-
Northern has repurchased approximately 12.0 million shares of common
stock since October 1, 2018, 4.6 million shares of which were
repurchased in this calendar year through January 21, 2019.
-
Production for the fourth quarter of 2018 is expected to be in the
upper half of prior guidance of 35,000 - 36,000 Boe per day, despite
negative impact from curtailments and shut-ins during a turbulent
quarter for in-basin realized prices.
-
Northern increased hedged oil volumes to further protect cash flows
and liquidity, with 2019 hedges averaging over $63 per barrel
(detailed hedge positon included below).
-
Northern experienced strong cash flows during the fourth quarter,
reducing the amount drawn on the company’s revolving credit facility
to only $140 million at December 31, 2018, a $35 million reduction
from the previously announced balance on November 5, 2018.
MINNEAPOLIS--(BUSINESS WIRE)--
Northern Oil and Gas, Inc. (NYSE American: NOG) today announced initial
activity under its previously announced stock repurchase program and
provided a general business update, including updated fourth quarter
estimates and hedging information. Management will be meeting with
investors in several cities over the coming weeks.
OPERATIONS
Completion activity for the quarter was in line with expectations. The
company added 7.7 organic net wells to production during the fourth
quarter, bringing 2018 organic well additions to 30.8 net wells.
Differentials were extremely volatile during the quarter and, based on
October and November receipts, Northern now expects its fourth quarter
average differential will be between $9.00 - $10.00 per barrel. This
would result in 2018 average differentials modestly above the high end
of prior guidance of $4.75 - $5.75. Differentials in the first quarter
of 2019 have improved substantially from fourth quarter levels, as
anticipated. Fourth quarter lease operating expenses (LOE) were better
than anticipated, and as a result full year 2018 average LOE is now
expected to be slightly below the low end of prior guidance of
$7.50 - $7.75.
CASH FLOW AND LIQUIDITY
Northern anticipates generating strong cash flow from operations in 2019
that exceeds the company’s capital expenditure budget. The focus
continues to be on executing the stated business plan of organic
production growth while generating free cash flow. The company will seek
to allocate a portion of that cash flow to acquisitions and debt
reduction, and monitor additional opportunities to return capital to
shareholders. A recent amendment from Northern’s bank syndicate,
allowing the company to repurchase up to $50 million of its Senior
Secured Notes, could be used to further reduce debt and interest
expense. Northern had total liquidity of approximately $285 million as
of December 31, 2018, consisting of cash and borrowing availability
under the revolving credit facility.
ACQUISITION OPPORTUNITIES
Northern’s goal is to leverage its strong financial position to allow
the company to counter-cyclically invest in acreage and drilling
opportunities in the Williston Basin during volatile pricing periods.
The company has had great success in this regard recently. Northern’s
ground game acquisition activity increased toward the end of the year
with lower oil prices as land brokers and operators began shedding
capital expenditure exposure. The company acquired approximately 1.0 net
producing well, 3.3 net wells in process and 8,465 net acres in the
fourth quarter and first few weeks of January at an average price of
$1,785 per acre. As the natural consolidator of non-operated working
interests in the Williston Basin, Northern believes this trend will
disproportionately benefit the company.
MANAGEMENT COMMENT
“Despite a very volatile market, Northern’s assets continued to deliver
in the fourth quarter, allowing the company to both reduce debt and
return capital to investors,” commented Northern’s Chief Executive
Officer, Brandon Elliott. “Northern is well positioned to take advantage
of volatile commodity markets. We look forward to meeting with investors
over the coming weeks and announcing our financial performance for 2018
and the fourth quarter in mid-March.”
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 tables summarize Northern’s crude oil
derivative and basis swap contracts scheduled to settle after
September 30, 2018.
|
|
|
Crude Oil Derivative Swaps
|
|
Contract Period
|
|
|
Volume (Bbls)
|
|
|
Weighted Average Price (per Bbl)
|
|
2018:
|
|
|
|
|
|
|
|
4Q
|
|
|
1,855,300
|
|
|
$63.66
|
|
2019:
|
|
|
|
|
|
|
|
1Q
|
|
|
1,775,700
|
|
|
$62.89
|
|
2Q
|
|
|
1,797,250
|
|
|
$63.09
|
|
3Q
|
|
|
1,666,480
|
|
|
$63.44
|
|
4Q
|
|
|
1,612,300
|
|
|
$63.90
|
|
2020:
|
|
|
|
|
|
|
|
1Q
|
|
|
1,574,300
|
|
|
$60.50
|
|
2Q
|
|
|
1,392,300
|
|
|
$59.65
|
|
3Q
|
|
|
1,223,600
|
|
|
$59.71
|
|
4Q
|
|
|
1,093,880
|
|
|
$58.83
|
|
2021:
|
|
|
|
|
|
|
|
1Q
|
|
|
817,200
|
|
|
$59.52
|
|
2Q
|
|
|
764,400
|
|
|
$60.75
|
|
3Q
|
|
|
138,000
|
|
|
$55.00
|
|
4Q
|
|
|
138,000
|
|
|
$55.00
|
|
|
|
Crude Oil Derivative Basis Swaps(1)
|
|
Contract Period
|
|
|
Total Volumes (Bbls)
|
|
|
Weighted Average Differential ($/Bbl)
|
|
2019
|
|
|
3,650,000
|
|
|
($2.41)
|
|
|
|
|
|
|
|
|
|
(1) Basis swaps are settled using the TMX UHC 1a index,
as published by NGX.
|
|
|
PRELIMINARY FINANCIAL INFORMATION
The foregoing preliminary unaudited financial and operating information
and estimates, including with respect to production, net well additions,
differentials, lease operating expenses, liquidity and other matters, is
based upon estimates and subject to completion of Northern’s financial
closing procedures and external audit processes. Such information has
been prepared by management solely on the basis of currently available
information. The preliminary unaudited information does not represent
and is not a substitute for a comprehensive statement of financial and
operating results, and Northern’s actual results may differ materially
from these estimates because of final adjustments, the completion of the
company’s financial closing procedures, and other developments after the
date of this release.
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 production and sales, cash flows, 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: risks related
to Northern’s final financial and operating closing procedures and
external audit processes, 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.
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Source: Northern Oil and Gas, Inc.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190122005321/en/
Nicholas O'Grady
Chief Financial Officer
(952) 476-9800
ir@northernoil.com
Source: Northern Oil and Gas, Inc.
Released January 22, 2019