EXHIBIT 99.4

UNAUDITED PRO FORMA FINANCIAL STATEMENTS AND OTHER DATA

On July 1, 2019, Northern Oil and Gas, Inc. (“Northern”, the “Company”, “we”, and “our”) completed the acquisition of certain oil and gas properties and interests from VEN Bakken, LLC (“Seller”), a wholly-owned subsidiary of Flywheel Bakken, LLC (“Flywheel Bakken”), with an effective date of July 1, 2019 (the “VEN Bakken Acquisition”). At closing the acquired assets consisted of approximately 87.8 net producing wells and 4.1 net wells in process, as well as approximately 18,000 net acres in North Dakota. The Company paid closing consideration to Seller consisting of $170.1 million in cash, 5,602,147 shares of the Company’s common stock, and a 6.0% Senior Unsecured Promissory Note due 2022 in the aggregate principal amount of $130.0 million (the “Promissory Note”). The cash and Promissory Note portions of the consideration are net of preliminary and customary purchase price adjustments and remain subject to final post-closing settlement between the Company and Seller.

The following unaudited pro forma financial statements present (i) our unaudited pro forma balance sheet as of June 30, 2019, (ii) our unaudited pro forma statement of operations for the year ended December 31, 2018, and (iii) our unaudited pro forma statement of operations for the six months ended June 30, 2019. The unaudited pro forma balance sheet has been developed by applying pro forma adjustments to our historical balance sheet to give effect to the VEN Bakken Acquisition as if it had occurred on June 30, 2019. The unaudited pro forma statements of operations have been developed by applying pro forma adjustments to our historical statements of operations to give effect to the VEN Bakken Acquisition as if it had occurred on January 1, 2018.

The unaudited pro forma financial statements are for illustrative and informational purposes only and are not intended to represent or be indicative of what our results of operations would have been had the above transactions occurred as of or on the dates indicated. The unaudited pro forma financial statements also should not be considered representative of our future results of operations.

The pro forma adjustments related to the VEN Bakken Acquisition are based on preliminary estimates, accounting judgments and currently available information and assumptions that management believes are reasonable and are subject to change. Accordingly, these pro forma adjustments are preliminary and have been made solely for the purpose of providing these unaudited pro forma financial statements. Differences between these preliminary estimates and the final acquisition accounting may occur and these differences could be material. The differences, if any, could have a material impact on the accompanying unaudited pro forma financial statements and our future results of operations.


NORTHERN OIL AND GAS, INC.

PRO FORMA BALANCE SHEET

(in thousands)

(unaudited)

 

     As of June 30, 2019  
     Historical
Northern
Oil and Gas
    Historical
VEN Bakken
Acquisition
    VEN Bakken
Acquisition
Adjustments
        Pro Forma
Combined
 

Assets

          

Current Assets:

          

Cash and cash equivalents

   $ 2,794     $ 825     $ (825   (b)   $ 2,794  

Accounts receivable, net

     87,697       15,864       (15,864   (b)     87,697  

Advances to operators

     1,425       —         —           1,425  

Prepaid expenses and other

     8,226       737       (737   (b)     8,226  

Derivative instruments

     32,531       550       (550   (b)     32,531  

Income tax receivable

     395       —         —           395  
  

 

 

   

 

 

   

 

 

     

 

 

 

Total current assets

     133,068       17,976       (17,976       133,068  

Oil and Natural Gas Properties, Full Cost Method of Accounting:

          

Proved properties

     3,607,214       314,280       5,861     (a), (c)     3,927,355  

Unproved properties

     9,249       —         —           9,249  

Other property and equipment

     1,609       —         —           1,609  

Less accumulated depreciation, depletion, amortization and impairment

     (2,324,790     (57,779     57,779     (b)     (2,324,790
  

 

 

   

 

 

   

 

 

     

 

 

 

Oil and natural gas properties, net

     1,293,282       256,501       63,640         1,613,423  

Other Assets:

          

Derivative instruments

     26,610       1,063       (1,063   (b)     26,610  

Deferred income taxes

     420       —         —           420  

Acquisition deposit

     31,000       —         (31,000   (d)     —    

Other noncurrent assets, net

     10,012       253       (253   (b)     10,012  
  

 

 

   

 

 

   

 

 

     

 

 

 

Total Assets

   $ 1,494,391     $ 275,793     $ 13,348       $ 1,783,533  
  

 

 

   

 

 

   

 

 

     

 

 

 

Liabilities and Stockholders’ Equity (Deficit)/Members’ Capital

          

Current Liabilities:

          

Accounts payable

   $ 93,355     $ 10,458     $ (10,458   (b)     93,355  

Accrued liabilities

     83,880       —         —           83,880  

Accrued interest

     15,050       —         —           15,050  

Debt exchange derivative

     2,791       —         —           2,791  

Derivative instruments

     95       3,814       215     (a), (e)     4,124  

Contingent consideration

     36,992       —         —           36,992  

Other current liabilities

     566       243       (243   (b)     566  
  

 

 

   

 

 

   

 

 

     

 

 

 

Total current liabilities

     232,726       14,515       (10,486       236,758  
  

 

 

   

 

 

   

 

 

     

 

 

 

Long-Term Liabilities:

          

Long-term debt, net

     857,198       134,591       133,146     (f)     1,124,935  

Derivative instruments

     1,644       6,405       (740   (a), (e)     7,309  

Asset retirement obligations

     12,845       1,016       (1,016   (b)     12,845  

Other noncurrent liabilities

     329       1,336       (1,336   (b)     329  
  

 

 

   

 

 

   

 

 

     

 

 

 

Total Liabilities

     1,104,742       157,863       119,568         1,382,176  

Commitments and Contingencies

          

Stockholders’ Equity/Members’ capital:

          

Preferred stock, par value $.001; 5,000,000 authorized, no shares outstanding

     —         —         —           —    

Common stock, par value $.001; 675,000,000 authorized, 389,435,991 shares outstanding at 6/30/2019

     389       —         6     (g)     395  

Members’ capital

     —         117,930       (117,930   (b)     —    

Additional paid-in capital

     1,248,906       —         11,703     (g)     1,260,609  

Retained deficit

     (859,647     —         —           (859,647
  

 

 

   

 

 

   

 

 

     

 

 

 

Total stockholders’ equity/members’ capital

     389,649       117,930       (106,221       401,357  
  

 

 

   

 

 

   

 

 

     

 

 

 

Total Liabilities and Stockholders’ Equity/Members’ Capital

   $ 1,494,391     $ 275,793     $ 13,348       $ 1,783,533  
  

 

 

   

 

 

   

 

 

     

 

 

 

The accompanying notes are an integral part of these financial statements.


NORTHERN OIL AND GAS, INC.

PRO FORMA STATEMENT OF OPERATIONS

(in thousands, except share and per share numbers)

(unaudited)

 

     For the Year Ended December 31, 2018  
     Historical
Northern
Oil and Gas
    Historical
VEN Bakken
Acquisition
    VEN Bakken
Acquisition
Adjustments
         Pro Forma
Combined
 

REVENUES

           

Oil and Gas Sales

   $ 493,909     $ 183,563     $ —          $ 677,472  

Gain (Loss) on Derivative Instruments, Net

     185,006       19,402       —            204,408  

Other Revenue

     9       —         —            9  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Revenues

     678,924       202,965       —            881,889  

OPERATING EXPENSES

           

Production Expenses

     66,646       42,392       —            109,038  

Production Taxes

     45,302       15,458       —            60,760  

General and Administrative Expenses

     14,568       4,967       —            19,535  

Depletion, Depreciation, Amortization, and Accretion

     119,780       39,473       5,870     (h)      165,123  

Exploration and other expense

     —         8       —            8  

Impairment of Other Current Assets

     —         —         —            —    
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Expenses

     246,296       102,298       5,870          354,464  

INCOME (LOSS) FROM OPERATIONS

     432,628       100,667       (5,870        527,425  

OTHER INCOME AND EXPENSE

           

Interest Expense, Net of Capitalization

     (86,005     (7,561     (6,607   (i)      (100,173

Write-Off of Debt Issuance Costs

     —         —         —            —    

Loss on the Extinguishment of Debt

     (173,430     —         —            (173,430

Debt Exchange Derivative Gain/(Loss)

     (598     —         —            (598

Contingent Consideration Loss

     (28,968     —         —            (28,968

Financing Expense

     (884     —         —            (884

Other Income (Expense)

     891       723       —            1,614  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Other Income (Expense)

     (288,994     (6,838     (6,607        (302,439

INCOME (LOSS) BEFORE TAXES

     143,634       93,829       (12,477        224,986  

INCOME TAX BENEFIT

     (55     —         —            (55
  

 

 

   

 

 

   

 

 

      

 

 

 

NET INCOME (LOSS)

   $ 143,689     $ 93,829     $ (12,477      $ 225,041  
  

 

 

   

 

 

   

 

 

      

 

 

 

Net Income (Loss) Per Common Share - Basic

   $ 0.61            $ 0.93  

Net Income (Loss) Per Common Share - Diluted

   $ 0.61            $ 0.93  

Weighted Average Shares Outstanding - Basic

     236,206,457         5,602,147     (j)      241,808,604  

Weighted Average Shares Outstanding - Diluted

     236,773,911         5,602,147     (j)      242,376,058  

The accompanying notes are an integral part of these financial statements.


NORTHERN OIL AND GAS, INC.

PRO FORMA STATEMENT OF OPERATIONS

(in thousands, except share and per share numbers)

(unaudited)

 

     For the Six Months Ended June 30, 2019  
     Historical
Northern
Oil and Gas
    Historical
VEN Bakken
Acquisition
    VEN Bakken
Acquisition
Adjustments
         Pro Forma
Combined
 

REVENUES

           

Oil and Gas Sales

   $ 282,530     $ 59,483     $ —          $ 342,013  

Gain (Loss) on Derivative Instruments, Net

     (103,031     (31,157     —            (134,188

Other Revenue

     7       —         —            7  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Revenues

     179,506       28,326       —            207,832  

OPERATING EXPENSES

           

Production Expenses

     50,799       19,086       —            69,885  

Production Taxes

     26,553       4,777       —            31,330  

General and Administrative Expenses

     11,300       2,042       —            13,342  

Depletion, Depreciation, Amortization, and Accretion

     91,225       15,723       (5,480   (h)      101,468  

Exploration and other expense

     —         2       —            2  

Impairment of Other Current Assets

     2,694       —         —            2,694  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Expenses

     182,571       41,630       (5,480        218,721  

INCOME (LOSS) FROM OPERATIONS

     (3,065     (13,304     5,480          (10,889

OTHER INCOME AND EXPENSE

           

Interest Expense, Net of Capitalization

     (37,327     (3,390     (3,694   (i)      (44,411

Write-Off of Debt Issuance Costs

     —         —         —            —    

Loss on the Extinguishment of Debt

     (425     —         —            (425

Debt Exchange Derivative Gain/(Loss)

     1,413       —         —            1,413  

Contingent Consideration Loss

     (23,371     —         —            (23,371

Financing Expense

     —         —         —            —    

Other Income (Expense)

     14       4       —            18  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total Other Income (Expense)

     (59,696     (3,386     (3,694        (66,776

INCOME (LOSS) BEFORE TAXES

     (62,762     (16,690     1,786          (77,665

INCOME TAX BENEFIT

     —         —         —            —    
  

 

 

   

 

 

   

 

 

      

 

 

 

NET INCOME (LOSS)

   $ (62,762   $ (16,690   $ 1,786        $ (77,665
  

 

 

   

 

 

   

 

 

      

 

 

 

Net Income (Loss) Per Common Share - Basic

   $ (0.17          $ (0.20

Net Income (Loss) Per Common Share - Diluted

   $ (0.17          $ (0.20

Weighted Average Shares Outstanding - Basic

     374,927,630         5,602,147     (j)      380,529,777  

Weighted Average Shares Outstanding - Diluted

     374,927,630         5,602,147     (j)      380,529,777  

The accompanying notes are an integral part of these financial statements.


NOTE 1. BASIS OF PRO FORMA PRESENTATION

These financial statements present our unaudited pro forma balance sheet as of June 30, 2019, unaudited pro forma statement of operations for the year ended December 31, 2018 and unaudited pro forma statement of operations for the six months ended June 30, 2019. These unaudited statements have been developed by applying pro forma adjustments to our historical financial statements to give effect to the VEN Bakken Acquisition.

The unaudited pro forma financial statements were prepared in accordance with Regulation S-X Article 11 of the Securities and Exchange Commission.

The pro forma adjustments related to the purchase price allocation of the VEN Bakken Acquisition are preliminary and are subject to revisions as additional information becomes available. Revisions to the preliminary purchase price allocation may have a significant impact on the pro forma amounts of depreciation, depletion, amortization, and accretion expense. The pro forma adjustments related to the VEN Bakken Acquisition reflect the fair values of the assets as of July 1, 2019 (the closing date of the transaction). The pro forma adjustments do not necessarily reflect the fair values that would have been recorded if the acquisition had occurred on January 1, 2018 or June 30, 2019.

The unaudited pro forma financial statements should be read together with our historical financial statements and the related notes as of and for the year ended December 31, 2018 and the six months ended June 30, 2019, and the historical financial statements and related notes for Flywheel Bakken as of and for the year ended December 31, 2018, and the six months ended June 30, 2019.

The pro forma financial information presented gives effect to pro forma events that are (1) directly attributable to the VEN Bakken Acquisition, (2) factually supportable and (3) with respect to the pro forma statements of operations, expected to have a continuing impact. The pro forma financial information is not necessarily indicative of financial results that would have been attained had the VEN Bakken Acquisition occurred on the date indicated or which could be achieved in the future. The pro forma adjustments are based on currently available information and certain estimates and assumptions. However, our management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma financial statements.

NOTE 2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS

The accompanying unaudited pro forma combined financial statements reflect the following pro forma adjustments:

 

  (a)

Represents the preliminary purchase price allocation for the VEN Bakken Acquisition of $310.4 million, consisting of $320.1 million of proved oil and natural gas properties, which was reduced by $9.7 million of assumed derivative instrument liabilities.

 

  (b)

Represents the elimination of historical assets, liabilities, and members’ capital related to the VEN Bakken Acquisition that we are not acquiring or assuming.

 

  (c)

Represents the elimination of the historical VEN Bakken Acquisition proved oil and natural gas properties of $314.3 million, which was offset by additions of proved oil and natural gas properties from the VEN Bakken Acquisition of $320.1 million.

 

  (d)

Represents the elimination of the acquisition deposit for the VEN Bakken Acquisition, which was released to Seller at closing.

 

  (e)

Represents adjustments to the historical VEN Bakken Acquisition derivative instrument liabilities, which were assumed by the Company, to reflect their fair values at closing.

 

  (f)

Represents the elimination of the historical VEN Bakken Acquisition long-term debt, net of $134.6 million, which the Company did not assume, offset by a $267.7 million increase due to the issuance of the Promissory Note at closing and additional borrowing on our revolving credit facility to fund payment of the cash closing consideration.


  (g)

Represents the 5,602,147 shares of our common stock issued as part of the closing consideration, valued at $11.7 million based on the $2.09 per share closing price of our common stock on the closing date of the acquisition.

 

  (h)

Represents the increase (decrease) in depreciation, depletion, amortization, and accretion expense computed on a unit of production basis following the preliminary purchase price allocation to proved oil and natural gas properties, as if the VEN Bakken Acquisition was consummated on January 1, 2018.

 

  (i)

Represents the increase in interest expense due to the issuance of the Promissory Note at closing and additional borrowing on our revolving credit facility to fund payment of the cash closing consideration, as if the VEN Bakken Acquisition closed on January 1, 2018.

 

  (j)

Represents the impact on weighted average shares outstanding of the shares issued as consideration in the VEN Bakken Acquisition, as if the VEN Bakken Acquisition closed and thus the shares were issued on January 1, 2018 (rather than July 1, 2019).


SUPPLEMENTAL PRO FORMA COMBINED OIL AND NATURAL GAS RESERVE AND

STANDARDIZED MEASURE INFORMATION (UNAUDITED)

The following unaudited supplemental pro forma oil and natural gas reserve tables present how the combined oil and natural gas reserves and standardized measure information of the Company and the VEN Bakken Acquisition may have appeared had the VEN Bakken Acquisition occurred on January 1, 2018. The supplemental pro forma combined oil and natural gas reserves and standardized measure information are for illustrative purposes only.

All of the reserves are located in the United States. Reserve estimates are based on the following:

 

(a)

For the Company’s Historical Results: as reported in our Annual Report on Form 10-K for the year ended December 31, 2018, based upon a reserve report prepared by our independent petroleum engineers as of December 31, 2018;

 

(b)

For the VEN Bakken Acquisition Historical Results: based upon a reserve report prepared by independent petroleum engineers as of December 31, 2018;

Numerous uncertainties are inherent in estimating quantities and values of proved reserves and in projecting future rates of production and the amount and timing of development expenditures, including many factors beyond the property owner’s control. Reserve engineering is a subjective process of estimating the recovery from underground accumulations of oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Because all reserve estimates are to some degree subjective, the quantities of oil and gas that are ultimately recovered, production and operating costs, the amount and timing of future development expenditures and future oil and gas sales prices may each differ from those assumed in these estimates. In addition, different reserve engineers may make different estimates of reserve quantities and cash flows based upon the same available data. The standardized measure shown below represents an estimate only and should not be construed as the current market value of the estimated oil and natural gas reserves reported below.

The pro forma estimates of proved reserves presented below include only those quantities of oil and natural gas that geologic and engineering data demonstrate with reasonable certainty to be recoverable in future periods from known reservoirs under existing economic, operating and regulatory practices. Proved developed reserves represent only those reserves estimated to be recovered through existing wells. Proved undeveloped reserves include those reserves that may be recovered from new wells on undrilled acreage or from existing wells on which a relatively major expenditure for recompletion or secondary recovery operation is required.

The following tables provide a summary of the changes in estimated proved reserves for the year ended December 31, 2018, as well as pro forma proved developed and proved undeveloped reserves as of the beginning and end of the year, giving effect to the VEN Bakken Acquisition as if it had occurred on January 1, 2018. The pro forma standardized measure does not include future income taxes attributable to the VEN Bakken Acquisition as the relevant entities are considered pass-through entities for tax purposes.


Estimated Pro Forma Combined Quantities of Proved Reserves

 

     Historical Northern Oil and Gas  
     Natural Gas
(MMcf)
     Oil
(Mbbl)
     MBOE  

Proved Developed and Undeveloped Reserves at December 31, 2017

     78,120        62,812        75,832  
  

 

 

    

 

 

    

 

 

 

Revisions of Previous Estimates

     426        3,470        3,541  

Extensions, Discoveries and Other Additions

     28,348        28,516        33,241  

Purchases of minerals in place

     37,397        25,965        32,198  

Production

     (9,225      (7,790      (9,328
  

 

 

    

 

 

    

 

 

 

Proved Developed and Undeveloped Reserves at December 31, 2018

     135,066        112,973        135,484  
  

 

 

    

 

 

    

 

 

 

Proved Developed Reserves:

        

December 31, 2017

     46,518        38,592        46,345  
  

 

 

    

 

 

    

 

 

 

December 31, 2018

     82,315        62,497        76,216  
  

 

 

    

 

 

    

 

 

 

Proved Undeveloped Reserves:

        

December 31, 2017

     31,602        24,220        29,487  
  

 

 

    

 

 

    

 

 

 

December 31, 2018

     52,752        50,476        59,268  
  

 

 

    

 

 

    

 

 

 

 

     Historical VEN Bakken Acquisition  
     Natural Gas
(MMcf)
     Oil
(Mbbl)
     MBOE  

Proved Developed and Undeveloped Reserves at December 31, 2017

     64,723        22,136        32,923  
  

 

 

    

 

 

    

 

 

 

Revisions of Previous Estimates

     (1,236      133        (73

Extensions, Discoveries and Other Additions

     7,575        3,165        4,428  

Purchases of minerals in place

     —          —          —    

Production

     (3,806      (2,614      (3,248
  

 

 

    

 

 

    

 

 

 

Proved Developed and Undeveloped Reserves at December 31, 2018

     67,256        22,820        34,029  
  

 

 

    

 

 

    

 

 

 

Proved Developed Reserves:

        

December 31, 2017

       37,031          11,798          17,970  
  

 

 

    

 

 

    

 

 

 

December 31, 2018

     37,801        13,333        19,633  
  

 

 

    

 

 

    

 

 

 

Proved Undeveloped Reserves:

        

December 31, 2017

     27,692        10,338        14,953  
  

 

 

    

 

 

    

 

 

 

December 31, 2018

     29,455        9,487        14,396  
  

 

 

    

 

 

    

 

 

 

 

     Pro Forma Combined  
     Natural Gas
(MMcf)
     Oil
(Mbbl)
     MBOE  

Proved Developed and Undeveloped Reserves at December 31, 2017

     142,843        84,948        108,755  
  

 

 

    

 

 

    

 

 

 

Revisions of Previous Estimates

     (810      3,603        3,468  

Extensions, Discoveries and Other Additions

     35,923        31,681        37,669  

Purchases of minerals in place

     37,397        25,965        32,198  

Production

     (13,031      (10,404      (12,576
  

 

 

    

 

 

    

 

 

 

Proved Developed and Undeveloped Reserves at December 31, 2018

     202,322        135,793        169,513  
  

 

 

    

 

 

    

 

 

 

Proved Developed Reserves:

        

December 31, 2017

     83,549        50,390        64,315  
  

 

 

    

 

 

    

 

 

 

December 31, 2018

     120,116        75,830        95,849  
  

 

 

    

 

 

    

 

 

 

Proved Undeveloped Reserves:

        

December 31, 2017

     59,294        34,558        44,440  
  

 

 

    

 

 

    

 

 

 

December 31, 2018

     82,207        59,963        73,664  
  

 

 

    

 

 

    

 

 

 


Pro Forma Combined Standardized Measure of Discounted Future Net Cash Flows

(in thousands)

 

     As of December 31, 2018  
     Historical
Northern
Oil and Gas
     Historical
VEN Bakken
Acquisition
     Pro Forma
Combined
 

Future Cash Inflows

   $ 7,524,587      $ 1,711,364      $ 9,235,951  

Future Production Costs

     (2,605,279      (734,266      (3,339,545

Future Development Costs

     (784,615      (146,488      (931,103

Future Income Tax Expense

     (611,989         (611,989
  

 

 

    

 

 

    

 

 

 

Future Net Cash Flows

     3,522,704        830,610        4,353,314  

10% Annual Discount for Estimated Timing of Cash Flows

     (1,643,061      (366,552      (2,009,613
  

 

 

    

 

 

    

 

 

 

Standardized Measure of Discounted Future Net Cash Flows

   $ 1,879,643      $ 464,058      $ 2,343,701  
  

 

 

    

 

 

    

 

 

 

Pro Forma Combined Changes in the Standardized Measure of Discounted Future Net Cash Flows

(in thousands)

 

     As of December 31, 2018  
     Historical
Northern
Oil and Gas
     Historical
VEN Bakken
Acquisition
     Pro Forma
Combined
 

Standardized measure, beginning of period

   $ 753,986      $ 297,660      $ 1,051,646  

Sales of oil and natural gas produced, net of production costs

     (381,961      (125,705      (507,666

Extensions and discoveries

     549,353        64,588        613,941  

Previously estimated development costs incurred

     115,542        25,364        140,906  

Net change of prices and production costs

     484,122        167,319        651,441  

Change in future development costs

     (91,829      (8,237      (100,066

Revisions of previous quantity estimates

     66,185        (1,145      65,040  

Accretion of discount

     75,800        29,766        105,566  

Change in income taxes

     (296,571      —          (296,571

Acquisition of reserves

     502,193        —          502,193  

Changes in timing and other

     102,825        14,448        117,273  
  

 

 

    

 

 

    

 

 

 

Standardized measure, end of period

   $  1,879,643      $ 464,058      $  2,343,703