Energy Prospectus

Northern Oil & Gas, Inc. NOG recently reported a decrease of around 10,000 barrels of oil equivalent per day (boe/d) in its production due to severe weather in December, affecting its operations in the Williston and Permian Basins. Despite the impact, the company still expects its full-year 2022 output to meet its previous guidance of 75,250 to 75,550 boe/d.

Northern Oil and Gas forecasts that its overall production volume for the fourth quarter will be slightly lower when compared with the third-quarter figure. However, the company expects that the average daily oil production will be higher sequentially. This implies that while the overall quantity of production might be lower, the production efficiency has improved, leading to higher daily oil production.

Despite the adverse weather conditions, Northern Oil and Gas was able to successfully bring 19.9 net wells online during the fourth quarter of the year, with 5.9 net wells being brought online in late December. This strong performance has built significant momentum heading into 2023. The company reported that its operations have largely returned to normal in January, indicating that the effects of the severe weather are reversed and the production is back on track. This is positive news for the company and its stakeholders, as it suggests that NOG is well-positioned to continue delivering strong results in the future.

NOG predicts higher operating costs of $10.05-$10.10 per barrel of oil equivalent in Q4 due to production outages and lower levels of production. However, the company anticipates these costs to return to normal in the first quarter of 2023. Meanwhile, capital expenditures related to development and acquisition during the October-December period is projected to be $143-$145 million.

The company has announced a cash dividend of 34 cents per share, up 13% from the last quarter. NOG plans to pay the dividend on Apr 28, 2023 to stockholders of record as of Mar 30, 2023. It also plans to propose a 9% increase to the quarterly common stock dividend, bringing it to 37 cents per share for the second quarter of 2023.

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Northern Oil and Gas is an upstream energy company based in Minnetonka, MN, specializing in the acquisition, exploration, development, and production of oil and natural gas properties in the Williston, Permian, and Appalachian basins in the United States.

FUTURE DIVIDEND PLANS

Management intends to submit a recommendation to the Board of Directors for a further 9% increase to NOG’s quarterly common stock dividend, to $0.37 per share, for the second quarter of 2023. Pending Board approval, this would represent the achievement of NOG’s most recently stated dividend growth plan two quarters ahead of plan.

SHAREHOLDER RETURN UPDATE

During the fourth quarter of 2022, the Company repurchased 1,103,178 shares of common stock at a weighted average price of $29.92 per share. For the full year 2022, the Company repurchased 1.91 million common shares at a weighted average price of $28.55 per share, for a total of $54.5 million. Additionally, the Company repurchased and retired $57.5 million of its Series A Perpetual Preferred Stock during 2022, with all remaining shares fully converted to common stock during the fourth quarter. The Preferred Stock repurchases reduced the fully diluted share count by 2.6 million shares, based on the final conversion ratio. On a combined basis, common and preferred stock repurchases reduced the fully diluted share count by 4.5 million shares in 2022, or approximately 5% of the current shares outstanding. The Company has $95.5 million of availability remaining on its existing common stock repurchase authorization.

As of December 31, 2022, the Company has retired $25.8 million of its 8.125% Senior Unsecured Notes (the "Notes") at an average of 96.7% of par value. There were $724.2 million par value of Notes outstanding at year-end with $24.2 million of capacity remaining on the Company’s existing notes repurchase authorization.

MANAGEMENT COMMENTS

"While weather issues adversely impacted production late in the fourth quarter of 2022, we remain on a path of significant growth for 2023 and as a result, we have recommended to our Board of Directors an acceleration of our dividend growth plan," commented Nick O’Grady, NOG’s Chief Executive Officer. "Pending Board approval, through 2023 we will have delivered dividends 30% higher than the plan we first announced in December 2021. The accelerated dividends are a testament to the confidence we have in the outlook for our business in 2023 and beyond."

Chad Allen, NOG’s Chief Financial Officer, added, "In addition to our enhanced dividend program, we are continuing to retire our Senior Unsecured Notes and executing on our share repurchase programs. Our differentiated business growth and capital return program demonstrate our commitment to delivering superior total returns for our shareholders."