Northern Oil and Gas, Inc. NOG reported third-quarter 2024 adjusted earnings per share of $1.40, which beat the Zacks Consensus Estimate of $1.26. The outperformance indicates strong production. However, the bottom line declined from the year-ago reported figure of $1.73 due to weaker realized prices from crude oil and natural gas and a 17.5% increase in operating expenses.
Oil and natural gas sales of $514 million missed the Zacks Consensus Estimate of $535 million. The top line increased from the year-ago figure of $512 million.
Northern Oil and Gas, Inc. Price, Consensus and EPS Surprise
Northern Oil and Gas, Inc. price-consensus-eps-surprise-chart | Northern Oil and Gas, Inc. Quote
NOG’s adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) was $412.4 million compared with $385.5 million in the year-ago period. Additionally, the figure beat our estimate of $376.8 million.
The oil and gas exploration and production company repurchased 397,301 shares of common stock at an average price of $36.38 per share, including commissions, in the open market in this quarter. Year to date, NOG has repurchased a total of 1,841,733 shares at an average price of $37.64, including commissions.
In July 2024, the company’s board of directors concluded the previous stock repurchase program, which had been nearly exhausted, and authorized a new program to repurchase up to $150 million of its outstanding common stock.
In August 2024, NOG's board of directors declared a quarterly cash dividend of 42 cents per share on its common stock, indicating a 5% increase from the previous rate. The dividend was payable to its stockholders of record as of Sept. 27, 2024, and was paid on Oct. 31.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
NOG’s Q3 Production Details
The third-quarter production increased 19% year over year to 121,815 Boe/d. Additionally, the figure beat our estimate of 121,700 Boe/d.
While oil volume totaled 70,913 Boe/d (up 12% year over year), natural gas (and natural gas liquids) amounted to 305,413 thousand cubic feet per day (up 31%). Our model estimate for oil volume and natural gas production was pegged at 70,800 Boe/d and 305,100 thousand cubic feet per day, respectively.
The average sales price for crude was $71.82 per barrel, indicating a 10% decrease from the prior-year quarter’s level of $79.48. However, the figure missed our expectation of $74.55 per barrel.
The average realized natural gas price was $1.60 per thousand cubic feet compared with $2.19 in the year-earlier period. Our model estimate for the same was pinned at $1.58 per thousand cubic feet.
NOG’s Costs & Expenses
Total operating expenses in the quarter rose to $319.7 million from $271.5 million in the year-ago period.This was mainly on account of a surge in production expenses, depletion, depreciation, amortization and accretion (DD&A) and other expenses.
In particular, the company’s lease operating expenses increased to $9.54 per Boe from the year-ago figure of $8.76. Meanwhile, depreciation outlay increased 17% year over year on a per-barrel basis. However, the figure missed our projection of $359.4 million.
NOG’s Capital Expenditures
During the third quarter, the company reported capital expenditures (CapEx) of $198 million (excluding non-budgeted acquisitions and other costs). This total included $187 million for drilling and completion (D&C) activities on organic and Ground Game assets, as well as $11.1 million for Ground Game-related activities, including pre-closing development costs. D&C spending aligned closely with expectations, caused by significant spud activity and healthy growth in the list, despite a lower number of turn-in lines. The company's weighted average gross authorization for expenditure in the third quarter was $9.1 million, slightly lower than the $9.4 million recorded in second-quarter 2024.
Of the total CapEx, 56% was allocated to the Permian Basin, 41% to the Williston Basin and 3% to the Appalachian Basin. On the Ground Game acquisition front, NOG completed six transactions during the quarter, acquiring a total of 1,259 net acres and 0.1 net current and future development wells through various deal structures.
NOG’s Financial Position
Cash flow from operations totaled $385.8 million. Excluding changes in net working capital, cash flow from operations amounted to $377.1 million, up 9% from that recorded a year ago. The company’s free cash flow for the quarter totaled $177.1 million.
As of Sept. 30, Northern had $34.4 million in cash and cash equivalents. The company had a long-term debt of $2 billion, with a debt-to-capitalization of 45.8%.
2024 Guidance for Northern Oil and Gas
The company has reiterated its capital expenditure and production guidance, with adjustments made to certain line items. For 2024, capital expenditures are expected between $825 million and $900 million. Production taxes have been updated to indicate revised expectations for the remainder of the year. Production expenses are expected to be in the range of $9.15-$9.40 per Boe, while production taxes are anticipated to be 8.5% to 9% of oil and gas sales. DD&A is expected to range from $15.5-$17.5 per Boe.
Adjustments to natural gas realizations and oil differentials are being made based on year-to-date results. Additionally, per-unit cash general and administrative (G&A) expenses are being reduced, due to lower external costs and the continued benefits of higher production volumes. G&A expenses, excluding transaction costs, are expected to be between 72 cents and 77 cents per Boe, with 25 cents to 27 cents of this being non-cash.
Annual oil production is anticipated in the range of 73,000-76,000 barrels per day, while total production is expected to reach between 120,000 Boe/d and 124,000 Boe/d.
NOG currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Important Energy Earnings So Far
Right in the middle of earnings season, there have been a few key energy releases so far. Let us glance through a couple of them.
Liberty Energy LBRT, the Denver-CO-based oil and gas equipment company, announced an adjusted net income of 45 cents per share, which missed the Zacks Consensus Estimate of 55 cents. This was primarily due to poor equipment and services execution and lower activity in the reported quarter. Additionally, the bottom line declined from the year-ago quarter’s reported figure of 86 cents due to a year-over-year increase in costs and expenses.
Ahead of the earnings release, LBRT’s board of directors announced a dividend of 8 cents per common share payable on Dec. 20, to its stockholders of record as of Dec. 6. This dividend represents a 14% increase from the prior regular quarterly dividend of 7 cents per share. In the quarter, Liberty returned $51 million to its shareholders through a combination of share repurchases and cash dividends.
Energy infrastructure provider,Kinder Morgan, Inc. KMI reported third-quarter adjusted earnings per share of 25 cents, which missed the Zacks Consensus Estimate of 27 cents. The bottom line was flat year over year. The weakness in quarterly results was caused by lower contributions from the Products Pipelines and CO2 business segments.
KMI also announced a quarterly cash dividend of 28.75 cents per share for the third quarter of 2024 (annualized dividend of $1.15), implying a 2% increase from the third-quarter 2023 level. The dividend is payable on Nov. 15, 2024, to its shareholders of record as of Oct. 31.
Schlumberger Limited SLB, a Houston, TX-based oil and gas equipment and services provider announced third-quarter earnings of 89 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 88 cents. The bottom line also increased from the year-ago quarter’s 78 cents. The strong quarterly earnings were primarily driven by broad-based earnings growth and margin expansion, especially in the Middle East, Asia and offshore North America. Additionally, cost optimization, greater adoption of digital solutions and contributions from long-cycle deepwater and gas projects played significant roles.
SLB reported a free cash flow of $1.81 billion in the third quarter. As of Sept. 30, the company had approximately $4.46 billion in cash and short-term investments. At the end of the quarter, it registered a long-term debt of $11.86 billion.
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