2014

Northern Oil and Gas, Inc. Announces 2013 First Quarter Results

WAYZATA, Minn., May 6, 2013 /PRNewswire/ -- Northern Oil and Gas, Inc. (NYSE MKT: NOG) today announced 2013 first quarter results of operations.

2013 FIRST QUARTER HIGHLIGHTS

  • First quarter 2013 production of one million barrels of oil equivalent ("Boe"), or 11,115 average Boe per day; an increase of approximately 30% when compared to first quarter of 2012
  • Oil and gas sales, including the impact of settled derivatives, increased 38% to $82.8 million, as compared to the first quarter of 2012
  • Northern added 128 gross (9.6 net) wells to production during the first quarter of 2013
  • Northern's oil price differential to the NYMEX WTI benchmark was $3.62 per barrel
  • Production expenses totaled $8.64 per Boe of production, falling 12% when compared with the fourth quarter of 2012 and up 3% when compared with the first quarter of 2012
  • General and administrative expenses were down 34% on a per Boe basis when compared with first quarter 2012

Northern's first quarter 2013 Adjusted Net Income was $18.1 million, or $0.29 per diluted share, a 25% increase compared to the first quarter of 2012.  Adjusted Net Income excludes the impact of unrealized mark-to-market gains and losses on derivative instruments.  GAAP net income for the first quarter of 2013 was $9.0 million, or $0.14 per diluted share.  Adjusted EBITDA for the first quarter of 2013 increased 42% to $63.5 million, as compared to the first quarter of 2012. 

ACREAGE UPDATE

As of March 31, 2012, Northern controlled approximately 181,823 net acres targeting the Williston Basin Bakken and Three Forks. During the first quarter of 2013, Northern acquired leasehold interests covering an aggregate of approximately 6,022 net mineral acres in its key prospect areas, for an average cost of $1,087 per net acre.

As of March 31, 2013, approximately 63% of Northern's total acreage position, and approximately 72% of Northern's North Dakota acreage position, was developed, held by production, held by operations or permitted.

DRILLING AND COMPLETIONS UPDATE

During the first quarter of 2013, Northern participated in 128 gross (9.6 net) wells that were completed and placed into production. As a result, Northern's producing wells totaled 1,355 gross (115.8 net) as of March 31, 2013. In addition to these wells, Northern was participating in 152 gross (12.2 net) wells drilling or awaiting completion at March 31, 2013.

CAPITAL EXPENDITURES AND LIQUIDITY UPDATE

During the first quarter of 2013, Northern incurred $88.7 million of capital expenditures on drilling and completion costs, $7.4 million on acreage and related activities, and $4.4 million on workover and other capital expenditure activities. 

Northern ended the quarter with $139 million drawn on its revolving credit facility, which has a total borrowing capacity of $400 million.  Northern ended the quarter with $8.5 million in cash, resulting in liquidity of approximately $270 million.

HEDGING UPDATE

Northern hedges portions of its expected production volumes to increase the predictability of its cash flow and to help maintain a strong financial position. The following table summarizes Northern's oil derivative contracts as of March 31, 2013, by fiscal quarter:

 


COSTLESS COLLARS


SWAPS

Contract

Period


Volume

(Bbls)


Weighted

Average

Floor/Ceiling

Price (per Bbl)


Volume

(Bbls)


Weighted

Average

Price

(per Bbl)

2013:









Q1


575,550


$89.71 - $103.87


210,000


$92.00

Q2


541,481


$89.83 - $103.91


255,000


$91.56

Q3


558,374


$90.36 - $104.23


315,000


$92.29

Q4


532,864


$90.45 - $104.29


375,000


$91.81

2014:









Q1


60,000


$90.00 - $99.05


870,000


$91.24

Q2


60,000


$90.00 - $99.05


900,000


$91.22

Q3


60,000


$90.00 - $99.05


915,000


$89.83

Q4


60,000


$90.00 - $99.05


945,000


$89.79

2015:









Q1




180,000


$89.53

Q2




180,000


$89.53

 

MANAGEMENT COMMENT

"Despite typical first quarter weather, we were able to increase our quarterly sequential average daily production and add nearly ten net wells to producing status," commented Northern's Chairman and Chief Executive Officer Michael Reger.  "Although road (load) restrictions in the second quarter may affect activity levels, we remain optimistic about our second half 2013 production profile due to pad drilling efficiencies and a more stable and predictable operating environment without the impact of weather or road (load) restrictions."

FIRST QUARTER 2013 OPERATING AND FINANCIAL RESULTS

The following tables summarize Northern's first quarter operating and financial results for 2013 as compared to 2012:



Quarter Ended March 31,


2013


2012


Change

Net Production:






Oil (Bbl)

902,738


717,518


26%

Natural Gas and other liquids (Mcf)

585,412


345,427


69%

Total (Boe)

1,000,306


775,089


29%







Average Daily Production:






Oil (Bbl)

10,030


7,885


27%

Natural Gas and other liquids (Mcf)

6,505


3,796


71%

Total (Boe)

11,115


8,517


30%







Average Sales Prices:






Oil (per Bbl)

$       88.63


$       87.35


1%

Effect of oil hedges on average price (per Bbl)

(0.41)


(7.44)


(94)%

Oil net of hedging (per Bbl)

88.22


79.91


10%

Natural Gas and other liquids (per Mcf)

5.40


7.14


(24)%

Realized price per Boe(a)

82.78


77.16


7%







Average Production Costs (per Boe of production):






Production Expenses

$       8.64


$       8.40


3%

Production Taxes

7.81


7.84


0%

General and Administrative

3.99


6.04


(34)%

Depletion, Depreciation, Amortization and Accretion

26.78


23.77


13%







(a) Realized prices include realized gains or losses on cash settlements for commodity derivatives.

In the first quarter of 2013, oil, natural gas and NGL sales, including the effect of settled derivatives, increased 38% compared to the first quarter of 2012, driven primarily by a 29% increase in production due to net wells added during the quarter.  Northern's oil price differential to the NYMEX WTI benchmark during the first quarter of 2013 was $3.62 per barrel, as compared to $14.09 per barrel in the first quarter of 2012.

As a result of oil price derivative activities, Northern incurred a net cash settlement loss of $0.4 million in the first quarter of 2013, compared to a loss of $5.3 million in the first quarter of 2012.  As a result of forward oil price changes, non-cash mark-to-market derivative losses were $14.9 million in the first quarter of 2013 compared to non-cash losses of $9.4 million in the first quarter of 2012. 

Production expenses were $8.6 million in the first quarter of 2013 compared to $6.5 million in the first quarter of 2012.  On a per unit basis, first quarter 2013 production expenses were $8.64 per Boe, up 3% from the $8.40 per Boe reported in the first quarter of 2012 but down 12% sequentially when compared to the fourth quarter of 2012.

Average production tax rates on oil and gas sales were 9.4% in the first quarter of 2013 and 9.3% in the first quarter of 2012. Production tax expense was $7.8 million in the first quarter of 2013, compared to $6.1 million in the first quarter of 2012.   

General and administrative expense was $4.0 million for the first quarter of 2013 compared to $4.7 million in the first quarter of 2012.  On a per unit basis, first quarter 2013 general and administrative expenses were $3.99 per Boe, a 34% reduction when compared with the $6.04 per Boe for the first quarter of 2012 and a 2% reduction when compared to fourth quarter 2012.

Depletion, depreciation, amortization and accretion ("DD&A") was $26.8 million, or $26.78 per Boe, in the first quarter of 2013, compared to $18.4 million, or $23.77 per Boe, in the first quarter of 2012.  Depletion expense, the largest component of DD&A, was $26.66 per Boe in the first quarter of 2013, compared to $23.62 per Boe in the first quarter of 2012. 

Interest expense was $6.1 million for the first quarter of 2013 compared to $0.2 million in the first quarter of 2012.  The increase in interest expense is due to the issuance of our senior notes during the second quarter of 2012.

Net income was $9.0 million in the first quarter of 2013, compared to $8.8 million in the first quarter of 2012.  Diluted net income per common share was $0.14 for the first quarter of 2013 and the first quarter of 2012.

Adjusted Net Income for the first quarter of 2013 was $18.1 million, or $0.29 per diluted share, as compared to $14.4 million, or $0.23 per diluted share, for the first quarter of 2012.  Northern defines Adjusted Net Income as net income (loss) excluding unrealized gain (loss) on derivative instruments, net of tax.

Northern's Adjusted EBITDA for the first quarter of 2013 was $63.5 million, which represents a 42% increase over Adjusted EBITDA of $44.8 million for the first quarter of 2012.  Northern defines Adjusted EBITDA as net income (loss) before (i) interest expense, (ii) income taxes, (iii) depreciation, depletion, amortization and accretion, (iv) unrealized gain (loss) on derivative instruments and (v) non-cash share based compensation expense. 

Adjusted Net Income and Adjusted EBITDA are non-GAAP measures.  A reconciliation of these measures to the most directly comparable GAAP measure is included in the accompanying financial tables found later in this release.  Management believes the use of these non-GAAP financial measures provides useful information to investors to gain an overall understanding of current financial performance.  Specifically, management believes the non-GAAP results included herein provide useful information to both management and investors by excluding certain expenses and unrealized derivatives gains and losses that management believes are not indicative of Northern's core operating results.  In addition, these non-GAAP financial measures are used by management for budgeting and forecasting as well as subsequently measuring Northern's performance, and management believes it is providing investors with financial measures that most closely align to its internal measurement processes.

FIRST QUARTER 2013 EARNINGS RELEASE CONFERENCE CALL

In conjunction with Northern's release of its financial and operating results, investors, analysts and other interested parties are invited to listen to a conference call with management on Tuesday, May 7, 2013 at 9:00 a.m. Central Standard Time.  Details for the conference call are as follows:

Dial-In Number:  (800) 500-3170 (US/Canada) and (719) 325-2434 (International)
Conference ID:  1029253 - Northern Oil and Gas, Inc. First Quarter 2013 Earnings Call
Replay Dial-In Number: (888) 203-1112 (US/Canada) and (719) 457-0820 (International)
Replay Access Code:  1029253 - Replay will be available through May 21, 2013

ABOUT NORTHERN OIL AND GAS

Northern Oil and Gas, Inc. is an exploration and production company with a core area of focus in the Williston Basin Bakken and Three Forks play in North Dakota and Montana. 

More information about Northern Oil and Gas, Inc. can be found at www.NorthernOil.com.

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 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act").  All statements other than statements of historical facts included in this release regarding Northern Oil's financial position, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance are forward-looking statements.  When used in this release, forward-looking statements are generally accompanied by terms or phrases such as "estimate," "project," "predict," "believe," "expect," "anticipate," "target," "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 Northern Oil's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: changes in crude oil and natural gas prices, general economic or industry conditions, nationally and/or in the communities in which Northern Oil conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, Northern Oil's ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, and other economic, competitive, governmental, regulatory and technical factors affecting Northern Oil's operations, products, services and prices. 

Northern Oil 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 Northern Oil's control. 

CONTACT:

Brandon Elliott
EVP, Corporate Development and Strategy
952-476-9800
belliott@northernoil.com

Erik Nerhus
VP, Business Development
952-476-9800
enerhus@northernoil.com

 


NORTHERN OIL AND GAS, INC.

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012

(UNAUDITED)




Three Months Ended

March 31,





2013


2012

 REVENUES





    Oil and Gas Sales


$         83,171,661


$      65,139,396

    Loss on Settled Derivatives


(371,283)


(5,335,597)

    Unrealized Loss on Derivative Instruments


(14,910,655)


(9,364,913)

    Other Revenue


8,359


84,106

    Total Revenue


67,898,082


50,522,992






 OPERATING EXPENSES





    Production Expenses


8,641,210


6,513,348

    Production Taxes


7,811,304


6,078,885

    General and Administrative Expense


3,988,806


4,681,378

    Depletion of Oil and Gas Properties


26,668,171


18,309,500

    Depreciation and Amortization


94,275


97,089

    Accretion of Discount on Asset Retirement Obligations


30,247


15,632

    Total Expenses


47,234,013


35,695,832






 INCOME FROM OPERATIONS


20,664,069


14,827,160






 OTHER INCOME (EXPENSE)





    Interest Expense


(6,108,000)


(196,299)

    Other Income


64


400

    Total Other Income (Expense)


(6,107,936)


(195,899)






 INCOME BEFORE INCOME TAXES


14,556,133


14,631,261






 INCOME TAX PROVISION


5,604,614


5,825,350






 NET INCOME


$           8,951,519


$       8,805,911






 COMPREHENSIVE INCOME, NET OF TAX





    Reclassification of Derivative Instruments Included in Income

   (Net of Tax of $39,000 for the three months ended March 31, 2012)


-


62,309

    Total Other Comprehensive Income


-


62,309






 COMPREHENSIVE INCOME


$            8,951,519


$        8,868,220






 Net Income Per Common Share – Basic


$                    0.14


$                 0.14

 Net Income Per Common Share – Diluted


$                    0.14


$                 0.14

 Weighted Average Shares Outstanding – Basic 


62,857,322


62,239,237

 Weighted Average Shares Outstanding – Diluted


63,316,301


62,670,156






 


NORTHERN OIL AND GAS, INC.

BALANCE SHEETS

MARCH 31, 2013 AND DECEMBER 31, 2012



March 31, 2013

(unaudited)


December 31, 2012

 CURRENT ASSETS




    Cash and Cash Equivalents

$               8,482,166


$             13,387,998

    Trade Receivables

75,890,491


70,219,669

    Advances to Operators

3,137,738


3,109,591

    Prepaid Expenses

782,327


592,001

    Other Current Assets

209,048


1,115,088

     Derivative Instruments

573,873


4,095,197

    Deferred Tax Asset

5,061,000


1,695,000

 Total Current Assets

94,136,643


94,214,544





 PROPERTY AND EQUIPMENT




    Oil and Natural Gas Properties, Full Cost Method of Accounting




        Proved

1,250,775,445


1,159,191,601

 Unproved

91,818,469


82,926,384

 Other Property and Equipment

3,232,324


3,158,224

 Total Property and Equipment

1,345,826,238


1,245,276,209

    Less – Accumulated Depreciation and Depletion

188,793,939


162,031,493

 Total Property and Equipment, Net

1,157,032,299


1,083,244,716





 DERIVATIVE INSTRUMENTS

1,171,612


1,763,008





 DEBT ISSUANCE COSTS

11,390,927


11,713,030





 TOTAL ASSETS

$        1,263,731,481


$        1,190,935,298





LIABILITIES AND STOCKHOLDERS' EQUITY




 CURRENT LIABILITIES




    Accounts Payable

$           118,562,082


$             95,822,162

    Accrued Expenses  

1,062,778


2,454,085

    Accrued Interest

8,199,330


2,180,416

    Derivative Instruments

7,119,763


-

 Total Current Liabilities

134,943,953


100,456,663





 LONG-TERM LIABILITIES




    Revolving Credit Facility

139,000,000


124,000,000

     8% Senior Notes Due 2020

300,000,000


300,000,000

    Derivative Instruments

6,225,917


2,547,745

    Other Noncurrent Liabilities

1,758,894


1,570,630

    Deferred Tax Liability

85,141,000


76,175,000

 Total Long-Term Liabilities

532,125,811


504,293,375





 TOTAL LIABILITIES

667,069,764


604,750,038





 COMMITMENTS AND CONTINGENCIES (NOTE 8)











 STOCKHOLDERS' EQUITY




    Preferred Stock, Par Value $.001; 5,000,000 Authorized, No Shares Outstanding

-


-

    Common Stock, Par Value $.001; 95,000,000 Authorized, (3/31/2013 – 63,784,732

      Shares Outstanding and 12/31/2012 – 63,532,622 Shares Outstanding)

63,784


63,532

    Additional Paid-In Capital

466,991,106


465,466,420

    Retained Earnings

129,606,827


120,655,308

 Total Stockholders' Equity

596,661,717


586,185,260





 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$        1,263,731,481


$        1,190,935,298





 

Reconciliation of Adjusted EBITDA




Three Months Ended

March 31,



2013


2012






Net Income


$                  8,951,519


$                  8,805,911

Add:





    Interest Expense


6,108,000


196,299

    Income Tax Provision


5,604,614


5,825,350

    Depreciation, Depletion, Amortization, and Accretion


26,792,693


18,422,221

    Non-Cash Share Based Compensation


1,122,274


2,204,927

    Unrealized Loss on Derivative Instruments


14,910,655


9,364,913

            Adjusted EBITDA


$                63,489,755


$                44,819,621






 

Reconciliation of Adjusted Net Income




Three Months Ended

March 31,



2013


2012






 Net Income


$          8,951,519


$          8,805,911

 Add:





 Unrealized Loss on Derivative Instruments, Net of Tax


9,169,655


5,637,913

 Adjusted Net Income


$        18,121,174


$       14,443,824






 Weighted Average Shares Outstanding - Basic 


62,857,322


62,239,237

 Weighted Average Shares Outstanding - Diluted


63,316,301


62,670,156






 Net Income Per Common Share - Basic


$                   0.14


$                   0.14

 Add:





 Change due to Unrealized Loss on Derivative Instruments, Net of Tax


0.15


0.09

 Adjusted Net Income Per Common Share - Basic


$                   0.29


$                   0.23






 Net Income Per Common Share - Diluted


$                   0.14


$                   0.14

 Add:





 Change due to Unrealized Loss on Derivative Instruments, Net of Tax


0.15


0.09

 Adjusted Net Income Per Common Share - Diluted


$                   0.29


$                   0.23

 

SOURCE Northern Oil and Gas, Inc.



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