Company Quick10K Filing
Quick10K
Northern Oil & Gas
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$1.88 382 $719
10-Q 2019-09-30 Quarter: 2019-09-30
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-11-08 Enter Agreement, Earnings, Exhibits
8-K 2019-10-30 Earnings, Exhibits
8-K 2019-09-04 Officers, Regulation FD, Exhibits
8-K 2019-08-01 Earnings, Exhibits
8-K 2019-07-31 Officers, Regulation FD, Exhibits
8-K 2019-07-24 Earnings, Exhibits
8-K 2019-07-16
8-K 2019-07-01 Enter Agreement, M&A, Off-BS Arrangement, Sale of Shares, Regulation FD, Exhibits
8-K 2019-06-28 Regulation FD
8-K 2019-06-03 Sale of Shares
8-K 2019-05-23
8-K 2019-05-09 Earnings, Exhibits
8-K 2019-04-18 Enter Agreement, Sale of Shares, Regulation FD, Exhibits
8-K 2019-03-12 Earnings, Exhibits
8-K 2019-03-07 Earnings, Exhibits
8-K 2019-02-28 Other Events
8-K 2019-01-22 Earnings, Exhibits
8-K 2018-12-31 Enter Agreement, Exhibits
8-K 2018-12-12 Regulation FD, Other Events, Exhibits
8-K 2018-11-08 Earnings, Exhibits
8-K 2018-10-05 Enter Agreement, Off-BS Arrangement, Regulation FD, Exhibits
8-K 2018-09-25 Enter Agreement, M&A, Sale of Shares, Regulation FD, Exhibits
8-K 2018-09-21 Enter Agreement, Exhibits
8-K 2018-09-21 Other Events, Exhibits
8-K 2018-09-19 Regulation FD, Exhibits
8-K 2018-09-14 Enter Agreement, M&A, Sale of Shares, Regulation FD, Exhibits
8-K 2018-09-11 Regulation FD, Exhibits
8-K 2018-08-23 Officers, Amend Bylaw, Shareholder Vote, Exhibits
8-K 2018-08-07 Other Events, Exhibits
8-K 2018-08-06 Earnings, Sale of Shares, Exhibits
8-K 2018-07-27 Enter Agreement, Earnings, Sale of Shares, Regulation FD, Exhibits
8-K 2018-07-17 Enter Agreement, Sale of Shares, Regulation FD, Exhibits
8-K 2018-07-09 Accountant
8-K 2018-07-05 Officers, Regulation FD, Exhibits
8-K 2018-06-20 Sale of Shares
8-K 2018-06-18 Sale of Shares
8-K 2018-06-12 Sale of Shares, Other Events
8-K 2018-06-04 Other Events, Exhibits
8-K 2018-06-01 Accountant, Officers, Exhibits
8-K 2018-05-24 Officers, Exhibits
8-K 2018-05-15 Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K 2018-05-09 Shareholder Rights, Amend Bylaw, Exhibits
8-K 2018-05-08 Shareholder Vote
8-K 2018-04-26 Regulation FD, Exhibits
8-K 2018-04-05 Other Events, Exhibits
8-K 2018-04-02 Enter Agreement, Exhibits
8-K 2018-03-20 Enter Agreement, Exhibits
8-K 2018-03-18 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-02-26 Regulation FD, Exhibits
8-K 2018-02-22 Earnings, Exhibits
8-K 2018-01-31 Enter Agreement, Earnings, Sale of Shares, Officers, Regulation FD, Exhibits
TOT Total 129,654
MRO Marathon Oil 9,979
KOS Kosmos Energy 2,428
AR Antero Resources 1,042
CRZO Carrizo Oil & Gas 795
CRC California Resources 499
TTI Tetra Technologies 205
GDP Goodrich Petroleum 135
SAEX Saexploration Holdings 10
PES Pioneer Energy Services 7
NOG 2019-09-30
Part I - Financial Information
Item 1. Condensed Financial Statements.
Note 1 Organization and Nature of Business
Note 2 Basis of Presentation and Significant Accounting Policies
Note 3 Crude Oil and Natural Gas Properties
Note 4 Long-Term Debt
Note 5 Common and Preferred Stock
Note 6 Stock-Based Compensation
Note 7 Related Party Transactions
Note 8 Commitments & Contingencies
Note 9 Income Taxes
Note 10 Fair Value
Note 11 Derivative Instruments and Price Risk Management
Note 12 Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-31.1 exhibit31120190930-10q.htm
EX-31.2 exhibit31220190930-10q.htm
EX-32.1 exhibit32120190930-10q.htm

Northern Oil & Gas Earnings 2019-09-30

NOG 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________________________
FORM 10-Q
_________________________________
 
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ____________ to____________
 
Commission File No. 001-33999
NORTHERN OIL AND GAS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware95-3848122
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer Identification No.)
601 Carlson Pkwy – Suite 990
Minnetonka, Minnesota 55305
(Address of Principal Executive Offices)
(952) 476-9800
(Registrant’s Telephone Number)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001NOG
NYSE American
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No

Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer  
Accelerated Filer  
Non-Accelerated Filer    

Smaller Reporting Company  
Emerging Growth Company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No

As of November 8, 2019, there were 405,787,759 shares of our common stock, par value $0.001, outstanding.


Table of Contents
GLOSSARY OF TERMS

Unless otherwise indicated in this report, natural gas volumes are stated at the legal pressure base of the state or geographic area in which the reserves are located at 60 degrees Fahrenheit.  Crude oil and natural gas equivalents are determined using the ratio of six Mcf of natural gas to one barrel of crude oil, condensate or natural gas liquids.

The following definitions shall apply to the technical terms used in this report.

Terms used to describe quantities of crude oil and natural gas:

Bbl.”  One stock tank barrel, of 42 U.S. gallons liquid volume, used herein in reference to crude oil, condensate or NGLs.

Boe.”  A barrel of oil equivalent and is a standard convention used to express crude oil, NGL and natural gas volumes on a comparable crude oil equivalent basis. Gas equivalents are determined under the relative energy content method by using the ratio of 6.0 Mcf of natural gas to 1.0 Bbl of crude oil or NGL.

Boepd. Boe per day.

Btu or British Thermal Unit.”  The quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

MBbl.”  One thousand barrels of crude oil, condensate or NGLs.

MBoe.”  One thousand Boe.

Mcf.”  One thousand cubic feet of natural gas.

MMBbl.”  One million barrels of crude oil, condensate or NGLs.

MMBoe.”  One million Boe.

MMBtu.”  One million British Thermal Units.

MMcf.”  One million cubic feet of natural gas.

NGLs.”  Natural gas liquids.  Hydrocarbons found in natural gas that may be extracted as liquefied petroleum gas and natural gasoline.

Terms used to describe our interests in wells and acreage:

Basin.”  A large natural depression on the earth’s surface in which sediments generally brought by water accumulate.

Completion.”  The process of treating a drilled well followed by the installation of permanent equipment for the production of crude oil, NGLs, and/or natural gas.

Conventional play.”  An area that is believed to be capable of producing crude oil, NGLs, and natural gas occurring in discrete accumulations in structural and stratigraphic traps.

Costless Collar. An option position where the proceeds from the sale of a call option at its inception fund the purchase of a put option at its inception.

Developed acreage.”  Acreage consisting of leased acres spaced or assignable to productive wells.  Acreage included in spacing units of infill wells is classified as developed acreage at the time production commences from the initial well in the spacing unit.  As such, the addition of an infill well does not have any impact on a company’s amount of developed acreage.

Development well.”  A well drilled within the proved area of a crude oil, NGL, or natural gas reservoir to the depth of a stratigraphic horizon (rock layer or formation) known to be productive for the purpose of extracting proved crude oil, NGL, or natural gas reserves.
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Differential.” The difference between a benchmark price of crude oil and natural gas, such as the NYMEX crude oil spot price, and the wellhead price received.

Dry hole.”  A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes.

Exploratory well.”  A well drilled to find and produce crude oil, NGLs, or natural gas in an unproved area, to find a new reservoir in a field previously found to be producing crude oil, NGLs, or natural gas in another reservoir, or to extend a known reservoir.

Field.”  An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.

Formation.”  A layer of rock which has distinct characteristics that differs from nearby rock.

Gross acres or Gross wells.”  The total acres or wells, as the case may be, in which a working interest is owned.

Held by operations.”  A provision in an oil and gas lease that extends the stated term of the lease as long as drilling operations are ongoing on the property.

Held by production.”  A provision in an oil and gas lease that extends the stated term of the lease as long as the property produces a minimum quantity of crude oil, NGLs, and natural gas.

Hydraulic fracturing.”  The technique of improving a well’s production by pumping a mixture of fluids into the formation and rupturing the rock, creating an artificial channel. As part of this technique, sand or other material may also be injected into the formation to keep the channel open, so that fluids or natural gases may more easily flow through the formation.

Infill well.”  A subsequent well drilled in an established spacing unit of an already established productive well in the spacing unit.  Acreage on which infill wells are drilled is considered developed commencing with the initial productive well established in the spacing unit.  As such, the addition of an infill well does not have any impact on a company’s amount of developed acreage.

Net acres.”  The percentage ownership of gross acres.  Net acres are deemed to exist when the sum of fractional ownership working interests in gross acres equals one (e.g., a 10% working interest in a lease covering 640 gross acres is equivalent to 64 net acres).

Net well.”  A well that is deemed to exist when the sum of fractional ownership working interests in gross wells equals one.

NYMEX.”  The New York Mercantile Exchange.

OPEC.”  The Organization of Petroleum Exporting Countries.

Productive well.”  A well that is found to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of the production exceed production expenses and taxes.

Recompletion.”  The process of treating a drilled well followed by the installation of permanent equipment for the production of crude oil, NGLs or natural gas or, in the case of a dry hole, the reporting of abandonment to the appropriate agency.

Reservoir.”  A porous and permeable underground formation containing a natural accumulation of producible crude oil, NGLs and/or natural gas that is confined by impermeable rock or water barriers and is separate from other reservoirs.

Spacing.”  The distance between wells producing from the same reservoir.  Spacing is often expressed in terms of acres, e.g., 40-acre spacing, and is often established by regulatory agencies.

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Unconventional play.”  An area believed to be capable of producing crude oil, NGLs, and/or natural gas occurring in cumulations that are regionally extensive but require recently developed technologies to achieve profitability.  These areas tend to have low permeability and may be closely associated with source rock as this is the case with crude oil and natural gas shale, tight crude oil and natural gas sands and coal bed methane.

Undeveloped acreage.”  Leased acreage on which wells have not been drilled or completed to a point that would permit the production of economic quantities of crude oil, NGLs, and natural gas, regardless of whether such acreage contains proved reserves.  Undeveloped acreage includes net acres held by operations until a productive well is established in the spacing unit.

Unit.”  The joining of all or substantially all interests in a reservoir or field, rather than a single tract, to provide for development and operation without regard to separate property interests.  Also, the area covered by a unitization agreement.

Wellbore.”  The hole drilled by the bit that is equipped for natural gas production on a completed well.  Also called well or borehole.

West Texas Intermediate or WTI.”  A light, sweet blend of oil produced from the fields in West Texas.

Working interest.”  The right granted to the lessee of a property to explore for and to produce and own crude oil, NGLs, natural gas or other minerals. The working interest owners bear the exploration, development, and operating costs on either a cash, penalty, or carried basis.

“Workover.” Operations on a producing well to restore or increase production.

Terms used to assign a present value to or to classify our reserves:

Possible reserves.”  The additional reserves which analysis of geoscience and engineering data suggest are less likely to be recoverable than probable reserves.

Pre-tax PV-10% or PV-10.”  The estimated future net revenue, discounted at a rate of 10% per annum, before income taxes and with no price or cost escalation or de-escalation in accordance with guidelines promulgated by the SEC.

Probable reserves.”  The additional reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than proved reserves but which together with proved reserves, are as likely as not to be recovered.

Proved developed producing reserves (PDPs).”  Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods.  Additional crude oil, NGLs, and natural gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery are included in “proved developed reserves” only after testing by a pilot project or after the operation of an installed program has confirmed through production response that increased recovery will be achieved.

Proved developed non-producing reserves (PDNPs). Proved crude oil, NGLs, and natural gas reserves that are developed behind pipe, shut-in or that can be recovered through improved recovery only after the necessary equipment has been installed, or when the costs to do so are relatively minor.  Shut-in reserves are expected to be recovered from (1) completion intervals which are open at the time of the estimate but which have not started producing, (2) wells that were shut-in for market conditions or pipeline connections, or (3) wells not capable of production for mechanical reasons. Behind-pipe reserves are expected to be recovered from zones in existing wells that will require additional completion work or future recompletion prior to the start of production.

Proved reserves.”  The quantities of crude oil, NGLs and natural gas, which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible, from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.  The project to extract the hydrocarbons must have commenced, or the operator must be reasonably certain that it will commence the project, within a reasonable time.

Proved undeveloped drilling location.”  A site on which a development well can be drilled consistent with spacing rules for purposes of recovering proved undeveloped reserves.

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Proved undeveloped reserves” or PUDs.”  Reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for development. Reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved reserves for other undrilled units are claimed only where it can be demonstrated with reasonable certainty that there is continuity of production from the existing productive formation.  Estimates for proved undeveloped reserves will not be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir or an analogous reservoir.

(i) The area of the reservoir considered as proved includes: (A) the area identified by drilling and limited by fluid contacts, if any, and (B) adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible crude oil, NGLs or natural gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (“LKH”) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (“HKO”) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) the project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average during the twelve-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based on future conditions.

Standardized measure.”  Discounted future net cash flows estimated by applying year-end prices to the estimated future production of year-end proved reserves. Future cash inflows are reduced by estimated future production and development costs based on period end costs to determine pre-tax cash inflows. Future income taxes, if applicable, are computed by applying the statutory tax rate to the excess of pre-tax cash inflows over our tax basis in the oil and natural gas properties. Future net cash inflows after income taxes are discounted using a 10% annual discount rate.

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NORTHERN OIL AND GAS, INC.
FORM 10-Q

September 30, 2019

C O N T E N T S

 Page
PART I – FINANCIAL INFORMATION 
  
Item 1.Condensed Financial Statements (unaudited)
Condensed Balance Sheets
Condensed Statements of Operations
Condensed Statements of Cash Flows
Condensed Statements of Stockholders’ Equity
Notes to Condensed Financial Statements
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Item 3.Quantitative and Qualitative Disclosures about Market Risk
 
Item 4. Controls and Procedures
 
PART II – OTHER INFORMATION
 
Item 1.Legal Proceedings
 
Item 1A.Risk Factors
 
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
 
Item 6.Exhibits
 
Signatures

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PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements.
NORTHERN OIL AND GAS, INC.
CONDENSED BALANCE SHEETS

(In thousands, except par value and share data)September 30, 2019December 31, 2018
ASSETS(Unaudited)
Current Assets:  
Cash and Cash Equivalents$1,901  $2,358  
Accounts Receivable, Net103,226  96,353  
Advances to Operators1,314  268  
Prepaid Expenses and Other2,717  12,360  
Derivative Instruments62,531  115,870  
Income Tax Receivable420  1,205  
Total Current Assets172,110  228,415  
Property and Equipment:  
Oil and Natural Gas Properties, Full Cost Method of Accounting  
Proved4,043,897  3,431,428  
Unproved11,145  4,307  
Other Property and Equipment1,999  998  
Total Property and Equipment4,057,041  3,436,732  
Less – Accumulated Depreciation, Depletion and Impairment(2,380,086) (2,233,987) 
Total Property and Equipment, Net1,676,955  1,202,745  
Derivative Instruments42,682  61,843  
Deferred Income Taxes420  420  
Other Noncurrent Assets, Net9,842  10,223  
Total Assets$1,902,009  $1,503,645  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:  
Accounts Payable$112,698  $55,015  
Accrued Liabilities90,114  83,237  
Accrued Interest17,567  16,468  
Debt Exchange Derivative  18,183  
Contingent Consideration10,058  58,069  
Other Current Liabilities387  555  
Total Current Liabilities230,824  231,526  
Long-term Debt, Net1,140,072  830,203  
Asset Retirement Obligations16,582  11,946  
Other Noncurrent Liabilities417  105  
TOTAL LIABILITIES$1,387,894  $1,073,780  
COMMITMENTS AND CONTINGENCIES (NOTE 8)
STOCKHOLDERS’ EQUITY  
Preferred Stock, Par Value $.001; 5,000,000 Authorized, No Shares Outstanding
    
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Common Stock, Par Value $.001; 675,000,000 Shares Authorized;
404,346,470 Shares Outstanding at 9/30/2019
378,333,070 Shares Outstanding at 12/31/2018
404  378  
Additional Paid-In Capital1,278,976  1,226,371  
Retained Deficit(765,266) (796,884) 
Total Stockholders’ Equity514,114  429,865  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$1,902,009  $1,503,645  

The accompanying notes are an integral part of these condensed financial statements.
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NORTHERN OIL AND GAS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands, except share and per share data)2019201820192018
REVENUES    
Oil and Gas Sales$157,989  $145,416  $440,519  $341,343  
Gain (Loss) on Derivative Instruments, Net75,892  (43,148) (27,139) (105,622) 
Other Revenue3  2  10  5  
Total Revenues233,883  102,269  413,389  235,729  
OPERATING EXPENSES    
Production Expenses32,347  18,161  83,146  45,198  
Production Taxes15,391  13,579  41,944  31,633  
General and Administrative Expense4,206  4,674  15,506  9,593  
Depletion, Depreciation, Amortization and Accretion55,566  30,258  146,791  71,485  
Impairment of Other Current Assets5,275    7,969    
Total Operating Expenses112,784  66,673  295,355  157,909  
INCOME FROM OPERATIONS121,100  35,597  118,034  77,820  
OTHER INCOME (EXPENSE)    
Interest Expense, Net of Capitalization(21,510) (20,438) (58,836) (65,948) 
Loss on the Extinguishment of Debt  (9,542) (425) (100,375) 
Debt Exchange Derivative Gain/(Loss)(23) 13,063  1,390  13,063  
Contingent Consideration Loss(5,262)   (28,633)   
Other Income (Expense)75  299  88  838  
Total Other Income (Expense)(26,719) (16,618) (86,416) (152,423) 
INCOME (LOSS) BEFORE INCOME TAXES94,381  18,979  31,619  (74,603) 
INCOME TAX PROVISION (BENEFIT)        
NET INCOME (LOSS)$94,381  $18,979  $31,619  $(74,603) 
Net Income (Loss) Per Common Share – Basic$0.24  $0.06  $0.08  $(0.40) 
Net Income (Loss) Per Common Share – Diluted$0.24  $0.06  $0.08  $(0.40) 
Weighted Average Shares Outstanding – Basic396,044,887  300,517,497  382,044,068  188,152,998  
Weighted Average Shares Outstanding – Diluted396,530,767  301,755,419  382,744,304  188,152,998  
The accompanying notes are an integral part of these condensed financial statements.
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NORTHERN OIL AND GAS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Nine Months Ended
September 30,
(In thousands)20192018
CASH FLOWS FROM OPERATING ACTIVITIES  
Net Income (Loss)$31,619  $(74,603) 
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:  
Depletion, Depreciation, Amortization and Accretion146,791  71,485  
Amortization of Debt Issuance Costs3,948  3,772  
Loss on Extinguishment of Debt425  100,375  
Amortization of Bond (Premium) Discount on Long-term Debt(2,165) 198  
Unrealized Loss of Derivative Instruments62,806  72,303  
Gain on Debt Exchange Derivative(1,390) (13,063) 
Loss on Contingent Consideration28,633    
PIK Interest on Second Lien Notes1,742    
Stock-Based Compensation Expense4,280  2,092  
Impairment of Other Current Assets7,969    
Other(41) (112) 
Changes in Working Capital and Other Items:  
Accounts Receivable, Net(6,589) (43,341) 
Prepaid and Other Expenses1,674  (3,216) 
Accounts Payable1,058  4,349  
Accrued Interest2,813  6,128  
Accrued Liabilities6,916  48  
Payment of Contingent Consideration(21,164)   
Net Cash Provided by Operating Activities269,323  126,416  
CASH FLOWS FROM INVESTING ACTIVITIES  
Drilling and Development Capital Expenditures(206,306) (164,584) 
Acquisition of Oil and Natural Gas Properties(210,642) (125,487) 
Acquisition Deposit  (20,000) 
Proceeds from Sale of Oil and Natural Gas Properties  22  
Proceeds from Sale of Other Property and Equipment  46  
Purchases of Other Property and Equipment(1,001) (87) 
Net Cash Used for Investing Activities(417,948) (310,090) 
CASH FLOWS FROM FINANCING ACTIVITIES  
Advances on Revolving Credit Facility313,000    
Repayments on Revolving Credit Facility(126,000)   
Borrowings on Term Loan Credit Agreement  60,000  
Repurchases of Second Lien Notes(10,488)   
Debt Issuance Costs Paid(328) (6,838) 
Debt Exchange Derivative Settlements(1,044)   
Contingent Consideration Settlements(11,278)   
Issuance of Common Stock  141,710  
Repurchases of Common Stock(15,108)   
Restricted Stock Surrenders - Tax Obligations(584) (415) 
Net Cash Provided by Financing Activities148,169  194,457  
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(456) 10,783  
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD2,358  102,183  
CASH AND CASH EQUIVALENTS – END OF PERIOD1,901  112,966  
The accompanying notes are an integral part of these condensed financial statements.
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NORTHERN OIL AND GAS, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)

 Common StockAdditional Paid-InRetainedTotal Stockholders’
(In thousands, except share data)SharesAmountCapitalDeficitEquity
December 31, 2018378,333,070  $378  $1,226,371  $(796,884) $429,865  
Issuance of Common Stock3,160,200  3  —  —  3  
Restricted Stock Forfeitures(4,802) —  —  —    
Stock-Based Compensation—  —  2,832  —  2,832  
Restricted Stock Surrenders - Tax Obligations(220,531) —  (558) —  (558) 
Repurchases of Common Stock(5,635,003) (6) (15,102) —  (15,108) 
Contingent Consideration Settlements1,167,544  1  2,886  —  2,887  
Net Loss—  —  —  (107,162) (107,162) 
March 31, 2019376,800,478  $377  $1,216,429  $(904,046) $312,760  
Issuance of Common Stock9,000    —  —    
Restricted Stock Forfeitures(402,033) —  —  —    
Stock-Based Compensation—  —  1,750  —  1,750  
Restricted Stock Surrenders - Tax Obligations(9,440) —  (26) —  (26) 
Debt Exchange Agreements5,249,879  5  12,186  —  12,192  
Contingent Consideration Settlements7,788,107  8  18,567  —  18,575  
Net Income—  —  —  44,399  44,399  
June 30, 2019389,435,991  $389  $1,248,906  $(859,647) $389,649  
Restricted Stock Forfeitures(45,600) —  —  —    
Stock-Based Compensation—  —  (8) —  (8) 
Debt Exchange Agreements1,985,530  2  3,541  —  3,543  
Acquisition of Oil and Natural Gas Properties5,602,147  6  11,703  —  11,708  
Contingent Consideration Settlements7,368,402  7  14,833  —  14,841  
Net Income—  —  —  94,381  94,381  
September 30, 2019404,346,470  404  1,278,976  (765,266) 514,114  



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Common StockAdditional Paid-InRetainedTotal Stockholders’
(In thousands, except share data)SharesAmountCapitalDeficitEquity (Deficit)
December 31, 201766,791,633  $67  $449,666  $(940,574) $(490,841) 
Issuance of Common Stock127,999  —  —  —    
Restricted Stock Forfeitures(892,086) (1) —  —  (1) 
Stock-Based Compensation—  —  (712) —  (712) 
Restricted Stock Surrenders - Tax Obligations(89,601) —  (188) —  (188) 
Net Income—  —  —  2,965  2,965  
March 31, 201865,937,945  $66  $448,766  $(937,609) $(488,776) 
Issuance of Common Stock3,025,303  3  —  —  3  
Stock-Based Compensation—  —  1,397  —  1,397  
Restricted Stock Surrenders - Tax Obligations(63,820) —  (161) —  (161) 
Equity Offerings96,926,019  97  141,613  —  141,710  
Debt Exchange Agreements121,774,822  122  279,192  —  279,314  
Acquisition of Oil and Natural Gas Properties6,000,000  6  15,234  —  15,240  
Net Loss—  —  —  (96,547) (96,547) 
June 30, 2018293,600,269  $294  $886,041  $(1,034,155) $(147,820) 
Issuance of Common Stock42,000    —  —    
Restricted Stock Forfeitures(18,000) —  —  —    
Stock-Based Compensation—  —  1,655  —  1,655  
Restricted Stock Surrenders - Tax Obligations(19,338) —  (66) —  (66) 
Equity Offerings      —    
Debt Exchange Agreements14,288,977  14  48,171  —  48,185  
Acquisition of Oil and Natural Gas Properties26,253,578  26  90,251  —  90,277  
Net Exercise of Stock Options62,500  —  —  —    
Net Income—  —  —  18,979  18,979  
September 30, 2018334,209,986  334  1,026,053  (1,015,177) 11,210  

The accompanying notes are an integral part of these condensed financial statements.
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NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(UNAUDITED)

NOTE 1     ORGANIZATION AND NATURE OF BUSINESS

Northern Oil and Gas, Inc. (the “Company,” “Northern,” “our” and words of similar import), a Delaware corporation, is an independent energy company engaged in the acquisition, exploration, exploitation, development and production of crude oil and natural gas properties. The Company’s common stock trades on the NYSE American market under the symbol “NOG”.

Northern’s principal business is crude oil and natural gas exploration, development, and production with operations in North Dakota and Montana that primarily target the Bakken and Three Forks formations in the Williston Basin of the United States. The Company acquires leasehold interests that comprise of non-operated working interests in wells and in drilling projects within its area of operations.

For the nine months ended September 30, 2019, crude oil accounted for 81% of the Company’s total production and 94% of its oil and gas sales.


NOTE 2     BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial information included herein is unaudited. The balance sheet as of December 31, 2018 has been derived from the Company’s audited financial statements for the year ended December 31, 2018. However, such information includes all adjustments (consisting of normal recurring adjustments and change in accounting principles) that are, in the opinion of management, necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods. The results of operations for interim periods are not necessarily indicative of the results to be expected for an entire year.

Certain information, accounting policies, and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted in this Form 10-Q pursuant to certain rules and regulations of the Securities and Exchange Commission (“SEC”).  The condensed financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2018, which were included in the Company’s 2018 Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

The preparation of financial statements under GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  The most significant estimates relate to proved crude oil and natural gas reserves, estimates relating to certain crude oil and natural gas revenues and expenses, fair value of derivative instruments, fair value of contingent consideration, acquisition date fair values of assets acquired and liabilities assumed, impairment of oil and natural gas properties, asset retirement obligations and deferred income taxes.  Actual results may differ from those estimates.

Reclassifications

Certain prior period balances in the balance sheets have been reclassified to conform to the current year presentation. Such reclassifications had no impact on net income, cash flows or stockholders’ equity previously reported.

Correction of Presentation

Subsequent to the issuance of the Company’s condensed financial statements as of and for the period ended September 30, 2018, the Company identified an immaterial error in the supplemental footnote disclosure of non-cash investing activities in which a “Change in Prepaid Expenses and Other” was improperly included in the amount of $12.4 million. Accordingly, within the “Supplemental Cash Flow Information” section included in this Note 2 below, the Company has removed the line item previously reported as the amount of “Change in Prepaid Expenses and Other.” The error did not impact the Statement of Cash Flows.


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Adopted and Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”). The objective of this ASU is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. FASB subsequently issued various ASUs which provided additional implementation guidance, and these ASUs collectively make up FASB ASC Topic 842 – Leases (“ASC 842”). ASC 842 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The standard permits retrospective application through recognition of a cumulative-effect adjustment at the beginning of either the earliest reporting period presented or the period of adoption. ASC 842 does not apply to leases used in the exploration or use of minerals, oil, natural gas, or other similar non-regenerative resources. The Company adopted ASC 842 effective January 1, 2019 using the modified retrospective method as of the adoption date. The Company has completed the assessment of its existing accounting policies and enhancement of its internal controls. The standard did not have a material impact on the Company’s condensed balance sheets, statement of operations or cash flows.

In June 2016 FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace the currently required incurred loss approach with an expected loss model for instruments measured at amortized cost. The standard is effective for interim and annual periods beginning after December 15, 2019 and shall be applied using a modified retrospective approach resulting in a cumulative effect adjustment to retained earnings upon adoption. The Company continues to evaluate the new standard and is unable to estimate its financial statement impact at this time; however, the impact is not expected to be material.

Revenue Recognition

The Company’s revenues are primarily derived from its interests in the sale of oil and natural gas production. The Company recognizes revenue from its interests in the sales of oil and natural gas in the period that its performance obligations are satisfied. Performance obligations are satisfied when the customer obtains control of product, when the Company has no further obligations to perform related to the sale, when the transaction price has been determined and when collectability is probable. The sales of oil and natural gas are made under contracts which the third-party operators of the wells have negotiated with customers, which typically include variable consideration that is based on pricing tied to local indices and volumes delivered in the current month. The Company receives payment from the sale of oil and natural gas production from one to three months after delivery. At the end of each month when the performance obligation is satisfied, the variable consideration can be reasonably estimated and amounts due from customers are accrued in trade receivables, net in the balance sheets. Variances between the Company’s estimated revenue and actual payments are recorded in the month the payment is received, however, differences have been and are insignificant. Accordingly, the variable consideration is not constrained.

The Company does not disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical exemption in accordance with ASC 606. The exemption, as described in ASC 606-10-50-14(a), applies to variable consideration that is recognized as control of the product is transferred to the customer. Since each unit of product represents a separate performance obligation, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.

The Company’s oil is typically sold at delivery points under contracts terms that are common in our industry. The Company’s natural gas produced is delivered by the well operators to various purchasers at agreed upon delivery points under a limited number of contract types that are also common in our industry. Regardless of the contract type, the terms of these contracts compensate the well operators for the value of the oil and natural gas at specified prices, and then the well operators will remit payment to the Company for its share in the value of the oil and natural gas sold.

A wellhead imbalance liability equal to the Company’s share is recorded to the extent that the Company’s well operators have sold volumes in excess of its share of remaining reserves in an underlying property. However, for the three and nine months ended September 30, 2019 and 2018, the Company’s natural gas production was in balance, meaning its cumulative portion of natural gas production taken and sold from wells in which it has an interest equaled its entitled interest in natural gas production from those wells.


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The Company’s disaggregated revenue has two revenue sources, which are oil sales and natural gas and NGL sales, and the Company only operates in one geographic area, the Williston Basin in the United States, primarily in North Dakota and Montana. Oil sales for the three months ended September 30, 2019 and 2018 were $152.8 million and $135.0 million, respectively. Natural gas and NGL sales for the three months ended September 30, 2019 and 2018 were $5.2 million and $10.4 million, respectively. Oil sales for the nine months ended September 30, 2019 and 2018 were $416.3 million and $315.2 million, respectively. Natural gas and NGL sales for the nine months ended September 30, 2019 and 2018 were $24.3 million and $26.2 million, respectively.

Net Income (Loss) Per Common Share

Basic earnings per share (“EPS”) are computed by dividing net income (loss) (the numerator) by the weighted average number of common shares outstanding for the period (the denominator).  Diluted EPS is computed by dividing net income (loss) by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period.  Potential common shares include stock options and restricted stock.  The number of potential common shares outstanding relating to stock options and restricted stock is computed using the treasury stock method.

The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the three and nine months ended September 30, 2019 and 2018 are as follows:

 Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands, except share and per share data)20192018