Northern Oil and Gas, Inc.

Greetings and welcome to the second quarter 2021 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. Please note this conference is being recorded. I will now turn the conference over to your host, Mike Kelly, Chief Strategy Officer. You may begin.

Good morning, and thank you for joining us for our discussion of Northern's second quarter 2021 earnings release. This morning before the market opened, we released our financial results for the second quarter. You can access our earnings release on our investor relations website, and our Form 10Q will be filed within the next few days with the SEC. We also posted a new investor deck on the website this morning as well. I'm joined here this morning with Northern CEO Nick O'Grady, our COO Adam Dirlam, CFO Chad Allen, and our Chief Engineer Jim Evans. Our agenda for today's call is as follows. Nick will start us off with his comments regarding Q2 and our overall strategy. After Nick, Adam will give you an overview of operations, and then Chad will review NOG's Q2 financials and our updated 2021 guidance. Finally, our executive team will be available to answer any questions. Before we go any further, though, let me 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 the risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these 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 this conference call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA and free cash flow. Reconciliations of these measures to the closest GAAP measure can be found in the earnings release that we issued this morning. With that taken care of, I will now hand the call over to Northern CEO, Nicholas O'Grady.

Good morning. I would like to thank everyone for joining us this morning. We've had a very productive first half of 2021. expanding significantly into two new basins, and we've continued to improve our balance sheet. Our disciplined investment approach has been paying off handsomely as our results show today. I would like to focus on four key points. Number one, we had a monster quarter, and one that truly highlights the flexibility and benefit of our differentiated and actively managed business model. In a quarter where the overall Williston Basin volumes decreased, Northern's oil volumes increased by 14%. Because of our ground game playbook and ownership of core rock in the Bakken, augmented by an increasing Permian presence, Northern's outlook is never tied solely to basin-wide activity levels. Strong well performance and accelerated pace of completions and robust realized pricing for both oil and gas resulted in us being able to exceed both internal and external forecasts. All of our key financial metrics, including production, EBITDA, cash flow, free cash flow, and earnings per share were above forecast across the board, and in most cases, new records for the company. Our capital expenditures were less than forecast. Our production costs fell on a unit basis as we integrated our low-cost Marsalis assets and as work over expenses in the Bakken began to tail off. Number two, our free cash flow outlook and our balance sheet projections continue to improve. Debt decreased this quarter and we expect to meaningfully exceed our initial and recently updated free cash flow estimates for 2021. We now expect to end the year with a run rate leverage ratio of less than one and a half times and to fall below one times by the end of the second quarter in 2022. During our conference call in June related to the Permian acquisition, we highlighted that we expected to produce more than 150 million of free cash in 2021 and cumulatively more than 800 through 2025. We now estimate over $160 million of free cash flow in 2021 and cumulatively more than $900 million through 2025. I would also like to point out that if the current pricing strip holds, we expect to be able to retire all of our bank debt by late 2022, leaving only $550 million of 2028 notes as our sole piece of debt. Number three, Northern's M&A pipeline continues to grow. The M&A landscape continues to remain strong. Even as we work down last quarter's M&A backlog, having selected the best prospects with our recent Permian transactions, new opportunities continue to arise across many basins of interest in the United States. To be clear, we could have transacted on many more deals than we have year to date, but we will not just do quote unquote Wall Street accretive deals because we value transactions as any cash buyer would. which is on return on capital employed and rate of return. It's money in, money out. We want to buy assets with discipline, not because we can. Number four, dividends and returns to our shareholders. Our board of directors has declared a 50% increase to our next quarterly common stock dividend for a total dividend of four and a half cents per share. As I mentioned last quarter, successful M&A could accelerate our dividend strategy. and with the Permian acquisitions and the associated financing, we expect to continue to increase dividends over the coming years. In conclusion, the outlook continues to improve as we have steadily exceeded our targets. We are ahead of our free cash flow forecasts and production outlook. We continue to grow our shareholder returns all the while improving our balance sheet. We have lowered our unit costs through scale and high-quality property acquisitions. The quality of assets testing the market is impressive and the possibilities for value creation continue to excite us. We are a company run by investors, for investors, and I truly want to thank each and every one of you for joining us today. With that, let me turn it over to Adam Dirlam.