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Jun 30, 2020
Northern Oil and Gas Q2 2020 Earnings Report
Announced second quarter 2020 results, demonstrating resilience through hedging and cost management amidst industry challenges.
Key Takeaways
Northern Oil and Gas, Inc. reported a GAAP net loss of $899.2 million, heavily impacted by non-cash items, but achieved an adjusted net income of $10.7 million. The company reduced total debt by $52.2 million and realized commodity hedge gains of $77.4 million. Production averaged 23,804 Boe per day, affected by curtailments and shut-ins.
Total debt reduced by $52.2 million, saving over $3 million in annual interest.
Realized commodity hedge gains of $77.4 million.
Cash flow from operations totaled $53.1 million, excluding $48.5 million from working capital changes.
Production averaged 23,804 barrels of oil equivalent per day due to curtailments.
Forward Guidance
Northern projects production of 22,500 - 30,000 Boe per day in Q3 and 30,000 - 40,000 Boe per day in Q4. Total capital expenditures are expected to be $50 - $75 million in the second half of 2020.
Positive Outlook
- Production curtailments will continue to subside.
- Completion activity will steadily increase starting late in the fourth quarter of 2020.
- Production approaching 40,000 Boe per day by early 2021, nearing volume levels seen in early 2020.
- Adjusted EBITDA and free cash flow at similar or higher levels to 2020, despite lower hedge values at recent strip prices.
- Continued success on the ground game front, which continues to build the number of wells in process to near record levels.
Challenges Ahead
- Significant uncertainty remains and actual results will be driven by the timing of curtailments and shut-ins returning to sales.
- Completed wells turned to sales and wells in process being completed and producing.
- Downside case assumes a slower WIP completion pace and little new drilling activity.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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