Northern Oil and Gas, Inc.

Greetings and welcome to the Northern Oil Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce to your host, Eric Rumslow, Chief Legal Officer. Thank you, Eric. Please go ahead.

Good morning, and welcome to our third quarter 2022 earnings conference call. Yesterday, after the market closed, we released our financial results for the third quarter. You can access our earnings release on our investor relations website, and our Form 10-Q will be filed with the SEC in the next few days. We also posted a new investor deck on our website last night. I'm joined here this morning by NOG's Chief Executive Officer, Nick O'Grady, our President, Adam Durlam, our Chief Financial Officer, Chad Allen, and our EVP and Chief Engineer, Jim Evans. Our agenda for today's call is as follows. First, Nick will provide his remarks on the quarter and our recent accomplishments. Then Adam will give you an overview of operations. And last, Chad will review our third quarter financials and updates to 2022 guidance. After the conclusion of our prepared remarks, the 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 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 pre-cash flow. Reconciliations of these measures to the closest GAAP measures can be found in our earnings release. With that, I will turn the call over to Nick.

Thank you, Eric, and thanks again to everyone joining us on today's call. I'll get right down to it with five key points. Number one, business is humming. We generated a company record $292 million of adjusted EBITDA this quarter and well over $100 million in free cash flow, the highest and third highest in company history, respectively. We produced over 79,000 BOE per day in the quarter, and we have already generated a cumulative $370 million of free cash flow in the first nine months of 2022. Leverage at the end of the quarter based on LQA adjusted EBITDA dropped below one times, even with the closing of our Williston acquisition in August. The increases to cash flow and decreases to leverage ratios quarter over quarter are even more impressive when you consider that oil prices were down substantially from the prior quarter. Number two, growth. As evidenced by the increase to our production and CapEx guidance, we are driving value creation through investment. It is translating into more profits, but more importantly, the increase in capital for the year isn't being driven by inflation, which is something we had already built into our expectations. Instead, the increase in capital is truly incremental investment in additional activity that will in turn drive cash flows higher in the coming quarters. With over 370 million in free cash flow generated so far this year, we are able to increase our investments in high return projects and are thrilled with the organic and ground game opportunities that we continue to see. We expect our balanced total returns based approach will continue to drive superior total returns for our shareholders and we still expect to generate approximately $500 million of free cash flow for the year. We are extremely proud of this achievement, given the decreases in oil prices and acceleration of near-term capital spending. Number three, outperformance. Despite high prices and inflation, we're seeing notable outperformance in all three basins. Our Wilson wells have thus far exceeded past years, even in an environment where we would typically expect step-out wells. Our Marcellus assets continue to surprise as EQTs, new pads materially outperform, and PDP declines have been shallower than expected. In the Permian, costs, realizations, and well performance have all exceeded internal estimates. As I said earlier, business is humming. Number four, acquisition success. As you've seen from our flurry of deal announcements over the last few months, we have been very busy on the M&A front. Make no mistake about it, our discipline remains and we continue to underwrite acquisitions with the same rigor. Our success is a testament to our role as the preferred partner, a company with a reputation of execution and consistency, with a capital availability and the ability to negotiate and close in an honest, straightforward manner. This often trumps price. And I want to stress that we are buying assets that are not just accretive to financial metrics, but accretive to asset quality and future growth prospects. This means resilient assets that have the ability to outperform our underwriting. In short, we're confident that our recent M&A success will deliver both near-term results and long-term value for our shareholders. Number five, shareholder returns. Our goal is to provide our shareholders the highest possible total return over the long term. We have implemented a multi-prong approach, including equity buybacks, repurchasing high-cost debt, and increasing the cash dividends for our common shareholders. A, during the third quarter and October, we repurchased and retired another 10 million of our eight and an eighth notes at less than 95% of par. This lowers fixed charges, which boosts free cash flow permanently, and retiring the notes at a discount to face value is accretive to enterprise value. We are prepared to continue to take advantage of opportunities to repurchase these senior notes. B, on the equity side, we've retired 109 million year-to-date, including 51.5 million of common stock, the remainder being preferred stock. As a reminder, we have 98.5 million remaining on our common stock buyback authorization. Last week, we announced a 20% increase to our quarterly common stock dividend to 30 cents per share for the fourth quarter with the goal of providing an attractive yield for our investors. We strongly believe that the consistency of a stable and growing quarterly dividend is more valuable to investors and our equity value over time than special dividend structures, which can introduce unpredictability and volatility. We announced yesterday that we have executed a mandatory conversion of our preferred stock into common stock. This will have no effect on the diluted share count because the preferred was already included on an as-converted basis. The conversion will reduce annual cash dividend payments and also avoid future dilution through cash dividend adjustments made to the preferred stock each quarter. Preferred Stock was created with our bondholders in 2019 to accelerate essential deleveraging of the company, and we are thrilled with the successful outcome for our common and preferred investors. This conversion milestone will simplify our balance sheet and continue to underscore the strength of our company. In closing, I'll remind you, as I always do, that we are a company run by investors for investors, and I want to thank each and every one of you for taking the time to listen to us today. With that, I'll turn it over to Adam.