Northern Oil and Gas, Inc. Releases Fourth Quarter 2024 Operational Update, 2025 Capital and Production Guidance, and Announces $40 Million Bolt-On Acquisition
Northern Oil and Gas, Inc., has released its operational update for the fourth quarter of 2024 while also providing its initial 2025 capital and production guidance. Additionally, the Company has announced a significant acquisition, securing 2,275 net acres in Upton County, Texas, through a $40 million deal, reinforcing its growth strategy in the Midland Basin.
Key Highlights from the Fourth Quarter and Initial 2025 Guidance
- Production Performance: Fourth-quarter production is estimated to range between 131.0 and 132.0 MBoe per day, positioning NOG near the upper limit of its annual production guidance.
- Elective Acquisitions: The Company engaged in multiple Ground Game and leasehold acquisitions totaling $27 million during the fourth quarter.
- Capital Expenditures: Fourth-quarter capital expenditures, excluding non-budgeted transactions, are projected to be between $231 and $232 million.
- 2025 Production Outlook: NOG projects an annual production rate of 130.0 to 135.0 MBoe per day for 2025.
- Capital Budget for 2025: The Company plans to allocate between $1.05 billion and $1.20 billion in capital expenditures to support increasing drilling and development activities, targeting significant growth in 2026.
- Strategic Acquisition: In early 2025, NOG signed an agreement to acquire 2,275 net acres in Upton County, TX, in partnership with a private operator, marking a $40 million investment in a joint development project.
Management Perspective on 2024 Performance and Future Strategy
Nick O’Grady, Chief Executive Officer of NOG, expressed optimism about the Company’s positioning despite some operational headwinds in the fourth quarter. He highlighted the Company’s ability to achieve over 25% production growth in 2024, even amidst external disruptions, such as forest fires and deferred well completions from price-sensitive operators.
“Our 2025 capital budget is strategically designed to build momentum throughout the year and accelerate development into 2026. This positions us for standout growth on a multi-year basis. At NOG, we maintain a long-term focus, planning for multiple years of sustainable growth. We believe this disciplined approach will enhance our capacity for increased shareholder returns and drive superior total returns over time,” said O’Grady.
Adam Dirlam, President of NOG, emphasized the Company’s ability to capitalize on market weaknesses, particularly in the A&D (Acquisition and Divestiture) market. He pointed out that NOG had an active fourth quarter, which included a joint development agreement in Appalachia and multiple leasehold transactions, setting a strong foundation for 2025.
Operational Performance in the Fourth Quarter of 2024
Production and Well Completions
NOG estimates that its fourth-quarter 2024 production volumes ranged between 131.0 and 132.0 MBoe per day, which is at the high end of the Company’s annual guidance. The Company saw a significant increase in oil production, which was estimated to be 78.5 to 78.9 MBoe per day, representing an 11% sequential increase.
However, production was impacted by various external factors, including:
- Forest Fires: Disruptions in the Williston Basin affected production volumes.
- Curtailments and Deferrals: Private operators deferred well completions due to lower commodity prices.
- Third-Party Infrastructure Issues: Downtime in crude takeaway infrastructure in the Uinta Basin impacted oil volumes.
Despite these issues, the Permian Basin remained a strong performer, registering a 12% quarter-over-quarter production increase, marking record oil and total volumes.
The Company completed 25.8 net wells turned-in-line (TIL) during the fourth quarter, bringing the total for 2024 to 90.7 net wells. As of the quarter’s end, NOG had 50.4 net wells-in-process, with several additional wells being deferred due to market conditions.
Commodity Price Realizations and Costs
- Natural Gas Pricing: Price realizations improved in the fourth quarter as regional market conditions strengthened. Estimated realizations for natural gas were 80% to 81% of NYMEX Henry Hub prices.
- Oil Differentials: As anticipated, oil price differentials widened modestly, with realized oil prices estimated at a discount of $3.86 per barrel compared to NYMEX WTI benchmark prices.
- Lease Operating Costs: The Company’s lease operating expenses (LOE) were estimated at $9.60 to $9.70 per Boe, slightly higher than the third quarter.
Ground Game and Leasehold Acquisitions
During the fourth quarter, NOG completed 14 elective Ground Game and leasehold acquisitions, totaling approximately $27 million. These transactions covered multiple basins and contributed 0.7 net producing wells, 3.2 net in-process wells, and 2,274 net acres.
For the full year of 2024, the Company’s Ground Game strategy resulted in:
- 10.7 net producing or in-process wells added.
- 7,013 net acres acquired across 37 transactions.
- Significant future drilling locations identified, ensuring long-term growth potential.
Capital Expenditures and Hedging Strategy
NOG’s fourth-quarter capital expenditures, excluding non-budgeted transactions, were estimated at $231 to $232 million. This includes investments in drilling and completions (D&C), refracturing, and workovers. Notably, approximately $12 million was allocated to refrac projects.
The total capital expenditure for the quarter, inclusive of elective acquisitions, amounted to $258 to $259 million.
NOG continued its hedging strategy, which aims to protect its capital program from commodity price volatility. The Company recorded an unrealized mark-to-market derivative loss of $59 to $60 million but realized hedge gains of $25 to $25.5 million.
2025 Capital and Production Guidance
NOG provided an initial outlook for 2025, highlighting expectations for stable capital spending, increasing production, and a continued emphasis on natural gas development.
2025 Production Expectations:
- Total daily production: 130,000 to 135,000 Boe per day.
- Oil production: 75,000 to 79,000 Bbls per day.
2025 Capital Budget:
- Total expenditures: $1.05 billion to $1.20 billion.
- Drilling program expansion: Increased focus on natural gas drilling, supported by the Appalachian joint development program.
- Refracs and workovers: Additional investment to maintain well productivity over time.
- Wells-in-process list: Expected to grow significantly, with 106 to 110 net wells spud, exceeding 97 to 99 net well completions.
Outlook for 2026
NOG anticipates double-digit production growth in 2026 driven by a high activity level in 2025:
- Overall production increase: ~10% growth in Boe per day.
- Oil production increase: ~14% growth in Bbls per day.
- Capital expenditures expected to remain stable at ~$1.05 billion to $1.20 billion.
First Quarter 2025 Acquisition: Upton County, TX
On February 11, 2025, NOG entered into an agreement to acquire 2,275 net acres in Upton County, TX, within the Midland Basin. The deal, valued at $40 million, strengthens NOG’s joint development efforts with a private operator. The transaction is expected to close in the second quarter, with associated development costs included in the Company’s 2025 capital expenditure guidance.
