Northern Oil and Gas, Inc.

Greetings, and welcome to Northern Oil and Gas' third quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mike Kelly, Executive Vice President, Finance.

Thank you, Brock, and good morning, everybody. We're happy to have you here for Northern's third quarter 2020 earnings call. In the room with me this morning, spaced a minimum six feet apart, is Northern's CEO, Nick O'Grady, our COO, Adam Dirlam, CFO, Chad Allen, Senior Vice President of Engineering, Jim Evans, as well as Northern's Chairman, Bram McCrotty. We will proceed as follows this morning. Bram will get us started with his perspective on how Northern is positioned in the current environment. And then we'll turn the call over to Nick and the rest of the team to provide details on the quarter and to touch on our forward guidance and strategy. After that, we'll open it up for the Q&A session. Before we go any further to cover our safe harbor language, 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, Thank you very much. Reconciliations of these measures to the closest gap measures can be found in the urgent news that we issued this morning. That taken care of, it's my pleasure to hand the call over to Northern's Chairman, Bram McCrotty.

Bram? Thank you, Mike. I'm very excited to be on this conference call today to update you on performance of NOG. We have a very interesting dichotomy between our strong financial performance and the performance of our stock price. Northern Oil and Gas is in a very enviable position. We entered 2020 expecting approximately 60% to 70% of our projected production hedged at $58 a barrel. However, with the convergence of the Saudi-Russia price war followed by a massive demand hit stemming from COVID, our oil prices catered and our production slowed abruptly, and we became almost completely hedged on every barrel of production. The positive impact of this situation for Northern Oil and Gas is that we collected $58 a barrel that was produced and stored our deferred production in the ground for free until oil prices recover. We have paid down $160 million of our debt year to date and we will pay off our $65 million FIBLE note with free cash flow in early 2021. Our banks, led by Wells Fargo, recently left our borrowing base unchanged, $660 million due to the stability of Northern Oil and Gas. 2021 also will be a great year for Northern Oil and Gas. Next year will remain in the same enviable position. If oil is under 35, we could spend as little as $50 million, but our free cash flow will be well in excess of $100 million. If oil is around $45 or higher. We spend a little more on CapEx and we'll see higher production and cash flow. And our free cash flow would still be approximately $100 million. Under any circumstance, you can envision for 2021, Northern Oil and Gas will generate material free cash flow. Our track record. If you reflect, On the track record of Northern Oil and Gas over the last couple years, nearly every quarter, we have been very busy. We have accretively grown the business, reduced debt to EBITDA, and made the company stronger. This course of action will continue, and it will be done accretively and precisely. We will continue to make the company stronger and reduce our debt position. We will position the company to be a very strong, publicly held, cash flow generating business. Opportunities in the Shale 3.0 era. Our high return non-op business model has a major competitive advantage in the Shale 3.0 era. As operated budgets take President over non-op budgets for traditional ENP. Northern Oil and Gas pipeline of drill-ready non-op prospects stands at all-time high. We target less than three-year payback on these deals. Thus, these investments are accretive to our already industry-leading return on capital metrics. Slide 7. in our Q3 slide deck lays out this opportunity in more detail. Alignment and like-minded. Management, the board, and approximately 40% of our investors are like-minded and committed to take NOG to a strong cash flow generating entity with very low levels of debt. We want the company to enjoy borrowing, at rates similar to our RBL. I'm grateful for this amazing management group has done and are doing every day. I'm thankful for the alignment from TRT, Angela Gordon, and other large partners. They're committed to building upon what we have done so far in the last couple of years and reaching the levels that I just established earlier. Thank you again.