Northern Oil and Gas Q1 2026 Earnings Report

Northern Oil and Gas EPS Results

• Actual EPS: $0.74
• Consensus EPS: $0.71
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $1.33

Northern Oil and Gas Revenue Results

• Actual Revenue: $5.03 million
• Expected Revenue: $511.38 million
• Beat/Miss: Missed by -$506.35 million
• YoY Revenue Growth: -6.20%

Northern Oil and Gas Announcement Details

• Quarter: Q1 2026
• Date: 4/28/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, April 29, 2026
• Conference Call Time: 9:00AM ET

Northern Oil and Gas (NYSE:NOG) is an independent exploration and production company focused on acquiring and managing non-operated interests in oil and natural gas properties. Rather than serving as the primary operator of wells, the company invests alongside established operators and participates in the development and production of upstream assets.

The company’s portfolio includes interests in producing and undeveloped properties across several major U.S. oil and gas regions, including the Williston Basin, Permian Basin and Uinta Basin. Its production mix includes crude oil, natural gas and natural gas liquids, with operations concentrated in onshore areas of the United States.

Founded in 2006, Northern Oil and Gas has expanded primarily through acquisitions of non-operated working interests and mineral interests. The company is headquartered in Minnetonka, Minnesota, and is led by President and Chief Executive Officer Nick O’Grady.

Northern Oil and Gas Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Operational beat: Q1 production reached a record >148,000 BOE/d (up ~6% sequentially) and EBITDA/production outperformed internal estimates, while a record "ground game" closed 41 transactions adding ~5,100 net acres and 6 net wells.
• Negative Sentiment: Geopolitical uncertainty: The Iran war has driven sharp spot-price volatility and AFE activity impacts are still TBD due to decision lags, so 2026 activity and guidance remain uncertain.
• Positive Sentiment: Improving long‑dated strip and M&A pipeline: Management cites stronger 2027–2028 strip levels, an improved backlog, and is evaluating roughly $10 billion of assets across eight deals, which could drive undeveloped activity and accretive acquisitions.
• Negative Sentiment: GAAP headwinds from non‑cash items: Q1 included a ~$521 million mark‑to‑market derivative loss and a $268 million impairment under full‑cost accounting, negatively affecting reported net income (company may shift accounting long term).
• Positive Sentiment: Financial resilience: NOG exited the quarter with >$1.2 billion of available liquidity (plus $175M untapped), a ~$230M equity raise, significant basis hedges protecting Permian gas realizations, and balanced Q1 CapEx of $270M.

Presentation

[Operator]

Greetings, and welcome to the NOG's first quarter 2026 earnings conference call. It is now my pleasure to introduce your host, Evelyn Infurna, Vice President, Investor Relations. Thank you. You may begin.

[Evelyn Infurna, VP of Investor Relations at Northern Oil and Gas]

Good morning. Welcome to NOG's first quarter 2026 earnings conference call. Yesterday after the close, we released our financial results. You can access our earnings release and presentation in the investor relations section of our website at noginc.com. We will be filing our March 31, 2026 Form 10-Q with the SEC within the next few days. I'm joined this morning by our Chief Executive Officer, Nick O'Grady, our President, Adam Dirlam, our Chief Financial Officer, Chad Allen, and our Chief Technical Officer, James Evans. Our agenda for today's call is as follows. Nick will provide introductory remarks, followed by Adam, who will share an overview of NOG's operations and business development activities. Chad will review our financial results. After our prepared remarks, the team will be available to answer any questions. Before we begin, let me remind you of our safe harbor language.

[Evelyn Infurna, VP of Investor Relations at Northern Oil and Gas]

Please be advised that our remarks today, including the answers to your questions, may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by our forward-looking statements. Those risks include, among others, matters that we have described in our earnings release as well as in our filings with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. We disclaim any obligation to update these forward-looking statements. During today's call, we may discuss certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow. Reconciliations of these measures to the closest GAAP measures can be found in our earnings release. With that, I'll turn the call over to Nick.

[Nick O'Grady, CEO at NOG]

Thank you, Evelyn. Welcome and good morning, everyone. Thank you for your interest in our company. I'll be very brief this quarter by highlighting nine key points. Number one. Business activity remains stable with few observable changes since we last reported. Number two. Potential changes to activity in 2026 remain a TBD for us as the effect of the Iran war is only now going to be potentially seen in AFE activity. We will update our investors accordingly throughout the year. Number three. The higher long-dated pricing stays, the more likely we see a sustained change in activity, especially as we head into 2027. Number four. In the meantime, we've seen a reversal of curtailments in the Williston. This will drive better capital efficiency throughout 2026.

[Nick O'Grady, CEO at NOG]

Number five, it was a banner first quarter for our ground game with an incredible 41 deals done while overall capital remains controlled. Number six, the current geopolitical storm is showing some key benefits and a few negatives to the business. We are seeing wide swings in oil differentials, which are likely benefiting our realizations materially, some in the Permian, but particularly in the Williston. On the gas front, Permian production remains hamstrung by limited takeaway for the time being, but we remain financially well insulated with significant basis hedges at less than $1 off Henry Hub. Number seven, our leasing program remains materially underappreciated, as through this effort, we've added over 70 net locations in the last year. Free Cash Flow yields aren't free when comparing us to peers that are just depleting away their inventory.

[Nick O'Grady, CEO at NOG]

Number eight, while all eyes are on Iran and the wide swings in spot prices, it is the longer-dated strip that matters. The improvement in the 2027 and 2028 strip are what drive growth in undeveloped activity and in asset prices. These improvements should help stabilize activity going forward, lubricate the M&A market, reduce bid-ask spreads, and drive up our competitiveness. We have several exciting large-sized package prospects in evaluation and more coming as the M&A market heats up. The backlog has improved in both size and quality, which is highly encouraging for our business model. Number nine, regardless of what happens in Iran, we believe things have been set in motion that will materially improve the long-term strip's outlook, absent significant economic turmoil. That bodes well for activity, acquisitions, and for our investors.

[Nick O'Grady, CEO at NOG]

Given our hefty Free Cash Flow generation despite adding inventory, our improved balance sheet, and our reputation in the marketplace, there is a huge opportunity for our business to find meaningful growth paths. Again, thank you for your interest in our company. We remain focused on growing our enterprise the right way. As always, our company run by investors for investors. With that, I'll turn it over to Adam.

[Adam Dirlam, President at NOG]

Thank you, Nick. As a whole, Q1 activity was in line with expectations. Production was strong, particularly in Appalachia, where we continued to see promising results from our growing asset base and with our Q1 program right on plan, showing strong IPs. The Williston also outperformed as multiple operators contributed meaningful return to sales volumes from prior curtailments, along with performance gains from recent IPs. The Uinta and Permian rounded out the quarter with performance in line with expectations.

[Adam Dirlam, President at NOG]

We ended the quarter with 43.7 net wells in process and 9.2 net AFEs, with the Permian representing roughly a third of our wells in process and approximately 60% of AFE inventory. Well proposals have held steady at 216 consents, squarely in the 200-230 range we saw throughout 2025. Based on our conversations with operators, our forward activity view is unchanged from what we laid out on the fourth quarter call. However, the next few months will be instructive for activity changes as it pertains to the expectations for the remainder of the year and 2027.

[Adam Dirlam, President at NOG]

On the ground game, we set a new quarterly record with 41 transactions in Q1, adding over 5,100 net acres and 6 net wells. Our Appalachian leasing program continues to perform well, but we were also able to close deals across all of our respective basins. Most transactions occurred early in the quarter ahead of rising commodity prices, and our pipeline continues to deliver as we diligently evaluate opportunities. Our ground game will stay central as we leverage NOG's proprietary infrastructure to grow our portfolio through smaller acquisitions and evaluate further joint development opportunities.

[Adam Dirlam, President at NOG]

Larger M&A opportunities have also picked up, and we are evaluating over $10 billion in assets across eight transactions that are currently in the market. As expected in this environment, there's a fair amount of variability in asset quality, but it has been encouraging to see higher quality assets coming to the forefront. Given the consistent number of opportunities afforded to us, we remain discerning and, as always, will prioritize packages that are resilient in any commodity environment and those that create long-term value. With that, I'll turn it over to Chad.

[Chad Allen, CFO at NOG]

Thanks, Adam. To avoid repeating standard financial metrics available in our release and presentation, I will focus my comments on the overall performance drivers and outliers encountered in the quarter. Our first quarter financial results and production cadence were largely in line with internal expectations, with no major disruptions. Despite the persistent macro volatility faced by the industry. Energy's diversified and scaled platform continued to deliver, outperforming internal estimates on production and EBITDA for the quarter. First quarter total average daily production was over 148,000 BOE per day, up 6% sequentially. A record for our company. Our oil-to-gas ratio was an even 50/50 split as our Appalachian JV reached its peak in terms of well deliveries. GAAP net income was impacted by two non-cash items.

[Chad Allen, CFO at NOG]

The first was a non-cash mark to market loss on derivatives of approximately $521 million, which was the result of a huge run-up in oil prices during the quarter due to the war in Iran. Hedges settled in the quarter was only $17.6 million loss, comprised of an $11 million gain in natural gas hedges, offset by a $28 million loss on our oil hedges. The second item impacting net income was a non-cash impairment charge of $268 million. As we have discussed on prior calls, NOG accounts for its assets under the full cost method, as opposed to the successful efforts method, which does not perform historical price-based asset tests. We are one of the only companies among our peers that utilize the full cost method.

[Chad Allen, CFO at NOG]

I should mention, given the recent change in oil prices, if they stay at current levels, this should be the last impairment charge for the year. We also continue to evaluate a potential shift to successful efforts longer term to avoid such optics. Moving on to pricing. Natural gas realizations have continued to be weak in the first quarter, coming in at 72% of benchmark prices, reflecting ongoing Waha market weakness due to constraints in the Permian. We expect gas realizations, specifically in the Permian, to remain weak for at least the next couple of quarters until planned infrastructure projects come online in the back half of 2026.

[Chad Allen, CFO at NOG]

I do want to point out that inclusive of our Waha basis hedges, our gas realizations in the Permian were 53% or $1.86 per Mcf versus the -1% or -$0.02 per Mcf that are included in our corporate gas realizations. We are well insulated from a risk management perspective for the rest of the year. CapEx in the quarter, excluding non-budget acquisitions and other, is $270 million, which includes the success we had in our ground game.

[Chad Allen, CFO at NOG]

The $270 million of capital was very balanced, with 31% to the Permian, 27% to Appalachia, 24% to the Williston, and 17% in the Uinta Basin. Approximately $227 million of the total spend in the quarter was allocated to organic development capital. We still expect CapEx cadence to track in approximately 60/40 split between the first half and the second half of the year, subject to change with activity behavior from our operating partners.

[Chad Allen, CFO at NOG]

After closing our joint Utica acquisition during the quarter, we exited the quarter with debt well within our comfort zone. Our balance sheet remains in a healthy spot. Our leverage and liquidity were further enhanced by the nearly $230 million equity offering we completed late in the first quarter. We currently have over $1.2 billion of liquidity available to us with an additional $175 million of untapped liquidity. Given all the work we've done on the maturity wall last year, we have plenty of runway to execute for years to come. With respect to our 2026 guidance, we have not made any updates given the significant level of volatility in commodity prices, our industry, and in the macro generally.

[Chad Allen, CFO at NOG]

Directionally, we are currently trending towards the higher end of the low activity scenario we laid out last quarter, but we still got a wide range of potential outcomes for the year. I'd anticipate that we'll be able to start tightening those ranges and narrowing our 2026 guidance by our second quarter call. That concludes our prepared remarks. Operator, please open up the line for Q&A.

[Operator]

Thank you. We will now begin the question and answer session. Your first question comes from the line of Neal Dingmann with William Blair. Please go ahead.

[Neal Dingmann, Analyst at William Blair]

Morning, guys, for all the details. Nick, my first question is just on incremental activity. Specifically, you all mentioned in your prepared remarks and release that you suggested operated activities remain flat, but I'm just wondering, based on your recent conversations and what you've seen sort of happen historically, both in this quarter and prior, what, in addition to the 12-month now surpassing $80, do you think has to happen in order to see what I'd call more sustainable change in activity? You know, when and if this happens, do you believe it occurs sort of equally in your Bakken, Permian, and Eagle Ford Play?

[Nick O'Grady, CEO at NOG]

Yeah. Thanks, Neal. Good morning. I'd say this. One, you know, when you think about our original guidance, you know, it didn't contemplate a war, right? It really comes into the fact that we're seeing obviously a huge surge in short-term prices, a decent surge in the long-term strip. Because it's being driven by geopolitical things, I think you're seeing a little bit more caution than you normally would from operators. One of the reasons we haven't made any substantive changes to guidance just yet is just that there is a lag factor, which is that, you know, I do think, you know, as I mentioned in my prepared comments, it's likely that we will see, you know, an increase in activity over time.

[Nick O'Grady, CEO at NOG]

That's really gonna be driven by the long-term strip. You know, the average spud to sale time is, it can be faster, but, you know, I'd say on average, it's sometimes around 150, 160 days. When you're making that decision today to pick up a rig to drill an additional pad, you're not capturing the $100 spot oil, right? You have to make those decisions based on the future. I think nobody from our operators, they don't wanna have egg on their face and commit to a bunch of new activity, sign up a bunch of stuff, and then have some resolution in the Gulf, and suddenly they feel like they're falling on their face.

[Nick O'Grady, CEO at NOG]

That being said, as we continue to draw oil out of storage, I think what's inevitable is that the long-term strip is gonna have to reflect that, right? You know, as it's around $70 on a two-year basis today, I think the reality is, that's probably enough in order to certainly incentivize activity, M&A, all those sort of things. I think you may see it creep higher, just to really give people a buffer to ensure they can feel good about making those investments, because that's really what drives that. You know, for us, I think frankly, just right now, you know, what happened in early March really only starts to affect us right now.

[Nick O'Grady, CEO at NOG]

We're really just asking for some grace to really see over the next several months of how this plays out. I do think, you know, look, I think we've talked about this from a guidance perspective. I think we're certainly confident in the high end of the low end. I think from there, you know, I think we just want a little bit more time in order to narrow that band. I think we'll certainly get it done by call it the second quarter.

[Neal Dingmann, Analyst at William Blair]

Yeah, that's more than fair. My second question, just on, typically on capital allocation. Specifically, I know, you know, talking to some of the operators, they seem to simply look at a lot, oftentimes just sort of mid-cycle pricing assumptions as what I'd call a primary driver between, you know, deciding if they're just leaning into share buybacks or, you know, more, you know, I guess ground game and M&A. Again, you all seem unique because you seem to have more ground game opportunities than most. Again, I'm just thinking when it comes to capital allocation, you know, is it simply looking at a mid-cycle price and how cheap your shares are or, you know, versus a ground game return or what's involved in that?

[Nick O'Grady, CEO at NOG]

Yeah, that's right. I mean, I think what I, what I'd tell you is that, you know, we have to manage a bunch of things, right? Like, at the end of the day, a share buyback is a higher return proposition, especially when prices were low, and we did do some buybacks at the end of last year. I'd also tell you that one of our goals as a company, one of the long-term goals is you really have to grow your business over time, it's not what a share buyback does, right? You just now own more of the same thing.

[Nick O'Grady, CEO at NOG]

Ultimately, the opportunity when prices are low countercyclically to acquire assets, which is why we were really so busy in January and February, ultimately can provide some of the best long-term value when you talk about that mid-cycle. You know, I mean, I think oil was $57 in January or February, right? That's certainly below what we would view as a mid-cycle oil price. Anything you're acquiring during that period of time is likely to deliver a really high return. As do buybacks, and I think it can all be part of the mix, but it's really about that balance.

[Neal Dingmann, Analyst at William Blair]

You got it. Thanks Nick, very much.

[Nick O'Grady, CEO at NOG]

You bet.

[Operator]

The next question comes from the line of John Davenport with Johnson Rice. Please go ahead.

[John Davenport, Analyst at Johnson Rice & Company]

Good morning, and thanks for taking my question. From the previous quarter, you guys kind of beat on natural gas pricing, specifically in Appalachia. I was just curious if that's going to be an ongoing trend both for next quarter and the second half of the year. I know the strip for natural gas hasn't looked all too strong in, you know, the past couple months. Just curious what your thoughts are on that.

[Nick O'Grady, CEO at NOG]

Yeah. Yeah. Well, as a two-stream reporter, it's a little bit different, right? Because our NGL yields in there. What I would tell you is that as it pertains specifically to Appalachia, you know, certainly, and some of our Appalachian gas is getting kind of on water NGL prices, right? We're certainly getting a huge benefit there. Appalachian differential is the bulk of our prices at M2, and M2 has certainly been better. I mean, it's one of the few basis areas where we're actually losing money on our hedges. M2 has been sort of tighter. It appears even, you know, it obviously tends to dip seasonally.

[Nick O'Grady, CEO at NOG]

It's certainly been better than what the averages have been for the last several years, we're definitely seeing an improvement there. In terms of our overall differentials, you know, I think Chad talked a little bit about this in guidance, I would tell you that we're seeing likely significantly better than expected oil differentials, which is really the biggest driver to our revenue, giving us about 80% of our revenue. We're seeing in aggregate worse oil gas differentials, and that's 100% driven by Waha pricing. At the financial level, it's not having as much of an effect at the bottom line because of our hedge position.

[Nick O'Grady, CEO at NOG]

At the end of the day, at the actual spot realizations, I think there's probably downward pressure in the short term. Obviously, I'm not, you know, I think there's something like 4 BCF a day of expansions going on in the Permian. You know, I think it certainly will improve from some of the doldrums we've seen in April, but that's going to take some time this year.

[John Davenport, Analyst at Johnson Rice & Company]

Okay. Yeah, perfect. I was also curious, you mentioned y'all are evaluating, call it $10 billion in potential large M&A transactions. I'm curious where, you know, what the locations of those might be, along with, you know, just give us some characteristics that you guys are looking for on those opportunities?

[Nick O'Grady, CEO at NOG]

Off the table, I'll let Adam finish it, but I'd say there's one. Consistent with the last several years, it's definitely more diversified. There's stuff all over the place. As our capabilities have expanded, obviously we've seen more than we ever have from, you know, call it Canada to every single sub basin in the U.S. What I would tell you is that we are seeing typically, people are willing to sell PDP-laden properties even in low price environments, especially in the days of ABS and things like that, where they view they're getting relatively good prices for them. When the long dated strip was $57 coming into this year, if you think about a DCF exercise, that's what drives the value of undeveloped inventory.

[Nick O'Grady, CEO at NOG]

Assets with strong undeveloped inventory, which are the characteristics we're looking for, really were starting to dry up on the oil side. That has obviously inverted completely. We're seeing higher quality Permian assets, in particular, coming to market. I think for us, you are right now at a little bit of a. It might seem counterintuitive given how high spot prices are, but with the strip closer to what we would view as a mid-cycle price today, it really does help the long-dated M&A. My point would be if oil prices went from $100 to $75 in the spot market today, it's not gonna have as much of an impact on the value of those assets versus that long-dated stripping. Take it away, Adam. I don't know if you want to add to that.

[Adam Dirlam, President at NOG]

That's right. I mean, I think the biggest difference that we're seeing between kind of 2025 and where we stand today has been, kind of a pivot from, you know, the gas-weighted, you know, quality assets that we were looking at last year, to more of the oil-weighted, which is obviously expected. I think you've got a number of, you know, operators, both consolidation now starting to kind of socialize their assets. You've got private equity groups that are obviously taking a look at the strip and coming to market. You know, based on my prepared remarks, you're certainly seeing a fair amount of variability. The quality is starting to improve, especially on the oil side.

[John Davenport, Analyst at Johnson Rice & Company]

All right. Excellent. Thank you guys for taking my question. That's all for me.

[Operator]

Thank you. The next question comes from the line of Paul Diamond with Citi. Please go ahead.

[Paul Diamond, Analyst at Citi]

Thank you. Good morning, all. Thanks for taking the call. I'm just wanting to quickly touch on you guys' hedge book. Looking forward to the curve and, you know, the big, I guess, big slug of swaps you guys hold. How should we think about any strategic shifts for the rest of the year, given the volatility and as you said before, the war that no one expected?

[Nick O'Grady, CEO at NOG]

Yeah. I don't think that you'll see much in terms of fireworks in terms of the swaptions. We don't really have that many swaptions remaining this year to be candid. What few ones we have will either, you know, be exercised or roll forward. I wouldn't expect any major shifts to our hedge book specifically for this year and then for next year. You know, we've started hedging, Paul, but not in a significant fashion at this point. I think it's just we're just trying to be patient, as we go through the, you know, we really wanna see the conclusion of what happens in the Middle East before we really make a call on 2027.

[Paul Diamond, Analyst at Citi]

Got it. Makes perfect sense. As you guys talked about the net wells in process, the current split is like a third Permian, third Williston, and then Spraberry even we have otherwise. Any reason to think with what you see in the down range right now that that shifts, or should we think about that as more locked in for the next year or so?

[Nick O'Grady, CEO at NOG]

I mean, I suppose.

[Adam Dirlam, President at NOG]

Yeah, I mean, I guess what I would be looking towards is probably more like the election activity, right? If you look at that, you're seeing about two-thirds, you know, related to the Permian, and you're starting to see, you know, a fair amount of Williston acceleration as well. I would expect, you know, kinda the Permian and the Williston to be the front runners. Obviously we've got a fair amount of activity in Appalachia, and that'll also be dependent on, you know, obviously the transaction that we just closed as well as the, you know, the ground game leasing program that we've got in place. The Uinta is really just kinda steady as it goes. Permian and Williston is probably where I'd be looking to.

[Nick O'Grady, CEO at NOG]

Yeah. I'd say, I think my guess would be just given the gas situation in the Permian right now, that the acceleration you see there really is probably later in the year, just as you get closer to a resolution there. On the Uinta, I think there are some options for some accelerations, but we'll have to see where we're at.

[Paul Diamond, Analyst at Citi]

Got it. Appreciate the time. Over to you.

[Operator]

Thank you. The next question comes from the line of Noel Parks with Tuohy Brothers. Please, go ahead.

[Noel Parks, Analyst at Tuohy Brothers]

Hi. Good morning. You know, I was wondering, and it's definitely interesting to hear about the different parties, the private side, coming to the table and so forth. Sorry, one moment. I was wondering, for operators, where do you think things stand now, around sort of basin rationalization, you know, in the wake of some of the big transactions of the last year or so now being fully digested? I guess I'm just curious if you think overall across your basins you're seeing operators more inclined to sort of expand their footprints or sort of, you know, core up and narrow them down right now.

[Nick O'Grady, CEO at NOG]

No, I don't know if I wanna speak for them completely. I would say this, that, you know, Adam had talked extensively last year about that he thought that post a lot of this consolidation, we would see rationalization. We are starting to see that. We're seeing several large companies put packages of non-core assets, sometimes in good basins to sell. I do think we're seeing some rationalization. We're seeing that in the Permian, the Eagle Ford. I'm trying to think of where else. I think there's a large Williston package coming at some point this year.

[Nick O'Grady, CEO at NOG]

We're definitely seeing that to some degree. I think, look, consolidation is a trend that I think continues. It both benefits and hurts us sometimes. Obviously, it tends to hurt us in the sense that, you probably have less aggregate activity, but it helps us from a cost efficiency and from a returns perspective. I don't know if you wanna add to that, Adam.

[Adam Dirlam, President at NOG]

I mean, going back to your initial question, I would just say that two things can be true at the same time, and ultimately it's gonna be, you know, dependent on the philosophical approach from the operator, right? Who did they consolidate with? Where are those positions? Ultimately, what does that integration, you know, difficulty look like? Because, you know, from our experience in talking with our operator, operating partners who have, you know, gone through this, some can go very smoothly and others cannot. I think you're gonna see, you know, some large asset packages, you're also gonna see, you know, other operators that might take small pieces, you know, non-op and kind of, you know, just kinda layer that out into the market, you know, as they go. I think you're going to see a little bit of everything.

[Noel Parks, Analyst at Tuohy Brothers]

Got it. I'm just wondering, are you seeing anything happening kind of, in the sort of off the beaten path gas plays? I'm thinking a little bit about MidCon, Rockies, just as people looking ahead to longer-term supply and sort of thinking about, you know, underutilized infrastructure and so forth, and maybe some capital finding its way there.

[Nick O'Grady, CEO at NOG]

Yeah. I mean, look, there have been some major consolidations on the private side in like Rockies Gas and some of the legacy assets, and there have been some companies that have put together some really good assets. You know, in some cases, some of the wild swings and differentials out there over the last couple of years have made those really, really sound investments. I'm not sure that's necessarily something for us, per se. I say I'm not sure, we really haven't evaluated a ton of it. You know, things like the San Juan Gas Basin or the Piceance, we've never really evaluated them, at any extent. I can't really speak to them. I'd say this in general, though.

[Nick O'Grady, CEO at NOG]

If you think about the life cycle of shale, and this is consistent with my public comments everywhere, in general, there is more life in the core basins of gas in the U.S. than there is in the core basins in oil. I think the necessity to really step out isn't quite there. You know, we have decades of gas inventory internally here alone. We don't really. Right? In our core basins. I don't know if you'd want to add to that.

[Adam Dirlam, President at NOG]

I think the only other thing I would add is, you know, obviously the season, kind of the ABS market come into play with maybe some more PDP-heavy type assets, you know, MidCon, Eagle Ford.

[Nick O'Grady, CEO at NOG]

Yeah.

[Adam Dirlam, President at NOG]

Things like that. You know, typically not the sandbox that we play in, but we're always having conversations about how we could potentially be helpful there. I think we'll continue to explore it.

[Nick O'Grady, CEO at NOG]

Yeah. I mean, as you know, we don't have any assets in the MidCon. We've done dozens of evaluations at this point. It's just a more complex area. It's not really. It's not really as uniform. It doesn't mean it's bad, but I think we'd have to be really highly selective if we ever entered that basin, just given. Most likely we would do it with an operating partner.

[Chad Allen, CFO at NOG]

What are we looking at relative to what's in our own backyard?

[Nick O'Grady, CEO at NOG]

Correct. So far it is sort of lost in the tug-of-war from a return on capital perspective. That doesn't mean it will forever. It's just we have yet to find an asset that really, you know.

[Chad Allen, CFO at NOG]

Compete.

[Nick O'Grady, CEO at NOG]

Compete it. That's right.

[Noel Parks, Analyst at Tuohy Brothers]

Terrific. Thanks a lot.

[Nick O'Grady, CEO at NOG]

You bet, Noel.

[Operator]

The next question comes from the line of Phillips Johnston with Capital One. Please go ahead.

[Phillips Johnston, Analyst at Capital One]

Thanks for the time. Just wanted to follow up on the earlier question about the oil swaptions and just ask about some of the accounting nuances for those swaptions. I think most of us understand that the vast majority of those swaptions that expire at the end of this year are required to be listed for 2026, even though the majority of them would actually turn into swaps for 2027 or even beyond, rather than this year if they're ultimately exercised. I guess I understand that nuance, but I just kinda wanted to square that with the makeup of the hedge liability on the balance sheet, where it looks like close to 65% of the hedge liability is classified as current.

[Chad Allen, CFO at NOG]

Yeah. That's because of the expiry, right? Just as you stated, Phillips, right? Because of when that expiry is being, in some instances or most instances, 12/31/2026, it's gotta sit into the current bucket there.

[Phillips Johnston, Analyst at Capital One]

Okay. Yeah. Okay. That makes sense. It's basically the same. Yeah.

[Chad Allen, CFO at NOG]

Yeah. Yeah. For accounting purposes, it's gotta be treated on, as for the bank's counterparty election date.

[Nick O'Grady, CEO at NOG]

It's not. Really how it works.

[Chad Allen, CFO at NOG]

It's, that's not how it works, no. What you'll see in our, you'll see in our 10-K or 10-Q, sorry, some updated disclosures with respect to how the swaptions roll out. Again, like what we've mentioned before, Phillips, we certainly actively manage this portfolio.

[Nick O'Grady, CEO at NOG]

Yeah. It's a nothing burger to be candid.

[Chad Allen, CFO at NOG]

It is.

[Phillips Johnston, Analyst at Capital One]

Okay, cool. Just checking on that. Thanks very much, guys.

[Chad Allen, CFO at NOG]

Yep.

[Phillips Johnston, Analyst at Capital One]

Makes sense.

[Chad Allen, CFO at NOG]

Thanks.

[Operator]

I'm showing no further questions at this time. I would like to turn it back to Mr. Nick O'Grady for closing remarks.

[Nick O'Grady, CEO at NOG]

Thanks very much for your time, this morning. We look forward to talking to you in the coming weeks. Appreciate it.

[Operator]

Thank you. Ladies and gentlemen, this concludes today's call. You may now disconnect.

Participants

Executives

• Adam Dirlam, President
• Chad Allen, CFO
• Evelyn Infurna, VP of Investor Relations

Analysts

• John Davenport, Analyst at Johnson Rice & Company
• Neal Dingmann, Analyst at William Blair
• Nick O'Grady, CEO at NOG
• Noel Parks, Analyst at Tuohy Brothers
• Paul Diamond, Analyst at Citi
• Phillips Johnston, Analyst at Capital One