Northern Oil & Gas (NOG) Q1 Results - May 5

[dan_s]

FIRST QUARTER HIGHLIGHTS

> Record quarterly production of 119,436 Boe per day (59% oil), increases of 4% from the fourth quarter of 2023 and 37% from the first quarter of 2023 < beat my forecast by 9,436 Boepd.
> GAAP net income of $11.6 million, Adjusted Net Income of $130.5 million and Adjusted EBITDA of $387.0 million. < This is a perfect example of how misleading GAAP accounting rules that require mark-to-market adjustments are on hedges. NOG's hedges cover three years, but the MTM adjustment is put into one quarter. Since WTI oil prices increased in Q1, the value of their hedges declined. When I worked at Hess, over 30 years ago, I was part of group of industry CFOs that argued with the SEC reps that their rules (a knee jerk reaction to the Enron failure) violated the "matching principle".
> Cash flow from operations of $392.1 million. Excluding changes in net working capital, cash flow from operations was $352.5 million, an increase of 19% from the first quarter of 2023 < Just remember that "Cash Flow pays the bills" and GAAP Net Income is close to a worthless number.
> Generated $54.0 million of Free Cash Flow.
> Closed on previously announced acquisition of non-operated interests across 3,000 net acres in the Northern Delaware Basin
> After the closing of the Northern Delaware acquisition in the first quarter, NOG paid $40 million in common stock dividends, repurchased $20 million of common stock, and repaid approximately $50 million of debt. < All of which, increase per share value.