Northern Oil and Gas, Inc. Announces Record Second Quarter Earnings, Record Production Volumes Exceeding Previous Guidance and Provides Operations Update
WAYZATA, Minn., Aug. 9 /PRNewswire-FirstCall/ -- Northern Oil and Gas, Inc. (NYSE/Amex: NOG) ("Northern Oil") today reported net income of $6,120,866, or $0.12 per share, on total revenues of $16,231,773 for the quarter ended June 30, 2010. Second quarter 2010 production volumes increased by 38% from the first quarter of 2010, exceeding previous expectations of 20% to 30% quarter-over-quarter production increases.
SECOND QUARTER 2010 RESULTS
Revenues from the sale of crude oil and natural gas, including hedge settlements, for the second quarter were $11,968,792, which represents a 46% increase compared to the first quarter of 2010 and a 426% increase compared to the second quarter of 2009. Total revenue, including the mark-to-market value of hedge instruments, for the second quarter were $16,231,773, which represents a 125% increase compared to the first quarter of 2010 and a 613% increase compared to the second quarter of 2009.
During the second quarter of 2010, Northern Oil's average realized price for crude oil was $70.98 per barrel, which included a $1.83 per barrel gain due to the settlement of crude oil derivative contracts. This compares to an average $68.70 per barrel realized price in the first quarter of 2010, which included a $1.48 per barrel loss due to the settlement of crude oil derivative contracts, and an average $52.36 per barrel realized price in the second quarter of 2009, which included a $2.85 per barrel loss due to the settlement of our crude derivative contracts.
Northern Oil's production volumes for the second quarter 2010 were a quarterly record of 172,663 barrels of oil equivalent ("BOE"), representing a 38% increase compared to the first quarter 2010 and a 235% increase compared to the second quarter 2009. This increase represents Northern Oil's tenth consecutive quarterly increase in production. Second quarter 2010 production consisted of 96% crude oil and approximately 4% associated natural gas. Northern Oil exited the second quarter of 2010 with production volumes of approximately 2,703 BOE per day. During the second quarter of 2010, production was added from approximately 3.89 net wells. Northern Oil has maintained a 100% drilling success rate in the Williston Basin Bakken and Three Forks trends since the company's inception.
Northern Oil's reported production expenses for the second quarter of 2010 were $561,427, or $3.30 per BOE on an accrued basis, compared to $332,330, or $3.15 per BOE, in the first quarter 2010 and $119,751, or $2.41 per BOE, in the second quarter 2009.
Depletion expense for the second quarter of 2010 was $2,600,836, or $15.06 per BOE, compared to $1,883,605, or $15.06 per BOE, from the first quarter 2010 and $548,124, or $10.64 per BOE, from the second quarter 2009.
Cash general and administrative (G&A) expenses for the second quarter of 2010 were $718,471, representing a 20% decrease compared to $893,671 in the first quarter 2010.
Northern Oil's reported net income for the second quarter of 2010 was $6,120,866, or $0.12 per diluted share, compared to net income of $1,559,630, or $0.04 per diluted share, for the first quarter 2010 and net income of $418,396, or $0.01 per diluted share, for the second quarter 2009.
Northern Oil's net income for the second quarter of 2010, excluding unrealized mark-to-market hedging gains, was $3,502,667, or $0.07 per diluted share, compared to net income in the first quarter 2010 excluding unrealized mark-to-market hedging losses of $2,172,446, or $0.05 per diluted share.
Northern Oil defines Adjusted EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation, depletion and amortization, (iv) accretion of abandonment liability, (v) pre-tax unrealized gain and losses on commodity risk and (vii) non-cash expenses relating to share based payments recognized under ASC Topic 718. Adjusted EBITDA for the second quarter of 2010 was $9,677,386, or $0.19 per diluted share, which represents a 51% increase over adjusted EBITDA of $6,417,708, or $0.14 per diluted share, for the first quarter of 2010.
Net income excluding unrealized mark-to-market hedging gains and adjusted EBITDA are non-GAAP measures. A reconciliation of these measures to GAAP is included in our accompanying financial tables found later in this release.
In the six months ending June 30, 2010, Northern Oil's capital expenditures relating to exploration and development activities approximated $54 million.
OPERATIONS UPDATE AND INCREASED PRODUCTION GUIDANCE
Northern Oil is currently participating in the drilling or completion of an additional 63 gross Bakken or Three Forks wells and one gross Red River well, for an aggregate of 7.24 net wells currently drilling or awaiting completion.
As of August 9, 2010, Northern Oil has spud approximately 13.85 net wells in 2010. Management reaffirms its previously announced guidance to spud approximately 18 net wells throughout 2010 and expects to increase production volumes by 30 to 35% in the third quarter of 2010 compared to previous guidance of 20 to 30% in the second quarter of 2010.
RECENT COMPLETION HIGHLIGHTS
The following table illustrates the most recent well completions in which Northern Oil participated.
WELL NAME |
OPERATOR |
COUNTY/ |
WI |
INITIAL |
DAYS |
AVG. |
|
SUMMERFIELD 15-15H |
AMERICAN |
DUNN, ND |
5.10% |
2,799 |
37 |
974 |
|
KUBIK TRUST #1-18-19H |
ANSCHUTZ |
DUNN, ND |
3.20% |
2,441 |
60 |
861 |
|
JACK CVANCARA 19-18 #1H |
BRIGHAM |
MOUNTRAIL, ND |
3.16% |
5,035 |
30 |
1,800 |
|
LIFFRIG #29-20 1-H TFS |
BRIGHAM |
MOUNTRAIL, ND |
6.25% |
2,477 |
84 |
654 |
|
GILLUND #1-32H |
CONTINENTAL |
DIVIDE, ND |
9.62% |
623 |
N/A |
N/A |
|
JOANNE #1-7H |
CONTINENTAL |
DIVIDE, ND |
37.58% |
452 |
N/A |
N/A |
|
SHONNA #2-15H |
CONTINENTAL |
DIVIDE, ND |
14.84% |
402 |
N/A |
N/A |
|
UXBRIDGE #1-9H |
CONTINENTAL |
DIVIDE, ND |
9.04% |
795 |
N/A |
N/A |
|
VAN HOOK #100-15H TFS |
EOG RESOURCES |
MOUNTRAIL, ND |
10.00% |
1,585 |
100 |
931 |
|
RS-NELSON FARMS 2829H-1 |
HESS CORP |
MOUNTRAIL, ND |
45.55% |
751 |
N/A |
N/A |
|
EDWARDS #5992 44-10 |
OASIS |
BURKE, ND |
21.00% |
612 |
88 |
315 |
|
BADGER #1-9H |
SLAWSON |
MOUNTRAIL, ND |
28.38% |
2,518 |
N/A |
N/A |
|
COUGAR FEDERAL #1-30H |
SLAWSON |
MOUNTRAIL, ND |
3.81% |
1,493 |
90 |
706 |
|
LUNKER FEDERAL #1-30-4H |
SLAWSON |
MOUNTRAIL, ND |
6.40% |
2,186 |
N/A |
N/A |
|
MACHETE #1-19H |
SLAWSON |
MOUNTRAIL, ND |
14.74% |
1,303 |
60 |
705 |
|
MINX #1-29H |
SLAWSON |
MOUNTRAIL, ND |
22.00% |
1,475 |
90 |
473 |
|
SNIPER FEDERAL #1-6-7H |
SLAWSON |
MOUNTRAIL, ND |
21.41% |
3,784 |
24 |
1,426 |
|
STALLION #1-1-12H |
SLAWSON |
MOUNTRAIL, ND |
22.41% |
2,753 |
125 |
953 |
|
VANDAL #1-16H |
SLAWSON |
RICHLAND, MT |
20.00% |
478 |
57 |
271 |
|
SCHILKE #2-24H |
PEAK |
MCKENZIE, ND |
5.24% |
1,679 |
N/A |
N/A |
|
UPDATED HEDGING ACTIVITY
The following table reflects the weighted average price of Northern Oil's open commodity derivative contracts as of July 31, 2010, by year with associated volumes.
Weighted Average Price |
|||||
Year |
Volumes |
Weighted |
|||
2010 |
315,000 |
$ 80.36 |
|||
2011 |
372,500 |
$ 80.32 |
|||
2012 |
141,000 |
$ 79.39 |
|||
MANAGEMENT COMMENT
Michael Reger, Northern Oil's Chief Executive Officer, commented, "Our strong production growth has been a result of continued improvement in well results, increased core acreage additions, robust drilling activity and growing efficiencies in this premier oil resource play. We continue to be impressed by the expanding size and scope of the Bakken and Three Forks trend as well as the evolution in completion techniques. We would like to thank all of the operators with whom we have been fortunate enough to work for all of their efforts in advancing the collective success of all participants in this exciting and high return oil play. We remain well capitalized and positioned to continue to execute on our strategy of acquiring high quality non-operated interests and developing our substantial core Bakken position. Northern Oil would like to reaffirm its focus on the Williston Basin Bakken play as we continue to exploit our leasing advantage and turn our high quality acreage to production."
SECOND QUARTER EARNINGS RELEASE TELECONFERENCE CALL
In conjunction with Northern Oil's release of its financial and operating results, investors, analysts and other interested parties are invited to listen to a conference call with management on Monday, August 9, 2010 at 10:00 a.m. Central Daylight Time. Details for the conference call are as follows:
Dial-In Number: (866) 261-2650 (US/Canada) and (703) 639-1221 (International) |
|
Conference ID: 1474933, Northern Oil and Gas Second Quarter Earnings Release |
|
ABOUT NORTHERN OIL AND GAS
Northern Oil and Gas, Inc. is an exploration and production company based in Wayzata, Minnesota. Northern Oil's core area of focus is the Williston Basin Bakken and Three Forks trend in North Dakota and Montana.
More information about Northern Oil and Gas, Inc. can be found at www.NorthernOil.com.
SAFE HARBOR
This press release contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act"). All statements other than statements of historical facts included in this report regarding our financial position, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance are forward-looking statements. When used in this report, forward-looking statements are generally accompanied by terms or phrases such as "estimate," "project," "predict," "believe," "expect," "anticipate," "target," "plan," "intend," "seek," "goal," "will," "should," "may" or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which our Company conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our Company's operations, products, services and prices.
We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control.
FINANCIAL INFORMATION |
||||
ASSETS |
||||
June 30, |
||||
2010 |
December 31, |
|||
(UNAUDITED) |
2009 |
|||
CURRENT ASSETS |
||||
Cash and Cash Equivalents |
$ 70,167,911 |
$ 6,233,372 |
||
Trade Receivables |
11,311,742 |
7,025,011 |
||
Prepaid Drilling Costs |
6,431,446 |
1,454,034 |
||
Prepaid Expenses |
481,371 |
143,606 |
||
Other Current Assets |
272,392 |
201,314 |
||
Short - Term Investments |
- |
24,903,476 |
||
Derivative Asset |
1,068,924 |
- |
||
Deferred Tax Asset |
863,000 |
2,057,000 |
||
Total Current Assets |
90,596,786 |
42,017,813 |
||
PROPERTY AND EQUIPMENT |
||||
Oil and Natural Gas Properties, Full Cost Method (including unevaluated cost |
156,185,056 |
96,801,626 |
||
Other Property and Equipment |
2,193,447 |
439,656 |
||
Total Property and Equipment |
158,378,503 |
97,241,282 |
||
Less - Accumulated Depreciation and Depletion |
9,626,536 |
5,091,198 |
||
Total Property and Equipment, Net |
148,751,967 |
92,150,084 |
||
DEBT ISSUANCE COSTS |
1,525,703 |
1,427,071 |
||
Total Assets |
$ 240,874,456 |
$ 135,594,968 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
CURRENT LIABILITIES |
||||
Accounts Payable |
$ 9,987,487 |
$ 6,419,534 |
||
Line of Credit |
- |
834,492 |
||
Accrued Expenses |
1,938,696 |
316,977 |
||
Derivative Liability |
- |
1,320,679 |
||
Other Liabilities |
18,574 |
18,574 |
||
Total Current Liabilities |
11,944,757 |
8,910,256 |
||
LONG-TERM LIABILITIES |
||||
Revolving Credit Facility |
- |
- |
||
Derivative Liability |
85,544 |
1,459,374 |
||
Subordinated Notes |
400,000 |
500,000 |
||
Other Noncurrent Liabilities |
315,727 |
243,888 |
||
Total Long-Term Liabilities |
801,271 |
2,203,262 |
||
DEFERRED TAX LIABILITY |
5,192,000 |
922,000 |
||
Total Liabilities |
17,938,028 |
12,035,518 |
||
STOCKHOLDERS' EQUITY |
||||
Common Stock, Par Value $.001; 100,000,000 Authorized, 51,079,143 |
51,080 |
43,912 |
||
Additional Paid-In Capital |
215,539,549 |
124,884,266 |
||
Retained Earnings |
8,522,388 |
841,892 |
||
Accumulated Other Comprehensive Income (Loss) |
(1,176,589) |
(2,210,620) |
||
Total Stockholders' Equity |
222,936,428 |
123,559,450 |
||
Total Liabilities and Stockholders' Equity |
$ 240,874,456 |
$ 135,594,968 |
||
NORTHERN OIL AND GAS, INC. CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (UNAUDITED) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
June 30, |
June 30, |
|||||||
2009 |
2009 |
|||||||
2010 |
Adjusted * |
2010 |
Adjusted * |
|||||
REVENUES |
||||||||
Oil and Gas Sales |
$ 11,664,873 |
$ 2,418,496 |
$ 20,033,720 |
$ 3,059,230 |
||||
Gain (Loss) on Settled Derivatives |
303,919 |
(143,412) |
126,936 |
(125,878) |
||||
Mark-to-Market of Derivative Instruments |
4,251,199 |
- |
3,260,383 |
- |
||||
Other Revenue |
11,782 |
- |
32,248 |
- |
||||
16,231,773 |
2,275,084 |
23,453,287 |
2,933,352 |
|||||
OPERATING EXPENSES |
||||||||
Production Expenses |
561,427 |
119,751 |
893,757 |
214,140 |
||||
Production Taxes |
1,024,277 |
189,400 |
1,670,143 |
247,715 |
||||
General and Administrative Expense |
718,471 |
519,014 |
1,612,142 |
910,674 |
||||
Share Based Compensation |
1,193,072 |
36,302 |
2,006,369 |
213,277 |
||||
Depletion of Oil and Gas Properties |
2,600,836 |
548,124 |
4,484,441 |
850,326 |
||||
Depreciation and Amortization |
26,267 |
22,777 |
50,897 |
45,456 |
||||
Accretion of Discount on Asset Retirement Obligations |
9,215 |
2,077 |
12,752 |
3,471 |
||||
Total Expenses |
6,133,565 |
1,437,445 |
10,730,501 |
2,485,059 |
||||
INCOME FROM OPERATIONS |
10,098,208 |
837,639 |
12,722,786 |
448,293 |
||||
OTHER EXPENSE |
(144,342) |
(139,243) |
(232,290) |
(182,770) |
||||
INCOME BEFORE INCOME TAXES |
9,953,866 |
698,396 |
12,490,496 |
265,523 |
||||
INCOME TAX PROVISION |
3,833,000 |
280,000 |
4,810,000 |
106,000 |
||||
NET INCOME |
$ 6,120,866 |
$ 418,396 |
$ 7,680,496 |
$ 159,523 |
||||
Net Income Per Common Share - Basic |
$ 0.12 |
$ 0.01 |
$ 0.16 |
$ 0.00 |
||||
Net Income Per Common Share - Diluted |
$ 0.12 |
$ 0.01 |
$ 0.16 |
$ 0.00 |
||||
Weighted Average Shares Outstanding – Basic |
49,934,409 |
34,582,282 |
47,032,602 |
34,404,093 |
||||
Weighted Average Shares Outstanding - Diluted |
50,609,944 |
34,741,036 |
47,593,962 |
34,484,966 |
||||
NORTHERN OIL AND GAS, INC. |
||||
CONDENSED STATEMENTS OF CASH FLOWS |
||||
FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009 |
||||
(UNAUDITED) |
||||
Six Months Ended |
||||
June 30, |
||||
2009 |
||||
2010 |
Adjusted * |
|||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||
Net Income |
$ 7,680,496 |
$ 159,523 |
||
Adjustments to Reconcile Net Income to Net Cash Provided by |
||||
Operating Activities: |
||||
Depletion of Oil and Gas Properties |
4,484,441 |
850,326 |
||
Depreciation and Amortization |
50,897 |
45,456 |
||
Amortization of Debt Issuance Costs |
280,768 |
168,790 |
||
Accretion of Discount on Asset Retirement Obligations |
12,752 |
3,471 |
||
Income Tax Provision |
4,810,000 |
106,000 |
||
Loss on Sale of Available for Sale Securities |
197,556 |
- |
||
Market Value adjustment of Derivative Instruments |
(3,260,383) |
- |
||
Amortization of Deferred Rent |
(9,287) |
(9,286) |
||
Share - Based Compensation Expense |
2,006,369 |
213,277 |
||
Changes in Working Capital and Other Items: |
||||
Increase in Trade Receivables |
(4,286,731) |
(775,192) |
||
Increase in Prepaid Expenses |
(337,765) |
(44,892) |
||
Decrease (Increase) in Other Current Assets |
(71,078) |
- |
||
Increase in Accounts Payable |
3,567,953 |
2,585,014 |
||
Decrease in Accrued Expenses |
(138,281) |
(934,162) |
||
Net Cash Provided By Operating Activities |
14,987,707 |
2,368,325 |
||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||
Purchases of Other Equipment and Furniture |
(1,753,791) |
(6,943) |
||
Decrease (Increase) in Prepaid Drilling Costs |
(4,977,412) |
19 |
||
Proceeds from Sale of Oil and Gas Properties |
237,877 |
- |
||
Proceeds from Sale of Available for Sale Securities |
25,890,901 |
- |
||
Increase in Oil and Gas Properties |
(51,636,851) |
(17,506,249) |
||
Net Cash Used For Investing Activities |
(32,239,276) |
(17,513,173) |
||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||
Payments on Line of Credit |
(834,492) |
(12,338) |
||
Advances on Revolving Credit Facility |
5,300,000 |
16,000,000 |
||
Payments on Revolving Credit Facility |
(5,300,000) |
- |
||
Increase (Decrease) in Subordinated Notes, net |
(100,000) |
500,000 |
||
Debt Issuance Costs Paid |
(379,400) |
(1,190,061) |
||
Proceeds from Issuance of Common Stock - Net of Issuance Costs |
82,500,000 |
12,701,049 |
||
Net Cash Provided by Financing Activities |
81,186,108 |
27,998,650 |
||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
63,934,539 |
12,853,802 |
||
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD |
6,233,372 |
780,716 |
||
CASH AND CASH EQUIVALENTS – END OF PERIOD |
$ 70,167,911 |
$ 13,634,518 |
||
Supplemental Disclosure of Cash Flow Information |
||||
Cash Paid During the Period for Interest |
$ 125,135 |
$ 189,128 |
||
Cash Paid During the Period for Income Taxes |
$ - |
$ - |
||
Non-Cash Financing and Investing Activities: |
||||
Purchase of Oil and Gas Properties through Issuance of Common Stock |
$ 5,698,337 |
$ 224,879 |
||
Payment of Compensation through Issuance of Common Stock |
$ 4,224,114 |
$ 261,280 |
||
Capitalized Asset Retirement Obligations |
$ 69,802 |
$ 61,403 |
||
Fair Value of Warrants Issued for Debt Issuance Costs |
$ - |
$ 221,153 |
||
Payment of Debt Issuance Costs through Issuance of Common Stock |
$ - |
$ 475,200 |
||
USE OF NON GAAP FINANCIAL MEASURES |
||||
Northern Oil and Gas, Inc. |
||||
Reconciliation of Adjusted EBITDA |
||||
Three Months Ended |
||||
March 31, |
June 30, |
|||
2010 |
2010 |
|||
Net Income |
$ 1,559,630 |
$ 6,120,866 |
||
Add Back: |
||||
Income Tax Provision |
977,000 |
3,833,000 |
||
Depreciation, Depletion, Amortization, |
2,062,170 |
2,766,688 |
||
Share Based Compensation |
813,297 |
1,193,072 |
||
Unrealized Gain on Commodity |
990,816 |
(4,251,199) |
||
Interest Expense |
14,795 |
14,959 |
||
Adjusted EBITDA |
$ 6,417,708 |
$ 9,677,386 |
||
EBITDA Per Common Share - Basic |
$ 0.15 |
$ 0.19 |
||
EBITDA Per Common Share - Diluted |
$ 0.14 |
$ 0.19 |
||
Weighted Average Shares Outstanding – Basic |
44,098,553 |
49,934,409 |
||
Weighted Average Shares Outstanding - Diluted |
44,544,469 |
50,609,944 |
||
Northern Oil and Gas, Inc. |
||||
Three Months Ended |
||||
March 31, |
June 30, |
|||
2010 |
2010 |
|||
Net Income, as Reported |
$ 1,559,630 |
$ 6,120,866 |
||
Unrealized Derivative Gains |
990,816 |
(4,251,199) |
||
Tax Impact |
(378,000) |
1,633,000 |
||
Earnings without the Effect |
$ 2,172,446 |
$ 3,502,667 |
||
Net Income Per Common Share - Basic |
$ 0.05 |
$ 0.07 |
||
Net Income Per Common Share - Diluted |
$ 0.05 |
$ 0.07 |
||
Weighted Average Shares Outstanding – Basic |
44,098,553 |
49,934,409 |
||
Weighted Average Shares Outstanding - Diluted |
44,544,469 |
50,609,944 |
||
CONTACT: |
|
Investor Relations |
|
772-219-7525 |
|
SOURCE Northern Oil and Gas, Inc.
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