Northern Oil and Gas(US:NOG)2023-05-05 23:21Financial Data and Key Metrics Changes - The company reported a record adjusted EBITDA of $325.5 million in Q1 2023, despite volatile commodity pricing [58] - Free cash flow for the first quarter was robust at $84 million, indicating strong financial health [58] - Average daily production reached 87,385 Boe per day, an 11% increase over Q4 2022, exceeding internal expectations [17][44] Business Line Data and Key Metrics Changes - The Williston basin accounted for approximately three-quarters of organic activity, with the closing of the Mascot joint development project adding 16.4 net wells to production [76] - The drilling and completing list finished Q1 with 59.3 net wells, up from 55.4 net wells at the start of the year [77] - Oil volumes increased by 12% sequentially over Q4, driven by better well performance across all basins [82] Market Data and Key Metrics Changes - The M&A landscape saw a slowdown in large asset packages, with the quality of offerings not particularly enticing [32] - The company is reviewing 14 opportunities across its basins, totaling over $6 billion, indicating a strong market presence [80] - Natural gas realizations were 142% of benchmark prices for Q1, significantly higher than guidance due to stabilization of NGL prices [106] Company Strategy and Development Direction - The company aims to provide the highest possible total return over the long term through a multi-pronged capital allocation strategy, including share repurchases and increasing dividends [73][75] - The focus remains on disciplined underwriting and targeting high-quality opportunities, avoiding growth for growth's sake [81] - The company is exploring partnerships and joint development agreements to enhance growth prospects [72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver growth opportunities despite a fragile overall market environment [36] - There are expectations for a material step-up in production and TIL cadence in the third quarter as new wells come online [120] - The company anticipates potential cost savings and stabilization in well costs as operators adjust to market conditions [84] Other Important Information - The company announced a 9% increase in its common stock dividend for Q2 2023, marking the ninth consecutive increase [48] - The company has retired $19.1 million of its 2028 notes and reduced its revolver balance by approximately $50 million post-acquisition [33] - The total addressable market for non-operated properties remains large, with the company invited to co-bid on several operated prospects [55] Q&A Session Summary Question: Can you discuss the production cadence and CapEx breakdown for the year? - Management provided insights on the expected production cadence, indicating a build-up throughout the year with a focus on maintaining a balanced CapEx strategy [28][107] Question: How do you see shareholder returns progressing into 2024? - Management indicated a combination of dividends and share buybacks will continue to be important, with a focus on risk-adjusted returns [18][19] Question: What are the expectations for the Mascot project? - Management expressed satisfaction with the Mascot project's performance, noting it has outperformed expectations by about 10% in current production [92][93] Question: Are you seeing more well proposals than in the past? - The company reported a record number of over 200 well proposals in Q1, indicating strong market activity despite varying working interests [95]