NOG Announces Second Quarter 2024 Results, Updates 2024 Guidance

SECOND QUARTER HIGHLIGHTS

Record quarterly production of 123,342 Boe per day (57% oil), increases of 3% from the first quarter of 2024 and 36% from the second quarter of 2023
GAAP net income of $138.6 million, Adjusted Net Income of $147.8 million and Adjusted EBITDA of $413.1 million. See “Non-GAAP Financial Measures” below
Cash flow from operations of $340.5 million. Excluding changes in net working capital, cash flow from operations was $374.2 million, an increase of 33% from the second quarter of 2023
Generated $133.7 million of Free Cash Flow. See “Non-GAAP Financial Measures” below
Announced joint acquisition of Uinta Basin properties from XCL Resources with SM Energy Company for $510 million net to NOG
Repurchased 895,076 shares of common stock at an average price of $38.96 per share

POST QUARTER HIGHLIGHTS

Announced joint acquisition of Delaware Basin properties from Point Energy Partners with Vital Energy, Inc. for $220 million net to NOG
Board of Directors approved new $150 million share repurchase authorization
Management will recommend that the Board of Directors approve a 5% mid-year increase to NOG’s quarterly common stock dividend, to $0.42 per share, for the third quarter of 2024

Northern Oil and Gas, Inc. (NYSE: NOG) (“NOG” or “Company”) today announced the Company’s second quarter results.

MANAGEMENT COMMENTS

“NOG’s results continue to underscore its role as the definitive national working interest franchise, diversified by region and commodity mix, with low leverage, strong free cash flow, and growing cash returns,” commented Nick O’Grady, NOG’s Chief Executive Officer. “Our cash flow and production are at record levels, and we have increased our shareholder returns. At the same time, we continue to find both organic and inorganic paths to growth for our investors positioning NOG as a superior investment alternative for the long term. As we reinforce through our financial results and through our corporate actions, we are unrivaled in our niche and continue to press our advantage. We remain highly aligned with and motivated to continue to deliver for our investors in the future.”

SECOND QUARTER FINANCIAL RESULTS

Oil and natural gas sales for the second quarter were $561.0 million. Second quarter GAAP net income was $138.6 million or $1.36 per diluted share. Second quarter Adjusted Net Income was $147.8 million or $1.46 per adjusted diluted share. Adjusted EBITDA in the second quarter was $413.1 million, a 31% increase from the second quarter of 2023. See “Non-GAAP Financial Measures” below.

PRODUCTION

Second quarter production was 123,342 Boe per day, an increase of 3% from the first quarter of 2024 and an increase of 36% from the second quarter of 2023. Oil represented 57% of total production in the second quarter with 69,645 Bbls per day, a decrease of 1% from the first quarter of 2024 and an increase of 27% from the second quarter of 2023. NOG had 30.1 net wells turned in-line during the second quarter, compared to 25.3 net wells turned in-line in the first quarter of 2024. Production increased by 3% on a sequential quarter basis and represented record total quarterly volumes in the Permian and Appalachian Basins.

PRICING

During the second quarter, NYMEX West Texas Intermediate (“WTI”) crude oil averaged $80.66 per Bbl, and NYMEX natural gas at Henry Hub averaged $2.32 per Mcf. NOG’s unhedged net realized oil price in the second quarter was $77.11, representing a $3.55 differential to WTI prices. NOG’s unhedged net realized gas price in the second quarter was $2.47 per Mcf, representing 106% realization compared with Henry Hub pricing. Oil differentials were modestly improved versus the first quarter of 2024, with in-basin prices in the Permian and Williston Basins improving versus the prior quarter. Natural gas realizations were significantly better than forecast, despite weak Waha hub differentials in the Permian, driven by higher than expected NGL prices and higher absolute prices of natural gas during the period.

OPERATING COSTS

Lease operating costs were $100.9 million in the second quarter of 2024, or $8.99 per Boe, 7% lower on a per unit basis compared to the first quarter of 2024. LOE costs were aided by lower firm transport costs and the lack of weather-related shut-ins experienced in the prior period. Second quarter general and administrative (“G&A”) costs totaled $13.5 million or $1.21 per Boe. This includes $2.1 million of legal and transaction expenses in connection with bolt-on acquisitions and $3.0 million of non-cash stock-based compensation. NOG’s cash G&A costs excluding these amounts totaled $8.4 million or $0.75 per Boe in the second quarter, down $0.02 per Boe compared to the first quarter of 2024. Despite including costs associated with several unsuccessful transactions, this represented the low end of the previous per Boe guidance range.

CAPITAL EXPENDITURES AND ACQUISITIONS

Capital expenditures for the second quarter were $237.4 million (excluding non-budgeted acquisitions and other). This was comprised of $226.4 million of total drilling and completion (“D&C”) capital on organic and Ground Game assets, and $10.9 million of Ground Game activity. D&C spending did see further acceleration of development activity, with additional turn-in-lines in late June 2024, however the effect on the overall budgeted capital was relatively minimal. NOG’s weighted average gross authorization for expenditure (or AFE) elected to in the second quarter was $9.5 million, which was flat with the first quarter of 2024, which is in line with expectations.

NOG’s Permian Basin spending was 59% of the capital expenditures for the second quarter, the Williston was 37%, and the Appalachian was 4%. On the Ground Game acquisition front, NOG closed on 11 transactions through various structures during the second quarter totaling 6.1 net current and future development wells and 1,772 net acres.

LIQUIDITY AND CAPITAL RESOURCES

NOG had total liquidity in excess of $1.3 billion as of June 30, 2024, consisting of $1.3 billion of committed borrowing availability under the Revolving Credit Facility and $7.8 million of cash. Additionally, the Company had $25.5 million in the form of a restricted cash deposit for the pending XCL acquisition.

SHAREHOLDER RETURNS

In the second quarter of 2024, the Company repurchased 895,076 shares of common stock at an average price, inclusive of commissions, of $38.96 per share in the open market. Year-to-date, the Company has repurchased 1,444,432 shares at an average price, inclusive of commissions, of $37.99. In July 2024, the Company’s board of directors terminated the prior stock repurchase program, which was substantially depleted, and approved a new stock repurchase program to acquire up to $150.0 million of the Company’s outstanding common stock.

In May 2024, NOG’s Board of Directors declared a regular quarterly cash dividend for NOG’s common stock of $0.40 per share for stockholders of record as of June 27, 2024, to be paid on July 31, 2024.

On July 29, 2024, NOG’s Management announced that it intends to recommend that the Board of Directors approve a 5%, or $0.02 increase to the quarterly dividend to $0.42 per share, for the third quarter of 2024.

2024 ANNUAL GUIDANCE(1)(2)

NOG is providing preliminary updated annual guidance, as shown in the table below, with the assumption that the pending XCL and Point acquisitions close on October 1, 2024.

Overall, the impact of the acquisitions serves to increase annual production and to reduce per unit operating expenses, production tax rates and per unit cash G&A costs. Additionally, capital expenditures are being adjusted to account for additional capital expected to be incurred on the acquired properties post-closing of the transactions. Given stronger than anticipated gas realizations year-to-date, further adjusted for the pending acquisitions, the Company is increasing guidance for gas realizations. Due to higher transportation costs expected in the Uinta Basin, slightly offset by modest improvements experienced year-to-date, the Company is widening its oil differentials for 2024 modestly. Additionally, NOG is adjusting its per unit DD&A rate guidance for the estimated impact of the pending acquisitions.

Original Guidance

Revised Guidance

Annual Production (Boe per day)

115,000 - 120,000

120,000 - 124,000

Annual Oil Production (Bbls per day)

70,000 - 73,000

73,000 - 76,000

Total Capital Expenditures ($ in millions)

$825 - $900

$890 - $970

Net Wells Turned-in-Line (“TIL”)

87.5 - 92.5

93.0 - 98.0

Net Wells Spud

67.5 - 72.5

73.0 - 78.0

Operating Expenses and Differentials:

Production Expenses (per Boe)

$9.25 - $9.90

$9.15 - $9.40

Production Taxes (as a percentage of Oil & Gas Sales)

9.0% - 10.0%

9.0% - 9.5%

Average Differential to NYMEX WTI (per Bbl)

($4.00) - ($4.40)

($4.00) - ($4.85)

Average Realization as a Percentage of NYMEX Henry Hub (per Mcf)

80% - 85%

87.5% - 92.5%

DD&A Rate (per Boe)

$15.50 - $17.50

$16.50 - $17.50

General and Administrative Expense (per Boe):

Non-Cash

$0.25 - $0.30

$0.25 - $0.27

Cash (excluding transaction costs on non-budgeted acquisitions)

$0.75 - $0.85

$0.74 - $0.80

________________

(1)

All forecasts are provided on a 2-stream production basis.

(2)

Updated guidance assumes an October 1, 2024 closing date for NOG’s pending XCL and Point acquisitions. Actual closing dates of these transactions may differ materially, which may impact NOG’s annual guidance and actual results. The closings of these transactions are subject to the satisfaction or waiver of closing conditions, many of which are out of the Company’s control. There can be no assurance that the transactions will close on the assumed timeline, or at all. See “Safe Harbor” below.

SECOND QUARTER 2024 RESULTS

The following tables set forth selected operating and financial data for the periods indicated.

Three Months Ended June 30,

2024

2023

% Change

Net Production:

Oil (Bbl)

6,337,728

4,981,162

Natural Gas (Mcf)

29,318,623

19,732,243

Total (Boe)

11,224,165

8,269,869

Average Daily Production:

Oil (Bbl)

69,645

54,738

Natural Gas (Mcf)

322,183

216,838

Total (Boe)

123,342

90,878

Average Sales Prices:

Oil (per Bbl)

77.11

71.03

Effect of Gain (Loss) on Settled Oil Derivatives on Average Price (per Bbl)

(2.30

)

1.31

Oil Net of Settled Oil Derivatives (per Bbl)

74.81

72.34

Natural Gas and NGLs (per Mcf)

2.47

3.18

(22

Effect of Gain on Settled Natural Gas Derivatives on Average Price (per Mcf)

0.80

1.05

(24

Natural Gas and NGLs Net of Settled Natural Gas Derivatives (per Mcf)

3.27

4.23

(23

Realized Price on a Boe Basis Excluding Settled Commodity Derivatives

49.98

50.36

Effect of Gain on Settled Commodity Derivatives on Average Price (per Boe)

0.79

3.30

(76

Realized Price on a Boe Basis Including Settled Commodity Derivatives

50.77

53.66

Costs and Expenses (per Boe):

Production Expenses

8.99

10.20

(12

Production Taxes

4.33

4.49

General and Administrative Expenses

1.21

1.50

(19

Depletion, Depreciation, Amortization and Accretion

15.73

12.87

Net Producing Wells at Period End

1,015.2

872.8

HEDGING

NOG hedges portions of its expected production volumes to increase the predictability of its cash flow and to help maintain a strong financial position. The following table summarizes NOG’s open crude oil commodity derivative swap contracts scheduled to settle after June 30, 2024.

Crude Oil Commodity Derivative Swaps(1)

Crude Oil Commodity Derivative Collars

Contract Period

Volume (Bbls/Day)

Weighted Average Price ($/Bbl)

Collar Call Volume (Bbls)

Collar Put Volume (Bbls)

Weighted Average Ceiling Price

($/Bbl)

Weighted Average Floor Price

($/Bbl)

2024:

31,621

75.29

1,725,056

1,573,256

80.90

71.23

27,469

74.06

2,080,749

1,906,800

81.28

71.65

2025:

23,308

75.10

1,943,286

1,619,849

79.02

70.34

21,089

74.37

1,683,671

1,382,233

78.33

70.32

12,504

72.73

1,476,994

1,173,970

78.43

70.10

12,091

72.28

1,450,511

1,147,487

78.64

70.12

2026:

3,930

71.96

380,726

264,289

75.28

68.89

3,930

71.91

384,957

267,227

75.28

68.89

3,930

71.86

389,187

270,163

75.28

68.89

3,930

71.79

389,187

270,163

75.28

68.89

_____________

(1)

Includes derivative contracts entered into as of July 29, 2024. This table does not include volumes subject to swaptions and call options, which are crude oil derivative contracts NOG has entered into which may increase swapped volumes at the option of NOG’s counterparties. This table also does not include basis swaps. For additional information, see Note 10 to our financial statements included in our Form 10-Q filed with the SEC for the quarter ended June 30, 2024.

The following table summarizes NOG’s open natural gas commodity derivative swap contracts scheduled to settle after June 30, 2024.

Natural Gas Commodity Derivative Swaps(1)

Natural Gas Commodity Derivative Collars

Contract Period

Volume (MMBTU/Day)

Weighted Average Price ($/MMBTU)

Collar Call Volume (MMBTU)

Collar Put Volume (MMBTU)

Weighted Average Ceiling Price

($/MMBTU)

Weighted Average Floor Price

($/MMBTU)

2024:

118,048

3.49

7,360,000

4.37

3.05

83,890

3.49

9,096,586

4.63

3.07

2025:

16,500

3.61

9,196,417

5.10

3.13

10,110

3.60

8,771,297

4.81

3.13

10,000

3.60

8,407,569

4.84

3.13

11,630

3.66

7,618,723

4.95

3.12

2026:

14,889

3.74

5,828,249

5.06

3.09

15,165

3.74

6,024,706

5.06

3.09

15,000

3.74

6,024,706

5.06

3.09

11,576

3.66

4,304,642

4.97

3.09

2027:

1,722

3.20

890,000

3.83

3.00

—

920,000

3.83

3.00

—

920,000

3.83

3.00

—

610,000

3.83

3.00

____________

(2)

Includes derivative contracts entered into as of July 29, 2024. This table does not include basis swaps. For additional information, see Note 10 to our financial statements included in our Form 10-Q filed with the SEC for the quarter ended June 30, 2024.

The following table presents NOG’s settlements on commodity derivative instruments and unsettled gains and losses on open commodity derivative instruments for the periods presented, which is included in the revenue section of NOG’s statement of operations:

Three Months Ended

June 30,

(In thousands)

2024

2023

Cash Received on Settled Derivatives

8,896

27,265

Non-Cash Mark-to-Market Gain (Loss) on Derivatives

(12,324

)

30,503

Gain (Loss) on Commodity Derivatives, Net

(3,428

)

57,769

CAPITAL EXPENDITURES & DRILLING ACTIVITY

(In millions, except for net well data)

Three Months Ended June 30, 2024

Capital Expenditures Incurred:

Organic Drilling and Development Capital Expenditures

212.2

Ground Game Drilling and Development Capital Expenditures

14.2

Ground Game Acquisition Capital Expenditures

10.9

Other

3.0

Non-Budgeted Acquisitions

(3.7

)

Net Wells Added to Production

30.1

Net Producing Wells (Period-End)

1,015.2

Net Wells in Process (Period-End)

41.0

Weighted Average Gross AFE for Wells Elected to

9.5

SECOND QUARTER 2024 EARNINGS RELEASE CONFERENCE CALL

In conjunction with NOG’s release of its financial and operating results, investors, analysts and other interested parties are invited to listen to a conference call with management on Wednesday, July 31, 2024 at 8:00 a.m. Central Time.

Those wishing to listen to the conference call may do so via webcast or phone as follows:

Webcast: https://events.q4inc.com/attendee/514541633 Dial-In Number: (888) 596-4144 (US/Canada) and (646) 968-2525 (International) Conference ID: 4503139 - NOG Second Quarter 2024 Earnings Conference Call Replay Dial-In Number: (800) 770-2030 (US/Canada) and (609) 800-9909 (International) Replay Access Code: 4503139 - Replay will be available through August 14, 2024

ABOUT NOG

NOG is a real asset company with a primary strategy of acquiring and investing in non-operated minority working and mineral interests in the premier hydrocarbon producing basins within the contiguous United States. More information about NOG can be found at www.noginc.com.

SAFE HARBOR

This press release contains forward-looking statements regarding future events and NOG’s future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this release regarding NOG’s financial position, operating and financial performance, business strategy, dividend plans and practices, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance are forward-looking statements. When used in this release, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “continue,” “anticipate,” “target,” “could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about actual or potential future production and sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond NOG’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: changes in crude oil and natural gas prices, the pace of drilling and completions activity on NOG’s current properties and properties pending acquisition; infrastructure constraints and related factors affecting NOG’s properties; cost inflation or supply chain disruptions; ongoing legal disputes over, and potential shutdown of, the Dakota Access Pipeline; NOG’s ability to acquire additional development opportunities, potential or pending acquisition transactions, the projected capital efficiency savings and other operating efficiencies and synergies resulting from NOG’s acquisition transactions, integration and benefits of property acquisitions, or the effects of such acquisitions on NOG’s cash position and levels of indebtedness; changes in NOG’s reserves estimates or the value thereof; disruption to NOG’s business due to acquisitions and other significant transactions; general economic or industry conditions, nationally and/or in the communities in which NOG conducts business; changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets; risks associated with NOG’s 3.625% convertible senior notes due 2029 (the “Convertible Notes”), including the potential impact that the Convertible Notes may have on NOG’s financial position and liquidity, potential dilution, and that provisions of the Convertible Notes could delay or prevent a beneficial takeover of NOG; the potential impact of the capped call transaction undertaken in tandem with the Convertible Notes issuance, including counterparty risk; increasing attention to environmental, social and governance matters; NOG’s ability to consummate any pending acquisition transactions; other risks and uncertainties related to the closing of pending acquisition transactions; NOG’s ability to raise or access capital; cyber-incidents could have a material adverse effect on NOG’s business, financial condition or results of operations; changes in accounting principles, policies or guidelines; events beyond NOG’s control, including a global or domestic health crisis, acts of terrorism, political or economic instability or armed conflict in oil and gas producing regions; and other economic, competitive, governmental, regulatory and technical factors affecting NOG’s operations, products and prices. Additional information concerning potential factors that could affect future results is included in the section entitled “Item 1A. Risk Factors” and other sections of NOG’s most recent Annual Report on Form 10-K for the year ended December 31, 2023, and Quarterly Report on Form 10-Q, as updated from time to time in amendments and subsequent reports filed with the SEC, which describe factors that could cause NOG’s actual results to differ from those set forth in the forward-looking statements.

NOG has based these forward-looking statements on its current expectations and assumptions about future events. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond NOG’s control. Accordingly, results actually achieved may differ materially from expected results described in these statements. NOG does not undertake any duty to update or revise any forward-looking statements, except as may be required by the federal securities laws.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended

June 30,

(In thousands, except share and per share data)

2024

2023

Revenues

Oil and Gas Sales

561,025

416,491

Gain (Loss) on Commodity Derivatives, Net

(3,428

)

57,769

Other Revenues

3,169

2,294

Total Revenues

560,766

476,554

Operating Expenses

Production Expenses

100,859

84,350

Production Taxes

48,589

37,138

General and Administrative Expenses

13,538

12,402

Depletion, Depreciation, Amortization and Accretion

176,612

106,427

Other Expenses

2,232

1,446

Total Operating Expenses

341,830

241,763

Income From Operations

218,936

234,791

Other Income (Expense)

Interest Expense, Net of Capitalization

(37,696

)

(31,968

)

Contingent Consideration Gain

—

3,931

Other Income (Expense)

Total Other Income (Expense)

(37,633

)

(27,965

)

Income Before Income Taxes

181,303

206,826

Income Tax Expense

42,746

39,012

Net Income

138,556

167,815

Net Income Per Common Share – Basic

1.38

1.89

Net Income Per Common Share – Diluted

1.36

1.88

Weighted Average Common Shares Outstanding – Basic

100,266,462

88,800,994

Weighted Average Common Shares Outstanding – Diluted

101,985,074

89,108,519

CONDENSED BALANCE SHEETS

(In thousands, except par value and share data)

June 30, 2024

December 31, 2023

Assets

(Unaudited)

Current Assets:

Cash and Cash Equivalents

7,778

8,195

Accounts Receivable, Net

359,649

370,531

Advances to Operators

21,685

49,210

Prepaid Expenses and Other

2,651

2,489

Derivative Instruments

19,569

75,733

Income Tax Receivable

2,335

3,249

Total Current Assets

413,667

509,407

Property and Equipment:

Oil and Natural Gas Properties, Full Cost Method of Accounting

Proved

9,111,493

8,428,518

Unproved

37,654

36,785

Other Property and Equipment

8,146

8,069

Total Property and Equipment

9,157,293

8,473,372

Less – Accumulated Depreciation, Depletion and Impairment

(4,891,014

)

(4,541,808

)

Total Property and Equipment, Net

4,266,279

3,931,563

Derivative Instruments

4,107

10,725

Acquisition Deposit

25,500

17,094

Other Noncurrent Assets, Net

15,111

15,466

Total Assets

4,724,664

4,484,255

Liabilities and Stockholders’ Equity

Current Liabilities:

Accounts Payable

150,145

192,672

Accrued Liabilities

215,833

147,943

Accrued Interest

26,804

26,219

Derivative Instruments

70,726

16,797

Other Current Liabilities

2,061

2,130

Total Current Liabilities

465,569

385,761

Long-term Debt, Net

1,874,909

1,835,554

Deferred Tax Liability

112,870

68,488

Derivative Instruments

159,091

105,831

Asset Retirement Obligations

41,409

38,203

Other Noncurrent Liabilities

2,509

2,741

Total Liabilities

2,656,357

2,436,578

Commitments and Contingencies

Stockholders’ Equity

Common Stock, Par Value $.001; 270,000,000 Shares Authorized;

100,172,478 Shares Outstanding at 6/30/2024

100,761,148 Shares Outstanding at 12/31/2023

502

503

Additional Paid-In Capital

1,995,432

2,124,963

Retained Earnings (Deficit)

72,373

(77,790

)

Total Stockholders’ Equity

2,068,307

2,047,676

Total Liabilities and Stockholders’ Equity

4,724,664

4,484,255

Non-GAAP Financial Measures

Adjusted Net Income, Adjusted EBITDA and Free Cash Flow are non-GAAP measures. NOG defines Adjusted Net Income (Loss) as income (loss) before income taxes, excluding (i) (gain) loss on unsettled commodity derivatives, net of tax, (ii) (gain) loss on extinguishment of debt, net of tax, (iii) contingent consideration (gain) loss, net of tax, (iv) acquisition transaction costs, net of tax, and (v) (gain) loss on unsettled interest rate derivatives, net of tax. NOG defines Adjusted EBITDA as net income (loss) before (i) interest expense, (ii) income taxes, (iii) depreciation, depletion, amortization and accretion, (iv) non-cash stock-based compensation expense, (v) (gain) loss on extinguishment of debt, (vi) contingent consideration (gain) loss (vii) acquisition transaction costs, (viii) (gain) loss on unsettled interest rate derivatives, and (ix) (gain) loss on unsettled commodity derivatives. NOG defines Free Cash Flow as cash flows from operations before changes in working capital and other items, less (i) capital expenditures, excluding non-budgeted acquisitions and changes in accrued capital expenditures and other items. A reconciliation of each of these measures to the most directly comparable GAAP measure is included below.

Management believes the use of these non-GAAP financial measures provides useful information to investors to gain an overall understanding of current financial performance. Management believes Adjusted Net Income and Adjusted EBITDA provide useful information to both management and investors by excluding certain expenses and unrealized commodity gains and losses that management believes are not indicative of NOG’s core operating results. Management believes that Free Cash Flow is useful to investors as a measure of a company’s ability to internally fund its budgeted capital expenditures, to service or incur additional debt, and to measure success in creating stockholder value. In addition, these non-GAAP financial measures are used by management for budgeting and forecasting as well as subsequently measuring NOG’s performance, and management believes it is providing investors with financial measures that most closely align to its internal measurement processes. The non-GAAP financial measures included herein may be defined differently than similar measures used by other companies and should not be considered an alternative to, or more meaningful than, the comparable GAAP measures. From time to time NOG provides forward-looking Free Cash Flow estimates or targets; however, NOG is unable to provide a quantitative reconciliation of the forward looking non-GAAP measure to its most directly comparable forward looking GAAP measure because management cannot reliably quantify certain of the necessary components of such forward looking GAAP measure. The reconciling items in future periods could be significant.

Reconciliation of Adjusted Net Income

Three Months Ended

June 30,

(In thousands, except share and per share data)

2024

2023

Income Before Income Taxes

181,303

206,826

Add:

Impact of Selected Items:

(Gain) Loss on Unsettled Commodity Derivatives

12,324

(30,503

)

Contingent Consideration Gain

—

(3,931

)

Acquisition Transaction Costs

2,112

3,612

Adjusted Income Before Adjusted Income Tax Expense

195,738

176,004

Adjusted Income Tax Expense (1)

(47,956

)

(43,121

)

Adjusted Net Income (non-GAAP)

147,782

132,883

Weighted Average Shares Outstanding – Basic

100,266,462

88,800,994

Weighted Average Shares Outstanding – Diluted

101,985,074

89,108,519

Less:

Dilutive Effect of Convertible Notes (2)

738,227

—

Weighted Average Shares Outstanding – Adjusted Diluted

101,246,847

89,108,519

Income Before Income Taxes Per Common Share – Basic

1.81

2.33

Add:

Impact of Selected Items

0.14

(0.35

)

Impact of Income Tax

(0.48

)

(0.48

)

Adjusted Net Income Per Common Share – Basic

1.47

1.50

Income Before Income Taxes Per Common Share – Adjusted Diluted

1.79

2.32

Add:

Impact of Selected Items

0.14

(0.35

)

Impact of Income Tax

(0.47

)

(0.48

)

Adjusted Net Income Per Common Share – Adjusted Diluted

1.46

1.49

______________

(1)

For the three months ended June 30, 2024 and June 30, 2023, this represents a tax impact using an estimated tax rate of 24.5%.

(2)

Weighted average shares outstanding - diluted, on a GAAP basis, includes diluted shares attributable to the Company’s Convertible Notes due 2029. However, the offsetting impact of the capped call transactions that the Company entered into in connection therewith is not recognized on a GAAP basis. As a result, for purposes of this calculation, the Company excludes the dilutive shares to the extent they would be offset by the capped calls.

Reconciliation of Adjusted EBITDA

Three Months Ended

June 30,

(In thousands)

2024

2023

Net Income

138,556

167,815

Add:

Interest Expense

37,696