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Jefferies Energy Conference – Northern Oil and Gas, Inc.

Northern Oil and Gas, Inc. · Nov 11, 2015 · 36 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 1
    November 2015 NYSE MKT: NOG
  2. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 2
    NYSE MKT: NOG Shares Outstanding 62.9 million (Fully-Diluted)(1) Market Capitalization(2) 310 million Enterprise Value(2) 1,189 billion Adjusted EBITDA (TTM) 291.2 million Net Producing Wells(1) 201.9 net Average Q3 2015 Daily…
  3. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 3
    Pure Play Williston Basin E&P 100% Non-Op business model Acquire high-quality, non-operated acreage on verge of development drilling Good visibility: Operator, AFE, EUR and ROIC Buy small at a significant discount to operated…
  4. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 4
    Do not drill or operate wells We own minority leasehold/working interest (WI) percentage in Drilling Spacing Units (DSU) Operator of the DSU initiates/proposes drill schedule State law requires the operator of the DSU to send all…
  5. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 5
    FLEXIBLE Our option to consent or non- consent a well PROPRIETARY DISCIPLINED 3,000+ well Evaluate every database gives us drilling opportunity, an advantage in allocate capital only analyzing wells and to wells with acreage…
  6. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 6
    GO Drill well and turn GO / NO-GO to production Consent to only Engineering those wells that will generate high IRRs Analysis AFE Review Use proprietary data to develop type Verify acreage and working interest curve and…
  7. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 7
    Our Operational Focus is Purely Bakken 8
  8. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 8
    North Dakota Active Horizontal Rig Count and Production(1) 1600 250 Active Horizontal Rig Count Daily Production (Mboe/d) 1400 200 1200 1000 150 800 600 100 400 50 200 0 0 Daily Oil Production (MBbl/d) Daily Gas…
  9. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 9
    Takeaway Capacity Options Takeaway Capacity (Mbopd) (1) 3,500 3,000 2,500 2,000 1,500 1,000 500 - Pipeline/Refining Rail Basin Production NDIC Production Forecast Current Pipeline and rail provide multiple…
  10. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 10
    Premier Oil Region Multi-pay, multi-play Current activity centered in the Big Four core counties: McKenzie, Williams, Mountrail and Dunn Source: NDIC and DrillingInfo 11
  11. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 11
    The Bakken remains the primary target but Three Forks well count is growing Bakken Averages Three Forks Averages Year Average of Stages Lbs of Proppant Bbls of Fluid Used of Stages Lbs of Proppant Bbls of Fluid Used 2010 21…
  12. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 12
    Completion Trends: 80% of new consented wells are planned high intensity completions 25% increase in EURs with new completion design 2016 per-well productivity expected to improve Source: NDIC and DrillingInfo 13
  13. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 13
    North Dakota Play to Date Completion Comparison Average EUR1 700 651 600 536 514 500 452 400 MBoe 300 200 100 0 Bakken Three Forks Conventional Enhanced 14 (1) NOG Internal Estimates
  14. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 14
    Our Competitive Advantage 15
  15. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 15
    Core Inventory: 200+ Net Locations 35 - 50 WTI Breakeven Avg AFE: 7.3 million Avg EUR: 750+ MBOE Source: Company information for producing wells as of June 30, 2015. 16
  16. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 16
    A Solid Foundation Northern Net Acreage Summary 19% 20% 29% 71% 80% 81% Montana North Dakota Total % Held (1) Total % Non-Held ND % Held (1) ND % Non-Held Net Acres By County Total Net Acreage: 169,000 (as of 9/30/2015)…
  17. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 17
    Percentage of Producing Wells By Operator Top 10 Operators Slawson 1 11.1% Exploration Continental 7.3% 2 Resources 21.9% 8.2% 3 Whiting Petroleum 4 Hess Less Than 2% 5.3% 5 Oasis Petroleum 11.0% 4.4% 6 EOG Resources…
  18. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 18
    Capital Discipline 2015 budget down 74% vs. 2014 actual capex spend 2015 production expected to be flat vs. 2014 levels Maintain Liquidity 387 million of available liquidity (up 18 million versus prior quarter) 8% senior notes do…
  19. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 19
    Capital Discipline Constrain capital to levels consistent with cash flow Maintain Liquidity Allocate capital only to high IRR opportunities Be prudent and patient with regards to a&d Operational Efficiencies likely continue…
  20. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 20
    Decreased Costs & Increased Reserves Average EUR1 Average AFE 800 10 751 9.2 9.1 700 9 8.0 600 8 7.7 527 (MM) MBoe 500 466 7 407 400 6 300 5 200 4 2014 YTD 2015 2014 YTD 2015 Consented Non-Consent…
  21. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 21
    Northern Average Well Profile by Year, Proposed IP Rates up 30% from 2014 30,000 180,000 25,000 150,000 20,000 120,000 Cum Production (Boe) Rate (Boepd) 15,000 90,000 10,000 60,000 5,000 30,000 - - 0 1 2 3…
  22. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 22
    Through the Lens of Capital Discipline and Liquidity 23
  23. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 23
    Disciplined Approach to Financial Management Maintain Commodity Hedging Program 990,000 Bbls swapped in 4Q 2015 and 900,000 Bbls swapped in 1H 2016 at 90/Bbl, 900,000 swapped in 2H 2016 at 65/Bbl Seek to protect cash flow/supports…
  24. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 24
    Annual Production (Boepd) Cash Flow from Operation ( millions) 20,000 300 16,000 250 200 12,000 150 8,000 100 4,000 50 0 0 2009 2010 2011 2012 2013 2014 TTM Q3'15 2009 2010 2011 2012 2013 2014 TTM Q3'15 Adjusted EBITDA (…
  25. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 25
    Well Costs (MM) Cash Operating Costs (/Boe) 25.00 9 20.33 8 20.00 2.62 7 6 14.46 15.00 /Millions 7.98 (/Boe) 5 2.38 9.2 4 7.7 10.00 3.46 3 2 5.00 9.73 8.62 1 0 - 2014 2015 (9 months) Q3 2014 Q3 2015 26…
  26. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 26
    TTM Q315 Unit Costs per BOE (1) 35.00 32.05 30.00 9.04 25.00 19.70 19.72 20.00 4.42 (/Boe) 17.10 1.63 16.53 4.97 14.46 3.59 15.00 2.95 5.83 1.83 4.39 10.14 2.28 4.38 3.49 10.00 2.48 18.59 3.01 12.26 5.00…
  27. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 27
    NOG Historical Cash Operating Margins per BOE (1)(2) 90.00 100.0% 80.00 79.0% 78.79 79.77 70.00 75.85 76.2% 76.0% 73.51 73.1% 74.9% 75.2% 60.00 75.0% % Margin 66.39 63.21 (/Boe) 50.00 57.77 59.87 59.97 52.44 53.70…
  28. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 28
    Financial Resources Liquidity2 600 Reaffirmed Oct. 2015 500 Liquidity of 387 Million in millions 400 7 300 550 200 380 380 100 170 7 0 Credit Facility(1) Outstanding Available Credit Cash Available Liquidity…
  29. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 29
    SWAPS Contract Period Volume (Bbls) Weighted Average Price (per Bbl) 2015: Q4 990,000 89.82 2016: Q1 450,000 90.00 Q2 450,000 90.00 Q3 450,000 65.00 Q4 450,000 65.00 30
  30. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 30
    Significant potential for in-fill drilling - many areas are seeing down spacing Economies of scale for large efficient operators (e.g. pad drilling, infrastructure consolidation) Enhanced completion techniques Expanded…
  31. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 31
    Proven Business Model Have been here since the play began - 2006 Participated in the completion of 2,500+ gross Bakken/Three Forks wells 20-25% of all Bakken/Three Forks drilling Favorable Non-Op laws in North Dakota & Montana…
  32. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 32
    APPENDIX: Supplemental Information 33
  33. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 33
    Year Ended December 31, First 9 months 2011 2012 2013 2014 2015 Production Oil (MBbls) 1,792.0 3,465.3 4,046.7 5,150.9 3,904.8 Natural Gas and NGLs 800.2 1,768.9 2,572.3 3,682.8 3,559.6 Total Production (Mboe) 1,925.3 3,760.1 4,475.4…
  34. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 34
    (/Boe, except % Margin) Year Realized Price* Production Expense Production Taxes Cash G&A Margin % Margin 2010 66.39 3.70 6.16 4.09 52.44 79.0% 2011 75.85 6.77 7.43 3.88 57.77 76.2% 2012 78.79 8.61 7.58 2.64 59.96 76.0% 2013…
  35. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 35
    Quarter Ended September 30, June 30, March 31, December 31, In thousands 2015 2015 2015 2014 Net Income (323,242) (250,061) (229,739) 103,584 Add Back: Interest Expense 16,154 14,388 11,737 11,258 Income Tax Provision (78)…
  36. Jefferies Energy Conference – Northern Oil and Gas, Inc. – slide 36
    2014 2013 2012 2011 2010 (In Thousands) Net Income 163,746 53,067 72,285 40,611 6,917 Add Back: Interest Expense 42,106 32,709 13,875 586 583 Income Tax Provision 99,367 30,768 43,002 26,835 4,419 Depreciation, Depletion,…

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