NOG Provides Fourth Quarter 2023 Operations Update and Preliminary 2024 Guidance
Company Sees 20% Year over Year Growth in Production
HIGHLIGHTS
- Fourth quarter 2023 production estimated to be 114.4 Mboe per day, resulting in annual production toward the high end of NOG’s guidance range
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Executed on
$25 million of opportunistic Ground Game acquisitions in the fourth quarter - Initiating preliminary 2024 production and capital spending guidance
- 2024 production guidance implies ~20% year over year growth on a flat capital budget at the midpoint of guidance ranges versus preliminary 2023 actuals (excluding non-budgeted acquisitions)
FOURTH QUARTER OPERATIONAL UPDATE
Production volumes in the fourth quarter of 2023 are estimated to have averaged 114.4 Mboe per day. Production increased 12% compared to the third quarter, driven by a full quarter contribution from the Novo acquisition (which closed mid-Q3) and increased
Mark-to-market gains on derivatives for the fourth quarter were an estimated
Lease operating costs in the fourth quarter were an estimated
MASCOT UPDATE
The Company continues to experience strong well performance at its
FOURTH QUARTER CAPITAL EXPENDITURES AND ELECTIVE GROUND GAME ACQUISITIONS
The Company experienced a significant acceleration in drilling activity in the fourth quarter, resulting in a material pull-forward of capital expenditures. Although the overall pace of turn-in-lines (TILs) remained consistent with previous expectations, the development cadence of NOG's wells-in-process advanced ahead of schedule. Consequently, NOG incurred approximately
During the fourth quarter, the Company turned-in-line an estimated 27.6 net wells, representing a 20% increase from the third quarter. Furthermore, the Company added 20.8 net wells to the drilling and completing (D&C) list, concluding the quarter at approximately 66.5 net wells-in-process, a 20% increase year-over-year. The combined strong activity levels contributed significantly to the increased capital expenditures in the fourth quarter.
Additionally, NOG seized on market opportunities created by significant dislocations from commodity price volatility in the fourth quarter as budget constraints developed across the space. This facilitated NOG’s completion of multiple Ground Game transactions, spending approximately
Given the acceleration of 2024 development capital and the additional elective Ground Game capital, total fourth quarter capital expenditures were approximately
FIRST QUARTER UPDATE
Extreme regional freezing conditions experienced in January had a slight impact on overall production levels. These weather-related disruptions led to modest curtailments in the
NOG expects first quarter 2024 production volumes to be slightly lower than the fourth quarter of 2023. The Company expects first quarter production to be affected by a modestly reduced completions count sequentially driven by a typical seasonal slowdown in the
PRELIMINARY 2024 PRODUCTION AND CAPITAL EXPENDITURE GUIDANCE
The Company will provide detailed line-item 2024 guidance with year-end 2023 results but is providing preliminary production and spending guidance for 2024 as follows:
- Full year 2024 production expected between 115,000 – 120,000 boe per day, with oil production estimated at 70,000 – 73,000 bbl per day
- Quarterly production expected to decline slightly in the first quarter, and increase modestly thereafter on a sequential quarterly basis throughout 2024
- Budgeting approximately 90 net turn-in-lines (TILs) and over 70 net well spuds for 2024
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Total 2024 capital expenditure budget of
$825 –$900 million , inclusive of drilling and completion, Ground Game acquisitions and workover expenses
Approximately 58% – 60% of the capital budget is expected to be incurred in the first half of 2024, driven primarily by activity ramps on NOG’s Mascot and Novo properties. Development plans for 2024 also reflect steady activity in the Williston and other assets throughout the year. The Company forecasts modestly reduced Appalachian natural gas activity from prior plans due to lower strip prices, which has a small impact on total volumes and minimal effect on cash flows. In total, the Company expects to turn in line approximately 3.1 net Appalachian wells in 2024, however the majority of the associated capital was incurred in 2023.
NOG’s preliminary capital expenditure budget anticipates 50% allocated to the
The Company’s capital budget does not forecast any significant change in well drilling and completion costs, although NOG has recently seen anecdotal evidence of cost reductions, particularly on the Mascot project and its Novo and Forge properties.
MANAGEMENT COMMENTS
“NOG enters 2024 guiding toward 20% year over year production growth on a flat budget, something few companies can offer in our space,” commented Nick O’Grady, NOG’s Chief Executive Officer. “Our balance sheet is stronger than ever, our cash flow is hedged and protected, and we will allocate our capital dynamically to seek the best possible total return for our investors. The opportunity set in front of us in 2024 is as strong as it has ever been during my tenure at the Company.”
“The fourth quarter was a testament to our ability to be creative, nimble and opportunistic on the deal front,” commented
ABOUT NOG
NOG is a real asset company with a primary strategy of acquiring and investing in non-operated minority working and mineral interests in the premier hydrocarbon producing basins within the contiguous
PRELIMINARY INFORMATION
The preliminary unaudited fourth quarter and full year 2023 financial and operating information and estimates included in this press release (including with respect to production, hedge gains, realized prices, lease operating costs, capital expenditures and other matters) are based on estimates and subject to completion of NOG’s financial closing procedures and audit processes. Such information has been prepared by management solely based on currently available information. The preliminary information does not represent and is not a substitute for a comprehensive statement of financial and operating results, and NOG’s actual results may differ materially from these estimates because of final adjustments, the completion of NOG’s financial closing and audit procedures, and other developments after the date of this release.
SAFE HARBOR
This press release contains forward-looking statements regarding future events and future results that are subject to the safe harbors created under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included or referenced in this press release regarding NOG’s dividend plans and practices (including timing, amounts and relative performance), financial position, business strategy, plans and objectives for future operations, industry conditions, cash flow, and borrowings are forward-looking statements. When used in this presentation, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “continue,” “anticipate,” “target,” “could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond NOG’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: changes in NOG’s capitalization, changes in crude oil and natural gas prices; the pace of drilling and completions activity on NOG’s properties and properties pending acquisition; NOG’s ability to acquire additional development opportunities; the projected capital efficiency savings and other operating efficiencies and synergies resulting from NOG’s acquisition transactions; integration and benefits of property acquisitions, or the effects of such acquisitions on NOG’s cash position and levels of indebtedness; changes in NOG’s reserves estimates or the value thereof; general economic or industry conditions, nationally and/or in the communities in which NOG conducts business; changes in the interest rate environment or market dividend practices, legislation or regulatory requirements; conditions of the securities markets; NOG's ability to consummate any pending acquisition transactions; other risks and uncertainties related to the closing of pending acquisition transactions; NOG’s ability to raise or access capital; changes in accounting principles, policies or guidelines; and financial or political instability, acts of war or terrorism, and other economic, competitive, governmental, regulatory and technical factors affecting NOG’s operations, products, services and prices. Additional information concerning potential factors that could affect future plans and results is included in the section entitled “Item 1A. Risk Factors” and other sections of NOG’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, as updated from time to time in amendments and subsequent reports filed with the
NOG has based these forward-looking statements on its current expectations and assumptions about future events. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks, contingencies, and uncertainties, most of which are difficult to predict and many of which are beyond NOG’s control. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except as may be required by applicable law or regulation, NOG does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
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Vice President of Investor Relations
(952) 476-9800
ir@northernoil.com
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