Northern Oil and Gas Inc. (NOG) reported a second-quarter net income of $167.8 million, down 33.2 percent from the previous-year net income of $251.3 million.
NOG’s oil and natural gas sales for the second quarter were $416.5 million, a decrease of 24.26 percent year over year, while the company’s adjusted EBITDA in the second quarter was $315.5 million, a 16 percent increase from the same period a year ago, according to its earnings release.
Second quarter production was 90,878 barrels of oil equivalent per day (boepd), an increase of four percent from the first quarter of 2023 and an increase of 25 percent from the second quarter of 2022. Oil represented 60 percent of total production in the second quarter with 54,738 barrels per day (bpd), an increase of two percent from the first quarter of 2023 and an increase of 31 percent from the second quarter of 2022, the company said.
NOG said it had 13.8 net wells turned in-line during the second quarter, compared to 13.1 net wells turned in-line in the first quarter of 2023. Production increased quarter over quarter, driven primarily by growth in NOG’s Williston basin production, which grew approximately 10 percent from the prior quarter and represented record quarterly volumes in the basin for NOG, the release said.
“NOG made meaningful strides in expanding its exposure to high-quality, low-breakeven acreage in the second quarter by executing on two highly accretive large-scale acquisitions with Forge and Novo”, NOG CEO Nick O’Grady said. “It was also a banner quarter for the Ground Game, completing 13 transactions that are expected to add over 16 net wells to production over the next several years. For the remainder of the year, we see potential for record levels of production and elevated cash flow from operations and free cash flow, as we begin to harvest our first half investments.”
In July, NOG closed its acquisition of Delaware Basin assets from Forge Energy II Delaware LLC, spanning a total of 10,200 net acres and including about 30 net-producing wells for $167.9 million in cash. The acquisition was made jointly with Vital Energy Inc., which will be the operator, according to an earlier news release.
In June, NOG and Earthstone Energy Inc. announced the acquisition of privately held Novo Oil & Gas Holdings LLC for $1.5 billion. Earthstone will pay $1 billion for a 66.67 percent stake in Novo while NOG will acquire working interests equal to 33.3 percent of the oil and gas assets for $0.5 billion.
The Novo assets are primarily located in Eddy County, New Mexico, and Culberson County, Texas. Upon closing and transition of services, Earthstone will operate substantially all the assets, with NOG participating in asset development subject to future joint operating agreements. The assets to be acquired by NOG include approximately 5,600 net acres, 29.2 net producing wells, 7.2 net wells-in-process, and 59.9 low-breakeven net undeveloped locations. Recent production was approximately 13,000 boepd. For the second half of 2023, NOG expects average production of approximately 11,500 boepd for its Novo assets and approximately $20 million of capital expenditures, according to an earlier news release.
Meanwhile, NOG amended its reserves-based revolving credit facility to increase the borrowing base to $1.8 billion from $1.6 billion and increase the elected commitment amount to $1.25 billion from $1.0 billion. The amendment will go into effect upon NOG’s closing of the Novo acquisition, scheduled mid-August, subject to other customary conditions. PNC Bank and Bank of Oklahoma have jumped in as new lenders, according to a separate news release.
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