Yahoo Finance Northern Oil & Gas Inc (NOG) Q1 2024 Earnings Call Transcript Highlights: Robust Growth and ...
Average Daily Production: Over 119,000 BOE per day, up 37% from Q1 2023.
Adjusted EBITDA: $387 million, up 19% year-over-year.
Free Cash Flow: $54 million, lower sequentially and year-over-year due to increased activity.
Adjusted EPS: $1.28 per diluted share.
Oil Differentials: Averaged $3.99, within guidance range.
CapEx: $296 million, with 68% allocated to Permian, 26% to Williston, and 6% to Appalachia.
Liquidity: Over $1 billion, including $32 million cash and $987 million available on revolving credit facility.
Net Debt to LQA EBITDA: 1.25 times, expected to trend down through 2024.
Share Repurchases: 549,000 shares for $20 million at an average price of $36.42.
Q2 Production Guidance: 117,500 to 119,500 BOE per day, flat versus Q1.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Good morning, guys. Good details on Nick. Maybe give to my first question is just on what I guess I would classify as maybe cycle time. It seems like your capital on the ground maybe increased has increased a little bit, but the setup I think as you And Adam, the guys describe it to me, it sounds like the future setup is better than ever. A: Yes, I mean, look, Neil, this is a five to a little bit of some of what we are in a little bit of how things are changing. We're returns-based organization and obviously as a non-operator, the timing of capital expenditures can shift to market. But as I as I said last quarter, and I'll say again, the total capital expenditures are the same and to the extent it increases from one quarter to Enexus because we're getting more activity, you know, if we're getting more activity that meets our return, that's a good thing.
Q: They have great well site. And then just a quick follow-up on capital allocation. You mentioned just the shots on goal and I continue to think you all have more opportunities than almost anybody found. How do you balance that in your shareholder return given you have more prospects than I think, any company out there? A: Yes. I mean, I think I don't see them. As I say, the same thing. We always would say is I don't think we view them as mutually exclusive. And I think I would also add that we look at a lot of acquisitions as things that can enhance those shareholder returns. So most of the assets that we're looking at are generally, you know, cash-flowing acquisitions.
Q: Thanks. So just to follow up on the CapEx for the year, possibly landing in the upper half of the range, assuming oil prices and activity remains elevated. Chad, you sort of alluded this you sort of alluded to this in your comments, but would you think that your net well count and your production volume for the year might also be a little bit biased to the upper half of the ranges, or do you think it's a little bit too early to tell just which are lag effects and whatnot. A: We ourselves as Nick. I mean, I think I read your note and I have to object to one of the things said, I think you I think you misconstrued what we were saying, we're not suggesting that our CapEx assumes that oil prices will stay high for the rest of the year. It's quite the opposite.
Q: Look, I'm going to kind of come back to the CapEx conversation we could dumb, but take a little bit different angle on it, I guess correct me if I'm wrong, but you back half CapEx, the implied quarterly run rates around [160] to [170]. And could you just give us a high-level view. I think your production probably is going to peak, you know, somewhere in that one, 20 plus range in the third quarter. A: Our decline rate is moderating as the year starts or overall maintenance capital is coming down, right? So we feel like we're losing about what, Jim five points of decline rate throughout the year. So as the year as the year progresses, our overall maintenance capital is coming down meaningfully. So the answer to your question is utility.
Q: Nick, Adam and Chad. I want I want to pick up perhaps right where we just left off on the source of the production beat. I wondered if you could look at it or tried to answer it in this framework in late February, you guys thought that there was going to be a slight decline and until you came in with, call it 4% growth on the quarter. So it was there were specific I think this is you I guess you already asked about the geographies. I guess what what changed in in March and that led to that, that led to that result. It was different from what you guys saw at the end of February. A: Well, I think as you're talking about what changed in what we were seeing. I think it's going to be a combination of what wells came online in March as well as as these wells are cleaning up in January and February. You've got very limited data in terms of what you're seeing. And so you've got to let it play out over an extended period of time. And then, Jim, I don't know if you want to comment on anything else in particular.
Q: Thanks. Good morning all. First one regarding the larger asset packages, how would you characterize the competition you're experiencing in that market at present, aside from the quality and wider bid-ask spreads you saw on Q one. Is that still a robust market, an opportunity for you? A: Yes, I mean I haven't we haven't at the larger package, Derek. I don't think we felt like there's a ton of money. We've certainly seen bankers trying to make give the illusion of competition in a couple of cases where we haven't really seen much competition a little bit behind in reality. I think where the challenge has been more that I think there's been I think of late, it's been harder for us to find assets that we've really wanted to lean in on, meaning like where you knew the clearing price.
Q: Hey, guys. Thanks for taking the questions. So I wanted to ask about I know we've already had a couple of people ask about the better than expected well performance and so especially beating a dead horse, but I kind of want to I want to get it really. So the core of it. So and in the sense of like to what extent should we should we care so on was this and if we just talk, let's forget about the wells being pulled forward or whatever we're just talking about on like a well on a well on it for a given well, the performance of that well versus your own expectations. A: I mean, I think I would certainly want to give credit to the operators for their great performance. And I certainly they do all the hard work and I don't want to I don't want to not give credit where credit's due. But to our engineering team, we were really hard to set a standard and underwrite accordingly and then trying to meet and beat those expectations and so I think that, you know, we tried of under and then obviously for you guys to under-promise and over-deliver, and it's not it's not all told to lowball or anything like that, but you really do it's a risky business, right?
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
