Capital Markets | Capital Expenditure | Drilling Program - Wells | Capital Expenditure - 2021

Northern Oil Details 2021 Capital Plan; Q4 Summary

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Northern Oil and Gas detailed its estimated 2021 guidance as well as its Q4 summary.

Q4 Summary

Fourth quarter production of 35,500 – 35,900 barrels of equivalent (“Boe”) per day was toward the upper end of management’s guidance range provided in its January 7, 2021 operations update. Northern estimates that December 2020 production averaged approximately 37,000 Boe per day, despite 3,000 Boe per day of continued production curtailments. Realized oil differentials are expected to be less than $7.25 per barrel for the fourth quarter. Natural gas realizations are expected to exceed 70% of NYMEX Henry Hub prices for the fourth quarter of 2020.

Fourth quarter 2020 capital expenditures are expected to total approximately $48.5 – $49.8 million. A 32% improvement in oil prices during Q4 drove an acceleration of development of Northern’s wells in process that were previously scheduled for Q1 and Q2 2021E. In addition, Northern realized continued success in its high return Ground Game strategy, which accounted for approximately $18 million in capital expenditures. Adjusting to the shift in development timing, Northern has reduced the midpoint of its 2021E standalone capital expenditure guidance by $12.5 million and has increased its 2021E standalone production guidance.

Cash flow from operations, inclusive of net changes in working capital, is expected to have increased over 100% sequentially during Q4, which drove a $39 million reduction in total debt.

2021E Guidance

2021E GUIDANCE – RELIANCE ASSETS – FULL YEAR

Hedge Update

Northern has hedged approximately 13,930 barrels per day of Clearbrook basis hedges at an average price of ~($2.40) for 2021. This will ensure stable pricing realizations in the event of transportation disruptions or volatility. Northern has an average of approximately ~21,500 barrels of oil per day hedged at an average price of ~$55 for 2021. For 2022, Northern has an average of approximately 7,000 barrels of oil per day hedged at an average price of $50.52. As noted above, Northern will begin a comprehensive hedging program for the acquired Assets. A comprehensive review of Northern’s hedges can be found in an updated corporate presentation found on Northern’s website.