NOG - Earnings call transcript Q1 2018 | Northern Oil and Gas, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to Northern Oil and Gas Inc., First Quarter 2018 Conference Call. Currently, at this time, all participants are in a listen only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] Also a reminder, this conference call is being recorded. I'd now like to turn the call over to your host to Brandon Elliott. begin. may you Sir,

Brandon Elliott

morning is Good everyone. Glenn. Brandon. This Thanks,

you first quarter are happy earnings Northern's welcome to We XXXX to call.

different risks to remarks be Before let we include results others have these as We statements these disclaim Private cause that forward-looking included our Please of reports materially the questions, These forward-looking Securities Report filings expectations me statements. forward-looking to Annual Form forward-looking results, could the obligation to our by statements. advised any release, our actual our the cover our statements on are from contemplated to get Safe and quarterly matters Harbor on may to the your that XX-K, with today, Form be Those risks including including our update the the well earnings described Litigation uncertainties meaning XX-Q. among as Act. in answers within language. we subject Reform SEC, that in and

call, conference certain earnings earlier EBITDA. including net measures we discuss this that measure the be issued morning. During release measures, found to adjusted we of these can in income Reconciliations closest this non-GAAP adjusted GAAP and financial the may

the finally about and strategy will And to questions. acquisitions of for plan then, then here is through talk cover I our of some we Reger of Board highlights Akradi, first call day. Okay, Michael our about will the quarter turn state call your to financials the to over you Allen the and the walk overall strategy I'll to talk the the turn will then and consolidation to Chairman Chad over get Bahram the will Company. and

quarter extracted net saying to a production and anticipated Let the resulted more results an operating than production of me in start going wells including us growth. adding off XXXX by strong for very first

our added wells we The adding to continue in. we day, drilling first oil XX,XXX we exited we wells of net the at best which than production during X.X% the be only the a exited guidance we net did the more not of above quarter, completing carried We wells and building increase X.X add have wells to XXXX into momentum we for Importantly, X.X to sequentially. in increase net production the XX approximately quarter, wells with net some coming X.X per list. XX% participated we and the as after process saw year-over-year wells production in equivalent first are adding barrels wells to production anticipated, net and drove quarter

Our process in with their of in eight our four continues of best-in-class of day and all-time has wells XX many wells the Basin Northern top Continental the in Continental a top working by complimented leading Williston recently the XX. operators way the with Resource to Bakken best of in rate inventory. the five which announced XX% of process be interest

our addition to excellent continue we other from operating to wells In Continental, see partners.

asset our quarter, million in, EURs that in XX%. elected barrel on our wells it average The of are made on first wells list the on average. to to rate the return Northern During X over expected to produce participate approximately process

wells to have the now XX are We XX expecting between and to net year. production for

growth XX% and XXXX our expect production production we guidance of of XX% wells, between for As the year. and the now are increasing performance that a again of result great and our

with approximately an our had accomplishments to bondholders, allocation group to the from some entered bonds. of exchange In a we had $XXX disciplined our that we of February, want also I seeing process, recap. addition In representing that we're other we results into outstanding agreement capital million announced

bond new of closing exchange we with the by that the closing will equity key common in May million exchange XXth. conditions come $XXX the April, underwritten equity and the equity combined and will raised at that capital. additional we that raised offering stock In exchange is requirement of satisfy we working closing a an condition to in million the are One of XX additional toward raise an

In Northern's the addition largest in and the in when of to acquire recently acquisition working definitive feel Gas. Oil entered acquisition Northern's exchange, play the We non-op core Williston bond and also interest history natural Creek in producing announced we consolidator of Salt position assets we to as a this from into demonstrates acreage Basin. the agreement the the

model our the acquisition business A&D with We will a and ground take advantage continue strengths on of to our our growth market focus allocation, accelerate look strategy. game, to of strict non-operated capital continue to on execute to

This call we you achieving are we let to financials. go updating quarter momentum look strategy. the forward over should to Allen turn the over on and continue to we With as execute our demonstrate me to Chad the that,

Chad Allen

adjusted million commodity over the first increase XXXX significant improved of $XX quarter first pricing. of and XX% Brandon. by quarter was the driven in that generated in and Thanks, production EBITDA a We increase

performance production EURs, with up year-over-year Based X.X% completing and in exceed per equivalent we're barrels coupled composition has the sequentially quarter seeing nicely an well inventory. set on initial and in to our quarter with oil in-process rates very average continued are remainder increased for day. X.X XXXX. us The the the to the first drilling of improved first Our optimistic XX,XXX the increased of net well the that we XX% of production of approximately well results about our expectations has additions

of higher inventory, the first this number going we had approximately game XX% Our over well quarter. adds that wells XXXX strong to XX exceeding, XX are acquisitions, net which in also workovers our increasing anticipated, net the million, is ground annual budget and in-process of capital the our guidance of increase large which we the to total to XXX expect not production, quality forward. growth the production production to to includes to and but to an than well we now With using to during XX% are now originally capitalized expect we updated given expenditure on surprising expenditures drive XXXX million the and were cost. We levels. add expect wells XXXX XX.X capital XXX the which we for budget results This

realized lower ago. Our was higher for and included by of driven the first the quarter by was price increase the derivatives differential. period than effects year higher was prices driven XX% commodity the oil settled a our same The

during of averaged was which per XX% Our the first than oil price differential quarter XXXX. $X.XX the quarter first barrel, lower

was moves production continues some basin. differential and in largely being production to our see now sales for to reversal of expect our million our and to in X.X Boe of compensation $X.X approximately in to $X.XX gas said, and expenses decrease in compared came in expenses share range per expense. and Boe million administrative range the as differential to increase fixed $X.X quarter are due starting $X.XX $X.XX are reduction to expenses The $X.XX primarily We driven widening $X.X the higher per million between our oil now decrease That We of first the costs non-cash $X.XX XXXX compared expect the in this based as expense were and production of a for oil the lease we to operating XXXX and price million same XXXX quarter higher to quarter tax be first compensation spread. the barrel. The per ago. due operating first at percentage XXXX. quarter X.X%. over year in to is General period Lease our a which by a between $X.XX oil

loan recent credit term over our so certain do volumes minimum book requires numbers, reserve hedging hedging I levels On I out year are but agreement want the develop to requirements our hedge on our our earnings proved point in percentages maintain We report. provided from our the a won't of producing of to three front, hedging release, us recite based period. current our that most

coming drilling. opposed to include expected from production will volumes As future total production which

I'll result, to out especially strategy. turn we commodity talk a years, upside Reger, price potential the over about that, call our the of the just an Mike to Founder and consolidation retain in environment. improved acquisitions significant our As With to

Michael Reger

our talking and a Thanks minutes to general. Chad. acquisitions few spend I would like in strategy about

to board Northern having was been a do substantial team Company capital, eager named this, by XXXX. friend to into pursue coming help act January, happy Chairman management as Emeritus raise asked complete was of founder the of to board as help the a Company. fall, and advisor I not last special the and In as of was and than to the I acquisition. change the more a but the shareholder As I exchange the bond more trajectory

the within Forks we time we core advantage million. of quite spent raise, assets that and anywhere Bakken During acquisitions a natural our from The the Williston the largest in Northern hundred consolidation consolidator ranging Bakken recent to a has X evaluating is basin. we of equity acquisition play. discussing the and the strategy million in of lot Three the Currently, non-op and the non-operator are are few capital core several

amount we over we basin the participating More data unparalleled X,XXX is importantly, of in wells. database from amassed the in have utilizing have substantial the

core operating a would recently as our as inventory in drilling operator, the have had isn’t the drilling seen other to be This we an in to has limited the opportunity to have were very partners for better. of Our the see opportunity core non-operator been Northern. never inventory Bakken add scale basins. we If case several

off-market to each our opportunity. every are aggressively new the additional to of core, for ground non-operated and acquiring working assets game AFEs we sale there In evaluate week continue and in addition interest

ago is The this XXXX drilling the Gas. rate acquisition we execute uniquely result play and per has history Oil the we This begun, the which comes substantial largest bond already of with hundred the and in cash, announced will currently than With two strategy. execution on equity barrels of approximately the asset million exchange completion of produces less Salt day. to weeks several consolidated positioned the be core in strategy inventory Company's Creek of the will consolidation and equivalent the in oil in

$XX,XXX for value core per barrel point acreage in acquired assume you the inventory we drilling If the production, free. of for roughly

we're importantly another approximately million operating cash shares Northern consist XX stock. in a is million the X transaction More acquiring cash times two flows and which Oil of the

be of growth. will three first EBITDA Northern's further the I'll our Northern's we accelerate the net our the to With over enable market to will of exchange, Bahram Akradi. completion annualized turn look with This Board, call Chairman to bond Northern sellers times. currency to that, equity under as to A&D With debt as quarter use the the

Bahram Akradi

as accomplish excited have we also accomplished not what continue the great in move give my forward. you what this only last we're planning to reemphasizing I'm again to months, on, Mike. and team join the quarter we but call on this Thanks several to company this perspective

on we metrics at we the As debt on focusing mentioned times and energy and approaching towards we XX basis EBITDA, trailing last to five something a wanted are we the are sub and growing of a in quarter, three near-term to month the EBITDA that we looking times that our to reduce our improving XXXX indicated balance at times, over two end long-term. sheet

progress made quarter, significant that some This front. on we

wells of results we team for drilled already driving best First, the great is any that continue the basin or the matter, described. some in that Bakken, to participate which in this has being

sheet. in forward acquire the bond forward of by Salt to also is grow exchange bonds. improving allows XXX through significant our unsecured agreement step as another million to reduce The major asset look a EBITDA equalizing acquisitions. balance agreement us to step debt is Our It we Creek

to In bonds new maturity the lien for on XXXX. being the notes second the are that of the addition, exchanged will also XXXX it extend from portion

balance been feel with I April. required further getting the that that, will the really we the we've equity all XX raise agreement, exchange already sheet we With million just had are We under in started. enhance equity including proceeds XXX in doing

over the to Thank allocation We will regular to and the for will to call improve turn on process I additional sheet accretive ongoing our work Brandon. to participating both call you of acquisitions. today now and our continue balance back capital pursuit

Brandon Elliott

we Elam, you please if turn portion Q&A operator over of will the Q&A. call. give right, the the the for with the All that to call instructions could for

Operator

of [Operator SunTrust. from Instructions] Our Neal Dingmann first question comes

Neal Dingmann

What million. Now at? you are said XX XX currently ranging from to as just you X looking deals

the how for there? is as just guys, Just deals wondering you Mike, landscape of see all there Bahram, today, M&A the busy really out -- you kind

Michael Reger

Neal, this is Mike.

are dozen deals that deals the several high actively in or marketed think some several are another of ranging are in those off-market category that I so deals hundred that million. to them. all are fairly evaluating We're seeing of profile. and are you of negotiations several that that There NOI currently on million same

these of forward make evaluate our use we cash to the both continue So, mix Creek Salt equity a similar deals will and to we be to acquisition as look of looking and to acquisition. all

Neal Dingmann

fluid a get after again, us through the with mean of how like how anything that is for not way. liquidity But earlier. guess And I gauge. spending actually I nice first, it's is think guess when And but these that certainly Brandon that a does then had back-end the all for end I now guess little all fruition it's the I year CapEx, to thought to just or deal, again new the of you take question I see more would've this question? Or coming opportunities, for been do that, foresee? it guys my you started, us this a with year? issue

Brandon Elliott

think we saw start of we're we XX you think XX-XX. and a first on is basin the in a probably we bit more back-half come XX% Neal, than could we've thinking see got what add, little to front-half, fantastic looks so the did Yes, like is we normally net off here weather year, mentioned, bit I wells as little we in quarter. but better that XX% loading -- into average, maybe to It really see about kind a XX shift a the the

more wells now comes guiding CapEx new bit that that were the on front, net little two in we includes that but think are adds to. the a additional So guidance quicker

overall I it. we So pretty feel about good think

Neal Dingmann

past? you seeing then are have And coming some able to kind are of bit like on percentages you are you interest you Is that walk the just these able are the you lastly, -- more up than working of a in. in to that little sounds

Brandon Elliott

Percentages on the return, Neal?

Neal Dingmann

you Continental on some just kind percentage are this like of interest able real there? what are on mentioned you you working interest these No, that to wells on of working take, Continental nice

Brandon Elliott

I into interest good wells we We goes going the the be. that already where obviously to are game we're, time, a opinion in. a think have on and I mean we to to see preaching ground long that great goes working are opportunities Yes, think the returns wells to we've and ground it think I are additional to how we been be what going for the game of add it

interest day we So, actively in day in wells looked working at those out. additional

Operator

from comes Our Jason Imperial next of Capital. Wangler question

Your please. question

Jason Wangler

You up to guys about obviously talked getting pretty close wrapping the bond exchange.

consent I Just this holder we kind wrapped only be for is fact, in two two that was think wanted to the the approval understand is things left and watching the should shareholder the up? tomorrow, of and believe things I is the get we vote

Brandon Elliott

get the are vote Yes, for slated we and is to And… so there headed that tomorrow, vote.

Chad Allen

have already We enough.

Brandon Elliott

good need. Yes, we really shape, we votes we think are in in the have

before done that’s all closing that’s on yes, and that to So or have hopefully will we XXth. needed May proceed and then quickly

Jason Wangler

the Maybe was were you maybe having Neal Mike asking for conversation M&A you. you even just what on

looking involved you and that private are it deals are agree guys the these how I competitive you're kind getting that shaking of seeing competition seeing as consolidator mostly are the kind so just out Is natural up in or at is you landscape? there. these? I’d equity guess As of you're that you

Michael Reger

that private that deals equity the specially we sub say larger that, to take ground ground our existing competition that’s been the then AFEs second and as very we marketed, better. on interest existing deals of buying on deal, games interest million that building wells, And find million, the see additional on deals. ground in units So XX The in our game those working off-market where smaller never acquiring are on XX a are composition. typically just little sub

very have now. on of that been the are more right marketed evaluating some deals, more deals we always successful market of off-market So we in are all the the but actively including high-profile deals

Jason Wangler

I that just think on some that on on could on to while some been conversation follow-up Mike, trying said is are equity is maybe I that. you buy private there there competitor if that there is side, monetize to equity folks on Maybe believe private flip the that there's a a well. I

guess, of scenario well, as from that is unit side packages depending kind future may speak, the either the out so be but on So to in I now there that right? coming or

Michael Reger

prices understood, packages where there this Yes, of and off-market. they they as some are can on are back -- lie, private of them. equity there we We we that as at were assets. are how to those of willing deploying more together those actively get they we now with are to assets they and ownership oil know then value taken those where more has the owns some the at deals several those finding substantially here with and packages are built them back as were somewhat And improve start looking out and part point put we oil And consider higher. who

good really So of those lot a we about feel deals.

specific given sheet believe the and we new that we believe So our that just and as Williston. consolidator the strategy in consolidation a we balance are model non-operator the

Operator

next [Operator of question Whitfield from comes Instructions] Derrick Stifel. Our

question Your please.

Derrick Whitfield

your QX Brandon, XX that expected or or look Mike you any developments are outsize For or well in operator there QX? standouts backlog, you as at

Michael Reger

Slawson it's Federal and online how and There substantial. get now, in bring on really really the so Bird had really and that Slawson interest has play are of pads are And pads substantial seeing to Mckenzie an equipment in that large especially weather turn as to to we're that bringing quarter just handful wells, some we Continental easier starting meaningful feat are Montreal excited amazing well around around. us. pads, several Unit well we unfolds and specifically move all have where Whiting, Continental pad, XX the moving out to see nice to are that Continental this the they're working them. there, for and

about excited early the and we're So here. mid summer

Brandon Elliott

be top If XX% of so and a so you And at Oasis counties operators our the best Whiting. four look county process, well. in a almost best list. perspective, as total four Slawson, still little on in They that XX%, the over wells to from XXX% counties seen Continental our Mike of obviously mentioned just wells of continue represent D&C and process, there, just all core the about big represent the the

Derrick Whitfield

with increase on differential decision of simply XXXX, for side guys low then to the your are your regard given your below And average of you conservatism oil range? the side to revised guidance earning the was QX

Michael Reger

now. what and Yes, with now at operators, our some Continental buck other some our -- looking we currently with differential we lift QX, other Whiting and But in to doing. we're know are were of our over we non-public what seeing right are of a operators, that starting

why that's earn production. bring the And that the did little side higher conservatism, basin oil then, up believe we in as bit a we increase prices. but it it to So due to also again, the on is of mainly the creeping

Derrick Whitfield

Yes.

Michael Reger

that's the it a up, bit I moving production little But think

Operator

Our next question comes Rice. from Ron Mills of Johnson

Ron Mills

at? other did versus deals? Just and the a I areas you production, in acquisition look acreage you prevalent to you on think in the production deal core more both Or any follow-up for preference Creek, is potentially the you were acreage an where around that Salt any

Michael Reger

Mike. This is

are top acreage. fairly what I towards that look think PDP are out there we've heavy value. that and with There always substantial come production us for of lots the was deals and key

in Salt some acquisition as looking equally substantial were to Creek Creek solid production, Salt other not that have at looking only and deal that buy we deals we're the future. where that as are we attractive good the inventory but With

and inventory. a So of production we'd mix have drilling rather better

is upon asset for We’re raise, for play. we’re the stuff build capital and because the to growth not the just core not of today said during the sake, as sale grow looking looking build a on several lot we've a times in of the inventory but in the non-operator level just there to like

and that's have We additional core are for those and The too. topped be for for non-operative we're just looking packages operating looking not that's operated. partners terribly consolidate consolidate great so difficult drilling drilling looking to to inventory it we're inventories, to heavy, is steps over all we're them

Operator

to further no Please in turn at see the I'd over back queue, the I remarks. like go questions to Brandon Elliott call closing time ahead. for this

Brandon Elliott

and look Thank we to certainly with you interest and and keep give you please the your strategy information. you talking for Glenn, in participation you Northern Gas. updated as We the Oil in instructions the forward replay again on everybody. the Thanks forward. can for call move

Operator

program. Thank today's concludes you call. participating in Thank This for the you.

disconnect. You may all

Northern Oil and Gas (NOG) 7 May 182018 Q1 Earnings call transcript