Northern Oil and Gas Q1 Earnings Call Highlights

Key Points

• Management said Q1 activity was largely in line with expectations and urged investors to focus on the longer-dated price strip (2027–2028) — not Iran-driven spot volatility — as the key driver for sustained drilling activity, asset values and M&A liquidity.
• Northern reported a company record of ~148,000 BOE/d (up 6% sequentially) with Appalachia and Williston leading performance, and completed a record 41 transactions in the quarter, adding ~5,100 net acres and 6 net wells while evaluating over $10 billion of assets.
• GAAP earnings were materially impacted by non-cash items — a roughly $521M mark-to-market loss on derivatives and a $268M impairment — while Permian gas realizations remain pressured (partly offset by basis hedges) and 2026 guidance was left unchanged amid commodity volatility.

Northern Oil and Gas NYSE: NOG executives said first-quarter 2026 activity and results were largely in line with expectations, while emphasizing that the market’s focus should be on longer-dated commodity prices rather than recent spot volatility tied to the war in Iran.

Management points to stable activity and improving long-term price signals

Chief Executive Officer Nick O’Grady opened the call by describing business conditions as “stable with few observable changes since we last reported,” while noting that potential changes to 2026 activity remain uncertain as the effects of geopolitical events begin to filter into authorizations for expenditure (AFEs).

O’Grady said the company is seeing a “reversal of curtailments in the Williston,” which he expects to support better capital efficiency through 2026. He also pointed to “wide swings in oil differentials,” which he said are “likely benefiting our realizations materially,” particularly in the Williston.

On the natural gas side, O’Grady said Permian production remains constrained by limited takeaway, but he argued the company is “financially well insulated” due to basis hedges that are “less than $1 off Henry Hub.”

O’Grady repeatedly stressed that longer-dated pricing is the key driver for sustained changes in drilling activity and asset values. “While all eyes are on Iran and the wide swings in spot prices, it is the longer-dated strip that matters,” he said, adding that improvement in the 2027 and 2028 strip should help stabilize activity, narrow bid-ask spreads, and “lubricate the M&A market.”

Operational update: Appalachia and Williston lead, deal volume sets record

In prepared remarks, the company said first-quarter activity was in line with expectations, with strong production in Appalachia and outperformance in the Williston as multiple operators returned volumes previously curtailed and delivered gains from recent wells. The Uinta and Permian were described as in line with expectations.

NOG ended the quarter with 43.7 net wells in process and 9.2 net AFEs. The company said the Permian represented about a third of wells in process and approximately 60% of AFE inventory. Well proposals remained steady at 216 consents, within the 200-230 range seen throughout 2025.

President Adam Dirlam highlighted a record quarter for NOG’s “ground game,” with 41 transactions completed in the first quarter. The company said it added more than 5,100 net acres and 6 net wells, with deals occurring across basins and many closing early in the quarter ahead of rising commodity prices.

Dirlam said NOG is also seeing a pickup in larger acquisition opportunities. He noted the company is evaluating “over $10 billion in assets across eight transactions that are currently in the market,” while cautioning that asset quality varies.

Financial results: record production, non-cash items weigh on GAAP income

Chief Financial Officer Chad Allen said first-quarter results and production cadence were largely in line with internal expectations, with “no major disruptions,” while production and EBITDA outperformed internal estimates.

Allen reported first-quarter average production of “over 148,000 BOE per day,” up 6% sequentially and a company record. He said the oil-to-gas ratio was 50/50 as the Appalachian joint venture reached its peak well-delivery period.

GAAP net income was impacted by two non-cash items, Allen said:

• A non-cash mark-to-market loss on derivatives of approximately $521 million, driven by a “huge run-up in oil prices during the quarter” related to the war in Iran.
• A non-cash impairment charge of $268 million under the company’s full-cost accounting method.

Allen added that hedges settled during the quarter resulted in a $17.6 million loss, consisting of an $11 million gain in natural gas hedges offset by a $28 million loss on oil hedges.

On impairments, Allen said that if oil prices remain at current levels, “this should be the last impairment charge for the year,” and he noted the company continues to evaluate a potential future shift to the successful-efforts method “to avoid such optics.”

Pricing and hedges: Permian gas basis remains pressured, protection in place

Allen said natural gas realizations remained weak, coming in at 72% of benchmark prices, reflecting Waha weakness due to Permian constraints. He expects Permian gas realizations to remain weak “for at least the next couple of quarters” until infrastructure projects come online in the back half of 2026.

However, he noted that inclusive of Waha basis hedges, Permian gas realizations were 53% (or $1.86 per Mcf), compared with corporate gas realizations that included “-1% or -$0.02 per Mcf.”

Asked about hedging strategy, O’Grady said he would not expect “much in terms of fireworks” this year and indicated there are not many swaptions remaining. He added that NOG has begun hedging next year but “not in a significant fashion,” and said the company wants to see how the Middle East situation evolves before making a larger decision on 2027 hedging.

During the Q&A, Allen also addressed a question about swaption accounting and the balance sheet classification of hedge liabilities, explaining that the current classification is driven by expiration timing. O’Grady characterized the issue as “a nothing burger,” while Allen said updated disclosures would be included in the upcoming 10-Q.

Capital allocation and outlook: guidance unchanged amid volatility

On capital spending, Allen said first-quarter CapEx excluding non-budget acquisitions and other items was $270 million, including the company’s ground-game activity. Of that total, about $227 million was organic development capital. He described the quarter’s spending mix as balanced across basins: 31% Permian, 27% Appalachia, 24% Williston, and 17% Uinta.

Allen said the company still expects a roughly 60/40 first-half/second-half cadence for 2026 CapEx, subject to changes in operator activity.

NOG did not update 2026 guidance due to commodity and macro volatility. Allen said the company is “trending towards the higher end of the low activity scenario” discussed on the prior call but still sees a wide range of potential outcomes. He said he expects the company can begin narrowing guidance ranges by the second-quarter call.

O’Grady also discussed how the company weighs buybacks versus acquisitions, saying buybacks can be attractive when shares are cheap, but long-term growth requires adding assets and inventory. He pointed to the company’s acquisition pace earlier in the year when oil prices were lower, saying deals done in that period can deliver strong returns while still balancing other capital allocation options.

In closing, O’Grady said NOG sees improved longer-term strip pricing as supportive for activity and acquisitions and said the company remains focused on “growing our enterprise the right way.”

About Northern Oil and Gas NYSE: NOG

Northern Oil and Gas, Inc is a publicly traded independent energy company focused on the acquisition, exploration and development of oil and natural gas resources in the United States. The company's primary operations are concentrated in the Williston Basin, where it secures acreage positions and partners with drilling operators to advance upstream projects. Through strategic leasehold acquisitions and joint ventures, Northern Oil and Gas seeks to expand its footprint in both conventional and unconventional reservoirs.

Northern Oil and Gas employs horizontal drilling and hydraulic fracturing technologies to develop unconventional resource plays, particularly in the Bakken, Three Forks and Red River formations of North Dakota and Montana.

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