NOG Beats Estimates on Strong Permian Production
Northern Oil and Gas, Inc. (NOG) posted adjusted net income of $130.5 million, or $1.28 per adjusted diluted share, for the first quarter.
The company’s adjusted EBITDA in the first quarter was $387.0 million, which was a 19 percent increase year over year, NOG said in its most recent earnings release. It beat the Zacks Consensus Estimate of $1.15 per share for the quarter.
NOG’s first-quarter production was 119,436 barrels of oil equivalent per day (boepd), up four percent from the fourth quarter of 2023 and an increase of 37 percent from the first quarter of 2023. Oil represented 59 percent of total production in the first quarter with 70,181 barrels per day (bpd), an increase of two percent sequentially and an increase of 30 percent year over year, according to the release.
NOG said it had 25.3 net wells turned in-line during the first quarter, compared to 27.6 net wells turned in-line in the previous quarter.
Production increased quarter over quarter, “driven primarily by better than expected well performance and growth in NOG’s Permian Basin production,” NOG said, which increased by six percent on a sequential quarterly basis and represented record quarterly volumes in the basin for the company. The Permian represented approximately 45 percent of total volumes and eclipsed the Williston to become the largest basin by production in the quarter for the first time in NOG's history, it noted.
The company’s capital expenditures for the first quarter were $295.8 million, excluding non-budgeted acquisitions and other costs, composed of $291.8 million of total drilling and completion (D&C) capital on organic and Ground Game assets, and $4.0 million of Ground Game activity. D&C spending was driven by an acceleration of development activity, some of which had been previously planned for the second quarter of 2024, NOG said.
NOG’s Permian Basin spending was 68 percent of the capital expenditures for the first quarter, while the Williston accounted for 26 percent, and the Appalachian six percent. On the Ground Game acquisition front, NOG said it closed on six transactions through various structures during the first quarter totaling 0.6 net current and future development wells and 1,709 net acres.
NOG reiterated its 2024 production guidance of 115,000 - 120,000 boepd. “Given the acceleration and pull forward of activity in the first quarter,” NOG said it expects relatively flat production in the second quarter and approximately 22 - 25 wells turned in-line.
“NOG has started 2024 in a powerful way, with strong well performance and better than expected cash flow and production,” NOG CEO Nick O’Grady said. “Our assets continue to perform exceptionally well, and we took advantage of market opportunities to repurchase shares at attractive prices during the first quarter. The acquisition pipeline remains robust and we remain disciplined in our approach to value creation, with a clear focus on maximizing total return for our investors”.
Despite the acceleration of cash flow and production in the first quarter, NOG noted it still expects approximately 60 percent of its budget to be incurred in the first half of 2024, with approximately $240 million to $260 million of capital expenditures in the second quarter, and reiterated its overall 2024 budget of $825 - $900 million.
NOG said it expects modestly improving differentials for crude oil in the Williston Basin and materially wider gas differentials in the Permian Basin, driven by negative field level Waha hub prices, in the second quarter.
https://www.rigzone.com/news/wire/nog_beats_estimates_on_strong_permian_production-02-may-2024-176611-article/