NOG - Earnings call transcript Q3 2018 | Northern Oil and Gas, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to Northern Oil and Gas, Inc.

Third Quarter 2018 Conference Call. [Operator Instructions]. Also a reminder that this conference is being recorded. I would like to turn the call over to Northern's Chief Executive Officer, Brandon Elliott. begin. may you Sir,

Brandon Elliott

morning, Quarter happy XXXX Good to welcome Northern's Third Earnings everyone. Victor. to We're you Thanks, Call.

different risks to remarks be Before let we include results others, have these as We statements these disclaim Private cause that forward-looking include, 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

Akradi, to by and then Bahram acquisitions. everyone the Reger, our through the call, you conference turn will over certain earnings last EBITDA. including talk to update for Board, President, net measures of as we we take first, start view discuss our will this capital. the Mike stand turn I our our And options Northern. We quite on from that measure we the questions. market; third the right. today. be his buckets: issued our All simply At I strategy walk the allocators During out in that then to about I release strategy ourselves way, of With we well the here's view want Then measures, on at and, found to our adjusted quarter. we your call beginning Like CFO, will of both our to these and ground to success quarter, activity; can in income about reemphasizing X Reconciliations quickly here Nick recap activity, the closest over will is Chairman night. thoughts what and some non-GAAP adjusted last daily of today. GAAP organic where and of Founder which the finally, of We financial A&D the Then third the highlights organic call will the is returning inbound capital may evaluation our acquisition to were includes proposals bucket financials. the agenda the game year, O’Grady, talking strategy. of we we this call, second shareholders. our

well utilize issued. As where now, this extensive most have where units we the and of proprietary Basin acreage to interest know in by database drilling pick and up our is of working additional you knowledge been Williston proposals

quarter's call, performing reshaped everyone and acquisitions. During of the second today. we million are our than estimates last tremendous closed, it we acquisitions Northern bucket, bolt-on have is on Those what now been success focused have original to in completely were our better having $XXX

successes the the and day oil this year. $XX.X ago, time we year A had of third generated we of frame Just million of per in just have producing some to adjusted barrels XX,XXX were EBITDA. since over quarter, last

in Nick over from and more the put several our comments will trend hedge Costs echo has will year-over-year year-over-year. there the the know partners differentials continued he we increased basis XXX% with of the insulated increased from production the have quarter seems cover so adjusted one to months, issue that I to hedges operating barrels of on transitory day, book year-over-year basin This company and equivalent some our lower in and the detail concern EBITDA have XX% and over have been many as XX,XXX of million. oil to differentials, per been some $XX.X shortly. last I

So suffice the XXXX. seen everything momentum the carrying proud incredible into the we some quarter year, are to team of about And has fourth just while year-over-year. improvements we say, have and excited are we as it accomplished this

are portion third also strength capital last strategy returning to the bucket, as would were all company We this the talked markets' We not this just weather of excited price until to, or the to quarter thrive of debt and in that to capital more wait we traditional with ability have funding environment. shareholders, about and a better today only but to of refinance our able oil sources. the volatility,

process, the made we base quarter, lien first with reserve far that costly facility lending facility. less loan October, third we decision accelerate and in a to the and During term replaced our traditional

fourth capital We some Due all and originally begin also quarter, in a return that are to enter in our scheduled retiring notes that mature bucket by shareholders the as our the we allocating earlier in XXXX. will to for maturities to completed of remaining of were offering we than we planned. extended mature tack-on the position XXXX notes

we to communicating shares a our clear investors we X.XX and that program confirming are that the fourth our during we quarter. results a repurchase and announced last stock night million we have repurchase simple reactivating As so year to are result, this I strategy. that far are hope already agreed

manner. as to are achieve then trying we a goals setting cash out is Northern free that that you the company telling timely flow-generating do in finally was and are envisioned. Today, We those to positioned

many All ratios we are add shareholders, our per-share to debt that our the have where acquisitions returning through through we short-term on are will the again, comments. Nick? acquisitions, capital game look the say excited something with to months. can talking EBITDA, generate we improved opportunity our CFO, or see the that, structure over we adjusted value, X.Xx allocate coming his in long-term below one ground up, looking quarter especially we capital we to for I market accretive We how creating is call and leverage our forward its is of will an that to is shareholders. to shaping and I think over we a for Nick, growing we driving while, about dislocation to bolt-on a flow the will for With whether when are you that capital basis. turn XXXX value of dislocations to last and disruptions cash feel

Nicholas O’Grady

hedge above It acquisitions well valuation. reality, about company, capital Brandon. A year but some want at simple parts, over to quarter over billion third company there allocation. clear, will forward, has strategy. strides leverage levered very ago, are want be as equity is not tremendous Thanks, going past to oil has In year is do undertook the in finance our This integration financially have market company to to in scenarios many of although a seeing a investors But this run in the a we adjusted many sheet for Xx discussed at oil a sorts. quarter. seamless evident company moving with condition is length. quickly talk Brandon the in an point, to was great be ways, short, oil. should Combined $X just down any plus X-year Today, I the book, as the our been specialty be an the a could this company we so. REIT I one we capital sheet have of period, that balance in consistent with $XX with Xx excellent balance and million continue liquidity a and $XX deployment cap. strong we company's sheet our EBITDA. rise And not believe balance large

best to shareholders. Our then ultimately most in cash to is investors' flow drive believe what buckets for capital value net drive higher we adjusted the job important allocate per into a share our will

is priority, are and activity. we've report substantial highest our This The acreage. remains we on happy activity organic first to our core seen bucket

spend. here will any investments on we drawing see the want the our in typically of our I investors spend this activity, we return exceed to at Our cash remind not Despite uptick organic a capital time where plausible do highest scenario have flow. money

to is current can somewhere strip XXXX. prices guidance $XXX in expect between flow point. XXXX cash at Our at we preliminary in $XXX you and excess tell I million this million generate would

of The second bucket, course, is A&D.

to the market. remain worth mentioned assets dollars' investors road, on there on the we've of of billions As

look of our adjusted getting sake can, bar to and want I investors want high, that many for assure capital We things basis, as at improve remains the employed. that we the we a buy bigger. inventory assets are debt as return on and we While on assets will not accretive add

asset we that unless the additive investors our quality deals of given footprint, this enterprise acreage at have base. believe massive do We anything time no to to the immediately our are to these need simply also improve we and remind want

quarter cash past profile. returns. The had deliver ultimately third years, and is next look refinance the that we debt would the share shareholder flow investors obvious the in our in We few returns shareholder to as stated given form dividends. are our buybacks of steps we in to The bucket

with acceleration in recognize in volatility companies of to the ahead towards the ensued schedule. fourth Brandon We apathy the refinancing returns As and deliver quarter. the we have some of of mentioned, our plans, that oil begun the marketplace has

the crude price and positive, entire multiples over net making in are undertaken. ago. that recipe sheets, is in our highest our absurd we executing our way. strip on Slide these share, not do near substantially quarters valuation peers, among net a what a the justified highlights per stock, valuations. the XX% stock not the we that just lower leverage were of presentation cash I'd below our flow our among a yields flow have best the traded think short of from we that to is lowest the and XX seen levels actually reducing added few note leverage quarterly any far highest patently balance it However, cash for addition in before margins deals is is think company than We or steps to with some were yet at this after summer, the cash have company

to reactivating we shares program. As repurchase X.XX agreed repurchase the million our authorized existing are have quarter, already third share to a subsequent result, and

was the quarter. modest increase sequential for $XX.X typical of in adjusted a XXXX production significant increases. XX% generated a increase and that Now EBITDA the We million third by driven the price the quarter, of quarter commodity second in of over rundown

of barrels XX% XX,XXX that oil increased and sequentially equivalent production quarter third average Our day. per XX% year-over-year

continued impact to days production This quarter that our Pivotal quarter, us only Creek with the substantially. guide additions expectations, XX acquisition allowed net coupled quarter fourth has has in from up third organic Salt performance of well our acquisition. The our X.X full estimates well the exceeded strong but included

benefit excess of in EBITDA adjusted Pivotal closing did from we of would without been $XX modestly in have still September, While million. the Pivotal

organic in will on cash as over ranges value. as and to dedicated a expenditures capital to on near our slowest forward flows net expect XX are activity XX% robust, updated the in now Williston XX% a Activity We $XX.X and increasing of that well increase were XXXX to quarters, drilling immediate from With be We spending, has sequentially. have and want forecast. our first in better-than-expected QX I are or annual $XX.X we budget activity pleased seasonally an weather $XXX the for quantity beyond wells increased on we're a acquisitions, XXXX and year-over-year XX% present been closed capital due expenditure we XXXX, quarters are million growth. to development which $XXX impact had have production midpoint to Initial during now investors initially also increase direct for a With production, using than third substantial QX wells activity approximately capital continued to increase of Basin. to and seen typically disciplined fourth net production our million there expect increase quarter XXXX XXXX at organic in quality remind imply approximately the to and XX to This levels. and we and million. more acreage. production, winter and guidance in modest we substantial million brings has add over to D&C

differential price which $X.XX previous barrel, the oil was lower XX% quarter the Our quarter. a during third averaged than

we oil As to predicted call, in widening higher we basin. production mentioned moved continues of quarter of our in some and the our the increase price differential has second as

took hence, weeks. we protect investors out fielded the in in temporary numerous believe we short In from last We and, the itself order. over short, the is have recent several issue will sort To opportunity and shareholders, differential $X.XX hedge more guidance we prices. XXXX than $X.XX for basis day months our XX,XXX hedges exposure our between per barrels potential to XXXX in at of with maintaining In are a barrel. kind, questions attractive

fact be band, of it's is we and the impress. X on per came continues In XXXX in base compared in the quarters. to remainder to the much in so quarter $X.XX upper previous to at the than BOE So production LOE our prior quarter, closer third larger fourth possible LOE $X.XX could that the BOE depending per quarter. the

from For corporate expect lower recent cost XXXX, we our the parent average. to acquisitions to to a or from corporate -- similar our structure recent continue -- have than

recent our with are $X.X for quarter. convention not as reason We expenses the to lease operating million for third quarter quarter-over-quarter the range from to and lowering Please remains The our note adjusted gas of And our our these and Cash that a XXXX production in associated XXXX expectations million sales significant X.X%. the to oil in year between figures. BOE expense percentage second full $X.XX uptick remove were tax of is per was costs a approximately $X.XX. compared costs transactions. noncapitalized $X.X G&A

expect We per year $X.XX to in structure continue time compensation, guidance. prior We per across G&A is X expect and BOE. inclusive cost $X.XX per expense, to socialized $X.XX decline, our versus is now G&A third pool. total full our All in we decline this BOE to particularly XXXX, guidance. base reduced the over cost estimate by the stock of new controllable in, impact between our G&A year range of our production quarters have we BOE This full as should

if the in capital quarter, our this hedge and On last book in the in robust derisked as has that active fourth oil our hedge current acquisitions release. strip. purpose: $XX free even moves regardless were lock cash The maintain the to them. early in and in point last also out up of below as debt-to-EBITDA Xx, both these to the into to it's would crude as and we given ratio I'd hedges, average that for to deliver thanks assets hedging were X foreseeable barrel we our future, from quarter X,XXX part day made. expect returns basis XXXX, we've of quarter, the a further front, profile our We flow the generate note hedging XXXX our a for hedge oil expanded to earnings I'd the since in levels. that commit and the barrels a we for has provided dramatically We the in again, regards quarter. well and to activity in book

completed senior Finally, and we of since onto million in our In the we -- called over to sheet. for XXXX which final the equitization balance remainder exchanges, note notes up cash $XXX October. September, XXXX June, added

ago. the of the overhang equity begun dated investors, this our potential restructuring the from last While focus eliminated and a maturity we roughly year not nearest always

offering With simple, expense did regular our of lien issued is We with $XXX our balance lower second interest also rate successfully a materially transaction, the With improves also notes, called this tack-on we liquidity our way it run and revolving at our value. our TPG which $XXX sheet of now replaced million credit facility. and term par this, million were of XXX% existing dramatically. is loan

prior addition, with associated time, our have repay to ability carry the with longer in credit In no structure. the loan our real term facility we negative

to favorable advantage the our lock far the of hedging witnessed pricing. company are capabilities by higher to and more in in ability In strip to our much take recently addition, highs requirements as multiyear

what on never a $XXX facility been senior Northern stronger X, of credit on a In As secured summary, has year $XXX.X approximately and notes. hand, makes. million difference $XX.X revolving of we literally in financially. million drawn have our November cash million

and I'll We talk with and and Reger, low cash to a With liquidity. Founder structure Mike simple company the to leverage a flow are abundant over debt about that, turn consolidation strategy. our call acquisitions President, and

Michael Reger

both be Nick. large everyone. and clearly I'll with acquisitions, Thanks, small. outstanding though Hi, even had brief have year we an

record ground one was acquisitions. quarter third on The our for busiest of game organic

in producing or net X,XXX net additional X.X closed quarter, the million an and we roughly that X.X $XX million acquire wells, acquisitions new the $XXX spent in from acres. process net larger wells third announced over to Aside in Northern

Northern last net X production, that's rig far which the we acres, in quarter flow on for in an net Totaling increasing release XX% we new this, so to with just over by the X,XXX As and XXX,XXX additional agreements controls wells is Northern Basin fourth been well here night, held up acres, date, mentioned process in press now has Williston fourth count. the our seeing approximately net in executed million $X.X And the X.X in producing net quarter. consideration. all have of and over deal

see in We being and the to market, shopped a small. lot of continue large deals both

game evaluate the database. ground we'll acquisitions, to that our our our over on proprietary engineering utilizing Our to we look organic land basin will and knowledge and call, of Chairman, turn extensive alongside With and only every call going the teams free final forward, Bahram the And the finish and flow. deal, our deals, -- transact to our significant using cash Akradi. accretive

Bahram Akradi

not Two, Three, leverage our ratio on a precious our With debt our compromise and would will trending tremendous in flow, is the this for X equity in free way. shareholders. adjusted future basis. produces pristine, and priority. I to value cash sheet now time is One, balance our will us. company our a X.Xx, sheet take will cash and strategy below for top grow like balance asset points any to the flow Mike. our Thanks, reiterate per-share remains we about we create our we to how Northern key

our stock will near- grow with and accretive can We all asset long-term with financial that our existing inventory will measures, not look base. and we levels our and compete at will that but activity is the on anything accretion consider not acquisitions,

been Finally, tremendous it our for company. has a year

While of believe recognized we we're has has strongly properly. -- have all not accomplished, this marketplace proud we the recognized

we prices, not Brandon. does shares, created. so. and we Brandon? price value With all At will stock back call the these we that, turn Our have to to I the will repurchase to plan reflect continue do

Brandon Elliott

portion Thanks, Victor, the that, Bahram. Q&A. give instructions call. the With we please over operator turn the the call could for question-and-answer if for you will the to of

Operator

of our Instructions]. Global. come the [Operator Aschenbeck And will Seaport question line from from first John

John Aschenbeck

of progress a period Congrats you've the really a all over year. just transformation over on last short the It's very made tremendous time.

So yes, uses more was cash of potential dig hoping your for first free one, flow. my to little into a I

you the so, that for acquisitions. reactivated think You've buyback the thoughts establishing to be But authorization, and get your use possibly any also if with can do you what dividend, strategy interest a you And dividend? there. was overall cash I if around have hoping a would

Bahram Akradi

and accomplished Let take redo me just the keep keep flow-positive. we as between things have Nick our a mechanical company I is last our the of balance board want that, the incredibly for focus make this. literally months. capital my the agile. that had order sheet we In get we it to is cash And executive and strong, We that completely to it times allows Brandon extremely clear that create the first explained, all to Bahram. agility company. -- the make do the team have in position get until this XX stack to to do multiple had Chairman to This organization, this company and alignment that,

our is at stock to based make level a of we the it make we understood think the buy market, ability sense back. stock use a in stock then will based right price where for to what's use value be shares the We If we opinion, believe those to our right, value to correctly our our through on and it's acquisitions. is acquisitions, want makes our make have us proposition position here, our in stock to to price on our not if

capital. do either through dividends. can share shareholders As to best done can be is done That or buyback, a large be give through to return it can shareholder, my goal the everything of we our

accretive completely So I'm want one we given time. to let on do our -- shareholders whichever prepared Nick any and well. for this to that... to comment at With be going as more is But

Nicholas O’Grady

I think in callable John, are simple, it Yes, our of keeping bonds May XXXX.

We that be that them I in refinancing at would call -- let's structure. dividend XX the that in And to think call of at next, or at it, ability coincide time, time. of point the before to part the XX with months, some would the have point a

And so it's highly we think I interested in. something are

is the want disaster to a We the to the consistently marketplace. the that, seen in examine. where having are thing it former in I attuned both to can dividend, be to quite MLP, would it appropriate And say, extent just grown think would that would way as that bystanders a dividends of for upstream obviously, is over shareowners we and, we need do an do and we create time. sustainable the

John Aschenbeck

said of the Got was properties easier similar a Great. But theme acquisition Bakken done. if stretch dislocation I with is if value at of that basin, a level, business more much basin. Okay. Appreciate it which thoughts see And potentially keeping in model just question, it. this color. your dislocation of seem I I great you a like other transferring doesn't exist in another kind too a it will. hoping value you That's of it. to then on to understand your from higher-level from a get and like maybe seems non-op that sellers look lot than high could here

how you of how potentially, think love just of company on into basin. the what would and done your a think the thoughts taking Bakken replicating different to in as potentially that I grows, get you've So you

Brandon Elliott

think what to and we out, buying think, in mentioned decided favorably Basin. I Williston truly already I mean, a in, a Mike to advantage risk-adjusted stuff think, obviously, Yes. has anything John, as we've the we've mentioned look we compare got And got quarter see. we on at basis I quarter

clearly And we be see our invested And basin? a the so clearly we've Could returns the market something the that outside that's got say I database. to see to Let's now, lot there. compare -- basin. capital think it's exceptional primary favorably And in going our But greatest done still right never. we never where be see focus. to on

John Aschenbeck

back just Okay. opportunity keeping set -- done see to potentially wondering Great. lot entertainment I you on And could if -- have a to frame basin, digging place? would what that's place then that need possibly in just me overall Bakken, kind the don't not, to I level, And kind there. I you the the to you about of comments -- When Bakken? transfer in that thoughts Brandon. do on staffing have a the terms Appreciate on high being assets put of do front. this amount that, any still the still -- What would to you work there in just were what talk you in to Yes, those in there's you would just or need still mean, maybe you if ballpark into don't replicating of dollar a to you need marketed. if was know basin the in of are enhancing, another how you figure know -- I dataset the Bakken. kind kind you it but of of be of going could

Brandon Elliott

internally outside the got not the could wanted base. replicate the have be Yes. you'd that have we'd I here but if you'd mean, to you knowledge convinced to and replicate that we obviously, to a team, that, look basin, to have we've only team --

item to outside be our looking gating to going a that's So basin.

basin, as far you. see it As turn the we Mike, what I'll in to

Michael Reger

portfolio quarter the last couple robust. or as the I the packages of in large their got and fourth So are call, divest as months to seeing front. of up firms mentioned to somewhat just the looking activity an third prices them of closer levels on somewhat been so third And of and busy are were were oil to quarter quarter as seen first some that had non-op some Private in in To just and larger organic small, ever well-known being month shopped really been we're equity off-market. -- the the kind as go and have $XX. the we've --

are we're fourth deals. go from to to cash we're operating partners flow-positive as opportunities see who of as larger down opportunities see I third be the that with starting through more their and capital As mean, looking the more see, far kind you operators we achieve status, to from non-op starting of could quarter our the that focused natural then because quarter, ever deals are as elsewhere, been. that's we've -- as their and we XX deals the in just now organic the game of focusing Northern it's start and operators the it's the built robust ago, the are ground non-op Really, capital on years consolidator Williston.

Brandon Elliott

me to that. add Let just on

A&D I fears us on when market. the greatest been we've about in oil think one our probably you've heard was prices of the difficult higher road, talk and how that would be

bit, little probably bit in oil So lemons for lemonade probably the market. A&D a little pulled out have make a of the advantageous prices is fact back us that

Operator

And our of Jason next question from comes from Wangler line Imperial Capital. the

Jason Wangler

flow get preliminary you in terms us at to a I throughout of activity Or of kind slowdown guys the see of you've maybe kind you up. and the mean production kind obviously, that look you and in wanted you first the historical I the do you that, as with see and weather quarter, that of to similar by kind the XXXX? of XXXX how And out due program laid of in that give predominantly then ramping as ask of guidance, basin ebb granular, as kind do year? kind

Brandon Elliott

Jason. Yes,

the then we've added half, typically and the weather, in everybody know, as the first given we've year of as in the think I net come the talked, wells told we into half. do get you back assuming seasonality in the about XX% XX%

those. does normal that this So QX, pattern. agree? kind that assume at yes, what We, to then And flat-to-down XQ of spring imply flat-to-down your... how would break QX -- depending usually up that and on Nick, -- to XQ point, What's

Nicholas O’Grady

very to Yes. from completions defer smaller drilling Obviously, I in we've at already That's they've the guidance on mean, a today, given seen the some I small with updated would basis, just typical. we've very forecast, that's a that activity quarter some of quarter. the the fourth QX. say, you we've of differentials if slowdown you the third organic operators been, where look seen into

So that of year, could would other. we're say, all just take borrowing we very that you're the stuff. into I potentially bleeds comfortable next X But hurt their then to through activity. this forecast QX it to from it kind

Our engineering doing and a risking spectacular things. does of all team job these

for I So within say, of things. accounts all our I'd those guidance, it think

Jason Wangler

And then Mike, helpful. Okay. That's might this you. be for

have, of you got looks acquisitions others of guys within Is you Slide of Williston continuing and the than kind in Just a popping the kind down are M&A guys just that of consummated? certain quarter are in like what kind seeing deals lot it McKenzie. Williams the XX in you that the kind focused that trend? are of more maybe as Or are up areas really

Michael Reger

Mike. is This

to during have we core. now the are we're opportunities of all highly quarter. year on think The returns as highest over seeing acquisitions know that focused where core months, the kind few the over looked last accretive to is. we're make I last and we've the And the and us

scale, far flow. op. to consolidator activity. our primary non-operator the non-op have the able drilling excess McKenzie best been as and we're we just unique in And good as largest of the given just have target in cash as as really So a and Williston, Williston Williams advantage the strategically And just

that from rig You the can count. see

up are. higher-return picking opportunities us see to the going where you're So rigs

Brandon Elliott

is Jason, Brandon. And this

of see acquired. dab I acreage wells that slide, wells, can in you highlighted and those the the acreage in up clearly we've since around you've one some brought of see acquired. smack the obviously, we right And think that

level's to core, kind ground that So and continue of point, cold the focused clearly game Mike's again, activity hot, too not accelerate for to stuff. us on to not in too reemphasize

Operator

our And from Jeff from next line Northland comes the question of Grampp Capital.

Jeffrey Grampp

is I wanted largely how past, weighted Can kind to maybe have a your operators know to guys have at guys dramatically? to the you I various to last maybe all the changed related that pie there your all in changed at would Has you -- say question with the of all the various leverage basin? similarly? operator those of acquisitions is exposure talk you Or recent at in charts. the -- bit Jason. kind

Michael Reger

This is Mike.

Continental, similar you've horsepower now, with the the kind We've from that's years. have really Slawson, in Southern Mountrail activity of inventory we're County. seen think operator is. over additional I set where the significant we in main and core our focused seen Whiting and where Right

As cash you flow. a that was Hook They private drilled Field. debt slowly remember Slawson, Southern it within Mountrail has Van developed with operator who no always

or core or So you amount X on Slawson, look see, we inventory in XX whereas of sit X, in got units, just X Field, of wells the each they've a unit. North, unit, in XX, Sanish the wells the if unique the their to at X on because X, you core,

largest would Slawson, that Continental, we've had going now, I Conoco of And our recently right now. then and Whiting, say, surrounded a and it's Conoco. lot So partners very with be to are -- exposure Burlington

activity the again, are. where So rigs the is

published. You'll our like what see that with we slide that acquisitions look year the throughout

the past good coming best I the the design. operators. think exposed months we're knows category goes given to. who completion saying, the best-in-class. participating And the new that everybody every and we're see now XX into is all and One It's throughout that most operator I'll note are without operators can with news just is, thing somewhat best-in-class that the right almost You

we a core. adopted I is unique the have core exposure it. think just everybody's to The unique, and

of on really technology set can operators you are, activity and is, -- and our and we're acreage you rigs our can good where the where So right where good it's levels are now. see see based a

Jeffrey Grampp

on That's credit potential just with guys guys guys your talk Mike. Great. ability down that any agreement? constraints you approach the And helpful, for the relatively And I Okay. buyback. do road? in how And to expanding anticipate Can or interest that? curious about systematic? looking buyback you share your might you at was Or Or follow-up, really opportunistic? my be the

Nicholas O’Grady

This is Nick.

-- clearly In part the terms of last your of question, your opportunistic.

And really to views lot can We And of value, our much terms we of do in we we of an buy on and low. have what that material it we in how obviously. agreement in We last limits, economic would drives bondholders time credit make clear to call, return. I are want said to and impact we this our any alike, very I shareholders to do which keep not want the limits much Obviously, our it do candidly, leverage not. own our leverage-sensitive. back. very leverage want we it we had if have thought our -- and spend intrinsic ratios, never does have would we on a this

carry capabilities. that refinancing, use year, where they think we But phrase capital strong go where expansion a now, have but of best I we we to when we this And likely suited. the lot, you're next a walk -- big the an of this stick. overuse softly will of through in a position, flex As I to it's I think our our have step ability -- like the I to and think we are final

-a I stock, nauseam that, like stock simply ad candidly, not our this think anymore. think we've beta but view, said company our and is are beta I just high-lever and at trade - this that point, a we

your where can that. therefore, return opportunistically stock huge of will so a on when is And we capital, trading you advantage take generate

Bahram Akradi

We need in to terms our about think efficiency. capital of company

Our to entity, the serve goal keep to do entity our best strong. is the

by really was for When we exactly the the can So of were any did Today, condition. in -- day course day months the goal. XX this have environment, stepped XX not luxury action itself the luxury right not almost entity in company. any ago. we we prevail through thinking what's have ago, we of This months

Nick said, no at X.X arbitrage. it is just a positive that emphasize, buy a being compromise our is as to position to creates like our strong or will stock If acquisition And long I like debt-to-EBITDA there of our But buy the ratio. use make $X, the $X, want below we flow stock we to $X we're our at stock is -- keeping methodically as chance sometimes, if going shares. to positive company our cash

us arbitrage acquisitions the make with right back. It So the gives to us ability the agile. it keeps stock or buy own our

Operator

next from the our Neal Dingmann comes SunTrust. line And from question of

Neal Dingmann

it return over at, rate finance looking of these more one here required now there. acquisitions are It's What First days. you you at of look of Reger, sort when looking position? rate about for PDP seems seems, sort why you before that them out step around a It there that, of plays of you at into for new are I'm return level. there's number guru a selling asking

return wondering, I that just required of this I'm year. guess, So continually higher rate gotten has

And And seeing number a of this opportunities rate you is what so fit I bill? are is my return? guess of that Mike, that question

Nicholas O’Grady

Nick. we in that -- return, I probably return should A&D a But we you about systematic I'll when let is on PDP what versus these tell it's it's talk Neal, don't the we of where its the analyze this it's actual quite our guys it's little different. for would because, use terms of of bit. say the approach, call very obviously, we obviously a rate in high. the needed I a analyze what pretty rate But PUD things. obviously, think are difference

slide process on year-to-date. consented level, to place. our deck every the single our XX% we corporate a mean, regimented can as we average have acquisition And the WACC deal And we at factors in risk I to we we, return rise pretty has the so you of comes -- use in rate those But wells we've things. materially. been look every obviously, that see down obviously, derisk earn and about a look at with at has

happens, So and then earn does some. that it no that matter what

Michael Reger

that of is thing on know this than and does a field. bow better One that. we schedule Mike. a have anybody long, for timing the I'll development and long this Neal, time just Northern put is

a of when because and it, where know the something, we're the and barrels we where how are many going edge science is drill anytime just get it the because bag becomes we our the much -- And know bid, something, than already really to -- to who's field more science when it, we drill they're know anybody. that's on how buy So understanding art going better we bidding to we the us in timing. that's we going is. is And to

Neal Dingmann

about Brandon, any me of the let maybe the thought ask, side? operating for non-op Bahram given then is there for the And in opportunities definitely seeing, side? on going you're stay or you'll Or sort

Bahram Akradi

I'll give take it, it to then I'll Brandon.

have team, We the or We We love my love or or game. this not non-op the in ability act all-star to participate play react developed to model. the mind, participate.

large a I guys company. As know, you run

think in about it's maybe XX,XXX perhaps with billion I $X.X EBITDA employees.

can do billion to that So billion EBITDA with of $X I employees. $X.X love company a XX

for much amazing thinking There capabilities love so here. thinking much an just needs is really the us reason what this are is about white else. and I start team to construct this so space, something about start There so has far doing. No is built no what opportunity with different. are. we to one So what Brandon? something

Brandon Elliott

can I anything think don't I Neal, Yes. to that. add

yes, covered how I And in think we see us, that with it's feel. that front we of one. exactly the Bahram runway out

Neal Dingmann

my diffs, little on that? seeing of other you you getting nervous be to potentially, for down waiting. in you problem bit you gotten you yet? lastly, question it's and, guess about more are I indication could are about talked anybody I some And -- people that the you're slowing on guess, prepared -- activity-wise, I the you your seeing in a just then long maybe certainly you around oil for talk out the how Nick, Brandon over just then because on, are reemphasize is, than there. Nick, to would group the even you any have that to dig want consider just And a seemed the I -- And remarks, diffs think of run or name. on Bakken It spot

Brandon Elliott

mentioned is mean, possibility. some I completions may I delays don't see into on I and some so. think production Neal, a think some Nick XXXX bringing as earlier, operators in the that Yes. wells

exposure in to Nick. we were XX,XXX put Nick's Obviously, barrels was and something early. more it fairly much Clearbrook day probably end a the credit, upper to differential significant, would turn everything we guidance I'll of on. over just mentioned, also hedges maybe a it towards couple it and say basis But i.e., to our than watching, things Nick As and trends of on given expect going that our that's

So yes, it's think that. incredibly detail. probably got Nick, we issue. do about But we transitory feel you've But a happy more

Nicholas O’Grady

get marketing think who call not gets. do quite I the this, case market agreement don't crude. the mean, in are Continental I Yes. same our Whiting that on people understand We we there or

So we prices. get those same

and matter. and to I guard. near- of storm At and larger level, You've on asked a perfect them I the mean, think I they now medium-term that caught don't basin the diff and we why situation simply react that the we feel calls of in railcars this in think most statements think of moved plenty And basin bit a we like there's a to time. takeaway, with where off guidance real all listened quarter, solutions. the been us a their have last I someone raised it's very glad did.

strong, to you to have are the railcars be the there. Now think the that have economics actually about but fact

You be don't sign And have want usually, do willing to when this, a people contract. like that. to is something temporary to

through begin end should question just year. itself Could -- it little time. Possibly. is bit it the of So the the resolve a quarter? this to it first answer into lead bleed the to Could

frame mark if market reference, a But tell that I'd million. for to mean, the X on prices hedges have those that we real, a hedges, I in for something when to $XX them. I the to give mean, were like they of handle like that today, tell it's to we next that But pertains just those also our be obviously. it favor, on As look quotes year, you I'd in have also you you --

-- they're So it's being to what it's -- reactive. this you you too way, no that wants that telling by one the transact and afraid because they're

here modeled already that for risked and just announcements. in Brandon to of We've well deferral there. bit see But in And time the it's know might basin. some $XX. certainly even activity to not from little just long-term sort what certainly we we're a protected. a production of And I'd cost you resolve take stuff. growth is it you've itself, mentioned, the seen type takeaway with a and may of say, of handful So Like of

part I'll don't is better I improvements lot months will Obviously, about here, think takeaway Partners if will this this. $XX time. talked over about talked modest huge And end I the issue. And this Basin Energy you a that had diffs a guys see -- ago. Permian were look for with add year. a just problem this, has think which in of Continental I short that at is you to the don't Permian Basin a this, you few the that up

next majority less year. Now infrastructure come don't they're than -- of online $X. until projects the When the the of end those

the So necessarily I'd in say that they are markets extremes But indicative it's economic long-term not fickle, of times. issue. bottlenecks and price at

Brandon Elliott

those so market And at barrels that we've their indicative back half those market's on hedge everyone's can't any I'll restate trading not what of of tried we prices, seeing put some what Nick fact probably said taken get and XX,XXX that Bloomberg's. think to is and on the we today they're the of takers, probably where

Neal Dingmann

if Brandon, why it some of with about cash to great in. and monetize it those trying temporal is that's and hedges plow to thoughts was taken I that ask going you

Brandon Elliott

tried. we've Yes, -- think I we've

$X there day what happens?" think at "Hey, out the and don't and and put barrels I go see there's... ahead think don't other I X,XXX Nick I And said, a I day hit why

Nicholas O’Grady

of in I of role reiterate want big but a is And of full receive we more up you're time, will pipes. the about are on sort those It or Remember inch. first to your the pricing launch prices Yes. companies out. day DAPL an through too some played the kind I the has their in had impacted XXX for, There just not staring have scenario. when points. of access these is Obviously, -- we quarter, all not our their some are pad haven't could has day, some prices filling mean, maintenance when goes with we been that moved for I you XX% in, that be full that the think discussion at all Canadian one where probably time have say, this But investors, annual hedges, Bakken-pricing. this times Clearbrook could takeaway. monetize monetize I've production worst-case issue probably that refinery pinch day throughput

that clear. want make I So just to

Operator

[Operator Instructions].

line question Stifel. from Our of comes Derrick next from the Whitfield

Derrick Whitfield

accomplished Perhaps the fairly Mike, you meaningful the general was you the noted to and regarding Page you're and for on speak XQ acreage. you acreage? on date, XX. top-tier location Congrats added outputs your activity transformation chunk expecting acreage of on that to on last a Could comment, it building the

Michael Reger

Yes.

in what the proprietary lot here seeing up to count also and in a a we've how in starting a -- been about up rigs. the McKenzie, that acreage of really We've are got really the activity, the of around, the here systems -- AFEs. database. rig Williston XX third fourth we're we're the where imagine, acquiring stepped the opportunities. I We're we're and think been you you And AFEs is unique the we our beginning McKenzie kind -- a And and where is Basin the project just up acreage. generally of where proactively nice which improved, Williams then going primary our through can got of quarter. and processes of saw of quarter. ago, acquire are XX The business Williston, years third speaking, as lot in under built to picking and end Northern consolidator we up as know, we've from

or those producing data at look units we've who have now, X,XXX wells. got owns of wellbores portfolio of entire our you we over what. those all Think where If

there's about well any those those to who We're permits hit people get people. chance a when any or the those data owns XX% of So not time what, more and in just proposed talking have to we're dockets, we new is that a unit, the talking permitted.

and unique model we're at good it. so have here, a we And business

Derrick Whitfield

That's for great. yourself, Brandon. And maybe Mike then or

that well based this industry refined a north seen day? the well really could on X by per and operator drill year the improvements how you think designs, the have guys million-barrel and do performance you west completion With and far a

Brandon Elliott

resident engineering room our with right got us. We expert the in

to going Evans comment we're on So that let Jim one.

Jim Evans

Yes.

that side time. really of expanded well. are and We've Montana I very County Northern Divide in Williams, and Williams McKenzie kind border wells performing also. the performing seeing Western drilled got of early we're into that very far. are pretty up that wells We're well on seeing It's think it's the near

But eye an we'll that think So keep we has them. expanded far. core the pretty on

Derrick Whitfield

the credit, to this helpful. quants returned Nick, very morning Slide workout guys. great, It's I XX. your That's And saw your from think and their

Your stock is behaving now. well

Brandon Elliott

on that I back slide a patted was. ago, what minute a the him pacing genius there

Nicholas O’Grady

Yes. Thank you.

Operator

line next Securities. One our question comes from And the from Capital Geraldine of Swanzy

Geraldine Swanzy

only on a there quick to your That out. I plan, you've X% get just XQ better follow-up question about have XXXX guidance production those just XXXX. trying implies a growth for over initial really put feel numbers

And impact that low guys. seems half have the X% how those first with for with of been things issues year, so going really seasonal the just even that you

you be is that upside conservative? And there guidance your some may would So those agree to initial pretty that numbers?

Brandon Elliott

Geraldine. Brandon. Yes, It's

Nick, we've all that. of standpoint, don't capital don't a I QX. year and But fact the around But bogey are We XX, the forward levels could the give until activity to sure, to start think you... a did with you that just there to your changes the through. they in Certainly, good We Yes. -- success give we this acquisition with. range, know, wait some typically had, the XX given be would capital to brackets ground upside from we've discipline that. think allocation I you cycle. at game least I And guidance the it's at with where some typically been point wanted we

Nicholas O’Grady

to money. residual production production. terms a just -- Growing that would make of this don't I want our We say of in want is we that. to grow

per substantial. X% adjusted free flow we grow if huge accordingly with net and And our so will we share. therefore, grow a enterprise can shrink be our growth cash yield, And value

we at value that, return could of obviously, accelerated create guidance implies, rates you have flow would amount same organic obviously we or spend -- that So of an activity see organic the and mean, I growth. enormous our if way. cash the

team somewhat But obviously, -- our can think would obviously, we A&D, and excess with if that flow, the be almost turns. well flow, comes. we're someone don't operators. obviously, non-operator, when if is fallacy But can it. for picks to revolver ground cash game do and we wait in our cash either create I augment companies down what then plan obviously fund just that we and no free a management But to we they don't our and pay the up, value the with base that that trouble beholden of opportunities. or goal think scenario to the happens simply their beyond us activity they the I Or to additional which that in grow of money per-share creation. many activity There's cycle is for they're have like As

Operator

And question of Gale from the our Joshua comes next Securities. from Nomura line

Joshua Gale

So share I bond XXXX and buybacks, off can my cross off call Clearbrook list of May here.

isn't like other's A&D I'd summarizing expensive in your opportunities. excerpts in And So I $XX just bolt-ons to the of like can environment, market may interest minority mom-and-pop but about ask probably don't sounds that of questions, the And environment. a best answers have large $XX, be get to it the activity that and many then get $XX those sellers. as slows, opportunity motivates But activated you a you because maybe bargain.

is your you. laid your would Is of a then for there? in assumption that an Or that look assumption? for in adds, environment $XX So budget spot are fair And sweet all game is -- be there out? ground those a you to -- that incremental those kind is preliminary XXXX

Brandon Elliott

one the Mike take last then I'll can the and take one. first, other

is, to they've far we're but I on. basis. mom-and-pop's, focused Nick's as think time And we'll that them a deal-by-deal stuff build well-by-well to let that's And point, what tremendous evaluating game not amount that. a Mike ground I'll we're a typically the it. and of goes. we so some is got do as last one And in evaluate into take There on be accretive, the there, basis as

Michael Reger

types Yes. shift a of assets. never really in major seen We've those

oil. fair for to say, acquisition. little We $XX I gets think But spot. sweet basin. to is to whether make or those, a oil is consolidate continue a oil mentioned $XX there do harder I price it, $XX this larger you oil a have and it's a $XX

was we from us the boardroom, Goldilocks So for oil looking and just probably price $XX think because of hoping or standpoint. scenario I $XX, for were spot a a it oil $XX an kind when acquisition a is around really just month sweet a ago,

like really book we book, love Nick's we this basin. hedge place this basis love all good sits, we where So our hedge in our feel and about really

Joshua Gale

to to so those up far. on public the like a are larger pocket. want you're non-op W, consideration. the your as follow There's $XX positions black hole acquisitions use large Creek, companies right. All all then in And Salt that's going currency necessarily public XXXX, of kind your exit. that in by in just equity cash equity's handful of wouldn't million But private burning trade entities looks Yes, in probably to Pivotal, a have that your held obviously, it could

the I did flexibility that have And with you with tweak So we do it the for maybe do think saw bit? can a you there's deal. think the public set larger you little opportunities up hour if to that that of cash you a buying W off more last at portion year. next operators you'll of

Brandon Elliott

you with And today. flexibility different. think I flexibility start And ended, was I certainly we've little transaction is the yes, bit I'll And a -- the think more today an time. the excellent the do equity standpoint. is which we where have issuing at to the sellers company

today that. how we've we pay more at we leave to assets want for So them. to decide yes, want it much flexibility acquire got to I'll think we how and

Operator

Johnston Capital question line from And One. of our next the comes from Phillips

Phillips Johnston

dividends. the for versus question follow topic of repurchases wanted or share to on just I one up Just Nick Bahram.

your program you at than that higher issued. the in You XX-year repurchase that's only prices company are certainly where out stock issued only there significantly the share E&P lows guys to aren't announce

So I of since, considered I you that in want a especially policy if back different ever in wanted have April. decision, is pointed ask on pick don't I position adopting special you to guess, to company out, a completely dividends. rightly as guys the But

mentioned in Nick, a finance specialty a to remarks Northern I you almost like your company, that REIT. that be think, you prepared consider

acreage shareholders? you're not that higher and to with So in the low a some? up low leverage of then flow prices, sinking times with and most the creep just of now cheap in conserve cash flow of the ratio on And you generation like flow cash and distributions doing So maybe operate cash ratio leverage up why prices times return on assets. essentially, let your the that focus picking take and your free cash generate the of oil

Brandon Elliott

answer? to going you Are

Nicholas O’Grady

they more. destroy. of oil and that's money goes that Nick. then then this oil spent, and up Phil, The is prices is more fallacy cash they the generate they've go they cycle spend and companies And down,

lost stock I about that me. talked is and financial of think pertains you what mean, stock during to I our So issuances. don't look the I to was I April at mean, repurchase, period really restructuring. a it issuance the not as

So I sellers don't higher now. is think obviously, significantly lower issued somewhat at really We about prices, to price stock it. and the market

at look So way the it. that's really I

to you and special clear. As we think dividends, hear loud it pertains I

obviously I business. depleting in a we're think

the where can so to And with reinvest put that we do some think ourselves cycle. of companies rate a obviously oil business. situation I have put not want do we fluctuate in, And -- to in not the therefore, return our in we

time. you but be to maintain, have healthy about so also over to your we capital inventory dollars, overall, have deploying And careful a

also special out that -- market just where capital shareholder is retain but underlevered a can rough more prices worth public if think a So would this to prefer then that take to we perspective, me times advantage of consistent of sheet, our from we part and flexibility. think do balance because that I it much having a just investors times, that to money can and at the those experience, that want dividending dividend. I in dividend we maintain if may regular materially allocate is and us my there be a than points that entrust can crack. is from than I to And

a over grow that target So flow grow with some we we I cash consistently time tax, time. think that can so and on business can alongside of per what share dividend would we our to that the sort speak, is it over so

Bahram Akradi

add And need what to on arbitrage means be have When value currency. at to trading that do to to we're create and here. in company. do. that our need position to we need use we fair going again, the for to our acquisitions, Once we react stock, I'm make currency And to to a going a ability our issue or use currency to is above,

it again We takes advantage a back currency, a keep of We so buy currency the opportunities. non-op. back a and to so dip, tool ourselves that take get operate need of position, also able we have in to don't benefit support to available we as our be shares will in, as if this

knowledge incredible insight basin. the We agile we market at to opportunistic on. need of the always be all have and engineering, basically in times, And

so And on. team this is always

make time. for We we like they're in days company allows right week, at are a each right we the the feel us terms And sheets the what's at And to today working can communication right X and bondholders, the every day. constantly other opportunities. in the and of the et looking decisions balance cetera. with just do our shareholders

Operator

question from line Raymond Johnson from next our of Rice. the Lenny And comes

Leonard Raymond

in rigs with XX% in Bakken. the you that recent participated of closing Historically, of the deals? have increased about the Have

Brandon Elliott

average. probably probably necessarily it's bit. today, a core don't today, I obviously, a that's with -- But pretty good the No. little think up

Nicholas O’Grady

little A XXX, Maybe points. basis yes. bit, XXX

Operator

call questions And to to time. I'm no the turn further back at for remarks. Brandon this like showing CEO, I'd our Elliott, closing

Brandon Elliott

the thank Victor, on we interest note months. next Northern busy everyone's schedule right. Gas. very we the All Oil and certainly participation in Please the have a that you. And take call several appreciate and

in our those conferences and are various details country, release. press the Some around

forward seeing quarter. Victor, you next to So look to travels forward you in again you Thanks, to we and everybody. of our look replay some talking the give can information.

Operator

thank for the disconnect. and This you you program, does gentlemen, participating may today's all in conclude and Ladies conference.

Northern Oil and Gas (NOG) 9 Nov 182018 Q3 Earnings call transcript