Northern Oil and Gas Inc: oil price volatility increased its opportunities

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Northern Oil and Gas Inc. executives said oil price volatility increased its opportunities for small “ground game” acquisitions in 4Q2018, and plans are to look for bigger prospects in the Williston Basin this year.

We are ultimately a Financing Company. We pay for land, wells we participate in, and receive an economic return on the back end. It is critical in our opinion, as we earn returns that vastly exceed our cost of capital to lock in those returns as we deploy, said capital.

In conclusion, we’re among — the most hedged at the best prices of any Company in North America and we expect to continue to be opportunistically.

In closing, we have a small nimble team, but this team has some very large company capabilities. We have participated in over 5,000 wells. More than 30% of all Bakken and Three Forks wells drilled in the Bakken Williston Basin. We can make rapid, but very exact capital allocation decisions day-in and day-out. We can leverage these large Company capabilities into both small and large acquisitions to grow and often outgrow our operating partners, not only in production, but also in core inventory and returns as well. This is the benefit of our non-op model. It may not be the benefit of all non-ops, but this particular non-op has built the size and scale to drive these large company advantages in a very nimble and exacting way.

Northern reported net income of $218.3 million (58 cents/share) in 4Q2018, compared with a net loss of $23.8 million (minus 37 cents) in the year-ago quarter. The company reported net income of $143.7 million (61 cents) in 2018, versus a net loss of $9.2 million (minus 15 cents) in 2017. Revenues totaled $443.2 million in 4Q2018, compared with $37 million in the year-ago quarter. For the year, revenues were $678.9 million in 2018, versus $209.3 million in 2017.

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