Northern Oil and Gas, Inc. Announces 2011 Second Quarter Results, Record Quarterly Production and Amended Senior Secured Revolving Credit Facility and Provides Operations Update

WAYZATA, Minn., Aug. 9, 2011 /PRNewswire/ --

  • 31% Quarterly Revenue Increase
  • 12.5% Quarterly Production Increase

Northern Oil and Gas, Inc. (NYSE/AMEX: NOG) ("Northern Oil") today announced record second quarter oil and gas sales of approximately $35.5 million.  For the three months ended June 30, 2011, Northern Oil had second quarter net income of $20.4 million, or $0.33 per fully diluted share.  Excluding the effect of unrealized mark-to-market gains from oil hedges, Northern Oil had net income of $7.7 million, representing $0.12 per fully diluted share.  The increase in net income, excluding the effect of unrealized mark-to-market gains from oil hedges represents a 120% increase from the second quarter of 2010 and a 30% increase from the first quarter of 2011.

2011 SECOND QUARTER RESULTS

Oil and gas sales for the second quarter of 2011 were $35.5 million, which represents a 204% increase compared to oil and gas sales of $11.7 million for the second quarter of 2010.  These results also represent a 31% increase in oil and gas sales during the second quarter of 2011 compared to the first quarter of 2011.

Production volumes for the second quarter of 2011 were a quarterly record of 400,928 barrels of oil equivalent ("BOE"), which represents a 132% increase compared to the second quarter of 2010 and a 12.5% increase compared to the first quarter of 2011.  The second quarter production volumes represent Northern Oil's fourteenth consecutive quarterly increase in production.  

Average daily production in the second quarter of 2011 was approximately 4,400 BOE per day ("BOEPD").  June 2011 daily production averaged approximately 5,200 BOEPD, an improvement from April 2011 and May 2011 average daily production which was affected by heavy rain, flooding and road restrictions in North Dakota and Montana.  Second quarter 2011 production consisted of approximately 94% crude oil and 6% associated natural gas and other liquids.  Northern Oil does not include flared and unsold gas volumes in its production figures.

During the second quarter of 2011, Northern Oil spud approximately 7.2 net wells and added production from 73 gross (6.7 net) wells.  During the first half of 2011, Northern Oil spud approximately 17 net wells and added 128 gross (11.71 net) wells to production.  Northern Oil reaffirms that it expects to spud at least 40 net wells throughout 2011.

Northern Oil continues to develop its core Bakken and Three Forks acreage position at an accelerating pace.  According to the North Dakota Industrial Commission, 187 rigs are drilling in North Dakota as of August 8, 2011.  Approximately 10 rigs are currently drilling in Montana as of August 8, 2011. The significant rig increase in the play continues to accelerate the development of Northern Oil's core acreage position.

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 average realized crude oil sale price for second quarter 2011 was $80.78 per barrel, after taking into account a $14.91 per barrel loss due to the settlement of crude oil derivative contracts.  This compares to an average $74.10 per barrel realized price in the first quarter 2011, which took into account a $9.73 per barrel loss due to the settlement of crude oil derivative contracts.  Northern Oil's average realized crude oil sale price for the six months ended June 30, 2011 was $77.63, after taking into account a $12.47 per barrel loss due to the settlement of crude oil derivative contracts.  This compares to an average $70.02 per barrel realized price for the six months ended June 30, 2010, which took into account a $0.44 gain due to the settlement of crude oil derivative contracts.

Production expenses for first quarter 2011 were $5.94 per BOE on an accrued basis, compared to $3.30 per BOE on an accrued basis for the second quarter of 2010 and $5.24 per BOE on an accrued basis for the first quarter of 2011. The increase in production expense is primarily due to lower production volumes due to heavy rain, flooding and road restrictions, the continued addition of producing oil and gas properties, exposure to new operators and new development areas, an increase in working interests, mature wells utilizing artificial lift and the general aging of production.

Depletion expense for second quarter 2011 was $8.3 million, or $20.83 per BOE.  As such, Northern Oil's second quarter 2011 depletion expense was consistent with its peer group in the Bakken and Three Forks play.  

General and Administrative ("G&A") expense, net of share based compensation, for second quarter 2011 was $1.2 million, compared to $1.4 million in the first quarter of 2011.  Share based compensation for the second quarter 2011 was $1.5 million, compared to $1.9 million in the first quarter of 2011.  The decrease in G&A expense was primarily due to the reduction in share based compensation, travel and professional services expenses.

ADJUSTED EBITDA

Adjusted EBITDA for the second quarter 2011 was $22.7 million, or $0.37 per fully diluted share, which represents a 135% increase over Adjusted EBITDA of $9.7 million, or $0.19 per fully diluted share, for the second quarter 2010 and a 22% increase compared to the first quarter of 2011.  

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 Accounting Standards Codification (ASC) Topic 718.  Net income excluding unrealized mark-to-market hedging gains or losses and Adjusted EBITDA are non-GAAP measures.  A reconciliation of this measure to GAAP and net income, excluding the effect of unrealized mark-to-market gains from oil hedges is included in our accompanying financial tables found later in this release.  Northern Oil's management believes the use of non-GAAP financial measures provides useful information to investors to gain an overall understanding of current financial performance.  Specifically, management believes the non-GAAP results included herein provide useful information to both management and investors by excluding certain expenses, unrealized commodity gains and losses that management believes are not indicative of Northern Oil's core operating results.  In addition, these non-GAAP financial measures are used by Northern Oil's management for budgeting and forecasting as well as subsequently measuring Northern Oil's performance, and management believes that Northern Oil is providing investors with financial measures that most closely align to its internal measurement processes.  

AMENDED SENIOR-SECURED REVOLVING CREDIT FACILITY

On August 8, 2011, Northern Oil amended its senior-secured revolving credit facility with Macquarie Bank Limited to provide that the aggregate maximum credit amount may be increased to up to $500 million in the future.  The amended facility also provides for an initial borrowing base of $150 million, subject to the aggregate maximum credit amount then in effect.  Initially, the amended facility provides for an aggregate maximum credit amount of $25 million that may be increased in increments of $20 million, to up to $500 million, subject to applicable conditions and increases in lender commitments.  Financing available under the amended facility is equal to the lesser of the aggregate maximum credit amount and the borrowing base.  Northern Oil currently has no outstanding borrowings under the facility.

DERIVATIVE ACTIVITY

As of June 30, 2011, Northern Oil had a total volume on open commodity swaps of 1,447,000 barrels of oil at a weighted average price of approximately $88.13 that settle between July 2011 and December 2012.  In addition to the swaps, Northern Oil has 243,000 barrels of crude oil collared between $85.00 and $101.75 that settle between July 2011 and December 2011. The following chart more clearly outlines our open commodity swaps.


Settlement Period


Oil (Barrels)


Fixed Price

Oil Swaps





07/01/11 – 02/29/12


15,000


51.25

07/01/11 – 12/31/11


9,000


66.15

07/01/11 12/31/11


24,000


82.60

07/01/11 12/31/11


9,000


84.25

07/01/11 12/31/11


27,498


80.90

07/01/11 12/31/11


46,000


88.00

07/01/11 06/30/12


170,502


80.00

07/01/11 06/30/12


398,000


81.50

07/01/11 06/30/12


132,000


85.50

01/01/12  12/31/12


376,000


95.15

01/01/12  12/31/12


240,000


100.00




2011 CAPITAL EXPENDITURES

Northern Oil reaffirms that it expects to spud at least 40 net wells in 2011, with drilling capital expenditures approximating $260 million, up from $252 million.  Average well costs are expected to now be approximately $6.5 million per well, up from $6.3 million per well.  The increase in drilling and completion costs is due to a higher percentage of our wells in the second half of 2011 that will be drilled in 1,280-acre spacing units utilizing longer laterals and an increased number of fracture stages.

Based on current, yet evolving, conditions in the field, Northern Oil expects to continue to deploy additional funds toward further strategic acreage acquisitions during 2011.  Northern Oil currently expects to spend approximately $20 million per quarter on acreage acquisitions for the remainder of 2011, consistent with previous guidance.  

Northern Oil currently expects to fund all 2011 drilling commitments and acreage acquisitions using cash-on-hand, cash flow and its undrawn credit facility.  Northern Oil currently has no borrowings outstanding under its credit facility.

ACREAGE UPDATE

During the second quarter of 2011, Northern Oil acquired leasehold interests covering an aggregate of 12,767 net mineral acres for an average of $1,995 per net acre and an aggregate of approximately $25.5 million.  Of the acquired 12,767 net acres, approximately 7,150 net acres (or 56%) were permitted or in an approved drilling spacing unit, under the bit or began producing as of June 30, 2011.  Northern Oil currently controls over 155,000 net acres in the Williston Basin Bakken and Three Forks play.

As of August 9, 2011, Northern Oil had 46,351 net acres either held by production or under the bit, which represents approximately 30% of Northern Oil's total Bakken and Three Forks acreage position at June 30, 2011.  Northern Oil expects that approximately 50% of its current acreage will be held by production or under the bit by the end of 2011.

MANAGEMENT COMMENT

Michael Reger, Chief Executive Officer, commented, "With over 30% of our Bakken and Three Forks position developed or under the bit, we are moving ahead at an excellent pace.  Importantly, we continue to acquire acreage at prices significantly below levels indicated in recent publicly-announced transactions conducted by other industry participants.  We believe our expertise and specialty in non-operated interests continues to yield excellent results and we continue to add meaningful acreage, production and cash flow.  With no debt, $77 million of cash on hand, and receivables, we believe we are well positioned to fund the development of our core acreage position in the Bakken and Three Forks play."

RECENT COMPLETION HIGHLIGHTS

The following table illustrates certain highlighted well completions in which Northern Oil has recently participated with a working interest ("WI").


WELL NAME

OPERATOR

STATE

COUNTY

WI

IP*
("BOPD")

BOPD
AVG**

DAYS***

BIGHORN #1-6H

SINCLAIR

ND

DUNN

48.79%

1,218

758

20

MUSTANG #1-22H

SLAWSON

ND

MOUNTRAIL

39.56%

1,829

523

30

ALAMO #2-19-18H  

SLAWSON

ND

MOUNTRAIL

29.98%

1,287

930

60

PORCUPINE #1-19H

SINCLAIR

ND

DUNN

29.02%

1,566

705

30

DIAMONDBACK #2-21H  

SLAWSON

ND

MOUNTRAIL

25.23%

1,909

711

30

CRUISER #2-16-9H

SLAWSON

ND

MOUNTRAIL

16.44%

1,115

793

30

HUNTER #1-8-17H

SLAWSON

ND

MOUNTRAIL

11.74%

1,668

839

60




*      The "IP BOPD" means the initial production ("IP") rate expressed in barrels of oil per day.  The IP rate is the 24-hour "Peak Production Rate."  Peak Production Rates may be established following the initial day of production, depending on operator design or well flowback profiles.  The IP rate may be estimated based on other third party estimates or limited data available at this time.  The IP BOPD is computed using crude oil production only, without taking into consideration any associated natural gas production. 

**     The "BOPD AVG" means the average barrels of oil per day during the applicable initial days of production.

***    The "DAYS" means number of initial days of production used to calculate the "BOPD AVG" from the commencement of established production.  The "DAYS" used to calculate the "BOPD AVG" does not include days during which a well is shut-in for weather or maintenance purposes.

CURRENT DRILLING ACTIVITY

The following table illustrates 166 Gross (17.14 Net) Bakken or Three Forks wells drilling, awaiting completion or completing in which Northern Oil is participating with a working interest as of August 9, 2011.



WELL NAME

OPERATOR

STATE

COUNTY

WI

1

ROSE #147-99-28-2H

CONOCO PHILLIPS

ND

MCKENZIE

50.00%

2

LORI #18-19H  

FIDELITY

ND

MOUNTRAIL

47.06%

3

LOVE #11-2 #1H

URSA

ND

WILLIAMS

40.00%

4

MUSTANG #2-22H  

SLAWSON

ND

MOUNTRAIL

39.56%

5

GUNNISON #44-25H

PRIMA

ND

BURKE

39.35%

6

KANDIYOHI #1-19H

EOG RESOURCES

ND

BURKE

37.47%

7

CONDOR #1-36-25H

SLAWSON

ND

MCKENZIE

35.94%

8

CHARLIE SORENSON 17-8 #1-H

BRIGHAM

ND

MOUNTRAIL

33.58%

9

CHARLIE SORENSON 17-8 #2-H  

BRIGHAM

ND

MOUNTRAIL

33.58%

10

OLSON RANCH #1-21-16H

G3 OPERATING

MT

ROOSEVELT

33.00%

11

YUKON #12-1-163-98H

SAMSON RESOURCES

ND

DIVIDE

32.81%

12

MOORE #5304 13-1H

OASIS

ND

WILLIAMS

32.70%

13

HOLLAND #9-19H

NORTH PLAINS

ND

WILLIAMS

32.68%

14

DENALI 13-24-163-98H

SAMSON RESOURCES

ND

DIVIDE

32.45%

15

CROSBY CREEK 1-5H

SINCLAIR

ND

DUNN

29.63%

16

FRENCH #21-30H

WHITING

MT

ROOSEVELT

29.20%

17

BLUE JAY #32-29-163-95H

SAMSON RESOURCES

ND

DIVIDE

29.13%

18

AV-SCHWARTZ-163-93-1102H-1

HESS

ND

BURKE

29.08%

19

STORK #20-17-162-96H

SAMSON RESOURCES

ND

DIVIDE

29.00%

20

PELICAN #26-35-162-96H

SAMSON RESOURCES

ND

DIVIDE

27.30%

21

STAMPEDE #2-36-25H  

SLAWSON

ND

WILLIAMS

25.00%

22

FREDDY #1-8H

CONTINENTAL

ND

DIVIDE

24.97%

23

STALLION #2-1-12H  

SLAWSON

ND

MOUNTRAIL

22.41%

24

ATHENA #1-36H

SLAWSON

ND

MOUNTRAIL

21.88%

25

REGEL #12-1-162-98H

SAMSON RESOURCES

ND

DIVIDE

21.30%

26

NEPTUNE #2-15H  

SLAWSON

ND

MOUNTRAIL

20.35%

27

PARADISE #5892 11-30H

OASIS

ND

MOUNTRAIL

18.78%

28

OBENOUR #150-99-21-16-1H

NEWFIELD

ND

MCKENZIE

18.75%

29

REGETH #22-1H

HESS

ND

DUNN

18.75%

30

CRESCENT FARMS 7-6 #1H

ZAVANNA

ND

MCKENZIE

17.88%

31

HARLAN REBSOM 1-2-11H-143-95

OXY

ND

DUNN

17.81%

32

BORRUD 156-101-11D-2-1H

PETRO HUNT

ND

WILLIAMS

17.48%

33

SKEDSVOLD #150-101-4B-9-1H

PETRO HUNT

ND

MCKENZIE

17.19%

34

SHORT PRAIRIE #3-1415H

EOG RESOURCES

ND

WILLIAMS

17.10%

35

LYNN #5502 11-10H

OASIS

ND

WILLIAMS

15.68%

36

SIDONIA #41-2017H  

EOG RESOURCES

ND

MOUNTRAIL

15.63%

37

STATE JAEGER #1-16-21H-142-94

OXY

ND

DUNN

15.63%

38

GO-SOLBERG #15-31H

HESS

ND

WILLIAMS

14.76%

39

SHORT PRAIRIE #7-1201H

EOG RESOURCES

ND

WILLIAMS

13.26%

40

MUSKRAT FEDERAL #2-28-33H  

SLAWSON

ND

MOUNTRAIL

12.83%

41

RHODA #24-31H  

MARATHON

ND

MOUNTRAIL

12.82%

42

HILLY 22-15 #1H

BRIGHAM

ND

MCKENZIE

12.66%

43

LINK #12-1H

WILLIAMS

ND

MCKENZIE

12.60%

44

EN-PERSON 156-94-1102H-2  

HESS

ND

MOUNTRAIL

12.55%

45

EN-PERSON 156-94-1102H-3  

HESS

ND

MOUNTRAIL

12.55%

46

LOSTWOOD #1-1201H  

EOG RESOURCES

ND

MOUNTRAIL

12.52%

47

LOSTWOOD #18-1224H

EOG RESOURCES

ND

MOUNTRAIL

12.52%

48

LOSTWOOD #19-1324H  

EOG RESOURCES

ND

MOUNTRAIL

12.52%

49

LOSTWOOD #2-1301H  

EOG RESOURCES

ND

MOUNTRAIL

12.52%

50

MATTER STATE #3-17H

CORNERSTONE

ND

BURKE

12.50%

51

BARKLEY #1-5H

CONTINENTAL

ND

MCKENZIE

12.32%

52

MOE #19-18-162-100H 1PB

BAYTEX

ND

DIVIDE

12.24%

53

FERTILE #28-26H

EOG RESOURCES

ND

MOUNTRAIL

11.88%

54

EN-WANDER 156-94-0904H-1

HESS

ND

MOUNTRAIL

11.84%

55

HUNTER #2-8-17  

SLAWSON

ND

MOUNTRAIL

11.74%

56

MUSTANG 7-6-163-98H

SAMSON RESOURCES

ND

DIVIDE

11.72%

57

LOSTWOOD #102-3526H  

EOG RESOURCES

ND

MOUNTRAIL

11.52%

58

LOSTWOOD #16-3526H

EOG RESOURCES

ND

MOUNTRAIL

11.52%

59

ALBERTINE 21X-2

XTO ENERGY

ND

WILLIAMS

11.52%

60

LOSTWOOD #20-1123H  

EOG RESOURCES

ND

MOUNTRAIL

11.51%

61

LOSTWOOD #21-1402H  

EOG RESOURCES

ND

MOUNTRAIL

11.51%

62

LOSTWOOD #22-1423H

EOG RESOURCES

ND

MOUNTRAIL

11.51%

63

LOSTWOOD #23-3526H

EOG RESOURCES

ND

MOUNTRAIL

11.51%

64

LOSTWOOD #6-1102H  

EOG RESOURCES

ND

MOUNTRAIL

11.51%

65

JACOBSON #8-33H

CORNERSTONE

ND

BURKE

11.14%

66

LANCASTER #2-11-162N-102W

CRESCENT POINT

ND

DIVIDE

11.10%

67

GORDON PAVLICEK #1-17-20H 141-95

OXY

ND

DUNN

10.94%

68

SUBMARINER FEDERAL #1-23-24H

SLAWSON

ND

MOUNTRAIL

10.89%

69

HOLM 9-4 #2-H  

BRIGHAM

ND

MOUNTRAIL

9.75%

70

HOLM 9-4 #1-H

BRIGHAM

ND

MOUNTRAIL

9.75%

71

EN-WEFALD 156-94-1324H-2  

HESS

ND

MOUNTRAIL

9.38%

72

FRANCHUK #44-20SWH

DENBURY

ND

DUNN

9.38%

73

BROWN 30-19 #2H  

BRIGHAM

ND

MOUNTRAIL

9.25%

74

FORT BERHOLD 152-94-14C-11-1H

PETRO HUNT

ND

MCKENZIE

8.10%

75

WHITE #157-100-17B-20-1H

PETRO HUNT

ND

WILLIAMS

7.55%

76

1-H OSMOND #3-10

NEWFIELD

ND

WILLIAMS

7.51%

77

WALDOCK #21-16H

MARATHON

ND

MCLEAN

7.05%

78

ROSENVOLD #1-30H

CONTINENTAL

ND

DIVIDE

6.44%

79

KANDIYOHI #5-3031H

EOG RESOURCES

ND

BURKE

6.36%

80

SQUADRON #1-15-14H

SLAWSON

MT

ROOSEVELT

6.30%

81

BUCKLEY #1-9H

CONTINENTAL

MT

RICHLAND

6.25%

82

EN-JOHNSON -A 155-94-2932H-2

HESS

ND

MOUNTRAIL

6.25%

83

GO-ALASKON-156-97-3427H-1

HESS

ND

WILLIAMS

5.94%

84

PLADSON 4-9 #1H

BRIGHAM

ND

MOUNTRAIL

5.91%

85

JACOB MADISON #11-27H  

MARATHON

ND

MOUNTRAIL

5.78%

86

1-H HUNTER #17-20

NEWFIELD

ND

WILLIAMS

5.55%

87

SIDONIA #26-2413H  

EOG RESOURCES

ND

MOUNTRAIL

5.55%

88

DAGGER #1-10H

SLAWSON

ND

DUNN

5.30%

89

RUTLEDGE #1-32H

CONTINENTAL

ND

DUNN

4.97%

90

LAMEY #1-30-31H-143-96

OXY

ND

DUNN

4.95%

91

BUFFALO 34-12H

MARATHON

ND

DUNN

4.91%

92

BRUCE  5-8 #1H

ZAVANNA

ND

WILLIAMS

4.69%

93

RAY #12-27TFH

WHITING

ND

MOUNTRAIL

4.69%

94

SORENSON #34-32 NWH

DENBURY

ND

MCKENZIE

4.69%

95

EN-CHARLES WOOD 157-94-1720H-1

HESS

ND

MOUNTRAIL

4.61%

96

HOWITZER #2-25  

SLAWSON

ND

MOUNTRAIL

4.50%

97

HONOLULU #1-22H

CONTINENTAL

ND

MCKENZIE

4.22%

98

OXY OLSON #160-90-10-P-1H

OXY

ND

BURKE

4.17%

99

AMBUSH #1-31-30H

SLAWSON

ND

WILLIAMS

3.96%

100

REIGER #9-11H

NORTH PLAINS

ND

WILLIAMS

3.91%

101

EN-JOHNSON #155-94-2017H-2

HESS

ND

MOUNTRAIL

3.91%

102

JOHNSON 44-32H  

MARATHON

ND

MOUNTRAIL

3.87%

103

WALLACE #7-1H

HESS

ND

DUNN

3.76%

104

SOVIG #150-100-22C-15-1H

PETRO HUNT

ND

MCKENZIE

3.59%

105

FERTILE #19-29H

EOG RESOURCES

ND

MOUNTRAIL

3.38%

106

L. TUFTO 7-6 #1-H

BRIGHAM

ND

WILLIAMS

3.24%

107

MEIERS #5692 11-19H

OASIS

ND

MOUNTRAIL

3.17%

108

LEE #34-31 NWH

DENBURY

ND

MCKENZIE

3.16%

109

WANNEMACHER #1-4-9H-142-95

OXY

ND

DUNN

3.14%

110

WILLIAM 41X-06

XTO ENERGY

ND

MCKENZIE

3.14%

111

FREDRICKSON #160-94-33C-28-2H  

PETRO HUNT

ND

BURKE

3.13%

112

GO-SOINE A-156-97-3229H-1

HESS

ND

WILLIAMS

3.13%

113

KOUFAX 3-10 #1H

ZAVANNA

ND

MCKENZIE

3.13%

114

SYVERSON #150-99-36-25-1H

NEWFIELD

ND

MCKENZIE

3.13%

115

NELSON #2-26H  

SINCLAIR

ND

MOUNTRAIL

3.11%

116

GLENDON #1-17H

CONTINENTAL

ND

WILLIAMS

3.05%

117

CHARLEY 10-15 #1H

BRIGHAM

MT

RICHLAND

2.73%

118

ROHDE #43-1TFH  

WHITING

ND

MOUNTRAIL

2.57%

119

VERLYN STROMMEN #34-8H  

MARATHON

ND

DUNN

2.50%

120

EN-NORSTEDT 157-93-1720H-1

HESS

ND

MOUNTRAIL

2.50%

121

DORIS 21X-5  

XTO ENERGY

ND

WILLIAMS

2.28%

122

EN-TRINITY 154-93-2833H-2  

HESS

ND

MOUNTRAIL

2.28%

123

EN-TRINITY 154-93-2833H-3  

HESS

ND

MOUNTRAIL

2.28%

124

ZOC DAKOTA-3 ELK #16-21H

WILLIAMS

ND

MOUNTRAIL

2.15%

125

ROLFSON #11-16H

DENBURY

ND

MCKENZIE

2.08%

126

CLEAR WATER #1-24-25H

HUNT OIL

ND

MOUNTRAIL

2.08%

127

OPEDAHL 21X-11

XTO ENERGY

ND

WILLIAMS

1.85%

128

SIDONIA #44-2821H  

EOG RESOURCES

ND

MOUNTRAIL

1.79%

129

COOK #2-24-13H  

HUNT OIL

ND

DUNN

1.70%

130

CHARLOTTE #2-22H  

CONTINENTAL

ND

MCKENZIE

1.68%

131

MONT #3-3403H

EOG RESOURCES

ND

WILLIAMS

1.67%

132

DRONE #1-34-27H

SLAWSON

ND

DUNN

1.59%

133

LIBERTY LR #17-11H

EOG RESOURCES

ND

MOUNTRAIL

1.59%

134

ELEANOR TWIST 1-10-3H-143-95

OXY

ND

DUNN

1.57%

135

HARTMAN #14-32H

MARATHON

ND

DUNN

1.57%

136

TILTON #34-7H

CONOCO PHILLIPS

ND

DUNN

1.53%

137

SCHILKE #1-30H

CONTINENTAL

ND

DIVIDE

1.51%

138

THIEL 2 11X-12  

XTO ENERGY

MT

RICHLAND

1.47%

139

LOOMER #24-34 NEH

DENBURY

ND

MCKENZIE

1.41%

140

EN-CVANCARA A-155-93-3231H-1

HESS

ND

MOUNTRAIL

1.39%

141

CROSSBOW #1-7-6H

SLAWSON

ND

MCKENZIE

1.30%

142

KIRBY #9-7H

NORTH PLAINS

ND

WILLIAMS

1.27%

143

FERTILE #45-29H

EOG RESOURCES

ND

MOUNTRAIL

1.25%

144

JAMES HILL #9-0112H

EOG RESOURCES

ND

MOUNTRAIL

1.25%

145

EN-CHAMLEY 156-93-0508H-1

HESS

ND

MOUNTRAIL

1.23%

146

EN-FRETHEIM A-155-93-3334H-2  

HESS

ND

MOUNTRAIL

1.19%

147

EN-FRETHEIM A-155-93-3334H-1

HESS

ND

MOUNTRAIL

1.18%

148

AMY ELIZABETH #11-2H

ARSENTAL

ND

MOUNTRAIL

1.13%

149

DAWSON #5494 13-1H

OASIS

ND

MOUNTRAIL

1.13%

150

LEWIS #5300 31-31H

OASIS

ND

WILLIAMS

1.02%

151

CLEARWATER #24-3025H

EOG RESOURCES

ND

MOUNTRAIL

1.02%

152

SPRATLEY #5494 34-13H

OASIS

ND

MOUNTRAIL

0.98%

153

WISNESS #152-96-28A-33-1H

PETRO HUNT

ND

MCKENZIE

0.82%

154

CATRON #1-26H

CONTINENTAL

ND

DUNN

0.78%

155

LUCY FLECKENSTEIN 34-20H

MARATHON

ND

DUNN

0.78%

156

SOLBERG #15-8H

HESS

ND

WILLIAMS

0.78%

157

TEMPE #1-29H

CONTINENTAL

ND

DIVIDE

0.78%

158

CARL #1-11H

CONTINENTAL

ND

DUNN

0.66%

159

EN-FRANDSON 154-93-2116H-2

HESS

ND

MOUNTRAIL

0.61%

160

EN-FRANDSON 154-93-2116H-3  

HESS

ND

MOUNTRAIL

0.61%

161

DEVON #5601 12-17H

OASIS

ND

WILLIAMS

0.56%

162

MARTENS #2-5H  

SINCLAIR

ND

MOUNTRAIL

0.56%

163

CANNONBALL FEDERAL #2-27-34H  

SLAWSON

ND

MOUNTRAIL

0.55%

164

EN-REITCH #157-94-3229H-3  

HESS

ND

MOUNTRAIL

0.52%

165

MORAN #15-1H

HESS

ND

MCKENZIE

0.51%

166

REDWING #1-3-10H

HUNT OIL

ND

MCKENZIE

0.50%




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 Tuesday, August 9, 2011 at 11:00 a.m. Central Daylight Time.  Details for the conference call are as follows:

Dial-In Number:  (888) 708-5689 (US/Canada) and (913) 312-1503 (International)

Conference ID:   1376043 - Northern Oil and Gas Second Quarter Earnings Release

Replay Dial-In Number: (888) 203-1112 (US/Canada) and (719) 457-0820 (International)

Replay Access Code:     1376043 - Replay will be available through August 23, 2011

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 play 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.  

CONTACT:

Investor Relations
Erik Nerhus
952-476-9800

NORTHERN OIL AND GAS, INC.
CONDENSED BALANCE SHEETS
JUNE 30, 2011 AND DECEMBER 31, 2010


ASSETS
(UNAUDITED)


















June 30,  


December 31,








2011


2010

CURRENT ASSETS





Cash and Cash Equivalents

$             77,379,376


$         152,110,701


Trade Receivables

35,586,298


22,033,647


Prepaid Drilling Costs

15,755,429


13,225,650


Prepaid Expenses

518,841


345,695


Other Current Assets

211,015


475,967


Short - Term Investments

-


39,726,700


Deferred Tax Asset

6,203,000


5,100,000




Total Current Assets

135,653,959


233,018,360











PROPERTY AND EQUIPMENT





Oil and Natural Gas Properties, Full Cost Method of Accounting






Proved

267,625,123


158,846,475



Unproved

185,767,402


136,135,163


Other Property and Equipment

2,552,891


2,479,199




Total Property and Equipment

455,945,416


297,460,837


Less - Accumulated Depreciation and Depletion

37,504,043


22,152,356




Total Property and Equipment, Net

418,441,373


275,308,481











DEBT ISSUANCE COSTS

1,186,783


1,367,124














Total Assets

$           555,282,115


$         509,693,965











LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES





Accounts Payable

$             56,416,606


$           48,500,204


Accrued Expenses

1,440,211


2,829


Derivative Liability

14,279,978


11,145,319


Other Liabilities

18,574


18,574




Total Current Liabilities

72,155,369


59,666,926











LONG-TERM LIABILITIES





Revolving Credit Facility

-


-


Derivative Liability

1,764,445


5,022,657


Other Noncurrent Liabilities

681,133


477,900




Total Long-Term Liabilities

2,445,578


5,500,557











DEFERRED TAX LIABILITY

19,141,000


9,167,000














Total Liabilities

93,741,947


74,334,483


COMMITMENTS AND CONTINGENCIES (Note 15)




STOCKHOLDERS' EQUITY





Preferred Stock, Par Value $.001; 5,000,000 Authorized, No Shares
Outstanding

-


-


Common Stock, Par Value $.001; 95,000,000 Authorized,
(6/30/2011 - 63,138,424 Shares Outstanding and





12/31/2010 – 62,129,424 Shares Outstanding)

63,138


62,129


Additional Paid-In Capital

440,772,915


428,484,092


Retained Earnings

21,134,250


7,759,192


Accumulated Other Comprehensive Loss

(430,135)


(945,931)




Total Stockholders' Equity

461,540,168


435,359,482














Total Liabilities and Stockholders' Equity

$           555,282,115


$         509,693,965
























NORTHERN OIL AND GAS, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(UNAUDITED)










Three Months Ended


Six Months Ended









June 30,


June 30,









2011


2010


2011


2010

REVENUES










Oil and Gas Sales


$  35,481,664


$  11,664,873


$  62,523,285


$  20,033,720


(Loss) Gain on Settled Derivatives


(5,608,231)


303,919


(8,870,287)


126,936


Mark-to-Market Gain (Loss) of Derivative Instruments


20,848,232


4,251,199


(430,397)


3,260,383


Other Revenue


104,433


11,782


130,246


32,248





Total Revenues


50,826,098


16,231,773


53,352,847


23,453,287
















OPERATING EXPENSES










Production Expenses


2,615,546


561,427


4,631,902


893,757


Production Taxes


3,311,037


1,024,277


5,926,901


1,670,143


General and Administrative Expense


2,749,418


1,911,543


6,040,007


3,618,511


Depletion of Oil and Gas Properties


8,349,600


2,600,836


15,213,079


4,484,441


Depreciation and Amortization


70,295


26,267


138,608


50,897


Accretion of Discount on Asset Retirement Obligations


7,794


9,215


12,524


12,752





Total Expenses


17,103,690


6,133,565


31,963,021


10,730,501
















INCOME FROM OPERATIONS


33,722,408


10,098,208


21,389,826


12,722,786
















OTHER INCOME (EXPENSE)


(229,508)


(144,342)


537,532


(232,290)
















INCOME BEFORE INCOME TAXES


33,492,900


9,953,866


21,927,358


12,490,496
















INCOME TAX PROVISION


13,060,000


3,833,000


8,552,300


4,810,000
















NET INCOME  


$  20,432,900


$    6,120,866


$  13,375,058


$    7,680,496
















Net Income Per Common Share - Basic


$             0.33


$             0.12


$             0.22


$             0.16
















Net Income Per Common Share - Diluted


$             0.33


$             0.12


$             0.22


$             0.16
















Weighted Average Shares Outstanding – Basic  


61,686,463


49,934,409


61,586,603


47,032,602
















Weighted Average Shares Outstanding - Diluted


62,053,888


50,609,944


62,028,292


47,593,962
























NORTHERN OIL AND GAS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(UNAUDITED)









Six Months Ended








June 30,








2011


2010

CASH FLOWS FROM OPERATING ACTIVITIES





Net Income

$   13,375,058


$     7,680,496


Adjustments to Reconcile Net Income to Net Cash Provided by







Operating Activities:






Depletion of Oil and Gas Properties

15,213,079


4,484,441



Depreciation and Amortization

138,608


50,897



Amortization of Debt Issuance Costs

180,341


280,768



Accretion of Discount on Asset Retirement Obligations

12,524


12,752



Deferred Income Taxes

8,550,000


4,810,000



Net (Gain) Loss on Sale of Available for Sale Securities

(215,092)


197,556



Unrealized Loss (Gain) on Derivative Instruments

430,397


(3,260,383)



Amortization of Deferred Rent

(9,287)


(9,287)



Share - Based Compensation Expense

3,363,345


2,006,369



Changes in Working Capital and Other Items:








Increase in Trade Receivables

(13,552,651)


(4,286,731)





Increase in Prepaid Expenses

(173,146)


(337,765)





Decrease (Increase) in Other Current Assets

264,952


(71,078)





Increase in Accounts Payable

7,916,402


3,567,953





Decrease (Increase) in Accrued Expenses

158


(138,281)





Net Cash Provided By Operating Activities

35,494,688


14,987,707











CASH FLOWS FROM INVESTING ACTIVITIES





Purchases of Other Equipment and Furniture

(73,692)


(1,753,791)


Increase in Prepaid Drilling Costs

(2,529,779)


(4,977,412)


Proceeds from Sale of Oil and Gas Properties

5,027,162


237,877


Purchase of Available for Sale Securities

(18,381,690)


-


Proceeds from Sale of Available for Sale Securities

58,606,328


25,890,901


Purchase of Oil and Gas Properties and Development Capital Expenditures

(154,374,342)


(51,636,851)





Net Cash Used For Investing Activities

(111,726,013)


(32,239,276)











CASH FLOWS FROM FINANCING ACTIVITIES





Payments on Line of Credit

-


(834,492)


Advances on Revolving Credit Facility

-


5,300,000


Payments on Revolving Credit Facility

-


(5,300,000)


Repayment of Subordinated Notes

-


(100,000)


Debt Issuance Costs Paid

-


(379,400)


Proceeds from Exercise of Warrants

1,500,000


-


Proceeds from Issuance of Common Stock - Net of Issuance Costs

-


82,500,000





Net Cash Provided by Financing Activities

1,500,000


81,186,108











NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(74,731,325)


63,934,539











CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD

152,110,701


6,233,372











CASH AND CASH EQUIVALENTS – END OF PERIOD

$   77,379,376


$   70,167,911





















Supplemental Disclosure of Cash Flow Information





Cash Paid During the Period for Interest

$                  -


$        125,135


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



Payment of Compensation through Issuance of Common Stock

$   12,227,060


$     4,224,114



Capitalized Asset Retirement Obligations

$        199,996


$          69,802














USE OF NON GAAP FINANCIAL MEASURES


Northern Oil and Gas, Inc.
Reconciliation of Adjusted EBITDA









Three Months Ended


Six Months Ended







June 30,


June 30,







2011


2010


2011


2010














Net Income





$ 20,432,900


$ 6,120,866


$ 13,375,058


$   7,680,496














Add Back:


























Income Tax Provision



13,060,000


3,833,000


8,552,300


4,810,000















Depreciation, Depletion, Amortization,










    and Accretion




8,427,689


2,766,688


15,364,211


4,548,090















Share Based Compensation



1,505,174


1,193,072


3,363,345


2,006,369















Mark-to-Market of Derivative Instruments


(20,848,232)


(4,251,199)


430,397


(3,260,383)















Interest Expense




122,546


14,959


243,188


310,522
















Adjusted EBITDA



$ 22,700,077


$ 9,677,386


$ 41,328,499


$ 16,095,094



























Adjusted EBITDA Per Common Share - Basic


$            0.37


$          0.19


$            0.67


$            0.34














Adjusted EBITDA Per Common Share - Diluted


$            0.37


$          0.19


$            0.67


$            0.34














Weighted Average Shares Outstanding – Basic  


61,686,463


49,934,409


61,586,603


47,032,602














Weighted Average Shares Outstanding - Diluted


62,053,888


50,609,944


62,028,292


47,593,962

















Northern Oil and Gas, Inc.
Reconciliation of Adjusted EBITDA Per Common Share - Basic









Three Months Ended


Six Months Ended







June 30,


June 30,







2011


2010


2011


2010

Net Income Per Common Share - Basic



$            0.33


$          0.12


$            0.22


$            0.16


(As Reported)
























Add Back:


























Income Tax Provision




0.22


0.08


0.14


0.10















Depreciation, Depletion, Amortization,










    and Accretion




0.14


0.06


0.25


0.10















Share Based Compensation



0.02


0.02


0.05


0.04















Mark-to-Market of Derivative Instruments


(0.34)


(0.09)


0.01


(0.07)















Interest Expense




0.00


0.00


0.00


0.01














Adjusted EBITDA Per Common Share - Basic


$            0.37


$          0.19


$            0.67


$            0.34


(Adjusted for Non-GAAP Measurements)

























Northern Oil and Gas, Inc.
Reconciliation of Adjusted EBITDA Per Common Share - Diluted









Three Months Ended


Six Months Ended







June 30,


June 30,







2011


2010


2011


2010

Net Income Per Common Share - Diluted


$            0.33


$          0.12


$            0.22


$            0.16


(As Reported)
























Add Back:


























Income Tax Provision




0.22


0.08


0.14


0.10















Depreciation, Depletion, Amortization,










    and Accretion




0.14


0.05


0.25


0.10















Share Based Compensation



0.02


0.02


0.05


0.04















Mark-to-Market of Derivative Instruments


(0.34)


(0.08)


0.01


(0.07)















Interest Expense




0.00


0.00


0.00


0.01














Adjusted EBITDA Per Common Share - Diluted


$            0.37


$          0.19


$            0.67


$            0.34


(Adjusted for Non-GAAP Measurements)












Northern Oil and Gas, Inc.
Reconciliation of GAAP Net Income to Non-GAAP Net Income Excluding
Unrealized Mark-to-Market Hedging Gains and Losses











Three Months Ended


Six Months Ended









June 30,


June 30,









2011


2010


2011


2010
















Net Income


$ 20,432,900


$ 6,120,866


$ 13,375,058


$ 7,680,496
















Mark-to-Market of Derivative Instruments


(20,848,232)


(4,251,199)


430,397


(3,260,383)
















Tax Impact


8,131,000


1,633,000


(168,000)


1,272,000
















Net Income without Effect of Certain Items


$   7,715,668


$ 3,502,667


$ 13,637,455


$ 5,692,113































Net Income Per Common Share - Basic


$            0.13


$          0.07


$            0.22


$          0.12
















Net Income Per Common Share - Diluted


$            0.12


$          0.07


$            0.22


$          0.12
















Weighted Average Shares Outstanding – Basic  


61,686,463


49,934,409


61,586,603


47,032,602
















Weighted Average Shares Outstanding - Diluted


62,053,888


50,609,944


62,028,292


47,593,962































Net Income Per Common Share - Basic


$            0.33


$          0.12


$            0.22


$          0.16
















Change due to Mark-to-Market of Derivative Investments


(0.34)


(0.08)


0.01


(0.07)
















Change due to Tax Impact


0.14


0.03


(0.01)


0.03
















Net Income without Effect of Certain Items Per Common Share - Basic


$            0.13


$          0.07


$            0.22


$          0.12
















Net Income Per Common Share - Diluted


$            0.33


$          0.12


$            0.22


$          0.16



(As Reported)
























Change due to Mark-to-Market of Derivative Investments


(0.34)


(0.08)


0.01


(0.07)
















Change due to Tax Impact


0.13


0.03


(0.01)


0.03
















Net Income without Effect of Certain Items Per Common Share - Diluted


$            0.12


$          0.07


$            0.22


$          0.12




SOURCE Northern Oil and Gas, Inc.