Northern Oil and Gas(US:NOG)2023-08-03 18:40Financial Data and Key Metrics Changes - The company's adjusted EBITDA for Q2 was $315.5 million, reflecting a 16% year-over-year increase, while cash flow from operations, excluding working capital, rose by 11% year-over-year [6][25]. - The average daily production reached 90,878 BOE per day, a 25% increase compared to Q2 2022 [24]. - Adjusted EPS was reported at $1.49 per share, with oil prices down 32% and natural gas prices down 69% year-over-year [6][25]. Business Line Data and Key Metrics Changes - The company added approximately 13.8 net wells to production in Q2, maintaining a similar pace to Q1 [17]. - The Williston Basin accounted for about two-thirds of the organic activity, driven by larger working interests [17]. - The company expects to close the Novo acquisition, which will add an additional 6.1 net wells to its in-process list [1][36]. Market Data and Key Metrics Changes - Oil realizations were better than expected, with Q2 differentials at $2.65 per barrel due to strong in-basin pricing [25]. - Natural gas realizations were at 137% of benchmark prices for Q2, although NGL prices weakened throughout the quarter [26]. - The company anticipates production guidance for 2023 to be in the range of 96,000 to 100,000 BOE per day, with Q3 expectations between 99,000 and 103,000 BOE per day [36]. Company Strategy and Development Direction - The company is focused on maximizing shareholder returns through capital allocation, with a recent 3% increase in its common stock dividend, marking the tenth consecutive increase [22]. - The investment cycle is shifting to a harvest mode, with a significant portion of capital spending front-loaded in the first half of the year [21]. - The company is actively pursuing M&A opportunities, having closed on 13 transactions that will facilitate the drilling of an additional 16.7 net wells through 2024 [33]. Management's Comments on Operating Environment and Future Outlook - Management remains conservative in estimates due to market volatility but expects benefits from higher commodity prices to materialize in 2024 [2]. - The company is optimistic about its asset quality and balance sheet position for the remainder of 2023 and into 2024 [12]. - Management highlighted the importance of maintaining capital efficiency and enhancing returns through strategic partnerships and operational adjustments [18]. Other Important Information - The company has tightened its expectations for oil cut to a range of 62% to 63% and reset TIL estimates for 2023 to 75 to 78 net wells [37]. - The firm transport program is expected to expire in 2025, which will impact future operational costs [26]. - The company has seen a 6% decrease in average well costs quarter-over-quarter, driven by longer laterals and reduced inflationary pressures [44]. Q&A Session Summary Question: What is the outlook for the M&A landscape? - Management indicated that while the large-scale M&A landscape appears less exciting currently, opportunities can change quickly, and they remain open to evaluating all options [54][55]. Question: How are operators in the Bakken and Permian responding to commodity prices? - Management noted that some operators in the Bakken have deferred completions due to commodity pricing, but overall activity remains steady in the Permian [49][50]. Question: What is the company's strategy regarding well costs and service providers? - Management clarified that while they cannot aggregate interests to negotiate better pricing with service providers, their credit profile can sometimes help operators secure better terms [86][94].