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Mar 31, 2020
Northern Oil and Gas Q1 2020 Earnings Report
Announced first quarter results and provided 2020 guidance.
Key Takeaways
Northern Oil and Gas reported a first quarter net income of $368.3 million, or $0.74 per diluted share, driven by a $345.1 million mark-to-market gain on unsettled commodity derivatives. Production increased 28% year-over-year, averaging 43,735 Boe per day, with oil production representing 79% of the total at 34,488 Bbls per day. The company also reduced its Senior Secured Notes by $90.2 million during the quarter and anticipates $175 to $200 million in total capital expenditures for 2020.
First quarter production increased 28% over the prior year, averaging 43,735 barrels of oil equivalent (“Boe”) per day
Cash flow from operations, excluding $7.1 million from changes in working capital, totaled $93.6 million, which was a 7% increase over the prior year and exceeded first quarter capital expenditures of $86.7 million
Senior Secured Notes reduced by $90.2 million in the first quarter; signed agreements to retire an additional $6.1 million subsequent to quarter-end
Over 27,000 barrels per day of remaining 2020 oil production hedged at over $58 per barrel (“Bbl”) average prices
Revenue by Segment
Forward Guidance
Northern anticipates $350 to $410 million in Adjusted EBITDA for 2020 and expects $55 to $60 million of total book interest expense for 2020. Northern anticipates approximately $175 to $200 million in total capital expenditures for 2020.
Positive Outlook
- Strong oil hedge position
- Significant free cash flow in 2020 and 2021
- $50 million of “reserve capital” for completions of its drilled but uncompleted inventory in the event of a substantial rise in commodity prices north of $40 WTI
- Board of Directors has elected to defer payment of the dividends on its Perpetual Preferred Stock and any potential common stock dividends until oil returns to economic levels
- This should save the Company approximately $15 million for 2020
Challenges Ahead
- Rapid deterioration in oil prices during the COVID-19 pandemic
- Operators continue to curtail and shut-in production in response to low wellhead prices
- Plans are fluctuating and the timeframe for them is fluid
Historical Earnings Impact
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Avg. Return Before/After Earnings
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