Northern Oil & Gas (NOG) Q1 Results - May 5
Posted: Thu May 05, 2022 5:49 pm
NOG Announces Record First Quarter 2022 Results and Updates Guidance
QUARTERLY HIGHLIGHTS
Record first quarter production of 71,255 Boe per day (60% oil), up 85% from the first quarter of 2021 < CRUSH MY FORECAST of 66,500 Boepd.
First quarter GAAP cash flow from operations of $154.0 million. Excluding changes in net working capital, cash flow from operations was $235.0 million, up 49% sequentially from the fourth quarter of 2021 < KEY STAT. This beats my forecast of $184.1 million operating cash flow. This will increase my valuation.
Total capital expenditures of $85.6 million during the first quarter, excluding closing of previously-announced Veritas acquisition on January 27, 2022
Record Free Cash Flow of $146.0 million during the first quarter, up 106% sequentially from the fourth quarter of 2021.
Updated 2022 guidance includes increased annual production and improved oil pricing differentials
SHAREHOLDER RETURN HIGHLIGHTS
Board of Directors has increased authorizations for Preferred and Common Stock repurchases and additionally authorized new Senior Notes repurchase program
Retired $36.3 million of Preferred Stock during the first quarter, and an additional $3.7 million in April 2022, for a total of $40.0 million year-to-date < Retiring preferred stock and debt is great news for common stockholders.
Declared $0.19 per share dividend for the second quarter of 2022, up 36% sequentially from the first quarter < NOG told me that they plan to increase dividends each quarter through at least 2023.
Management plans to recommend to Board of Directors a $0.25 per share dividend for the third quarter of 2022, 14% higher than previous target and up 32% sequentially
MANAGEMENT COMMENTS
"Our accretive acquisitions of high quality properties over the last year are translating into record results," commented Nick O’Grady, NOG’s Chief Executive Officer. "Record Adjusted EBITDA, Free Cash Flow and production were all achieved in the first quarter as our new properties have been integrated and are performing well. Our execution continues to prove the superiority of our low leverage, diversified working interest model. We also continue to de-risk the enterprise, allowing us to grow shareholder returns at an increasing pace."
FIRST QUARTER FINANCIAL RESULTS
Oil and natural gas sales for the first quarter were $456.5 million, up 37% over the fourth quarter of 2021. First quarter GAAP net loss, inclusive of a $384.2 million non-cash mark-to-market loss on derivatives, was $206.6 million or $2.69 per diluted share. First quarter Adjusted Net Income was $138.9 million or $1.58 per diluted share, up 49% from the fourth quarter of 2021. Adjusted EBITDA in the first quarter was $256.6 million, up 46% from the fourth quarter of 2021. See "Non-GAAP Financial Measures" below.
PRODUCTION
First quarter production was 71,255 Boe per day, an 11% increase from the fourth quarter of 2021 and an 85% increase from the first quarter of 2021. Oil represented 60% of total production in the first quarter. Oil production was 42,489 Bbl per day, a 12% increase over the fourth quarter of 2021 and a 45% increase over the first quarter of 2021. NOG had 10.6 net wells turned in-line during the first quarter, compared to 6.7 net wells turned in-line in the first quarter of 2021. Production continues to benefit from increased AFE activity across our 252,345 net acre position, with net AFE activity having increased 62% sequentially in the fourth quarter of 2021 and now 40% in the first quarter of 2022. NOG’s Permian production made up approximately 20% of volumes in the first quarter, reflecting a partial quarter impact from the Veritas acquisition, and is expected to continue to increase throughout 2022.
PRICING
During the first quarter, NYMEX West Texas Intermediate ("WTI") crude oil averaged $95.17 per Bbl, and NYMEX natural gas at Henry Hub averaged $4.63 per million cubic feet ("Mcf"). NOG’s unhedged net realized oil price in the first quarter was $91.19, representing a $3.98 differential to WTI prices. NOG’s unhedged net realized gas price in the first quarter was $6.94 per Mcf, representing approximately 150% realizations compared with Henry Hub pricing.
QUARTERLY HIGHLIGHTS
Record first quarter production of 71,255 Boe per day (60% oil), up 85% from the first quarter of 2021 < CRUSH MY FORECAST of 66,500 Boepd.
First quarter GAAP cash flow from operations of $154.0 million. Excluding changes in net working capital, cash flow from operations was $235.0 million, up 49% sequentially from the fourth quarter of 2021 < KEY STAT. This beats my forecast of $184.1 million operating cash flow. This will increase my valuation.
Total capital expenditures of $85.6 million during the first quarter, excluding closing of previously-announced Veritas acquisition on January 27, 2022
Record Free Cash Flow of $146.0 million during the first quarter, up 106% sequentially from the fourth quarter of 2021.
Updated 2022 guidance includes increased annual production and improved oil pricing differentials
SHAREHOLDER RETURN HIGHLIGHTS
Board of Directors has increased authorizations for Preferred and Common Stock repurchases and additionally authorized new Senior Notes repurchase program
Retired $36.3 million of Preferred Stock during the first quarter, and an additional $3.7 million in April 2022, for a total of $40.0 million year-to-date < Retiring preferred stock and debt is great news for common stockholders.
Declared $0.19 per share dividend for the second quarter of 2022, up 36% sequentially from the first quarter < NOG told me that they plan to increase dividends each quarter through at least 2023.
Management plans to recommend to Board of Directors a $0.25 per share dividend for the third quarter of 2022, 14% higher than previous target and up 32% sequentially
MANAGEMENT COMMENTS
"Our accretive acquisitions of high quality properties over the last year are translating into record results," commented Nick O’Grady, NOG’s Chief Executive Officer. "Record Adjusted EBITDA, Free Cash Flow and production were all achieved in the first quarter as our new properties have been integrated and are performing well. Our execution continues to prove the superiority of our low leverage, diversified working interest model. We also continue to de-risk the enterprise, allowing us to grow shareholder returns at an increasing pace."
FIRST QUARTER FINANCIAL RESULTS
Oil and natural gas sales for the first quarter were $456.5 million, up 37% over the fourth quarter of 2021. First quarter GAAP net loss, inclusive of a $384.2 million non-cash mark-to-market loss on derivatives, was $206.6 million or $2.69 per diluted share. First quarter Adjusted Net Income was $138.9 million or $1.58 per diluted share, up 49% from the fourth quarter of 2021. Adjusted EBITDA in the first quarter was $256.6 million, up 46% from the fourth quarter of 2021. See "Non-GAAP Financial Measures" below.
PRODUCTION
First quarter production was 71,255 Boe per day, an 11% increase from the fourth quarter of 2021 and an 85% increase from the first quarter of 2021. Oil represented 60% of total production in the first quarter. Oil production was 42,489 Bbl per day, a 12% increase over the fourth quarter of 2021 and a 45% increase over the first quarter of 2021. NOG had 10.6 net wells turned in-line during the first quarter, compared to 6.7 net wells turned in-line in the first quarter of 2021. Production continues to benefit from increased AFE activity across our 252,345 net acre position, with net AFE activity having increased 62% sequentially in the fourth quarter of 2021 and now 40% in the first quarter of 2022. NOG’s Permian production made up approximately 20% of volumes in the first quarter, reflecting a partial quarter impact from the Veritas acquisition, and is expected to continue to increase throughout 2022.
PRICING
During the first quarter, NYMEX West Texas Intermediate ("WTI") crude oil averaged $95.17 per Bbl, and NYMEX natural gas at Henry Hub averaged $4.63 per million cubic feet ("Mcf"). NOG’s unhedged net realized oil price in the first quarter was $91.19, representing a $3.98 differential to WTI prices. NOG’s unhedged net realized gas price in the first quarter was $6.94 per Mcf, representing approximately 150% realizations compared with Henry Hub pricing.