Energy Prospectus

NOG is one of the fastest growing companies in the Sweet 16 with 62.4% YOY production growth in 2021 and on-track for more than 40% YOY production growth in 2022. This growth is being funded by operating cash flow AND they have enough free cash flow to keep paying down debt and raising their dividend.
My current valuation of $63/share is just 5X annualized operating cash flow. That is a low multiple for a company with this much running room.
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NOG Announces Closing of Midland Basin Bolt-on Acquisition and Shareholder Return Update

HIGHLIGHTS

NOG closed its previously announced $110 million acquisition of non-operated Midland Basin properties on October 3, 2022
Management will recommend that the Board of Directors approve a 20% increase to NOG’s quarterly common stock dividend, to $0.30 per share, for the fourth quarter of 2022

MINNEAPOLIS--(BUSINESS WIRE)-- Northern Oil and Gas, Inc. (NYSE: NOG) (the “Company” or “NOG”) today announced the closing of a previously announced acquisition and provided a shareholder return update.

MIDLAND BASIN ACQUISITION

On October 3, 2022, NOG closed its previously announced acquisition of non-operated properties in the Midland Basin. The closing settlement was $110.1 million in cash, which includes a $11.0 million deposit paid at signing in August 2022. The closing cash settlement is net of preliminary and customary purchase price adjustments and remains subject to final post-closing settlement between NOG and the seller. Additional information regarding this acquisition can be found in NOG’s August 2022 prior press release announcing the transaction, which is available here.

SHAREHOLDER RETURN UPDATE

Management intends to submit a request to the Board of Directors for a 20% increase to NOG’s quarterly common stock dividend, to $0.30 per share, for the fourth quarter of 2022. Under Delaware law, the Board may not approve dividends more than 60 days before the record date.

NOG repurchased and retired an additional $10.0 million of its 8.125% Senior Unsecured Notes due 2028 at 94.8% of par during the third quarter of 2022. NOG has $726.6 million of par value of the 8.125% Notes currently outstanding. The Company also repurchased approximately 359,000 shares of common stock during the third quarter of 2022 at an average price of $24.22 per share.

MANAGEMENT COMMENTS

“NOG continues to execute, with both the closing of this acquisition and the recent announcement of another,” commented Nick O’Grady, NOG’s Chief Executive Officer. “We remain focused on our mission to allocate capital efficiently, grow our enterprise to bolster long-term returns on capital employed, and ultimately increase shareholder returns.”

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 the United States. More information about NOG can be found at www.northernoil.com.

This is another acquisition that should close in December, so it will be included in the Company's 12-31-2022 reserve report, but won't have much impact on earnings and cash flow until 2023. NOG's production should be ~85,000 Boepd in Q1 2023, compared to 71,255 Boepd in Q1 2022.

NOG Announces Core Northern Delaware Basin Bolt-on Acquisition

HIGHLIGHTS

Bolt-on acquisition of core non-operated working interest properties in the Northern Delaware Basin for an initial purchase price of $157.5 million
Average production of ~3,000 to 3,500 Boe per day (68% oil, 2-stream) expected for 2023, generating an estimated $46.5 to $54.3 million of unhedged cash flow in 2023 at strip pricing as of September 28, 2022
~2,800 net acres located in Lea and Eddy counties, NM and Loving County, TX with significant Tier-1 inventory (sub-$40 per barrel average breakevens)
Strong growth and free cash flow profile with ~$32 million average annual capital spending expected on the assets over the next three years, delivering expected production of over 4,000 Boe per day in 2024 and 2025
Transaction expected to be accretive to key financial metrics in 2023
Acquisition to be financed with cash on hand, operating free cash flow and borrowings under NOG’s revolving credit facility

MINNEAPOLIS--(BUSINESS WIRE)-- Northern Oil and Gas, Inc. (NYSE: NOG):

DELAWARE BASIN ACQUISITION

NOG has entered into a definitive agreement to acquire certain non-operated interests in the Delaware Basin from Alpha Energy Partners (the “Seller”) for an initial purchase price of $157.5 million in cash, subject to typical closing adjustments. NOG expects to fund the acquisition with cash on hand, operating free cash flow and borrowings under NOG’s revolving credit facility.

NOG may deliver the Seller additional cash consideration depending on average front month NYMEX WTI pricing during the first six months of 2023. The amount will be determined on a sliding scale from zero additional consideration if such pricing is below $75.00 per barrel, up to $22.5 million of additional consideration if such pricing is at least $87.85 per barrel. The additional consideration, if any, would be paid in the third quarter of 2023.

The acquired assets are located in Lea and Eddy counties, NM and Loving County, TX, and include approximately 2,800 acres, 9.6 net producing wells, 2.8 net AFEs and wells-in-process and approximately 21.2 net undeveloped locations. The primary operator of the assets is Mewbourne Oil, one of the most cost efficient and active operators in the Northern Delaware Basin. Other operators include Conoco and EOG.

The effective date for the transaction is September 1, 2022, and NOG expects to close the transaction in December 2022. The obligations of the parties to complete the transactions contemplated by the purchase agreement are subject to the satisfaction or waiver of customary closing conditions.

HEDGING UPDATE

In addition to its continuous hedging program, NOG has hedged, as standard practice, a significant portion of the production from the pending transaction. Updated hedge schedules can be found in NOG’s related September Acquisition Presentation at http://ir.northernoil.com.

MANAGEMENT COMMENTS

“NOG continues to execute on creating shareholder value as a proven, reliable and disciplined consolidator of working interests,” commented Nick O’Grady, NOG’s Chief Executive Officer. “These assets are squarely in our core focus area and are poised to deliver substantial growth over the coming years, while delivering significant cash flow to bolster shareholder returns.”

“The Northern Delaware Basin continues to be a key target for our consolidation efforts,” commented Adam Dirlam, NOG’s President. “This asset has some of the highest quality, lowest-cost inventory we have acquired, and is leveraged to NOG’s top operator in the Permian.”