FOURTH QUARTER 2018
-
Production increased 117% over the prior year and 36% over the prior
quarter, averaging a record of 36,258 barrels of oil equivalent
(“Boe”) per day.
-
Lease operating expenses and general and administrative expenses were
each down 26% per Boe from the prior year.
-
Cash flow from operations, excluding a $10.3 million net increase from
changes in working capital, was $107.5 million.
-
Drilling and development capital expenditures totaled $78.2 million, a
decrease of 4% from the prior quarter.
-
Net income increased to $218.3 million or $0.58 per diluted share from
a $0.37 loss per diluted share the prior year. Adjusted Net Income
increased to $94.8 million or $0.25 per diluted share. Adjusted EBITDA
increased 157% over the prior year to $124.9 million.
FULL YEAR 2018
-
Production increased 73% over the prior year, averaging a record of
25,555 Boe per day.
-
Cash flow from operations, excluding a $25.7 million net decrease from
changes in working capital, was $270.0 million.
-
Drilling and development capital expenditures totaled $260.9 million.
-
Net income increased to $143.7 million or $0.61 per diluted share from
a $0.15 loss per diluted share in 2017. Adjusted Net Income increased
to $140.7 million or $0.59 per diluted share. Adjusted EBITDA
increased 141% over the prior year to $349.3 million.
MINNEAPOLIS--(BUSINESS WIRE)--
Northern Oil and Gas, Inc. (NYSE American: NOG) (“Northern”) today
announced the company’s fourth quarter and full year 2018 results and
provided updated 2019 guidance.
Fourth quarter 2018 production increased 117% from the prior year and
36% from the prior quarter to 3.34 million Boe. Average realized oil
price per barrel was down 5% from the prior year and down 25%
sequentially. Oil and gas sales in the fourth quarter increased 111%
from the prior year to $152.6 million. Net income in the fourth quarter
increased to $218.3 million or $0.58 per diluted share from a $0.37 loss
per diluted share the prior year. Adjusted Net Income in the fourth
quarter increased to $94.8 million or $0.25 per diluted share from $6.6
million or $0.10 per diluted share the prior year. Adjusted EBITDA in
the fourth quarter increased 157% to $124.9 million from $48.5 million
the prior year. (See “Non-GAAP Financial Measures” below.)
Total production for the year increased 73% to 9.33 million Boe, which
combined with a 28% increase in average realized oil price drove a 121%
increase in oil and gas sales to $493.9 million. Net income increased to
$143.7 million or $0.61 per diluted share from a $0.15 loss per diluted
share the prior year. Adjusted Net Income increased to $0.59 per diluted
share from $0.14 per diluted share the prior year. Adjusted EBITDA
increased 141% to $349.3 million from $144.7 million the prior year.
(See “Non-GAAP Financial Measures” below).
Fourth Quarter Caps Transformative Year
“The fourth quarter of 2018 was the culmination of a truly
transformational year for Northern and further testimony to the
effectiveness of our non-operator model,” said Brandon Elliott, Chief
Executive Officer of Northern Oil and Gas. “We generated solid,
sustainable cash flow from operations and record production. Our success
was driven by our team’s ability to efficiently execute on, and in many
cases, exceed, our stated business goals for the year.”
Elliott concluded “With an interest in over 5,000 gross wells across our
157,000 acre position in the Williston Basin, we have positioned
Northern to build on this strong momentum. In 2019, we will continue to
actively manage our capital expenditure budget to achieve our key
objectives: further drive free cash flow, reduce our debt obligations
and grow debt adjusted cash flow per share. Our focus is on building
sufficient, sustainable cash flow to deliver returns to our shareholders
regardless of commodity prices. We will be patient and prudent as we
continue to evaluate opportunities to grow through our “ground game” and
other, larger acquisitions, all while not compromising on these
objectives.”
Record Production, Lower Operating Costs Drive Cash Flow and Adjusted
EBITDA
Record production was driven by increased organic net well additions and
aided by acquisitions, both smaller “ground game” and the larger
acquisitions that closed in the second half of 2018. The capital
allocation decisions made throughout the year, including acquisitions,
helped to drive the significant improvement in lease operating expense
for the fourth quarter and full year of 2018. Industry activity levels
remain resilient across North Dakota with between 55 and 65 rigs
operating consistently over the last several quarters, providing a
wealth of opportunities for Northern to deploy capital to the highest
return opportunities. The combination of production and revenue gains
and lower costs drove the significant improvement in Adjusted Net
Income, Adjusted EBITDA and cash flows for both the quarter and year.
2019 Cash Flow Focused on Highest Return Opportunities
Strong production and stable to declining costs continue to drive cash
flow estimates for 2019, which is largely protected by the robust
hedging program that Northern has in place for 2019 and beyond. While
industry activity will likely remain flat in the current commodity price
environment, the fourth quarter’s oil price volatility increased
Northern’s smaller “ground game” acquisition opportunities. Northern
will continue to opportunistically evaluate larger acquisition prospects
that will accelerate future cash flows, improve long-term leverage
ratios and grow debt adjusted cash flow per share as they present
themselves.
“The steps taken in 2018 put Northern in the enviable position to have a
multi-year outlook for substantial free cash flow, which began in the
fourth quarter of 2018,” said Nick O’Grady, Chief Financial Officer of
Northern Oil and Gas. “We will seek to deploy this cash flow to generate
the best returns for our shareholders, including through further debt
reduction, high return bolt-on acquisitions, and returns of cash in the
form of dividends and share repurchases. We believe a balanced strategy
of disciplined capital allocation can grow our free cash flow profile
and still deliver double-digit total shareholder returns over time.”
2019 Base Plan Predicated on $50 WTI Oil Price Environment
Current Williston Basin activity levels support our 2019 plan to add
between 28 and 32 net wells to production during the year. Production
curtailments and typical weather related completion timing in the first
quarter of 2019 will likely result in net well additions and production
being weighted to the second half of 2019. We currently expect capital
expenditures to range between $247 and $285 million, comprised of
between $227 and $260 million in drilling and completion capital, and
between $20 and $25 million in ground game acquisitions, acreage,
workover and other capitalized expenses. As a result, production is
expected to range between 34,500 and 35,500 Boe per day for 2019.
Northern expects that curtailments and seasonality will result in high
single-digit production declines in the first quarter of 2019 and
production growth resuming as curtailments ease in the second, third and
fourth quarters. Additional information regarding Northern’s current
expectations are included in the table below.
|
|
|
|
|
|
|
2019
|
|
Operating Expenses:
|
|
|
|
Production Expenses (per Boe)
|
|
$6.75 - $7.75
|
|
Production Taxes (% of Oil & Gas Sales)
|
|
~ 9.1%
|
|
General and Administrative Expense (per Boe)
|
|
|
|
Cash
|
|
$1.00 - $1.25
|
|
Non-Cash
|
|
~ $0.50
|
|
|
|
|
|
Average Differential to NYMEX WTI
|
|
$4.50 - $6.50
|
|
|
|
|
FOURTH QUARTER 2018 RESULTS
The following table sets forth selected operating and financial data for
the periods indicated.
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
2018
|
|
2017
|
|
% Change
|
|
Net Production:
|
|
|
|
|
|
|
|
|
Oil (Bbl)
|
|
|
2,745,700
|
|
|
|
1,282,122
|
|
|
114
|
%
|
|
Natural Gas and NGLs (Mcf)
|
|
|
3,540,439
|
|
|
|
1,548,688
|
|
|
129
|
%
|
|
Total (Boe)
|
|
|
3,335,773
|
|
|
|
1,540,237
|
|
|
117
|
%
|
|
|
|
|
|
|
|
|
|
|
Average Daily Production:
|
|
|
|
|
|
|
|
|
Oil (Bbl)
|
|
|
29,845
|
|
|
|
13,936
|
|
|
114
|
%
|
|
Natural Gas and NGL (Mcf)
|
|
|
38,483
|
|
|
|
16,834
|
|
|
129
|
%
|
|
Total (Boe)
|
|
|
36,258
|
|
|
|
16,742
|
|
|
117
|
%
|
|
|
|
|
|
|
|
|
|
|
Average Sales Prices:
|
|
|
|
|
|
|
|
|
Oil (per Bbl)
|
|
$
|
49.15
|
|
|
$
|
51.79
|
|
|
(5
|
)%
|
|
Effect of Gain on Settled Derivatives on Average Price (per Bbl)
|
|
|
3.80
|
|
|
|
(1.45
|
)
|
|
|
|
Oil Net of Settled Derivatives (per Bbl)
|
|
|
52.95
|
|
|
|
50.34
|
|
|
5
|
%
|
|
Natural Gas and NGLs (per Mcf)
|
|
|
4.97
|
|
|
|
3.92
|
|
|
27
|
%
|
|
Realized Price on a Boe Basis Including all Realized Derivative
Settlements
|
|
|
48.86
|
|
|
|
45.85
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses (per Boe):
|
|
|
|
|
|
|
|
|
Production Expenses
|
|
$
|
6.43
|
|
|
$
|
8.65
|
|
|
(26
|
)%
|
|
Production Taxes
|
|
|
4.10
|
|
|
|
4.31
|
|
|
(5
|
)%
|
|
General and Administrative Expense
|
|
|
1.49
|
|
|
|
2.00
|
|
|
(26
|
)%
|
|
Depletion, Depreciation, Amortization and Accretion
|
|
|
14.48
|
|
|
|
11.45
|
|
|
26
|
%
|
|
|
|
|
|
|
|
|
|
|
Net Producing Wells at Period End
|
|
|
325.1
|
|
|
|
229.0
|
|
|
42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FULL YEAR 2018 RESULTS
The following table sets forth selected operating and financial data for
the periods indicated.
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2018
|
|
2017
|
|
% Change
|
|
Net Production:
|
|
|
|
|
|
|
|
|
Oil (Bbl)
|
|
|
7,790,182
|
|
|
|
4,537,295
|
|
|
72
|
%
|
|
Natural Gas and NGLs (Mcf)
|
|
|
9,224,766
|
|
|
|
5,187,886
|
|
|
78
|
%
|
|
Total (Boe)
|
|
|
9,327,643
|
|
|
|
5,401,943
|
|
|
73
|
%
|
|
|
|
|
|
|
|
|
|
|
Average Daily Production:
|
|
|
|
|
|
|
|
|
Oil (Bbl)
|
|
|
21,343
|
|
|
|
12,431
|
|
|
72
|
%
|
|
Natural Gas and NGL (Mcf)
|
|
|
25,273
|
|
|
|
14,213
|
|
|
78
|
%
|
|
Total (Boe)
|
|
|
25,555
|
|
|
|
14,800
|
|
|
73
|
%
|
|
|
|
|
|
|
|
|
|
|
Average Sales Prices:
|
|
|
|
|
|
|
|
|
Oil (per Bbl)
|
|
$
|
57.78
|
|
|
$
|
45.09
|
|
|
28
|
%
|
|
Effect of Gain (Loss) on Settled Derivatives on Average Price (per
Bbl)
|
|
|
(2.94
|
)
|
|
|
0.83
|
|
|
|
|
Oil Net of Settled Derivatives (per Bbl)
|
|
|
54.84
|
|
|
|
45.92
|
|
|
19
|
%
|
|
Natural Gas and NGLs (per Mcf)
|
|
|
4.74
|
|
|
|
3.74
|
|
|
27
|
%
|
|
Realized Price on a Boe Basis Including all Realized Derivative
Settlements
|
|
|
50.50
|
|
|
|
42.16
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses (per Boe):
|
|
|
|
|
|
|
|
|
Production Expenses
|
|
$
|
7.15
|
|
|
$
|
9.21
|
|
|
(22
|
)%
|
|
Production Taxes
|
|
|
4.86
|
|
|
|
3.81
|
|
|
28
|
%
|
|
General and Administrative Expenses
|
|
|
1.56
|
|
|
|
3.51
|
|
|
(56
|
)%
|
|
Depletion, Depreciation, Amortization and Accretion
|
|
|
12.84
|
|
|
|
11.01
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
Net Producing Wells at Period-End
|
|
|
325.1
|
|
|
|
229.0
|
|
|
42
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEDGING
Northern 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 Northern’s open crude
oil derivative contracts scheduled to settle after December 31, 2018.
|
|
|
Crude Oil Derivative Price Swaps
|
|
Contract Period
|
|
Volume (Bbls)
|
|
Weighted Average Price
(per Bbl)
|
|
2019:
|
|
|
|
|
|
1Q
|
|
1,775,700
|
|
$62.89
|
|
2Q
|
|
1,797,250
|
|
$63.09
|
|
3Q
|
|
1,758,480
|
|
$63.21
|
|
4Q
|
|
1,704,300
|
|
$63.63
|
|
2020:
|
|
|
|
|
|
1Q
|
|
1,642,550
|
|
$60.30
|
|
2Q
|
|
1,551,550
|
|
$59.24
|
|
3Q
|
|
1,430,600
|
|
$59.17
|
|
4Q
|
|
1,300,880
|
|
$58.37
|
|
2021:
|
|
|
|
|
|
1Q
|
|
1,019,700
|
|
$58.72
|
|
2Q
|
|
969,150
|
|
$59.63
|
|
3Q
|
|
345,000
|
|
$55.28
|
|
4Q
|
|
345,000
|
|
$55.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil Derivative Basis Swaps(1)
|
|
Contract Period
|
|
Volume (Bbls)
|
|
Weighted Average Price
(per Bbl)
|
|
2019
|
|
3,741,000
|
|
(2.41)
|
__________
(1) Basis swaps are settled using the TMX UHC 1a index, as published by
NGX.
LIQUIDITY
As of December 31, 2018, Northern had $2.4 million in cash and $140.0
million outstanding on its revolving credit facility. Northern had total
liquidity of $287.4 million as of December 31, 2018, consisting of cash
and borrowing availability under the revolving credit facility.
CAPITAL EXPENDITURES & DRILLING ACTIVITY
|
|
|
|
|
|
|
|
|
Fourth Quarter
2018
|
|
Full Year
2018
|
|
Capital Expenditures Incurred:
|
|
|
|
|
|
Drilling and Development Capital Expenditures
|
|
$78.2 million
|
|
$260.9 million
|
|
Acquisition of Oil and Natural Gas Properties
|
|
$353.1 million
|
|
$583.7 million
|
|
Other
|
|
$1.6 million
|
|
$3.9 million
|
|
|
|
|
|
|
|
Net Organic Wells Added to Production
|
|
7.7
|
|
31.2
|
|
|
|
|
|
|
|
Net Producing Wells (Period-End)
|
|
|
|
325.1
|
|
|
|
|
|
|
|
Net Wells in Process (Period-End)
|
|
|
|
22.8
|
|
Increase in Wells in Process over Prior Period
|
|
3.6
|
|
4.5
|
|
Weighted Average AFE for Wells Elected to Year-to-Date
|
|
|
|
$8.1 million
|
|
|
|
|
|
|
Capitalized costs are a function of the number of net well additions
during the period as well as changes in wells in process from beginning
to end of period. Capital expenditures attributable to the 3.6 and 4.5
increase in net wells in process for the fourth quarter and year,
respectively, are reflected in the amounts included for “Drilling and
Development Capital Expenditures” in the table above.
ACREAGE
As of December 31, 2018, Northern controlled leasehold of approximately
157,000 net acres targeting the Williston Basin Bakken and Three Forks
formations, and approximately 93% of its total acreage position was
developed, held by production or held by operations.
FOURTH QUARTER 2018 EARNINGS RELEASE CONFERENCE CALL
In conjunction with Northern’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 Tuesday, March 12, 2019
at 10:00 a.m. Central Time.
Those wishing to listen to the conference call may do so via the
company’s website, www.northernoil.com,
or by phone as follows:
Dial-In Number: (866) 373-3407 (US/Canada)
and (412) 902-1037 (International)
Conference
ID: 13688118 - Northern Oil and Gas, Inc. Fourth Quarter and
Year-End 2018 Earnings Conference Call
Replay
Dial-In Number: (877) 660-6853 (US/Canada) and (201) 612-7415
(International)
Replay Access Code:
13688118 - Replay will be available through March 19, 2019
|
|
|
UPCOMING CONFERENCE SCHEDULE
|
|
|
|
47th Annual Scotia Howard Weil Energy Conference
|
|
March 24 - 27, 2019, New Orleans, LA.
|
|
|
|
25th Annual Independent Petroleum Association of America
|
|
Oil & Gas Investment Symposium (OGIS)
|
|
April 8 - 9, 2019, New York, NY
|
|
|
|
NYSE - Investor Access Day - Energy
|
|
April 10, 2019, New York, NY
|
|
|
ABOUT NORTHERN OIL AND GAS
Northern Oil and Gas, Inc. is an exploration and production company with
a core area of focus in the Williston Basin Bakken and Three Forks play
in North Dakota and Montana.
More information about Northern Oil and Gas, Inc. can be found at www.NorthernOil.com.
SAFE HARBOR
This press release contains forward-looking statements regarding future
events and future results that are subject to the safe harbors created
under the Securities Act of 1933 (the “Securities Act”) and the
Securities Exchange Act of 1934 (the “Exchange Act”). All statements
other than statements of historical facts included in this release
regarding Northern’s financial position, business strategy, 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 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 our company’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 Northern’s properties, Northern’s ability to acquire
additional development opportunities, changes in Northern’s reserves
estimates or the value thereof, general economic or industry conditions,
nationally and/or in the communities in which Northern conducts
business, changes in the interest rate environment, legislation or
regulatory requirements, conditions of the securities markets,
Northern’s ability to raise or access capital, changes in accounting
principles, policies or guidelines, financial or political instability,
acts of war or terrorism, and other economic, competitive, governmental,
regulatory and technical factors affecting our company’s operations,
products and prices.
Northern 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 Northern’s
control. Northern does not undertake any duty to update or revise any
forward-looking statements, except as may be required by the federal
securities laws.
|
|
|
|
|
|
|
NORTHERN OIL AND GAS, INC.
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
Oil and Gas Sales
|
|
$
|
152,565,878
|
|
|
$
|
72,476,191
|
|
|
$
|
493,909,268
|
|
|
$
|
223,963,010
|
|
|
Gain (Loss) on Derivative Instruments, Net
|
|
|
290,628,481
|
|
|
|
(35,477,317
|
)
|
|
|
185,006,169
|
|
|
|
(14,666,655
|
)
|
|
Other Revenue
|
|
|
1,555
|
|
|
|
3,407
|
|
|
|
9,059
|
|
|
|
23,314
|
|
|
Total Revenues
|
|
|
443,195,914
|
|
|
|
37,002,281
|
|
|
|
678,924,496
|
|
|
|
209,319,669
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
Production Expenses
|
|
|
21,447,799
|
|
|
|
13,315,460
|
|
|
|
66,646,080
|
|
|
|
49,732,861
|
|
|
Production Taxes
|
|
|
13,668,566
|
|
|
|
6,638,456
|
|
|
|
45,301,892
|
|
|
|
20,604,256
|
|
|
General and Administrative Expense
|
|
|
4,975,781
|
|
|
|
3,076,000
|
|
|
|
14,568,362
|
|
|
|
18,987,801
|
|
|
Depletion, Depreciation, Amortization and Accretion
|
|
|
48,294,929
|
|
|
|
17,631,875
|
|
|
|
119,779,675
|
|
|
|
59,500,155
|
|
|
Total Expenses
|
|
|
88,387,075
|
|
|
|
40,661,791
|
|
|
|
246,296,009
|
|
|
|
148,825,073
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM OPERATIONS
|
|
|
354,808,839
|
|
|
|
(3,659,510
|
)
|
|
|
432,628,487
|
|
|
|
60,494,596
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
Interest Expense, Net of Capitalization
|
|
|
(20,057,024
|
)
|
|
|
(20,881,740
|
)
|
|
|
(86,005,183
|
)
|
|
|
(70,286,341
|
)
|
|
Write-off of Debt Issuance Costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(95,135
|
)
|
|
Loss on the Extinguishment of Debt
|
|
|
(73,054,861
|
)
|
|
|
(992,950
|
)
|
|
|
(173,430,042
|
)
|
|
|
(992,950
|
)
|
|
Debt Exchange Derivative Loss
|
|
|
(13,660,976
|
)
|
|
|
—
|
|
|
|
(598,124
|
)
|
|
|
—
|
|
|
Contingent Consideration Loss
|
|
|
(28,968,176
|
)
|
|
|
—
|
|
|
|
(28,968,176
|
)
|
|
|
—
|
|
|
Financing Expense
|
|
|
(883,698
|
)
|
|
|
—
|
|
|
|
(883,698
|
)
|
|
|
—
|
|
|
Other Income (Expense)
|
|
|
53,159
|
|
|
|
115,497
|
|
|
|
890,971
|
|
|
|
116,042
|
|
|
Total Other Income (Expense)
|
|
|
(136,571,576
|
)
|
|
|
(21,759,193
|
)
|
|
|
(288,994,252
|
)
|
|
|
(71,258,384
|
)
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
218,237,263
|
|
|
|
(25,418,703
|
)
|
|
|
143,634,235
|
|
|
|
(10,763,788
|
)
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX BENEFIT
|
|
|
(55,000
|
)
|
|
|
(1,570,016
|
)
|
|
|
(55,000
|
)
|
|
|
(1,570,016
|
)
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
218,292,263
|
|
|
$
|
(23,848,687
|
)
|
|
|
143,689,235
|
|
|
$
|
(9,193,772
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per Common Share – Basic
|
|
$
|
0.58
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.61
|
|
|
$
|
(0.15
|
)
|
|
Net Income (Loss) Per Common Share – Diluted
|
|
$
|
0.58
|
|
|
|
(0.37
|
)
|
|
$
|
0.61
|
|
|
$
|
(0.15
|
)
|
|
Weighted Average Shares Outstanding – Basic
|
|
|
378,799,871
|
|
|
|
64,672,781
|
|
|
|
236,206,457
|
|
|
|
62,408,855
|
|
|
Weighted Average Shares Outstanding – Diluted
|
|
|
379,401,105
|
|
|
|
64,672,781
|
|
|
|
236,773,911
|
|
|
|
62,408,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORTHERN OIL AND GAS, INC.
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
ASSETS
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
2,357,858
|
|
|
$
|
102,183,191
|
|
|
Accounts Receivable, Net
|
|
|
96,352,918
|
|
|
|
46,851,682
|
|
|
Advances to Operators
|
|
|
268,494
|
|
|
|
604,977
|
|
|
Prepaid Expenses and Other
|
|
|
12,360,027
|
|
|
|
2,333,288
|
|
|
Derivative Instruments
|
|
|
115,870,246
|
|
|
|
—
|
|
|
Income Tax Receivable
|
|
|
1,205,016
|
|
|
|
785,016
|
|
|
Total Current Assets
|
|
|
228,414,559
|
|
|
|
152,758,154
|
|
|
|
|
|
|
|
|
Property and Equipment:
|
|
|
|
|
|
Oil and Natural Gas Properties, Full Cost Method of Accounting
|
|
|
|
|
|
Proved
|
|
|
3,431,427,768
|
|
|
|
2,585,490,133
|
|
|
Unproved
|
|
|
4,306,513
|
|
|
|
1,699,344
|
|
|
Other Property and Equipment
|
|
|
998,192
|
|
|
|
981,303
|
|
|
Total Property and Equipment
|
|
|
3,436,732,473
|
|
|
|
2,588,170,780
|
|
|
Less – Accumulated Depreciation, Depletion and Impairment
|
|
|
(2,233,987,232
|
)
|
|
|
(2,114,951,189
|
)
|
|
Total Property and Equipment, Net
|
|
|
1,202,745,241
|
|
|
|
473,219,591
|
|
|
|
|
|
|
|
|
Derivative Instruments
|
|
|
61,842,846
|
|
|
|
—
|
|
|
Deferred Income Taxes
|
|
|
420,000
|
|
|
|
785,000
|
|
|
Other Noncurrent Assets, Net
|
|
|
10,222,659
|
|
|
|
5,490,934
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
1,503,645,305
|
|
|
$
|
632,253,679
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
Accounts Payable
|
|
$
|
135,482,513
|
|
|
$
|
93,152,297
|
|
|
Accrued Expenses
|
|
|
2,769,438
|
|
|
|
6,339,425
|
|
|
Accrued Interest
|
|
|
16,467,628
|
|
|
|
4,836,112
|
|
|
Debt Exchange Derivative
|
|
|
18,183,212
|
|
|
|
—
|
|
|
Derivative Instruments
|
|
|
—
|
|
|
|
18,681,891
|
|
|
Contingent Consideration
|
|
|
58,068,917
|
|
|
|
—
|
|
|
Asset Retirement Obligations
|
|
|
554,589
|
|
|
|
565,521
|
|
|
Total Current Liabilities
|
|
|
231,526,297
|
|
|
|
123,575,246
|
|
|
|
|
|
|
|
|
Long-term Debt, Net
|
|
|
830,203,272
|
|
|
|
979,324,222
|
|
|
Derivative Instruments
|
|
|
—
|
|
|
|
11,496,929
|
|
|
Asset Retirement Obligations
|
|
|
11,946,271
|
|
|
|
8,562,607
|
|
|
Other Noncurrent Liabilities
|
|
|
104,582
|
|
|
|
135,225
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
1,073,780,422
|
|
|
|
1,123,094,229
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
Preferred Stock, Par Value $.001; 5,000,000 Authorized, No Shares
Outstanding
|
|
|
—
|
|
|
|
—
|
|
|
Common Stock, Par Value $.001; 675,000,000 Authorized (12/31/2018
– 378,333,070 Shares Outstanding and 12/31/2017 – 142,500,000
Authorized, 66,791,633 Shares Outstanding)
|
|
|
378,333
|
|
|
|
66,792
|
|
|
Additional Paid-In Capital
|
|
|
1,226,371,047
|
|
|
|
449,666,390
|
|
|
Retained Deficit
|
|
|
(796,884,497
|
)
|
|
|
(940,573,732
|
)
|
|
Total Stockholders’ Equity (Deficit)
|
|
|
429,864,883
|
|
|
|
(490,840,550
|
)
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
$
|
1,503,645,305
|
|
|
$
|
632,253,679
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
Adjusted Net Income and Adjusted EBITDA are non-GAAP measures. Net
income (loss) is the most directly comparable GAAP measure for both
Adjusted Net Income and Adjusted EBITDA, and tabular reconciliations for
these measures are included below. Northern defines Adjusted Net Income
as net income (loss) excluding (i) (gain) loss on the mark-to-market of
derivative instruments, net of tax, (ii) financing expense, net of tax,
(iii) write-off of debt issuance costs, net of tax, (iv) loss on the
extinguishment of debt, net of tax, (v) debt exchange derivative loss,
net of tax, (vi) certain legal settlements, net of tax, and (vii)
contingent consideration loss, net of tax. Northern defines Adjusted
EBITDA as net income (loss) before (i) interest expense, (ii) income
taxes, (iii) depreciation, depletion, amortization, and accretion, (iv)
(gain) loss on the mark-to-market of derivative instruments, (v)
non-cash share based compensation expense, (vi) write-off of debt
issuance costs, (vii) loss on the extinguishment of debt, (viii) debt
exchange derivative loss, (ix) contingent consideration loss, and (x)
financing expense. 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. Specifically, management believes the non-GAAP
financial measures included herein provide useful information to both
management and investors by excluding certain items that management
believes are not indicative of Northern’s core operating results. In
addition, these non-GAAP financial measures are used by management for
budgeting and forecasting as well as subsequently measuring Northern’s
performance, and management believes it is providing investors with
financial measures that most closely align to its internal measurement
processes.
Reconciliation of Adjusted Net Income
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
(in thousands, except share and per common share data)
|
|
Net Income (Loss)
|
|
$
|
218,292
|
|
|
$
|
(23,849
|
)
|
|
$
|
143,689
|
|
|
$
|
(9,194
|
)
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Impact of Selected Items:
|
|
|
|
|
|
|
|
|
|
(Gain) Loss on the Mark-to-Market of Derivative Instruments
|
|
|
(280,195
|
)
|
|
|
33,614
|
|
|
|
(207,892
|
)
|
|
|
18,443
|
|
|
Financing Expense
|
|
|
884
|
|
|
|
—
|
|
|
|
884
|
|
|
|
—
|
|
|
Write-off of Debt Issuance Costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
95
|
|
|
Loss on the Extinguishment of Debt
|
|
|
73,055
|
|
|
|
993
|
|
|
|
173,430
|
|
|
|
993
|
|
|
Debt Exchange Derivative Loss
|
|
|
13,661
|
|
|
|
—
|
|
|
|
598
|
|
|
|
—
|
|
|
Contingent Consideration Loss
|
|
|
28,968
|
|
|
|
—
|
|
|
|
28,968
|
|
|
|
—
|
|
|
Legal Settlements
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,589
|
|
|
Selected Items, Before Income Taxes (Benefit)
|
|
|
(163,627
|
)
|
|
|
34,607
|
|
|
|
(4,012
|
)
|
|
|
23,121
|
|
|
Income Tax (Benefit) of Selected Items (1)
|
|
|
40,089
|
|
|
|
(4,119
|
)
|
|
|
983
|
|
|
|
(5,388
|
)
|
|
Selected Items, Net of Income Taxes (Benefit)
|
|
|
(123,538
|
)
|
|
|
30,487
|
|
|
|
(3,029
|
)
|
|
|
17,733
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
|
|
$
|
94,754
|
|
|
$
|
6,639
|
|
|
$
|
140,660
|
|
|
$
|
8,539
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding – Basic
|
|
|
378,799,871
|
|
|
|
64,672,781
|
|
|
|
236,206,457
|
|
|
|
62,408,855
|
|
|
Weighted Average Shares Outstanding – Diluted
|
|
|
379,401,105
|
|
|
|
65,077,695
|
|
|
|
236,773,911
|
|
|
|
62,769,234
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per Common Share – Basic
|
|
$
|
0.58
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.61
|
|
|
$
|
(0.15
|
)
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Impact of Selected Items, Net of Income Taxes (Benefit)
|
|
$
|
(0.33
|
)
|
|
|
0.47
|
|
|
|
(0.01
|
)
|
|
|
0.29
|
|
|
Adjusted Net Income Per Common Share – Basic
|
|
$
|
0.25
|
|
|
$
|
0.10
|
|
|
$
|
0.60
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per Common Share – Diluted
|
|
$
|
0.58
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.61
|
|
|
$
|
(0.15
|
)
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Impact of Selected Items, Net of Income Taxes (Benefit)
|
|
$
|
(0.33
|
)
|
|
|
0.47
|
|
|
|
(0.02
|
)
|
|
|
0.29
|
|
|
Adjusted Net Income Per Common Share – Diluted
|
|
$
|
0.25
|
|
|
$
|
0.10
|
|
|
$
|
0.59
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________
|
(1)
|
|
For the 2018 columns, this represents a tax impact using an
estimated tax rate of 24.5% for the three and twelve months ended
December 31, 2018 and does not include an adjustment for a change in
valuation allowance. For the 2017 columns, this represents a tax
impact using an estimated tax rate of 38.8% and 39.1% for the three
and twelve months ended December 31, 2017, respectively, which
includes a $9.3 million and $3.7 million, excluding the impact for
the Tax Cuts and Jobs Act, adjustment for a change in valuation
allowance for the three and twelve months ended December 30, 2017,
respectively.
|
|
|
|
|
Reconciliation of Adjusted EBITDA
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
(in thousands)
|
|
Net Income (Loss)
|
|
$
|
218,292
|
|
|
$
|
(23,849
|
)
|
|
$
|
143,689
|
|
|
$
|
(9,194
|
)
|
|
Add:
|
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
|
20,057
|
|
|
|
20,882
|
|
|
|
86,005
|
|
|
|
70,286
|
|
|
Income Tax Provision (Benefit)
|
|
|
(55
|
)
|
|
|
(1,570
|
)
|
|
|
(55
|
)
|
|
|
(1,570
|
)
|
|
Depreciation, Depletion, Amortization and Accretion
|
|
|
48,295
|
|
|
|
17,632
|
|
|
|
119,780
|
|
|
|
59,500
|
|
|
Non-Cash Share Based Compensation
|
|
|
1,903
|
|
|
|
841
|
|
|
|
3,876
|
|
|
|
6,107
|
|
|
Write-off of Debt Issuance Costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
95
|
|
|
Loss on the Extinguishment of Debt
|
|
|
73,055
|
|
|
|
993
|
|
|
|
173,430
|
|
|
|
993
|
|
|
Debt Exchange Derivative Loss
|
|
|
13,661
|
|
|
|
—
|
|
|
|
598
|
|
|
|
—
|
|
|
Contingent Consideration Loss
|
|
|
28,968
|
|
|
|
—
|
|
|
|
28,968
|
|
|
|
—
|
|
|
Financing Expense
|
|
|
884
|
|
|
|
—
|
|
|
|
884
|
|
|
|
—
|
|
|
(Gain) Loss on the Mark-to-Market of Derivative Instruments
|
|
|
(280,195
|
)
|
|
|
33,614
|
|
|
|
(207,892
|
)
|
|
|
18,443
|
|
|
Adjusted EBITDA
|
|
$
|
124,865
|
|
|
$
|
48,542
|
|
|
$
|
349,283
|
|
|
$
|
144,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Click
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View source version on businesswire.com: https://www.businesswire.com/news/home/20190312005267/en/
Nicholas O'Grady
Chief Financial Officer
952-476-9800
nogrady@northernoil.com
Source: Northern Oil and Gas, Inc.
Released March 12, 2019