||||||||
2024: | |||||||||||||||
Q4 | 32,969 | $ | 73.85 | 2,195,749 | 1,998,800 | $ | 81.32 | $ | 71.58 | ||||||
2025: | |||||||||||||||
Q1 | 32,791 | $ | 74.82 | 2,303,286 | 1,889,849 | $ | 78.25 | $ | 69.68 | ||||||
Q2 | 27,123 | 74.54 | 2,502,671 | 2,019,233 | 77.45 | 69.41 | |||||||||
Q3 | 19,413 | 73.57 | 2,304,994 | 1,817,970 | 77.43 | 69.15 | |||||||||
Q4 | 18,933 | 73.29 | 2,278,511 | 1,791,487 | 77.55 | 69.15 | |||||||||
2026: | |||||||||||||||
Q1 | 2,930 | $ | 70.38 | 1,325,726 | 894,289 | $ | 74.41 | $ | 66.15 | ||||||
Q2 | 2,930 | 70.31 | 1,340,457 | 904,227 | 74.41 | 66.15 | |||||||||
Q3 | 2,930 | 70.24 | 1,355,187 | 914,163 | 74.41 | 66.15 | |||||||||
Q4 | 2,930 | 70.15 | 1,355,187 | 914,163 | 74.41 | 66.15 | |||||||||
_____________ | ||
(1) | Includes derivative contracts entered into as of November 5, 2024. 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 10 to our financial statements included in our Form 10-Q filed with the SEC for the quarter ended September 30, 2024. | |
The following table summarizes NOG's open natural gas commodity derivative swap contracts scheduled to settle after September 30, 2024.
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) | |||||||||
2024: | |||||||||||||||
Q4 | 100,738 | $ | 3.48 | 9,406,586 | 9,406,586 | $ | 4.60 | $ | 3.07 | ||||||
2025: | |||||||||||||||
Q1 | 72,500 | $ | 3.46 | 10,086,417 | 10,086,417 | $ | 4.98 | $ | 3.12 | ||||||
Q2 | 30,330 | 3.47 | 9,691,297 | 9,691,297 | 4.71 | 3.11 | |||||||||
Q3 | 30,000 | 3.47 | 9,327,569 | 9,327,569 | 4.73 | 3.11 | |||||||||
Q4 | 24,891 | 3.53 | 8,228,723 | 8,228,723 | 4.86 | 3.11 | |||||||||
2026: | |||||||||||||||
Q1 | 14,889 | $ | 3.74 | 5,828,249 | 5,828,249 | $ | 5.06 | $ | 3.09 | ||||||
Q2 | 15,165 | 3.74 | 6,024,706 | 6,024,706 | 5.06 | 3.09 | |||||||||
Q3 | 15,000 | 3.74 | 6,024,706 | 6,024,706 | 5.06 | 3.09 | |||||||||
Q4 | 11,576 | 3.66 | 4,304,642 | 4,304,642 | 4.97 | 3.09 | |||||||||
2027: | |||||||||||||||
Q1 | 1,722 | $ | 3.20 | 890,000 | 890,000 | $ | 3.83 | $ | 3.00 | ||||||
Q2 | - | - | 920,000 | 920,000 | 3.83 | 3.00 | |||||||||
Q3 | - | - | 920,000 | 920,000 | 3.83 | 3.00 | |||||||||
Q4 | - | - | 610,000 | 610,000 | 3.83 | 3.00 | |||||||||
____________ | ||
(2) | Includes derivative contracts entered into as of November 5, 2024. This table does not include basis swaps. For additional information, see Note 10 to our financial statements included in our Form 10-Q filed with the SEC for the quarter ended September 30, 2024. | |
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 September 30, | ||||||
(In thousands) | 2024 | 2023 | ||||
Cash Received on Settled Derivatives | $ | 29,709 | $ | 5,164 | ||
Non-Cash Mark-to-Market Gain (Loss) on Derivatives | 208,441 | (204,712 | ) | |||
Gain (Loss) on Commodity Derivatives, Net | $ | 238,150 | $ | (199,548 | ) | |
CAPITAL EXPENDITURES & DRILLING ACTIVITY | |||
(In thousands, except for net well data) | Three Months Ended
| ||
Capital Expenditures Incurred: | |||
Organic Drilling and Development Capital Expenditures | $ | 161,945 | |
Ground Game Drilling and Development Capital Expenditures | $ | 25,010 | |
Ground Game Acquisition Capital Expenditures inclusive of pre-closing development costs | $ | 11,073 | |
Other | $ | 1,890 | |
Non-Budgeted Acquisitions | $ | 198,726 | |
Net Wells Added to Production | 9.5 | ||
Net Producing Wells (Period-End) | 1,049.8 | ||
Net Wells in Process (Period-End) | 52.2 | ||
Weighted Average Gross AFE for Wells Elected to | $ | 9,147 | |
THIRD QUARTER 2024 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 Wednesday, November 6, 2024 at 8:00 a.m. Central Time.
Those wishing to listen to the conference call may do so via webcast or phone as follows:
Webcast: https://events.q4inc.com/attendee/395412196
Dial-In Number: (800) 715-9871 (US/Canada) and (646) 307-1963 (International)
Conference ID: 4503139 - NOG Third Quarter 2024 Earnings Conference Call
Replay Dial-In Number: (800) 770-2030 (US/Canada) and (609) 800-9909 (International)
Replay Access Code: 4503139 - Replay will be available through November 20, 2024
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.noginc.com.
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 release regarding NOG's financial position, operating and financial performance, business strategy, dividend plans and practices, 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 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 3.625% convertible senior notes due 2029 (the "Convertible Notes"), including the potential impact that the Convertible Notes may have on NOG's financial position and liquidity, potential dilution, and that provisions of the Convertible Notes could delay or prevent a beneficial takeover of NOG; the potential impact of the capped call transaction undertaken in tandem with the Convertible Notes issuance, including counterparty risk; increasing attention to environmental, social and governance matters; 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; cyber-incidents could have a material adverse effect on NOG's business, financial condition or results of operations; changes in accounting principles, policies or guidelines; events beyond NOG's control, including a global or domestic health crisis, acts of terrorism, political or economic instability or armed conflict in oil and gas producing regions; and other economic, competitive, governmental, regulatory and technical factors affecting NOG's operations, products and prices. Additional information concerning potential factors that could affect future 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 for the year ended December 31, 2023, and Quarterly Report 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. Accordingly, results actually achieved may differ materially from expected results described in these statements. NOG does not undertake any duty to update or revise any forward-looking statements, except as may be required by the federal securities laws.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||
Three Months Ended September 30, | |||||||
(In thousands, except share and per share data) | 2024 | 2023 | |||||
Revenues | |||||||
Oil and Gas Sales | $ | 513,541 | $ | 511,651 | |||
Gain (Loss) on Commodity Derivatives, Net | 238,150 | (199,548 | ) | ||||
Other Revenues | 1,947 | 1,870 | |||||
Total Revenues | 753,638 | 313,973 | |||||
Operating Expenses | |||||||
Production Expenses | 106,902 | 82,506 | |||||
Production Taxes | 14,671 | 42,158 | |||||
General and Administrative Expenses | 10,005 | 11,846 | |||||
Depletion, Depreciation, Amortization and Accretion | 185,657 | 133,791 | |||||
Other Expenses | 2,463 | 1,234 | |||||
Total Operating Expenses | 319,698 | 271,535 | |||||
Income From Operations | 433,940 | 42,438 | |||||
Other Income (Expense) | |||||||
Interest Expense, Net of Capitalization | (36,837 | ) | (37,040 | ) | |||
Loss on Unsettled Interest Rate Derivatives, Net | (20 | ) | - | ||||
Other Income | 140 | 21 | |||||
Total Other Expense, Net | (36,717 | ) | (37,019 | ) | |||
Income Before Income Taxes | 397,223 | 5,419 | |||||
Income Tax Expense (Benefit) | 98,777 | (20,691 | ) | ||||
Net Income | $ | 298,446 | $ | 26,111 | |||
Net Income Per Common Share - Basic | $ | 3.00 | $ | 0.28 | |||
Net Income Per Common Share - Diluted | $ | 2.96 | $ | 0.28 | |||
Weighted Average Common Shares Outstanding - Basic | 99,494,313 | 92,768,035 | |||||
Weighted Average Common Shares Outstanding - Diluted | 100,724,784 | 93,742,407 | |||||
CONDENSED BALANCE SHEETS | |||||||
(In thousands, except par value and share data) | September 30, 2024 | December 31, 2023 | |||||
Assets | (Unaudited) | ||||||
Current Assets: | |||||||
Cash and Cash Equivalents | $ | 34,356 | $ | 8,195 | |||
Accounts Receivable, Net | 316,933 | 370,531 | |||||
Advances to Operators | 18,153 | 49,210 | |||||
Prepaid Expenses and Other | 12,111 | 2,489 | |||||
Derivative Instruments | 100,797 | 75,733 | |||||
Income Tax Receivable | 36,573 | 3,249 | |||||
Total Current Assets | 518,923 | 509,407 | |||||
Property and Equipment: | |||||||
Oil and Natural Gas Properties, Full Cost Method of Accounting | |||||||
Proved | 9,524,785 | 8,428,518 | |||||
Unproved | 23,006 | 36,785 | |||||
Other Property and Equipment | 8,182 | 8,069 | |||||
Total Property and Equipment | 9,555,973 | 8,473,372 | |||||
Less - Accumulated Depreciation, Depletion and Impairment | (5,075,954 | ) | (4,541,808 | ) | |||
Total Property and Equipment, Net | 4,480,019 | 3,931,563 | |||||
Derivative Instruments | 14,730 | 10,725 | |||||
Acquisition Deposit | 25,500 | 17,094 | |||||
Other Noncurrent Assets, Net | 16,155 | 15,466 | |||||
Total Assets | $ | 5,055,327 | $ | 4,484,255 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities: | |||||||
Accounts Payable | $ | 152,455 | $ | 192,672 | |||
Accrued Liabilities | 237,244 | 147,943 | |||||
Accrued Interest | 28,034 | 26,219 | |||||
Derivative Instruments | 804 | 16,797 | |||||
Other Current Liabilities | 1,751 | 2,130 | |||||
Total Current Liabilities | 420,288 | 385,761 | |||||
Long-term Debt, Net | 1,953,099 | 1,835,554 | |||||
Deferred Tax Liability | 210,738 | 68,488 | |||||
Derivative Instruments | 112,442 | 105,831 | |||||
Asset Retirement Obligations | 42,867 | 38,203 | |||||
Other Noncurrent Liabilities | 2,391 | 2,741 | |||||
Total Liabilities | $ | 2,741,825 | $ | 2,436,578 | |||
Commitments and Contingencies | |||||||
Stockholders' Equity | |||||||
Common Stock, Par Value $.001; 270,000,000 Shares Authorized; 99,825,164 Shares Outstanding at 9/30/2024 100,761,148 Shares Outstanding at 12/31/2023 | 502 | 503 | |||||
Additional Paid-In Capital | 1,942,181 | 2,124,963 | |||||
Retained Earnings (Deficit) | 370,819 | (77,790 | ) | ||||
Total Stockholders' Equity | 2,313,502 | 2,047,676 | |||||
Total Liabilities and Stockholders' Equity | $ | 5,055,327 | $ | 4,484,255 | |||
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) loss 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 September 30, | |||||||
(In thousands, except share and per share data) | 2024 | 2023 | |||||
Income Before Income Taxes | $ | 397,223 | $ | 5,419 | |||
Add: | |||||||
Impact of Selected Items: | |||||||
(Gain) Loss on Unsettled Commodity Derivatives | (208,441 | ) | 204,712 | ||||
Acquisition Transaction Costs | (1,901 | ) | 3,385 | ||||
Loss on Unsettled Interest Rate Derivatives | 20 | - | |||||
Adjusted Income Before Adjusted Income Tax Expense | 186,901 | 213,516 | |||||
Adjusted Income Tax Expense (1) | (45,791 | ) | (52,311 | ) | |||
Adjusted Net Income (non-GAAP) | $ | 141,110 | $ | 161,205 | |||
Weighted Average Shares Outstanding - Basic | 99,494,313 | 92,768,035 | |||||
Weighted Average Shares Outstanding - Diluted | 100,724,784 | 93,742,407 | |||||
Less: | |||||||
Dilutive Effect of Convertible Notes (2) | 115,626 | 434,944 | |||||
Weighted Average Shares Outstanding - Adjusted Diluted | 100,609,158 | 93,307,463 | |||||
Income Before Income Taxes Per Common Share - Basic | $ | 3.99 | $ | 0.06 | |||
Add: | |||||||
Impact of Selected Items | (2.11 | ) | 2.24 | ||||
Impact of Income Tax | (0.46 | ) | (0.56 | ) | |||
Adjusted Net Income Per Common Share - Basic | $ | 1.42 | $ | 1.74 | |||
Income Before Income Taxes Per Common Share - Adjusted Diluted | $ | 3.95 | $ | 0.06 | |||
Add: | |||||||
Impact of Selected Items | (2.09 | ) | 2.23 | ||||
Impact of Income Tax | (0.46 | ) | (0.56 | ) | |||
Adjusted Net Income Per Common Share - Adjusted Diluted | $ | 1.40 | $ | 1.73 | |||
______________ | ||
(1) | For the three months ended September 30, 2024 and September 30, 2023, this represents a tax impact using an estimated tax rate of 24.5%. | |
(2) | Weighted average shares outstanding - diluted, on a GAAP basis, includes diluted shares attributable to the Company's Convertible Notes due 2029. However, the offsetting impact of the capped call transactions that the Company entered into in connection therewith is not recognized on a GAAP basis. As a result, for purposes of this calculation, the Company excludes the dilutive shares to the extent they would be offset by the capped calls. | |
Reconciliation of Adjusted EBITDA | |||||||
Three Months Ended September 30, | |||||||
(In thousands) | 2024 | 2023 | |||||
Net Income | $ | 298,446 | $ | 26,111 | |||
Add: | |||||||
Interest Expense | 36,837 | 37,040 | |||||
Income Tax Expense | 98,777 | (20,691 | ) | ||||
Depreciation, Depletion, Amortization and Accretion | 185,657 | 133,791 | |||||
Non-Cash Stock-Based Compensation | 3,018 | 1,178 | |||||
Acquisition Transaction Costs | (1,901 | ) | 3,385 | ||||
Loss on Unsettled Interest Rate Derivatives | 20 | - | |||||
(Gain) Loss on Unsettled Commodity Derivatives | (208,441 | ) | 204,712 | ||||
Adjusted EBITDA | $ | 412,413 | $ | 385,525 | |||
Reconciliation of Free Cash Flow | |||
Three Months Ended September 30, | |||
(In thousands) | 2024 | ||
Net Cash Provided by Operating Activities | $ | 385,761 | |
Exclude: Changes in Working Capital and Other Items | (8,704 | ) | |
Less: Capital Expenditures (1) | (199,918 | ) | |
Free Cash Flow | $ | 177,139 | |
_______________ | |||
(1) Capital expenditures are calculated as follows: | |||
Three Months Ended September 30, | |||
(In thousands) | 2024 | ||
Cash Paid for Capital Expenditures | $ | 381,824 | |
Less: Non-Budgeted Acquisitions | (204,571 | ) | |
Plus: Change in Accrued Capital Expenditures and Other | 22,665 | ||
Capital Expenditures | $ | 199,918 | |
Contacts
Evelyn Infurna
Vice President of Investor Relations
952-476-9800
ir@northernoil.com
