Sign in

You're signed outSign in or to get full access.

NO

NORTHERN OIL & GAS, INC. (NOG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered record adjusted EBITDA of $434.7M and daily production of 134,959 Boe/d (58% oil), with free cash flow up 41% sequentially to $135.7M, while annual guidance was reaffirmed .
  • EPS beat Wall Street: adjusted diluted EPS was $1.33 vs consensus $1.13*, and adjusted EBITDA $434.97M vs $391.98M*, driven by strong Uinta and Appalachian volumes and lower per-unit LOE; revenue comparisons depend on definition (company total revenue $602.1M vs S&P actual $544.3M*) with consensus at $563.6M*; EBITDA and FCF also exceeded consensus* .
  • Management emphasized non-op flexibility, >60% 2025 production hedged, and liquidity >$0.9B; credit facility commitment increased to $1.6B, and buybacks plus dividends totaled ~$57M YTD by mid-April .
  • Stock reaction catalysts: reaffirmed guidance, strong hedge book and leverage trending ~1.3x, basin mix improvements (Uinta under SM), and expanding Ground Game opportunities amid commodity volatility .

Note: Values marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Record adjusted EBITDA ($434.7M) and strong free cash flow ($135.7M), with production up 13% YoY to 134,959 Boe/d; Uinta volumes grew >15% sequentially and Appalachian volumes hit a record .
  • Cost discipline: LOE fell to $9.39/Boe (-2% QoQ), production taxes $2.97/Boe (down sequentially), and cash G&A $0.87/Boe; realized gas price achieved 100% of Henry Hub, supported by stronger seasonal NGL prices .
  • Strategic flexibility and hedging: management highlighted the “catbird seat” of the non-op model, >60% of 2025 production hedged, and ability to pivot capital to Ground Game in downturns .

What Went Wrong

  • Oil price differentials widened to $5.79/bbl vs prior quarter, driven by higher seasonal differentials in Permian/Williston and full-quarter Uinta transportation costs .
  • Gas differentials softened late in the quarter due to Waha weakness despite overall benchmark strength; activity cadence expected flattish through Q2/Q3 before ramping in Q4 .
  • Revenue definitional discrepancy vs consensus datasets: company reported total revenue $602.1M and oil & gas sales $576.95M, while S&P Global’s “actual revenue” tracked $544.27M*, highlighting estimation-definition mismatch .

Note: Values marked with * retrieved from S&P Global.

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Oil & Gas Sales ($USD Millions)$513.541 $545.472 $576.952
Total Revenues ($USD Millions)$753.638 $514.977 $602.098
GAAP Net Income ($USD Millions)$298.446 $71.698 $138.982
GAAP Diluted EPS ($USD)$2.96 $0.71 $1.39
Adjusted Diluted EPS ($USD)$1.40 $1.11 $1.33
Adjusted EBITDA ($USD Millions)$412.413 $406.631 $434.735
Free Cash Flow ($USD Millions)$177.139 $96.382 $135.693
Average Daily Production (Boe/d)121,815 131,777 134,959
Oil % of Production58% 59.9% 58%

KPIs and Unit Economics

KPI (per Boe unless noted)Q3 2024Q4 2024Q1 2025
Realized Oil Price ($/Bbl)$71.82 $65.40 $64.92
Realized Gas & NGL Price ($/Mcf)$1.60 $2.42 $3.86
LOE ($/Boe)$9.54 $9.62 $9.39
Production Taxes ($/Boe)$1.31 $3.52 $2.97
G&A ($/Boe)$0.89 $1.28 $1.19
DD&A ($/Boe)$16.57 $16.88 $16.93
Net Wells Turned In-Line (period)9.5 25.8 27.3

Basin Capital Allocation (Q1 2025)

BasinShare of Capex
Permian57%
Williston20%
Uinta15%
Appalachian8%

Results vs S&P Global Consensus (Q1 2025)

MetricConsensus*Actual*Outcome
Adjusted Diluted EPS ($)1.13*1.33*Beat*
Revenue ($USD Millions)563.6*544.3*Miss* (definition differs from company’s $602.1M total revenues )
Adjusted EBITDA ($USD Millions)392.0*435.0*Beat*
Free Cash Flow ($USD Millions)61.2*115.2*Beat*

Note: Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Annual Production (Boe/d)FY 2025130,000 – 135,000 130,000 – 135,000 Maintained
Annual Oil Production (Bbl/d)FY 202575,000 – 79,000 75,000 – 79,000 Maintained
Total Capex ($MM)FY 2025$1,050 – $1,200 $1,050 – $1,200 Maintained
Net Oil TILsFY 202587.0 – 91.0 87.0 – 91.0 Maintained
Net Wells SpudFY 2025106.0 – 110.0 106.0 – 110.0 Maintained
Production Expenses ($/Boe)FY 2025$9.15 – $9.40 $9.15 – $9.40 Maintained
Production Taxes (% of oil & gas sales)FY 20258.5% – 9.0% 8.5% – 9.0% Maintained
Avg Differential to WTI ($/Bbl)FY 2025($4.75) – ($5.50) ($4.75) – ($5.50) Maintained
Gas Realization (% of Henry Hub)FY 202585% – 90% 85% – 90% Maintained
DD&A ($/Boe)FY 2025$16.50 – $17.50 $16.50 – $17.50 Maintained
G&A Cash ($/Boe)FY 2025$0.85 – $0.90 $0.85 – $0.90 Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (prior)Q4 2024 (prior)Q1 2025 (current)Trend
Capital flexibility & Ground GamePivot capital amid price volatility; activity acceleration and inventory replacement Building D&C list; multiple JVs; capacity to reallocate organic vs Ground Game Emphasized non-op adaptability; accelerating Ground Game screening (100+ in April) Increasing optionality
Hedging disciplineMaintained hedging to protect capital and enable countercyclical investment Reiterated hedging approach; lower backwardation slows out-year oil hedging >60% of 2025 production hedged; added hedges; minimal hedge gains in Q1 Strengthening protection
Uinta Basin operationsEarly performance encouraging; long laterals, sand mine savings planned Transition to SM operations; spacing optimization & 3-mile laterals Uinta volumes up >15% QoQ; full-quarter transportation costs widened differentials Operational ramp with cost focus
Service costs & AFESigns of deflation; lower normalized costs in Williston Workovers/refracs 10–15% of budget; monitoring costs vs AFEs ~10% normalized cost decrease driven by longer laterals; completions relief likely Improving efficiency
Production cadenceExpect ramp in Q4, exit stronger; seasonal Williston effects Building D&C list in H1, ramp later; minor Q1 downtick typical Flattish through Q2/Q3, highest production in Q4 absent major pullback Back-half weighted growth
Macro/tariffs & Permian gasCost sensitivity and infrastructure bottlenecks monitored Potential tariff impacts on OCTG; buffered via budgeting Permian local prices improved; potential infrastructure build-out (data centers) Mixed but manageable

Management Commentary

  • “We continue to improve our margins, generate prodigious free cash flow, reduce leverage and add value through shareholder returns and Ground Game acquisitions… our robust hedge book keeps our cash flows insulated” — CEO Nick O’Grady .
  • “Adjusted EBIT[D]A… a record for NOG, and free cash flow was nearly $136 million, up 41% sequentially… leverage ~1.3x… net debt reduced ~$90 million in the quarter” — CFO Chad Allen .
  • “Our first quarter elections saw a 23% increase in lateral lengths… 10% decrease to normalized well costs… elected ~96% of well proposals” — President Adam Dirlam .
  • “We are in the catbird seat… over 60% of expected production is hedged for 2025… leverage remains extremely low… offering a cushion to navigate market shifts” — CEO Nick O’Grady .

Q&A Highlights

  • Production cadence: Expect flattish profile through Q2/Q3 with a Q4 ramp; Capex likely sequentially down in Q2; many wells in process scheduled to TIL later in the year .
  • Service pricing and AFEs: ~10% normalized cost decline driven by 20–25% longer laterals; drilling rates sticky, completion pricing relief expected .
  • Ground Game acceleration: Screening ~100 transactions in Q1 and another ~100 in April; selective bidding with lower-for-longer price deck scenarios .
  • Maintenance Capex: ~$850–$900M sustaining level; maintenance expectation similar into 2026–2027, subject to drilling cost changes .
  • Taxes and mix: Production tax rate to trend back into guidance as Permian grows (higher taxes vs Uinta) .

Estimates Context

  • Q1 2025 adjusted diluted EPS $1.33 vs consensus $1.13* → beat; adjusted EBITDA $435.0M vs $392.0M* → beat; free cash flow $115.2M vs $61.2M* → beat; revenue comparison depends on definitions (company total revenue $602.1M vs S&P “actual” $544.3M* vs consensus $563.6M*) .
  • Implication: EPS and cash generation outperformed expectations; consensus models may need to reflect stronger Uinta/Appalachian volumes, improved unit costs, and hedge-supported stability; revenue definition alignment is required for apples-to-apples comparisons.

Note: Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Non-op model and hedge book (>60% 2025 volumes hedged) underpin cash flow durability and capital allocation flexibility through commodity volatility .
  • Back-half weighted activity and production ramp set up Q4 2025 strength; reaffirmed full-year guidance with basin mix favoring Permian (66% of budget) and Uinta optimization under SM .
  • Cost trajectory improving: longer laterals, completion efficiency, and Uinta logistics/sand mine savings; LOE trends and normalized well costs supportive of margins .
  • Liquidity runway and facility commitment expanded to $1.6B; leverage ~1.3x with net debt declining supports opportunistic buybacks/ground game .
  • Revenue definition differences in consensus datasets warrant caution; focus on adjusted EBITDA, FCF, and unit metrics for performance vs expectations .
  • Near-term trading: reaffirmed guidance and beats on EPS/EBITDA/FCF are positive; watch differentials (Permian/Uinta) and Waha pricing dynamics .
  • Medium-term thesis: diversified basin exposure, disciplined Ground Game, and JV structures position NOG to compound through cycles with improving capital efficiency and inventory depth .

Additional Q1 2025 Announcements

  • Credit facility elected commitment increased to $1.6B; borrowing base unchanged at $1.8B; bank group expanded to 20 (added CIBC) .
  • Quarterly dividend $0.45/share declared (12.5% YoY increase; same as prior quarter) and continued buybacks (499,100 shares at $30.07 avg in Q1) .
  • Hedging update: realized hedge gains ~$11–12M and unrealized mark-to-market gains ~$9–10M in Q1; updated oil/gas/NGL hedging tables disclosed .