Northern Oil and Gas (NOG) is ready to take advantage of the downturn if it happens, company executives said on NOG’s April 30 earnings call.
“We are in the catbird seat,” CEO Nick O’Grady said. “NOG operates with a uniquely adaptable model—no rig contracts, no frac commitments, no field offices, and non-consent rights across the vast majority of our joint ventures and assets. This economic machine adjusts activity based solely on marketplace dynamics focusing singularly on profitability.”
NOG reported net income of $139 million on oil and gas sales of $602 million in the quarter, versus $11.6 million on $532 million in the first quarter of 2024. Last year’s results included a $139 million loss on commodity derivatives. NOG generated $136 million in free cash flow and $94 million after dividends in first-quarter 2025.
“With oil at around $70 and gas at around $3.50, NOG put forth incredible numbers,” O’Grady said.
With the plunge of oil prices below $60 in April and an uncertain outlook for the rest of the year, O’Grady sees opportunity.
“The cyclical nature of commodities means that low prices often serve as a reset for higher prices in future periods,” he said. “While short-term volatility may challenge perceptions, NOG's hedging strategy and non-op model ensure resilience.”
O’Grady and President Adam Dirlam said NOG’s operating partners have made minimal changes to their development plans since prices started falling. If prices stay low, they said they expect those companies to focus on their most productive wells.
“To the extent that we see another leg down in oil pricing, reduced activity and spending levels would likely follow,” Dirlam said.
They’re also ready to move based on what they learned in the COVID-19 downturn of 2020.
“Navigating through the last downturn, we were able to deploy some of the most productive capital in the company's history,” Dirlam said. “We anticipate that similar opportunities could emerge in this environment.”
NOG also reported closing the cash purchase of 2,275 net acres in the Midland Basin on April 1 $61.7 million cash. The company also completed seven ground game deals during the three-month period to add more than 1,000 acres and 1.1 net wells for $4.8 million.
Jefferies analysts said they expect NOG to be proactive with ground game activity and value creation “in a down cycle.”
“NOG maintained '25 capex guidance of ~$1.05-1.2bn, but notes ~[$200 million to $300 million] of growth capital in the budget,” Jeffries Analyst Lloyd Byrne wrote in a report.
Other highlights from the report:
- Record total quarterly production of 134,959 boe/d, up 13% from a year earlier;
- Oil volumes of 78,675 bbl/d;
- Record Appalachian volumes of 113.5 MMcfe/d;
- Uinta Basin volumes up over 15% from prior quarter; and
Cash flow from operations up $387.4 million, a 10% increase from the same period last year.