-
Total proved reserves increased 79% to 135.5 million barrels of oil
equivalent (“MMBoe”), 83% crude oil, with an associated PV-10 of $2.18
billion.
-
Total proved reserves increased 38% before giving credit for the
acquisitions announced and closed in 2018.
-
Proved developed reserves increased 64% to 76.2 MMBoe, with an
associated PV-10 of $1.52 billion.
-
Proved undeveloped reserves included 97.9 net drilling locations,
reflecting an average of less than 20 net organic wells per year over
the five year drill schedule limitation, compared to the approximately
31 net organic wells that Northern added to production during 2018.
MINNEAPOLIS--(BUSINESS WIRE)--
Northern Oil and Gas, Inc. (NYSE American: NOG) today announced its
total proved reserves at December 31, 2018 increased 79% to 135.5
million barrels of oil equivalent with an associated PV-10 value of
$2.18 billion (see “Reconciliation of PV-10 to Standardized Measure”
below). Reserves are calculated under SEC guidelines relating to both
commodity price assumptions and a maximum five year drill schedule.
Northern’s proved reserves are located entirely in the Williston Basin
in North Dakota and Montana and do not include or reflect the value of
Northern’s open crude oil hedge contracts listed below.
“This reserve report highlights the strength of Northern’s organic
assets as proved reserves grew 38% before any contribution from 2018
acquisitions,” commented Northern’s Chief Executive Officer, Brandon
Elliott. “Northern’s size allows our non-operated business model to
actively manage and strategically deploy capital in the Williston Basin
to seek the highest returns possible as the play evolves. These
advantages allow Northern to increase its core drilling inventory and
generate higher returns in a manner not necessarily available to an
operated business model.”
Table 1: Proved Reserves and PV-10 at SEC Pricing (as of December 31,
2018)
|
|
|
SEC Pricing(1)
|
|
|
|
Reserve Volumes
|
|
PV-10(3)
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Oil
|
|
Natural Gas
|
|
Total
|
|
|
|
(In
|
|
|
|
Reserve Category
|
|
(MBbls)
|
|
(MMcf)
|
|
(MBoe)(2)
|
|
%
|
|
thousands)
|
|
%
|
|
PDP Properties
|
|
55,426
|
|
73,266
|
|
67,637
|
|
50
|
%
|
|
$
|
1,310,931
|
|
60
|
%
|
|
PDNP Properties
|
|
7,071
|
|
9,048
|
|
8,579
|
|
6
|
%
|
|
206,113
|
|
10
|
%
|
|
PUD Properties(4)
|
|
50,476
|
|
52,752
|
|
59,268
|
|
44
|
%
|
|
663,184
|
|
30
|
%
|
|
Total Proved
|
|
112,973
|
|
135,066
|
|
135,484
|
|
100
|
%
|
|
$
|
2,180,228
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________
|
(1)
|
|
Based on average prices of $65.56 per barrel of oil and $3.10 per
MMbtu of natural gas. Under SEC guidelines, these prices represent
the average prices at the beginning of each month in the 12-month
period prior to the end of the reporting period. The average
resulting price used as of December 31, 2018, after adjustment to
reflect applicable transportation and quality differentials, was
$61.23 per barrel of oil and $4.50 per Mcf of natural gas.
|
|
(2)
|
|
Boe are computed based on a conversion ratio of one Boe for each
barrel of oil and one Boe for every 6,000 cubic feet (i.e., 6 Mcf)
of natural gas.
|
|
(3)
|
|
Pre-tax PV10%, or “PV-10,” may be considered a non-GAAP financial
measure as defined by the SEC and is derived from the standardized
measure of discounted future net cash flows, which is the most
directly comparable GAAP measure. See “Reconciliation of PV-10 to
Standardized Measure” below.
|
|
(4)
|
|
SEC guidelines only allow for five years of total future drilling
inventory.
|
|
|
|
|
Table 2: Changes in Proved Reserves
|
|
|
Natural Gas
|
|
Oil
|
|
|
|
|
|
(BCF)
|
|
(MMBBLS)
|
|
MMBOE
|
|
Proved Developed and Undeveloped Reserves at December 31, 2017
|
|
78.1
|
|
|
62.8
|
|
|
75.8
|
|
|
|
|
|
|
|
|
|
|
Revisions of Previous Estimates
|
|
0.4
|
|
|
3.5
|
|
|
3.5
|
|
|
Extensions, Discoveries and Other Additions
|
|
28.4
|
|
|
28.5
|
|
|
33.3
|
|
|
Purchases of Minerals in Place
|
|
37.4
|
|
|
26.0
|
|
|
32.2
|
|
|
Production
|
|
(9.2
|
)
|
|
(7.8
|
)
|
|
(9.3
|
)
|
|
|
|
|
|
|
|
|
|
Proved Developed and Undeveloped Reserves at December 31, 2018
|
|
135.1
|
|
|
113.0
|
|
|
135.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3: Proved Reserves and PV-10 at $55 Flat Price Deck (as of
December 31, 2018)
To illustrate the effects of commodity price fluctuations on estimated
reserve quantities and present values, Northern is also providing an
alternative summary of proved reserves, calculated in accordance with
SEC rules, with the exception of using constant prices of $55.00 per
barrel for oil and $2.70 per MMbtu of natural Gas.
|
|
|
$55 Flat Price Deck(1)
|
|
|
|
Reserve Volumes
|
|
PV-10(3)
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
Oil
|
|
Natural Gas
|
|
Total
|
|
|
|
(In
|
|
|
|
Reserve Category
|
|
(MBbls)
|
|
(MMcf)
|
|
(MBoe)(2)
|
|
%
|
|
thousands)
|
|
%
|
|
PDP Properties
|
|
53,272
|
|
70,130
|
|
64,960
|
|
50
|
%
|
|
$
|
1,013,718
|
|
64%
|
|
PDNP Properties
|
|
6,957
|
|
8,906
|
|
8,441
|
|
7
|
%
|
|
163,494
|
|
10%
|
|
PUD Properties(4)
|
|
47,774
|
|
49,531
|
|
56,029
|
|
43
|
%
|
|
416,081
|
|
26%
|
|
Total Proved
|
|
108,003
|
|
128,567
|
|
129,430
|
|
100
|
%
|
|
$
|
1,593,293
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________
|
(1)
|
|
Based on average prices of $55.00 per barrel of oil and $2.70 per
MMbtu of natural gas. The average resulting price used as of
December 31, 2018, after adjustment to reflect applicable
transportation and quality differentials, was $50.66 per barrel of
oil and $3.92 per Mcf of natural gas.
|
|
(2)
|
|
Boe are computed based on a conversion ratio of one Boe for each
barrel of oil and one Boe for every 6,000 cubic feet (i.e., 6 Mcf)
of natural gas.
|
|
(3)
|
|
Pre-tax PV10%, or PV-10, may be considered a non-GAAP financial
measure. See “Reconciliation of PV-10 to Standardized Measure” below
for a reconciliation of the PV-10 of our SEC Pricing proved reserves
to the Standardized Measure. GAAP does not prescribe a corresponding
measure for PV-10 of proved reserves based on other than SEC prices.
As a result, it is not practicable for us to reconcile the PV-10 of
our proved reserves based on the $55 Flat Price Deck.
|
|
(4)
|
|
SEC guidelines only allow for five years of total future drilling
inventory.
|
|
|
|
|
Crude Oil Hedges
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 crude oil
derivative and basis swap contracts scheduled to settle after
December 31, 2018.
|
Crude Oil Derivative 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.
|
|
|
|
|
Reconciliation of PV-10 to Standardized Measure
PV-10 is derived from the Standardized Measure of discounted future net
cash flows, which is the most directly comparable GAAP financial measure
for proved reserves calculated using SEC pricing. PV-10 is a computation
of the Standardized Measure of discounted future net cash flows on a
pre-tax basis. PV-10 is equal to the Standardized Measure of discounted
future net cash flows at the applicable date, before deducting future
income taxes, discounted at 10 percent. We believe that the presentation
of PV-10 is relevant and useful to investors because it presents the
discounted future net cash flows attributable to our estimated net
proved reserves prior to taking into account future corporate income
taxes, and it is a useful measure for evaluating the relative monetary
significance of our oil and natural gas properties. Further, investors
may utilize the measure as a basis for comparison of the relative size
and value of our reserves to other companies. Moreover, GAAP does not
provide a measure of estimated future net cash flows for reserves other
than proved reserves or for reserves calculated using prices other than
SEC prices. We use this measure when assessing the potential return on
investment related to our oil and natural gas properties. PV-10,
however, is not a substitute for the Standardized Measure of discounted
future net cash flows. Our PV-10 measure and the Standardized Measure of
discounted future net cash flows do not purport to represent the fair
value of our oil and natural gas reserves.
The following table reconciles the pre-tax PV10% value of our SEC
Pricing proved reserves as of December 31, 2018 to the Standardized
Measure of discounted future net cash flows.
|
SEC Pricing Proved Reserves
|
|
(in thousands)
|
|
Standardized Measure Reconciliation
|
|
|
|
Pre-Tax Present Value of Estimated Future Net Revenues (Pre-Tax
PV10%)
|
|
$
|
2,180,228
|
|
|
Future Income Taxes, Discounted at 10%
|
|
(300,197
|
)
|
|
Standardized Measure of Discounted Future Net Cash Flows
|
|
$
|
1,880,031
|
|
|
|
|
|
|
|
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 Northern’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 Northern’s operations,
products, services 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.
Source: Northern Oil and Gas, Inc.
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View source version on businesswire.com: https://www.businesswire.com/news/home/20190307005111/en/
Nicholas O’Grady
Chief Financial Officer
(952) 476-9800
ir@northernoil.com
Source: Northern Oil and Gas, Inc.
Released March 7, 2019