Northern Oil and Gas, Inc. Announces 2011 First Quarter Results, Provides Operations Update and Announces Approval of Stock Repurchase Program
WAYZATA, Minn., May 10, 2011 /PRNewswire/ -- Northern Oil and Gas, Inc. (NYSE/AMEX: NOG) ("Northern Oil") today announced record first quarter oil and gas sales of approximately $27.0 million. Excluding the effect of unrealized, mark-to-market of oil hedges, Northern Oil had net income of $5.9 million, representing $0.09 per fully diluted share. Including the effect of unrealized mark-to-market of oil hedges, Northern Oil had a first quarter net loss of $7.1 million, representing a $0.11 loss per share.
2011 QUARTERLY RESULTS
Oil and gas sales for the first quarter of 2011 were $27.0 million compared to $8.4 million for the first quarter of 2010, representing a 223% increase. These results represent a 13% increase in oil and gas sales during the first quarter of 2011 compared to the fourth quarter of 2010.
Production volumes for the first quarter of 2011 were a quarterly record of 356,622 barrels of oil equivalent ("BOE"), representing a 185% increase compared to the first quarter of 2010 and a 5% increase compared to the fourth quarter of 2010. The first quarter production volumes represent Northern Oil's thirteenth consecutive quarterly increase in production.
First quarter 2011 production consisted of approximately 94% crude oil and 6% associated natural gas and other liquids. Northern Oil exited the first quarter of 2011 with production volumes of approximately 5,413 BOE per day ("BOEPD"). Northern Oil does not include flared and unsold gas volumes in its production figures. During the first quarter of 2011, Northern Oil spud approximately 9.8 net wells and added production from 55 gross (4.98 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 average realized crude oil sale price for first quarter 2011 was $74.10 per barrel, after taking into account a $9.73 per barrel loss due to the settlement of crude oil derivative contracts. This compares to an average $70.49 per barrel realized price in the fourth quarter of 2010, which took into account a $4.25 per barrel loss due to the settlement of crude oil derivative contracts.
Production expenses for first quarter 2011 were $5.24 per BOE on an accrued basis, compared to $3.15 per BOE on an accrued basis for the first quarter of 2010 and $3.69 per BOE on an accrued basis for the fourth quarter of 2010. The increase in production expense is primarily due to 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 our production.
Depletion expense for first quarter 2011 was $6.9 million, or $19.25 per BOE. As such, Northern Oil's first 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 first quarter 2011 was $1.4 million, compared to $1.1 million in the fourth quarter of 2010. Share based compensation for the first quarter 2011 was $1.9 million, compared to $835,363 in the fourth quarter of 2010. The increase in share based compensation was primarily due to share issuances related to amended and restated employment agreements which included the extension of non-compete terms from one to three years along with various other modifications.
Adjusted EBITDA for the first quarter 2011 was $18.6 million, or $0.29 per diluted share, which represents a 190% increase over Adjusted EBITDA of $6.4 million, or $0.14 per diluted share for the first quarter 2010 and a 2% increase compared to the fourth quarter of 2010.
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 these measures to GAAP 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, and a depletion adjustment 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.
2011 DRILLING AND PRODUCTION GUIDANCE
As of May 9, 2011, Northern Oil held working interests in a total of 395 gross (34.08 net) producing wells. As of May 9, 2011, Northern Oil was also participating in 138 gross (12.94 net) Bakken or Three Forks wells drilling, awaiting completion or completing, meaning Northern Oil has participated in a total of 533 gross wells since its inception.
Northern Oil affirms that it expects to spud approximately 40 net wells throughout 2011 and reaffirms its guidance to produce an average of 6,500 to 7,100 BOEPD in 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, 178 rigs are currently drilling in North Dakota. The significant rig increase in the play continues to accelerate the development of Northern Oil's core acreage position.
2011 CAPITAL EXPENDITURES
Northern Oil expects to drill approximately 40 net wells in 2011 with drilling capital expenditures approximating $252 million. 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 fund all 2011 drilling commitments using cash-on-hand, cash flow and its undrawn credit facility.
During first quarter 2011, Northern Oil acquired leasehold interests covering an aggregate of 11,514 net mineral acres for an average of $1,601 per net acre and an aggregate of $18.4 million. Of the acquired 11,514 net acres, 3,417 net acres were permitted, under the bit or began producing as of March 31, 2011.
As of March 31, 2011, Northern Oil had 37,226 net acres either held by production or under the bit, which represents approximately 25% of Northern Oil's total Bakken and Three Forks position. Northern Oil expects that approximately 50% of its current acreage will be held by production or under the bit by the end of 2011.
CONTINUING THREE FORKS DELINEATION
Northern Oil recently participated in the Water Moccasin #1-34H, a successful Three Forks test well operated by Slawson Exploration in the southern Mountrail County Windsor project area. Northern Oil controls a 44.14% working interest in the well, which had an initial production rate of 1,490 BOEPD. The well had an initial tubing pressure of 2,800 psi on a 12/64th choke.
On the same drilling pad as the Water Moccasin #1-34H, yet different spacing unit, Slawson Exploration recently completed the Vagabond #1-27H well. The well is a Bakken producer in which Northern Oil controls a 49.04% working interest. The well had an initial production rate of 1,229 BOEPD and an initial tubing pressure of 3,100 psi on an 11/64th choke.
Michael Reger, Chief Executive Officer, commented: "The Water Moccasin and Vagabond results confirm the expanding productivity of the Three Forks formation and the efficiencies gained from pad drilling. Slawson Exploration has received approval from the North Dakota Industrial Commission to drill six wells per spacing unit in the Windsor project area."
STOCK REPURCHASE PROGRAM
Northern Oil also today announced that its board of directors approved a stock repurchase program to acquire up to $150 million of Northern Oil's outstanding common stock. The stock repurchase program will allow Northern Oil to repurchase its shares from time to time in the open market and in negotiated transactions.
Michael Reger, Chief Executive Officer, commented, "With over 25% of our Bakken and Three Forks position developed or under the bit, we believe 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 look forward to continuing to add to our acreage inventory throughout 2011. With no debt, cash, receivables and short-term investments of approximately $150 million, we are well positioned to fund the development of our core acreage position in the Bakken and Three Forks play."
RECENT WELL COMPLETIONS
The following table illustrates certain producing wells in which Northern Oil has participated with a working interest ("WI") during 2011.
WELL NAME OPERATOR COUNTY/STATE WI IP/BOEPD JEANIE 25-36 #2H URSA MCKENZIE, ND 54.58% 1,185 VAGABOND #1-27H SLAWSON MOUNTRAIL, ND 49.04% 1,229 HOVDEN FEDERAL #1-20H SINCLAIR DUNN, ND 45.72% 1,325 WATER MOCCASIN #1-34H SLAWSON MOUNTRAIL, ND 44.14% 1,490 BORSETH #15-22 1H URSA MCKENZIE, ND 39.55% 2,015 TVEIT 25-36 #1H URSA RICHLAND, MT 39.54% 735 NOVA #4-9-163-98H SAMSON DIVIDE, ND 37.50% 601 BANDIT #2-29H SLAWSON MOUNTRAIL, ND 26.25% 959 NIELSEN #1-12H CONTINENTAL DIVIDE, ND 24.25% 857 SHELL #1-3-34H HUNT OIL MOUNTRAIL, ND 23.44% 511 VONA #1-13H CONTINENTAL DIVIDE, ND 20.31% 921 ERNEST SCHARCHENKO #34-33H MARATHON DUNN, ND 17.57% 400 BONANZA #1-21-16H SLAWSON MCKENZIE, ND 14.84% 1,549 MUSKRAT FEDERAL #1-28-33H SLAWSON MOUNTRAIL, ND 12.83% 1,453 ZI PAYETTE #10-15H ZENERGY MCKENZIE, ND 12.50% 1,323 HOLTE #1-32H CONTINENTAL WILLIAMS, ND 12.50% 933 GEORGE TANK #151-96-10C-3-3H PETRO HUNT MCKENZIE, ND 12.35% 902 ALMER 31X-6 XTO WILLIAMS, ND 11.14% 388 BROWN 30-19 #1H BRIGHAM MOUNTRAIL, ND 9.25% 2,240 CROWFOOT #35-3031H EOG MOUNTRAIL, ND 8.38% 330 TATTU #19-1H HESS MCKENZIE, ND 8.21% 1,479 COWDEN #5404 13-35H OASIS WILLIAMS, ND 7.65% 1,594 EN-HEINLE #156-94-2536H-3 HESS MOUNTRAIL, ND 7.29% 600 VIXEN FEDERAL #1-19-30H SLAWSON MOUNTRAIL, ND 6.70% 2,218 HELEN 11X-05 XTO WILLIAMS, ND 6.64% 917 BENNY #1-13H CONTINENTAL RICHLAND, MT 6.25% 232 NORWAY #1-5H CONTINENTAL MCKENZIE, ND 5.14% 1,429
* The "IP BOEPD" means the initial production ("IP") rate expressed in barrels of oil equivalent 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 BOEPD may be computed using crude oil production only, without taking into consideration any associated natural gas production.
The following table illustrates all Bakken and Three Forks wells drilling, awaiting completion or completing in which Northern Oil is participating with a working interest as of May 9, 2011.
WELL NAME OPERATOR COUNTY/STATE WI BIGHORN #1-6H SINCLAIR DUNN, ND 48.79% MUSTANG #1-22H SLAWSON MOUNTRAIL, ND 39.56% GUNNISON #44-25H PRIMA BURKE, ND 39.35% KANDIYOHI #1-19H EOG BURKE, ND 37.47% STATE JAEGER 1-16-21H-142-94 OXY DUNN, ND 34.38% CHARLIE SORENSON 17-8 #1-H BRIGHAM MOUNTRAIL, ND 33.58% OLSON RANCH #1-21-16H G3 OPERATING ROOSEVELT, MT 33.00% YUKON #12-1-163-98H SAMSON DIVIDE, ND 32.81% MOORE #5304 13-1H OASIS WILLIAMS, ND 32.70% HOLLAND #9-19H NORTH PLAINS WILLIAMS, ND 32.68% DENALI #13-24-163-98H SAMSON DIVIDE, ND 32.45% AV-SCHWARTZ-163-93-1102H-1 HESS BURKE, ND 30.61% ALAMO #2-19-18H SLAWSON MOUNTRAIL, ND 29.98% CROSBY CREEK #1-5H SINCLAIR DUNN, ND 29.63% BLUE JAY #32-29-163-95H SAMSON DIVIDE, ND 29.13% PORCUPINE #1-19H SINCLAIR DUNN, ND 29.02% DIAMONDBACK #2-21H SLAWSON MOUNTRAIL, ND 25.23% CYCLONE #1-21-16H SLAWSON MCKENZIE, ND 25.00% FREDDY #1-8H CONTINENTAL DIVIDE, ND 24.97% RASCAL #1-18H SLAWSON RICHLAND, MT 20.00% PARADISE #5892 11-30H OASIS MOUNTRAIL, ND 18.78% GOODSON #1-28H CONTINENTAL DIVIDE, ND 18.75% OBENOUR #150-99-21-16-1H NEWFIELD MCKENZIE, ND 18.75% HARLAN REBSOM #1-2-11H-143-95 OXY DUNN, ND 17.81% CRUISER #2-16-9H SLAWSON MOUNTRAIL, ND 16.44% LYNN #5502 11-10H OASIS WILLIAMS, ND 15.68% CLEO 31X-5 XTO WILLIAMS, ND 14.33% SHORT PRAIRIE #7-1201H EOG WILLIAMS, ND 13.26% LOSTWOOD #1-1201H EOG MOUNTRAIL, ND 12.52% LOSTWOOD #18-1224H EOG MOUNTRAIL, ND 12.52% LOSTWOOD #19-1324H EOG MOUNTRAIL, ND 12.52% MATTER STATE #3-17H CORNERSTONE BURKE, ND 12.50% ALLEN 21X-17 XTO WILLIAMS, ND 11.90% FERTILE #28-26H EOG MOUNTRAIL, ND 11.88% HUNTER #1-8-17 SLAWSON MOUNTRAIL, ND 11.74% HUNTER #2-8-17H SLAWSON MOUNTRAIL, ND 11.74% MUSTANG #7-6-163-98H SAMSON DIVIDE, ND 11.72% ALBERTINE 21X-2 XTO WILLIAMS, ND 11.52% LOSTWOOD #20-1123H EOG MOUNTRAIL, ND 11.51% LOSTWOOD #21-1402H EOG MOUNTRAIL, ND 11.51% LOSTWOOD #22-1423H EOG MOUNTRAIL, ND 11.51% LOSTWOOD #6-1102H EOG MOUNTRAIL, ND 11.51% SUBMARINER FEDERAL #1-23-24H SLAWSON MOUNTRAIL, ND 10.89% BATTALION #1-3H SLAWSON ROOSEVELT, MT 10.15% KOSTELNAK #28-1H HESS DUNN, ND 10.00% HOLM #9-4 1-H BRIGHAM MOUNTRAIL, ND 9.75% EN-WEFALD 156-94-1324H-2 HESS MOUNTRAIL, ND 9.38% EN-WEFALD 156-94-1324H-3 HESS MOUNTRAIL, ND 9.38% FRANCHUK 44-20SWH ENCORE DUNN, ND 9.38% UXBRIDGE #2-9H CONTINENTAL DIVIDE, ND 9.04% ORCA FEDERAL #1-23-26H SLAWSON MOUNTRAIL, ND 8.44% FORT BERHOLD 152-94-14C-11-1H PETRO HUNT MCKENZIE, ND 8.10% HARDSCRABBLE #13-3526H EOG WILLIAMS, ND 7.81% RELLA #18-19H ZENERGY WILLIAMS, ND 7.26% ROSENVOLD #1-30H CONTINENTAL DIVIDE, ND 6.44% VARDON #1-14H CONTINENTAL MCKENZIE, ND 6.37% KANDIYOHI #5-3031H EOG BURKE, ND 6.36% BUCKLEY #1-9H CONTINENTAL RICHLAND, MT 6.25% JACOBSON #8-33H CORNERSTONE BURKE, ND 5.86% JACOB MADISON #11-27H MARATHON MOUNTRAIL, ND 5.78% KOESER 41-15 SWH ENCORE MCKENZIE, ND 5.59% ELK USA #11-17H MARATHON MOUNTRAIL, ND 5.57% DAGGER #1-10H SLAWSON DUNN, ND 5.30% RUTLEDGE #1-32H CONTINENTAL DUNN, ND 4.97% LAMEY #1-30-31H-143-96 OXY DUNN, ND 4.95% BUFFALO #34-12H MARATHON DUNN, ND 4.91% SCHA 33-34 #1-H BRIGHAM MOUNTRAIL, ND 4.88% STENEHJEM 27-34 #1H ABRAXAS WILLIAMS, ND 4.87% BRUCE 5-8 #1H ZAVANNA WILLIAMS, ND 4.69% SHELL #1-35-26H HUNT OIL MOUNTRAIL, ND 4.66% EN-CHARLES WOOD 157-94-1720H-1 HESS MOUNTRAIL, ND 4.61% POMERAL STATE #7-36H CORNERSTONE BURKE, ND 4.50% WIZARD #2-35H SLAWSON MOUNTRAIL, ND 4.50% FIELD TRUST 7-6 #1-H BRIGHAM WILLIAMS, ND 4.28% JAGUAR #2-32H SLAWSON MOUNTRAIL, ND 4.22% NIGHTCRAWLER #2-17H SLAWSON MOUNTRAIL, ND 4.20% OXY OLSON #160-90-10-P-1H OXY BURKE, ND 4.17% AMBUSH #1-31-30H SLAWSON WILLIAMS, ND 3.96% MONTAGUE #5501 13-3H OASIS WILLIAMS, ND 3.95% JOHNSON #44-32H MARATHON MOUNTRAIL, ND 3.87% ROSS #27-2728H EOG MOUNTRAIL, ND 3.75% SOVIG #150-100-22C-15-1H PETRO HUNT MCKENZIE, ND 3.59% GENESIS #2-13H SLAWSON MOUNTRAIL, ND 3.44% FERTILE #19-29H EOG MOUNTRAIL, ND 3.38% WALLACE #7-1H HESS DUNN, ND 3.27% L. TUFTO 7-6#1-H BRIGHAM WILLIAMS, ND 3.24% BAGLEY #4-30H SM ENERGY DIVIDE, ND 3.20% MEIERS #5692 11-19H OASIS MOUNTRAIL, ND 3.17% LEE #34-31 NWH DENBURY MCKENZIE, ND 3.16% GO-ALASKON-156-97-3427H-1 HESS WILLIAMS, ND 3.13% GO-SOINE A-156-97-3229H-1 HESS WILLIAMS, ND 3.13% KOUFAX #3-10 1H ZAVANNA MCKENZIE, ND 3.13% WANNEMACHER 1-4-9H-142-95 OXY DUNN, ND 3.13% WOODROW 24X-32 XTO WILLIAMS, ND 3.12% NELSON #2-26H SINCLAIR MOUNTRAIL, ND 3.11% WARDNER #24-35H MARATHON DUNN, ND 3.09% GLENDON #1-17H CONTINENTAL WILLIAMS, ND 3.05% JUGHEAD FEDERAL #2-26H SLAWSON MOUNTRAIL, ND 2.81% VERLYN STROMMEN #34-8H MARATHON DUNN, ND 2.50% STORVIK 7-6 #1H URSA RICHLAND, MT 2.35% DORIS 21X-5 XTO WILLIAMS, ND 2.28% EN-TRINITY 154-93-2833H-2 HESS MOUNTRAIL, ND 2.28% EN-TRINITY 154-93-2833H-3 HESS MOUNTRAIL, ND 2.28% BARMAN #15-7H HESS WILLIAMS, ND 2.25% DAKOTA-3 ELK #16-21H ZENERGY MOUNTRAIL, ND 2.15% CLEAR WATER #1-24-25H HUNT MOUNTRAIL, ND 2.08% HOVDE 33-4 #1H BRIGHAM MCKENZIE, ND 2.08% SIDONIA #44-2821H EOG MOUNTRAIL, ND 1.79% CHARLOTTE #1-22H CONTINENTAL MCKENZIE, ND 1.68% MONT #3-3403H EOG WILLIAMS, ND 1.67% JOHNSRUD #1-1H SM ENERGY MCKENZIE, ND 1.67% DRONE #1-34-27H SLAWSON DUNN, ND 1.59% LIBERTY LR #17-11H EOG MOUNTRAIL, ND 1.59% HARTMAN #14-32H MARATHON DUNN, ND 1.57% TILTON #34-7H CONOCO DUNN, ND 1.53% JORGENSON #158-94-11D-2-1H PETRO HUNT MOUNTRAIL, ND 1.49% THIEL 2 11X-12 XTO RICHLAND, MT 1.47% EN-CVANCARA A-155-93-3231H-1 HESS MOUNTRAIL, ND 1.39% KLOSE #24-1H HESS MCKENZIE, ND 1.35% FERTILE #45-29H EOG MOUNTRAIL, ND 1.25% HELLAND #15-19H AMERICAN WILLIAMS, ND 1.25% JAMES HILL #9-0112H EOG MOUNTRAIL, ND 1.25% EN-CHAMLEY 156-93-0508H-1 HESS MOUNTRAIL, ND 1.23% RANSOM #44-31H CONOCO MCKENZIE, ND 1.19% AMY ELIZABETH #11-2H ARSENAL MOUNTRAIL, ND 1.13% HAGEN #23-13H TRUE OIL MCKENZIE, ND 1.11% CLEARWATER #24-3025H EOG MOUNTRAIL, ND 1.02% DEBBIE BAKLENKO USA #12-26H MARATHON MCKENZIE, ND 1.00% HAUSTVEIT 42X-10 XTO WILLIAMS, ND 0.94% RMJK #31-26H MARATHON MOUNTRAIL, ND 0.94% LUCY FLECKENSTEIN #34-20H MARATHON DUNN, ND 0.78% SOLBERG #15-8H HESS WILLIAMS, ND 0.78% KALIL FARM 14-23 #1H BRIGHAM WILLIAMS, ND 0.68% EN-FRANDSON 154-93-2116H-2 HESS MOUNTRAIL, ND 0.61% EN-FRANDSON 154-93-2116H-3 HESS MOUNTRAIL, ND 0.61% DEVON #5601 12-17H OASIS WILLIAMS, ND 0.56% MARTENS #2-5H SINCLAIR MOUNTRAIL, ND 0.56% CANNONBALL FEDERAL #2-27-34H SLAWSON MOUNTRAIL, ND 0.55%
FIRST 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, May 10, 2011 at 10:00 a.m. Central Daylight Time. Details for the conference call are as follows:
Dial-In Number: (866) 847-7864 (US/Canada) and (703) 639-1430 (International)
Conference ID: 1528973 - Northern Oil and Gas First Quarter Earnings Release
Replay Dial-In Number: (866) 837-8032 (US/Canada)
Replay Access Code: 1528973 - Replay will be available through May 24th, 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.
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.
NORTHERN OIL AND GAS, INC. CONDENSED BALANCE SHEETS MARCH 31, 2011 AND DECEMBER 31, 2010 ASSETS March 31, December 31, 2011 2010 (UNAUDITED) CURRENT ASSETS Cash and Cash Equivalents $ 99,705,160 $ 152,110,701 Trade Receivables 27,027,334 22,033,647 Prepaid Drilling Costs 15,350,719 13,225,650 Prepaid Expenses 396,474 345,695 Other Current Assets 753,661 475,967 Short - Term Investments 24,866,660 39,726,700 Deferred Tax Asset 11,884,000 5,100,000 Total Current Assets 179,984,008 233,018,360 PROPERTY AND EQUIPMENT Oil and Natural Gas Properties, Full Cost Method of Accounting Proved 202,071,631 158,846,475 Unproved 157,678,911 136,135,163 Other Property and Equipment 2,499,699 2,479,199 Total Property and Equipment 362,250,241 297,460,837 Less - Accumulated Depreciation and Depletion 29,084,148 22,152,356 Total Property and Equipment, Net 333,166,093 275,308,481 DEBT ISSUANCE COSTS 1,277,732 1,367,124 Total Assets $ 514,427,833 $ 509,693,965 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable $ 28,531,576 $ 48,500,204 Accrued Expenses 439,790 2,829 Derivative Liability 27,954,596 11,145,319 Other Liabilities 18,574 18,574 Total Current Liabilities 56,944,536 59,666,926 LONG-TERM LIABILITIES Revolving Line of Credit - - Derivative Liability 9,221,859 5,022,657 Other Noncurrent Liabilities 563,127 477,900 Total Long-Term Liabilities 9,784,986 5,500,557 DEFERRED TAX LIABILITY 11,247,000 9,167,000 Total Liabilities 77,976,522 74,334,483 STOCKHOLDERS' EQUITY Preferred Stock, Par Value $.001; 5,000,000 Authorized, No Shares Outstanding - - Common Stock, Par Value $.001; 95,000,000 Authorized, 63,135,424 Outstanding (12/31/2010 – 62,129,424 Shares Outstanding) 63,135 62,129 Additional Paid-In Capital 436,920,522 428,484,092 Retained Earnings 701,350 7,759,192 Accumulated Other Comprehensive Income (Loss) (1,233,696) (945,931) Total Stockholders' Equity 436,451,311 435,359,482 Total Liabilities and Stockholders' Equity $ 514,427,833 $ 509,693,965
NORTHERN OIL AND GAS, INC. CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED) Three Months Ended March 31, 2011 2010 REVENUES Oil and Gas Sales $ 27,041,621 $ 8,368,847 Loss on Settled Derivatives (3,262,056) (176,983) Mark-to-Market of Derivative Instruments (21,278,629) (990,816) Other Revenue 25,813 20,466 2,526,749 7,221,514 OPERATING EXPENSES Production Expenses 2,016,356 332,330 Production Taxes 2,615,864 645,866 General and Administrative Expense 3,290,589 1,706,968 Depletion of Oil and Gas Properties 6,863,479 1,883,605 Depreciation and Amortization 68,313 24,630 Accretion of Discount on Asset Retirement Obligations 4,730 3,537 Total Expenses 14,859,331 4,596,936 (LOSS) INCOME FROM OPERATIONS (12,332,582) 2,624,578 OTHER INCOME (EXPENSE) 767,040 (87,948) (LOSS) INCOME BEFORE INCOME TAXES (11,565,542) 2,536,630 INCOME TAX (BENEFIT) PROVISION (4,507,700) 977,000 NET (LOSS) INCOME $ (7,057,842) $ 1,559,630 Net (Loss) Income Per Common Share - Basic $ (0.11) $ 0.04 Net (Loss) Income Per Common Share - Diluted $ (0.11) $ 0.04 Weighted Average Shares Outstanding – Basic 63,000,113 44,098,553 Weighted Average Shares Outstanding - Diluted 63,000,113 44,544,469
NORTHERN OIL AND GAS, INC. CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED) Three Months Ended March 31, 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES Net (Loss) Income $ (7,057,842) $ 1,559,630 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Depletion of Oil and Gas Properties 6,863,479 1,883,605 Depreciation and Amortization 68,313 24,630 Amortization of Debt Issuance Costs 89,392 150,398 Accretion of Discount on Asset Retirement Obligations 4,730 3,537 Income Tax (Benefit) Provision (4,510,000) 977,000 Net (Gain) Loss on Sale of Available for Sale Securities (459,998) 104,217 Net Unrealized Loss on Derivative Instruments 21,278,629 990,816 Amortization of Deferred Rent (4,644) (4,643) Share - Based Compensation Expense 1,858,171 813,297 Changes in Working Capital and Other Items: Increase in Trade Receivables (4,993,687) (968,924) Increase in Other Receivables - (237,877) Increase in Prepaid Expenses (50,779) (65,741) Increase in Other Current Assets (277,694) (111,971) (Decrease) Increase in Accounts Payable (19,968,628) 7,076,193 Decrease in Accrued Expenses (263) (45,601) Net Cash (Used For) Provided By Operating Activities (7,160,821) 12,148,566 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of Other Equipment and Furniture (20,500) (30,360) Increase in Prepaid Drilling Costs (2,125,069) (4,495,200) Proceeds from Sale of Oil and Gas Properties - 237,877 Purchase of Available for Sale Securities (18,381,690) - Proceeds from Sale of Available for Sale Securities 32,949,813 7,639,783 Purchase of Oil and Gas Properties (59,167,274) (22,077,340) Net Cash Used For Investing Activities (46,744,720) (18,725,240) CASH FLOWS FROM FINANCING ACTIVITIES Payments on Line of Credit - (803,115) Advances on Revolving Credit Facility - 2,300,000 Proceeds from Exercise of Warrants 1,500,000 - Net Cash Provided by Financing Activities 1,500,000 1,496,885 NET DECREASE IN CASH AND CASH EQUIVALENTS (52,405,541) (5,079,789) CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD 152,110,701 6,233,372 CASH AND CASH EQUIVALENTS – END OF PERIOD $ 99,705,160 $ 1,153,583 Supplemental Disclosure of Cash Flow Information Cash Paid During the Period for Interest $ - $ 26,515 Cash Paid During the Period for Income Taxes $ 2,300 $ - Non-Cash Financing and Investing Activities: Purchase of Oil and Gas Properties through Issuance of Common Stock $ - $ 99,475 Payment of Compensation through Issuance of Common Stock $ 7,374,660 $ 1,655,747 Capitalized Asset Retirement Obligations $ 85,141 $ 16,158
USE OF NON GAAP FINANCIAL MEASURES Northern Oil and Gas, Inc. Reconciliation of Adjusted EBITDA Three Months Ended March 31, 2011 March 31, 2010 Net Income (Loss) $ (7,057,842) $ 1,559,630 Add Back: Income Tax Provision (Benefit) (4,507,700) 977,000 Depreciation, Depletion, Amortization, and Accretion 6,936,522 1,911,772 Share Based Compensation 1,858,171 813,297 Mark-to-Market Derivative Instruments 21,278,629 990,816 Interest Expense 120,642 165,193 Adjusted EBITDA $ 18,628,422 $ 6,417,708 Adjusted EBITDA Per Common Share - Basic $ 0.30 $ 0.15 Adjusted EBITDA Per Common Share - Diluted $ 0.29 $ 0.14 Weighted Average Shares Outstanding – Basic 63,000,133 44,098,553 Weighted Average Shares Outstanding - Diluted 63,246,984 44,544,469
Northern Oil and Gas, Inc. Reconciliation of Adjusted EBITDA Per Common Share – Basic Three Months Ended March 31, 2011 March 31, 2010 Net (Loss) Income Per Common Share - Basic $ (0.11) $ 0.04 (As Reported) Add Back: Income Tax (Benefit)Provision (0.07) 0.02 Depreciation, Depletion, Amortization, and Accretion 0.11 0.04 Share Based Compensation 0.03 0.02 Mark-to-Market Derivative Instruments 0.34 0.02 Interest Expense 0.00 0.01 Adjusted EBITDA Per Common Share - Basic $ 0.30 $ 0.15 (Adjusted for Non-GAAP Measurements)
Northern Oil and Gas, Inc. Reconciliation of Adjusted EBITDA Per Common Share - Diluted Three Months Ended March 31, 2011 March 31, 2010 Net (Loss) Income Per Common Share - Diluted $ (0.11) $ 0.04 (As Reported) Add Back: Income Tax (Benefit) Provision (0.07) 0.02 Depreciation, Depletion, Amortization, and Accretion 0.11 0.04 Share Based Compensation 0.03 0.02 Mark-to-Market Derivative Instruments 0.33 0.02 Interest Expense 0.00 0.00 Adjusted EBITDA Per Common Share - Diluted $ 0.29 $ 0.14 (Adjusted for Non-GAAP Measurements)
Northern Oil and Gas, Inc. Reconciliation of GAAP Net Income to Net Income Excluding Unrealized Mark-to-Market Hedging Losses Three Months Ended March 31, 2011 March 31, 2010 Net (Loss) Income $ (7,057,842) $ 1,559,630 Mark-to-Market of Derivative Instruments 21,278,629 990,816 Tax Impact (8,299,000) (378,000) Net Income without Effect of Certain Items $ 5,921,787 $ 2,172,446 Net Income Per Common Share - Basic $ 0.09 $ 0.05 Net Income Per Common Share - Diluted $ 0.09 $ 0.05 Weighted Average Shares Outstanding – Basic 63,000,113 44,098,553 Weighted Average Shares Outstanding - Diluted 63,246,984 44,544,469 Net (Loss) Income Per Common Share - Basic $ (0.11) $ 0.04 Change due to Mark-to-Market of Derivative Investments 0.34 0.02 Change due to Tax Impact (0.14) (0.01) Net Income without Effect of Certain Items Per Common Share - Basic $ 0.09 $ 0.05 Net Income Per Common Share - Diluted $ (0.11) $ 0.04 (As Reported) Change due to Mark-to-Market of Derivative Investments 0.34 0.02 Change due to Tax Impact (0.14) (0.01) Net Income without Effect of Certain Items Per Common Share - Diluted $ 0.09 $ 0.05
SOURCE Northern Oil and Gas, Inc.
Released May 10, 2011