Northern Oil and Gas, Inc.

Greetings and welcome to the NOG's fourth quarter and year-end 2024 earnings conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If you would like to ask a question during this time, simply press star followed with the number one on your telephone keypad. We encourage participants to limit yourselves to one question and one follow-up. If you would like to withdraw your question, press star one again. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Eric Rumslow, Chief LEGO Officer. Thank you. You may begin.

Good morning. Welcome to NOG's fourth quarter and year-end 2024 earnings conference call. I'm standing in for Evelyn Inferno today, who could not be here but will be back soon. Yesterday, after the market closed, we released our financial results for the fourth quarter. You can access our earnings release and presentation on our investor relations website at noginc.com. We will be filing our 2024 10K with the SEC within the next few days. I'm joined this morning by our Chief Executive Officer, Nick O'Grady, our President, Adam Durland, our Chief Financial Officer, Chad Allen, and our Chief Technical Officer, Jim Evans. Our agenda for today's call is as follows. First, Nick will provide his introductory remarks. Then Adam will give you an overview of operations and business development activities. And finally, Chad will review our financial results and walk through the details of our 2025 guidance. After our prepared remarks, the team will be available to answer any questions. Before we begin, 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 free 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. Thanks, Eric.

Welcome and good morning, everyone. I'm going to deviate from my typical rundown of points, and my comments will be fairly brief this quarter. One of the hallmarks of the non-operated strategy is in its diversification. Our broad footprint of operators, basins, and well exposures typically means that we're well insulated from more acute disruptions that happen from time to time in the fields. It's something we purposely built here at NOG over the past seven years. In the past four months, we've been hit with forest fires, refinery outages, freeze-offs, shut-ins, delays of every kind, and material deferments, many of which have been a result of the aforementioned issues, all at the same time. This confluence of events, while beyond anyone's control, is extraordinary in nature and very rare for our business. With that said, it had a material effect not just on the fourth quarter, but started us out at a lower level of base oil volumes, primarily in the Williston and to a lesser extent in the Uinta coming into 2025. and our capital program will spend a portion of 2025 catching back up. As a result, we'll exit 2025 much stronger than we would have otherwise, however. I think it's important that we put these events in perspective. Oftentimes, we have a tendency to compartmentalize results versus expectations and forego looking at the actual trends at hand. The reality is that we grew volumes last year, 25% year over year, and despite recent disruptions, oil volumes will grow again in the high single digits this year and will exit materially higher than that. These are huge numbers. The oil that was deferred in Q4 is still there in the ground, and much of the capital for those wells has already been spent. The wells in production continue to perform as expected, and so ultimately, this is an issue about timing. We think and execute for the long term here. As a non operator, we allocate capital and focus meticulously on the engineering well by well. But as we've discussed in the past, the timing for these wells can shift leading to periodic lumpiness quarter to quarter. We don't and frankly cannot run our business in 90 day increments. Our budget this year is designed purposely in that fashion. With a hefty spud schedule to drive long term growth and that it will. As an example of this thinking, Are you into program is immediately going to a larger program with optimally spaced 3 mile laterals. Which will materially improve longer term production performance returns and capital efficiency. But it also has the added effect of pushing out turning lines and thus volumes later into the year given. They also take longer to drill. So, you only look at the 2025 numbers might come to the opposite capital efficiency conclusion, but you'd be wrong. We're setting the stage not just to grow in 2025, but to position NOG for the future. We often have a choice. We can front-end load capital so we can grow more now at the expense of the future or vice versa. And here at NOG, we'll always choose what's best for the long term, both from an organic growth perspective, which may involve recasting the cadence of the development plan, and in the way we underwrite and pursue bolt-ons and other inorganic opportunities. On the topic of inorganic opportunities, things are looking increasingly strong. As oil prices weaken, we find our competitive advantage grows, and the need for our capital and the request for partnerships from a variety of operators and other potential partners has never been greater. As gas prices strengthen, we find that this market is becoming healthier on the M&A front, that there is more activity, and that M&A activity becomes more realistic as the contango spread improves. Operators continue to seek our capital to accelerate development, and many assets remain stranded looking for permanent homes. As Adam will discuss, we've had success in every one of our basins adding leaseholds, but especially in Appalachia. We have stated that we can double our business over the next several years. We are looking at some of the largest transactions in our history, and the need for and call on our capital has never been greater. The inbound activity and backlog of evaluations we're underwriting on a daily basis is as high or higher than at any time during my tenure. And it gives me confidence that we can continue to find meaningful ways inorganically to create value for our investors over time. It will require discipline, but the right opportunities will present themselves. And that discipline has paid off over the years. Our corporate return on capital employed has remained above almost all our peers. And as we do multi-year lookbacks on our acquisitions, from our early Wilson deals to the Marcellus to our series of Permian transactions, our underwriting has continued to deliver strong returns. which gives us confidence in our forward plan to grow further over time. As an example, our 2021 Marsalis transaction we estimate has delivered well over double the internal return we originally projected, paid out in less than two years, and still has decades of life on it. Based on the current gas strip, it's positioned for multiple years of strong cash flow ahead. It's important to note that as we have scaled our platform, we have also been mindful to ensure that we have the internal infrastructure in place to support our growth. During 2025, we'll be investing significantly in our financial, land, data science, and engineering teams, and have already expanded our capabilities by building out an internal geology function that, when paired with our engineering prowess, can help identify additional value that can be extracted from the acreage we already own and find value where we do not. I'll conclude with a review of the highlights of our business model. As the dominant non-operator in the space, NOG is uniquely positioned as a growth story and a consolidator. Our opportunity set continues to grow as we scale, and as a non-operator, our diversification by region, commodity mix, and operator over time should give us a stable business profile. Our strong margins provide a durable cash profile that has provided steady, peer-leading growth in dividends over time. We will continue through thick and thin to manage risk properly and hedge where appropriate. All of this combined with a disciplined approach to capital allocation should translate into superior shareholder return over time. This has been proven out in the marketplace over the past seven years, and we're going to continue with the same methodical approach to creating value for our investors going forward. I remain incredibly excited for what lies ahead for our company. That concludes my prepared remarks. Thanks to everyone for listening, and again, for your interest in our company. I'll turn it over to Adam.