10-Q 1 nog-20240331.htm 10-Q nog-20240331
Q1FALSE2024--12-310001104485http://fasb.org/us-gaap/2023#OilAndGasMember http://fasb.org/us-gaap/2023#ProductAndServiceOtherMemberhttp://fasb.org/us-gaap/2023#OilAndGasMember http://fasb.org/us-gaap/2023#ProductAndServiceOtherMemberhttp://fasb.org/us-gaap/2023#OilAndGasMember http://fasb.org/us-gaap/2023#ProductAndServiceOtherMemberhttp://fasb.org/us-gaap/2023#OilAndGasMember http://fasb.org/us-gaap/2023#ProductAndServiceOtherMemberP1M0.02631040.0265943P3Y00011044852024-01-012024-03-3100011044852024-04-26xbrli:shares00011044852024-03-31iso4217:USD00011044852023-12-31iso4217:USDxbrli:shares00011044852023-01-012023-03-310001104485nog:OilGasAndNaturalGasProductionMember2024-01-012024-03-310001104485nog:OilGasAndNaturalGasProductionMember2023-01-012023-03-310001104485us-gaap:ProductAndServiceOtherMember2024-01-012024-03-310001104485us-gaap:ProductAndServiceOtherMember2023-01-012023-03-3100011044852022-12-3100011044852023-03-310001104485us-gaap:CommonStockMember2023-12-310001104485us-gaap:PreferredStockMember2023-12-310001104485us-gaap:AdditionalPaidInCapitalMember2023-12-310001104485us-gaap:RetainedEarningsMember2023-12-310001104485us-gaap:CommonStockMember2024-01-012024-03-310001104485us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001104485us-gaap:RetainedEarningsMember2024-01-012024-03-310001104485us-gaap:CommonStockMember2024-03-310001104485us-gaap:PreferredStockMember2024-03-310001104485us-gaap:AdditionalPaidInCapitalMember2024-03-310001104485us-gaap:RetainedEarningsMember2024-03-310001104485us-gaap:CommonStockMember2022-12-310001104485us-gaap:PreferredStockMember2022-12-310001104485us-gaap:AdditionalPaidInCapitalMember2022-12-310001104485us-gaap:RetainedEarningsMember2022-12-310001104485us-gaap:CommonStockMember2023-01-012023-03-310001104485us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001104485us-gaap:RetainedEarningsMember2023-01-012023-03-310001104485us-gaap:CommonStockMember2023-03-310001104485us-gaap:PreferredStockMember2023-03-310001104485us-gaap:AdditionalPaidInCapitalMember2023-03-310001104485us-gaap:RetainedEarningsMember2023-03-310001104485srt:MinimumMember2024-01-012024-03-310001104485srt:MaximumMember2024-01-012024-03-31nog:revenueSourcenog:geographicArea0001104485nog:WillistonMembersrt:OilReservesMember2024-01-012024-03-310001104485nog:PermianMembersrt:OilReservesMember2024-01-012024-03-310001104485nog:AppalachianMembersrt:OilReservesMember2024-01-012024-03-310001104485srt:OilReservesMember2024-01-012024-03-310001104485nog:WillistonMembersrt:OilReservesMember2023-01-012023-03-310001104485nog:PermianMembersrt:OilReservesMember2023-01-012023-03-310001104485nog:AppalachianMembersrt:OilReservesMember2023-01-012023-03-310001104485srt:OilReservesMember2023-01-012023-03-310001104485nog:WillistonMembernog:NaturalGasandNGLMember2024-01-012024-03-310001104485nog:PermianMembernog:NaturalGasandNGLMember2024-01-012024-03-310001104485nog:AppalachianMembernog:NaturalGasandNGLMember2024-01-012024-03-310001104485nog:NaturalGasandNGLMember2024-01-012024-03-310001104485nog:WillistonMembernog:NaturalGasandNGLMember2023-01-012023-03-310001104485nog:PermianMembernog:NaturalGasandNGLMember2023-01-012023-03-310001104485nog:AppalachianMembernog:NaturalGasandNGLMember2023-01-012023-03-310001104485nog:NaturalGasandNGLMember2023-01-012023-03-310001104485nog:OtherMembernog:WillistonMember2024-01-012024-03-310001104485nog:PermianMembernog:OtherMember2024-01-012024-03-310001104485nog:AppalachianMembernog:OtherMember2024-01-012024-03-310001104485nog:OtherMember2024-01-012024-03-310001104485nog:OtherMembernog:WillistonMember2023-01-012023-03-310001104485nog:PermianMembernog:OtherMember2023-01-012023-03-310001104485nog:AppalachianMembernog:OtherMember2023-01-012023-03-310001104485nog:OtherMember2023-01-012023-03-310001104485us-gaap:OilAndGasMembernog:WillistonMember2024-01-012024-03-310001104485nog:PermianMemberus-gaap:OilAndGasMember2024-01-012024-03-310001104485us-gaap:OilAndGasMembernog:AppalachianMember2024-01-012024-03-310001104485us-gaap:OilAndGasMember2024-01-012024-03-310001104485us-gaap:OilAndGasMembernog:WillistonMember2023-01-012023-03-310001104485nog:PermianMemberus-gaap:OilAndGasMember2023-01-012023-03-310001104485us-gaap:OilAndGasMembernog:AppalachianMember2023-01-012023-03-310001104485us-gaap:OilAndGasMember2023-01-012023-03-310001104485us-gaap:OilAndGasMembernog:TopFourOperatorsMembernog:OperatorConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-31xbrli:pure0001104485nog:LargestOperatorMemberus-gaap:OilAndGasMembernog:OperatorConcentrationRiskMembersrt:MinimumMemberus-gaap:SalesRevenueNetMember2024-01-012024-03-310001104485nog:LargestOperatorMemberus-gaap:OilAndGasMembernog:OperatorConcentrationRiskMemberus-gaap:SalesRevenueNetMembersrt:MaximumMember2024-01-012024-03-310001104485us-gaap:OilAndGasMembernog:TopFourOperatorsMembernog:OperatorConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310001104485us-gaap:OilAndGasMembernog:OperatorConcentrationRiskMembersrt:MinimumMembernog:TopTwoOperatorsMemberus-gaap:SalesRevenueNetMember2023-01-012023-03-310001104485us-gaap:OilAndGasMembernog:OperatorConcentrationRiskMembernog:TopTwoOperatorsMemberus-gaap:SalesRevenueNetMembersrt:MaximumMember2023-01-012023-03-310001104485us-gaap:RestrictedStockMember2024-01-012024-03-310001104485us-gaap:RestrictedStockMember2023-01-012023-03-310001104485us-gaap:SeriesOfIndividuallyImmaterialAssetAcquisitionsMember2024-01-012024-03-310001104485nog:DelawareAcquisitionMember2024-01-012024-01-3100011044852024-01-310001104485nog:DelawareAcquisitionMember2024-01-162024-03-310001104485nog:DelawareAcquisitionMember2024-01-160001104485nog:DelawareAcquisitionMember2024-01-162024-01-160001104485us-gaap:SeriesOfIndividuallyImmaterialAssetAcquisitionsMember2023-01-012023-12-310001104485nog:MPDCMember2023-01-05utr:Ratenog:unit0001104485nog:MPDCMember2023-01-052023-01-050001104485nog:MPDCMember2023-01-052023-12-310001104485nog:ForgeAcquisitionMember2023-06-300001104485nog:ForgeEnergyIIDelawareLLCMembernog:VitalEnergyIncMember2023-06-300001104485nog:ForgeAcquisitionMember2023-06-302023-06-300001104485nog:ForgeAcquisitionMember2023-07-012024-03-310001104485nog:ForgeAcquisitionMember2023-07-012023-12-310001104485nog:NovoOilGasHoldingsIncMember2023-08-150001104485nog:EarthstoneEnergyHoldingsLLCMembernog:NovoOilGasHoldingsIncMember2023-08-150001104485nog:NovoOilGasHoldingsIncMember2023-08-152023-08-150001104485nog:NovoOilGasHoldingsIncMember2023-08-152024-03-310001104485nog:NovoOilGasHoldingsIncMember2023-08-152023-12-310001104485nog:ForgeAcquisitionMember2023-08-150001104485us-gaap:RevolvingCreditFacilityMember2024-03-310001104485us-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Member2024-03-310001104485nog:ConvertibleNotesDue2029Member2024-03-310001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMember2024-03-310001104485us-gaap:RevolvingCreditFacilityMember2023-12-310001104485us-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Member2023-12-310001104485nog:ConvertibleNotesDue2029Member2023-12-310001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMember2023-12-310001104485us-gaap:OtherNoncurrentAssetsMemberus-gaap:RevolvingCreditFacilityMember2024-03-310001104485us-gaap:OtherNoncurrentAssetsMemberus-gaap:RevolvingCreditFacilityMember2023-12-310001104485nog:ThirdAmendedAndRestatedCreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2024-03-310001104485us-gaap:SubsequentEventMembernog:ThirdAmendedAndRestatedCreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2024-04-290001104485nog:ThirdAmendedAndRestatedCreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2022-06-070001104485nog:TermLoanMembernog:ThirdAmendedAndRestatedCreditAgreementMember2024-03-310001104485us-gaap:FederalFundsEffectiveSwapRateMemberus-gaap:RevolvingCreditFacilityMember2019-11-222019-11-220001104485us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMember2019-11-222019-11-220001104485us-gaap:BaseRateMembersrt:MinimumMemberus-gaap:RevolvingCreditFacilityMember2019-11-222019-11-220001104485us-gaap:BaseRateMembersrt:MaximumMemberus-gaap:RevolvingCreditFacilityMember2019-11-222019-11-220001104485us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembersrt:MinimumMemberus-gaap:RevolvingCreditFacilityMember2019-11-222019-11-220001104485us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembersrt:MaximumMemberus-gaap:RevolvingCreditFacilityMember2019-11-222019-11-220001104485us-gaap:RevolvingCreditFacilityMember2019-11-220001104485us-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Member2021-02-180001104485us-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Member2021-11-150001104485us-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Member2023-03-310001104485us-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Member2023-01-012023-03-310001104485us-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Memberus-gaap:DebtInstrumentRedemptionPeriodTwoMember2021-02-182021-02-180001104485us-gaap:DebtInstrumentRedemptionPeriodThreeMemberus-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Member2021-02-182021-02-180001104485us-gaap:DebtInstrumentRedemptionPeriodFourMemberus-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Member2021-02-182021-02-180001104485us-gaap:DebtInstrumentRedemptionPeriodFiveMemberus-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Member2021-02-182021-02-180001104485us-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Member2021-02-182021-02-180001104485us-gaap:UnsecuredDebtMembernog:ConvertibleNotesDue2029Member2022-10-140001104485us-gaap:UnsecuredDebtMembernog:ConvertibleNotesDue2029Member2024-03-310001104485nog:ConvertibleNotesDue2029Memberus-gaap:ConvertibleDebtMember2022-10-142022-10-14nog:day0001104485us-gaap:CommonStockMember2022-10-140001104485nog:ConvertibleNotesDue2029Memberus-gaap:ConvertibleDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2022-10-142022-10-140001104485nog:ConvertibleNotesDue2029Memberus-gaap:ConvertibleDebtMember2022-10-1400011044852022-10-012022-10-310001104485us-gaap:InterestRateCapMember2022-10-1100011044852022-10-112022-10-110001104485us-gaap:CommonStockMemberus-gaap:InterestRateCapMember2022-10-110001104485us-gaap:InterestRateCapMember2024-03-310001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMember2023-05-150001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2023-05-150001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2023-05-152023-05-150001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMembersrt:ScenarioForecastMember2026-06-152026-06-150001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodOneMembersrt:ScenarioForecastMember2026-06-152026-06-150001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMembersrt:ScenarioForecastMember2026-06-150001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMembersrt:ScenarioForecastMember2026-06-150001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMembersrt:ScenarioForecastMember2026-06-152026-06-150001104485us-gaap:DebtInstrumentRedemptionPeriodTwoMembersrt:ScenarioForecastMember2026-06-152026-06-150001104485us-gaap:UnsecuredDebtMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMembersrt:ScenarioForecastMember2026-06-150001104485us-gaap:UnsecuredDebtMembernog:ConvertibleNotesDue2029Member2022-10-142022-10-140001104485us-gaap:UnsecuredDebtMembernog:ConvertibleNotesDue2029Member2024-01-012024-03-310001104485us-gaap:CommonStockMember2024-01-012024-03-310001104485nog:VeritasMember2024-03-012024-03-310001104485nog:WarrantsCancelledMembernog:VeritasMember2024-03-3100011044852024-02-012024-02-2900011044852022-05-310001104485nog:EquityIncentivePlan2018Member2024-03-310001104485nog:EmployeesAndOfficersMembersrt:MinimumMemberus-gaap:RestrictedStockMember2024-01-012024-03-310001104485nog:EmployeesAndOfficersMemberus-gaap:RestrictedStockMembersrt:MaximumMember2024-01-012024-03-310001104485srt:DirectorMemberus-gaap:RestrictedStockMember2024-01-012024-03-310001104485nog:EmployeesAndOfficersMemberus-gaap:RestrictedStockMember2024-01-012024-03-310001104485nog:ServiceBasedRSAsMember2023-12-310001104485nog:ServiceBasedRSAsMember2024-01-012024-03-310001104485nog:ServiceBasedRSAsMember2024-03-310001104485us-gaap:RestrictedStockMember2024-03-310001104485us-gaap:RestrictedStockMember2024-01-012024-03-310001104485us-gaap:RestrictedStockMember2023-01-012023-03-310001104485us-gaap:PerformanceSharesMember2022-04-012022-04-300001104485srt:MinimumMemberus-gaap:PerformanceSharesMember2022-04-012022-04-300001104485us-gaap:PerformanceSharesMembersrt:MaximumMember2022-04-012022-04-300001104485us-gaap:PerformanceSharesMember2023-01-012023-01-310001104485us-gaap:RestrictedStockUnitsRSUMember2023-12-012023-12-310001104485us-gaap:RestrictedStockUnitsRSUMembersrt:MinimumMember2023-12-310001104485us-gaap:RestrictedStockUnitsRSUMembersrt:MaximumMember2023-12-310001104485us-gaap:RestrictedStockUnitsRSUMembersrt:MinimumMember2023-12-012023-12-310001104485us-gaap:RestrictedStockUnitsRSUMembersrt:MaximumMember2023-12-012023-12-310001104485us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310001104485us-gaap:RestrictedStockUnitsRSUMember2024-03-310001104485us-gaap:PerformanceSharesMember2023-12-310001104485us-gaap:PerformanceSharesMember2024-01-012024-03-310001104485us-gaap:PerformanceSharesMember2024-03-310001104485us-gaap:StockAppreciationRightsSARSMember2024-01-012024-03-310001104485us-gaap:StockAppreciationRightsSARSMember2024-03-310001104485us-gaap:PerformanceSharesMember2022-01-012022-12-310001104485us-gaap:PerformanceSharesMember2023-01-012023-12-310001104485us-gaap:StockAppreciationRightsSARSMember2023-01-012023-12-310001104485nog:VeritasMember2022-01-012022-01-310001104485nog:VeritasMember2022-01-310001104485nog:VeritasMember2023-03-012023-03-310001104485nog:VeritasMember2023-03-310001104485nog:VeritasMember2023-12-310001104485nog:VeritasMember2024-01-012024-03-310001104485nog:VeritasMember2024-03-310001104485us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMembernog:DerivativeAssetCurrentMember2024-03-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMembernog:DerivativeAssetCurrentMember2024-03-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMembernog:DerivativeAssetCurrentMember2024-03-310001104485us-gaap:FairValueInputsLevel1Membernog:DerivativeAssetNoncurrentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMember2024-03-310001104485nog:DerivativeAssetNoncurrentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMember2024-03-310001104485nog:DerivativeAssetNoncurrentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMember2024-03-310001104485us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMembernog:DerivativeLiabilityCurrentMemberus-gaap:CommodityContractMember2024-03-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Membernog:DerivativeLiabilityCurrentMemberus-gaap:CommodityContractMember2024-03-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Membernog:DerivativeLiabilityCurrentMemberus-gaap:CommodityContractMember2024-03-310001104485us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMembernog:DerivativeLiabilityNoncurrentMemberus-gaap:CommodityContractMember2024-03-310001104485us-gaap:FairValueMeasurementsRecurringMembernog:DerivativeLiabilityNoncurrentMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMember2024-03-310001104485us-gaap:FairValueMeasurementsRecurringMembernog:DerivativeLiabilityNoncurrentMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMember2024-03-310001104485us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2024-03-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2024-03-310001104485us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMembernog:DerivativeAssetCurrentMember2023-12-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMembernog:DerivativeAssetCurrentMember2023-12-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMembernog:DerivativeAssetCurrentMember2023-12-310001104485us-gaap:FairValueInputsLevel1Membernog:DerivativeAssetNoncurrentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMember2023-12-310001104485nog:DerivativeAssetNoncurrentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMember2023-12-310001104485nog:DerivativeAssetNoncurrentMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMember2023-12-310001104485us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMembernog:DerivativeLiabilityCurrentMemberus-gaap:CommodityContractMember2023-12-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Membernog:DerivativeLiabilityCurrentMemberus-gaap:CommodityContractMember2023-12-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Membernog:DerivativeLiabilityCurrentMemberus-gaap:CommodityContractMember2023-12-310001104485us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMembernog:DerivativeLiabilityNoncurrentMemberus-gaap:CommodityContractMember2023-12-310001104485us-gaap:FairValueMeasurementsRecurringMembernog:DerivativeLiabilityNoncurrentMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMember2023-12-310001104485us-gaap:FairValueMeasurementsRecurringMembernog:DerivativeLiabilityNoncurrentMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMember2023-12-310001104485us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-12-310001104485us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-12-310001104485us-gaap:UnsecuredDebtMembernog:UnsecuredNotesDue2028Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001104485nog:ConvertibleNotesDue2029Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001104485nog:UnsecuredNotesDue2031Memberus-gaap:UnsecuredDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001104485nog:DerivativeSettlementPeriod1Membernog:WTINYMEXSwapsMember2024-03-31utr:bbl0001104485nog:WTINYMEXSwapsMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:WTINYMEXSwapsMember2024-03-310001104485nog:WTINYMEXSwapsMembernog:DerivativeSettlementPeriod4Member2024-03-31iso4217:USDutr:bbl0001104485nog:WTINYMEXSwaptionsMembernog:DerivativeSettlementPeriod1Member2024-03-310001104485nog:WTINYMEXSwaptionsMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:WTINYMEXSwaptionsMember2024-03-310001104485nog:WTINYMEXSwaptionsMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:DerivativeSettlementPeriod1Membernog:ArgusAmericanCrudeWTIMidlandToWTINYMEXBasisSwapsMember2024-03-310001104485nog:DerivativeSettlementPeriod2Membernog:ArgusAmericanCrudeWTIMidlandToWTINYMEXBasisSwapsMember2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:ArgusAmericanCrudeWTIMidlandToWTINYMEXBasisSwapsMember2024-03-310001104485nog:ArgusAmericanCrudeWTIMidlandToWTINYMEXBasisSwapsMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:WTINYMEXCallOptionsMembernog:DerivativeSettlementPeriod1Member2024-03-310001104485nog:WTINYMEXCallOptionsMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:WTINYMEXCallOptionsMembernog:DerivativeSettlementPeriod3Member2024-03-310001104485nog:WTINYMEXCallOptionsMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:BrentICECallOptionsMembernog:DerivativeSettlementPeriod1Member2024-03-310001104485nog:BrentICECallOptionsMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:BrentICECallOptionsMember2024-03-310001104485nog:BrentICECallOptionsMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:DerivativeSettlementPeriod1Membernog:WTINYMEXCollarsMembernog:CollarPutVolumeMember2024-03-31utr:MMBTU0001104485nog:DerivativeSettlementPeriod2Membernog:WTINYMEXCollarsMembernog:CollarPutVolumeMember2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:WTINYMEXCollarsMembernog:CollarPutVolumeMember2024-03-310001104485nog:WTINYMEXCollarsMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:CollarCallVolumeMembernog:DerivativeSettlementPeriod1Membernog:WTINYMEXCollarsMember2024-03-310001104485nog:CollarCallVolumeMembernog:DerivativeSettlementPeriod2Membernog:WTINYMEXCollarsMember2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:CollarCallVolumeMembernog:WTINYMEXCollarsMember2024-03-310001104485nog:CollarCallVolumeMembernog:WTINYMEXCollarsMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:DerivativeSettlementPeriod1Membernog:WTINYMEXCollarsMember2024-03-310001104485nog:WTINYMEXCollarsMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:WTINYMEXCollarsMember2024-03-310001104485nog:HenryHubNYMEXSwapsMembernog:DerivativeSettlementPeriod1Member2024-03-310001104485nog:HenryHubNYMEXSwapsMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:HenryHubNYMEXSwapsMembernog:DerivativeSettlementPeriod3Member2024-03-310001104485nog:HenryHubNYMEXSwapsMembernog:DerivativeSettlementPeriod4Member2024-03-31iso4217:USDutr:MMBTU0001104485nog:HenryHubNYMEXSwaptionsMembernog:DerivativeSettlementPeriod1Member2024-03-310001104485nog:HenryHubNYMEXSwaptionsMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:HenryHubNYMEXSwaptionsMember2024-03-310001104485nog:HenryHubNYMEXSwaptionsMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:DerivativeSettlementPeriod1Membernog:WahaInsideFERCToHenryHubBasisSwapsMember2024-03-310001104485nog:WahaInsideFERCToHenryHubBasisSwapsMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:WahaInsideFERCToHenryHubBasisSwapsMember2024-03-310001104485nog:WahaInsideFERCToHenryHubBasisSwapsMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:NETETCOM2BasisSwapsMembernog:DerivativeSettlementPeriod1Member2024-03-310001104485nog:NETETCOM2BasisSwapsMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:NETETCOM2BasisSwapsMember2024-03-310001104485nog:NETETCOM2BasisSwapsMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:DerivativeSettlementPeriod1Membernog:HenryHubNYMEXCallOptionsMember2024-03-310001104485nog:DerivativeSettlementPeriod2Membernog:HenryHubNYMEXCallOptionsMember2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:HenryHubNYMEXCallOptionsMember2024-03-310001104485nog:DerivativeSettlementPeriod4Membernog:HenryHubNYMEXCallOptionsMember2024-03-310001104485nog:HenryHubNYMEXCollarsMembernog:DerivativeSettlementPeriod1Membernog:CollarPutVolumeMember2024-03-310001104485nog:HenryHubNYMEXCollarsMembernog:DerivativeSettlementPeriod2Membernog:CollarPutVolumeMember2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:HenryHubNYMEXCollarsMember2024-03-310001104485nog:HenryHubNYMEXCollarsMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:HenryHubNYMEXCollarsMembernog:CollarCallVolumeMembernog:DerivativeSettlementPeriod1Member2024-03-310001104485nog:HenryHubNYMEXCollarsMembernog:CollarCallVolumeMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:DerivativeSettlementPeriod3Membernog:HenryHubNYMEXCollarsMembernog:CollarCallVolumeMember2024-03-310001104485nog:HenryHubNYMEXCollarsMembernog:CollarCallVolumeMembernog:DerivativeSettlementPeriod4Member2024-03-310001104485nog:HenryHubNYMEXCollarsMembernog:DerivativeSettlementPeriod1Member2024-03-310001104485nog:HenryHubNYMEXCollarsMembernog:DerivativeSettlementPeriod2Member2024-03-310001104485nog:WTINYMEXCallOptionsMembernog:DerivativeSettlementPeriod5Member2024-03-310001104485nog:CurrentAssetsMembernog:PriceSwapMember2024-03-310001104485nog:CurrentAssetsMembernog:PriceSwapMember2023-12-310001104485us-gaap:BasisSwapMembernog:CurrentAssetsMember2024-03-310001104485us-gaap:BasisSwapMembernog:CurrentAssetsMember2023-12-310001104485nog:PriceCollarMembernog:CurrentAssetsMember2024-03-310001104485nog:PriceCollarMembernog:CurrentAssetsMember2023-12-310001104485nog:PriceCallOptionsContractsMembernog:CurrentAssetsMember2024-03-310001104485nog:PriceCallOptionsContractsMembernog:CurrentAssetsMember2023-12-310001104485nog:PriceShortPutOptionsMembernog:CurrentAssetsMember2024-03-310001104485nog:PriceShortPutOptionsMembernog:CurrentAssetsMember2023-12-310001104485nog:NonCurrentAssetsMembernog:PriceSwapMember2024-03-310001104485nog:NonCurrentAssetsMembernog:PriceSwapMember2023-12-310001104485nog:NonCurrentAssetsMemberus-gaap:BasisSwapMember2024-03-310001104485nog:NonCurrentAssetsMemberus-gaap:BasisSwapMember2023-12-310001104485nog:NonCurrentAssetsMembernog:PriceCollarMember2024-03-310001104485nog:NonCurrentAssetsMembernog:PriceCollarMember2023-12-310001104485nog:PriceCallOptionsContractsMembernog:NonCurrentAssetsMember2024-03-310001104485nog:PriceCallOptionsContractsMembernog:NonCurrentAssetsMember2023-12-310001104485nog:CurrentLiabilitiesMembernog:PriceSwapMember2024-03-310001104485nog:CurrentLiabilitiesMembernog:PriceSwapMember2023-12-310001104485us-gaap:BasisSwapMembernog:CurrentLiabilitiesMember2024-03-310001104485us-gaap:BasisSwapMembernog:CurrentLiabilitiesMember2023-12-310001104485nog:PriceSwaptionsMembernog:CurrentLiabilitiesMember2024-03-310001104485nog:PriceSwaptionsMembernog:CurrentLiabilitiesMember2023-12-310001104485nog:PriceCollarMembernog:CurrentLiabilitiesMember2024-03-310001104485nog:PriceCollarMembernog:CurrentLiabilitiesMember2023-12-310001104485nog:PriceCallOptionsContractsMembernog:CurrentLiabilitiesMember2024-03-310001104485nog:PriceCallOptionsContractsMembernog:CurrentLiabilitiesMember2023-12-310001104485nog:NonCurrentLiabilitiesMembernog:PriceSwapMember2024-03-310001104485nog:NonCurrentLiabilitiesMembernog:PriceSwapMember2023-12-310001104485us-gaap:BasisSwapMembernog:NonCurrentLiabilitiesMember2024-03-310001104485us-gaap:BasisSwapMembernog:NonCurrentLiabilitiesMember2023-12-310001104485nog:PriceCollarMembernog:NonCurrentLiabilitiesMember2024-03-310001104485nog:PriceCollarMembernog:NonCurrentLiabilitiesMember2023-12-310001104485nog:PriceCallOptionsContractsMembernog:NonCurrentLiabilitiesMember2024-03-310001104485nog:PriceCallOptionsContractsMembernog:NonCurrentLiabilitiesMember2023-12-310001104485nog:PriceSwaptionsMembernog:NonCurrentLiabilitiesMember2024-03-310001104485nog:PriceSwaptionsMembernog:NonCurrentLiabilitiesMember2023-12-310001104485nog:CurrentAssetsMember2024-03-310001104485nog:NonCurrentAssetsMember2024-03-310001104485nog:CurrentLiabilitiesMember2024-03-310001104485nog:NonCurrentLiabilitiesMember2024-03-310001104485nog:CurrentAssetsMember2023-12-310001104485nog:NonCurrentAssetsMember2023-12-310001104485nog:CurrentLiabilitiesMember2023-12-310001104485nog:NonCurrentLiabilitiesMember2023-12-31
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 March 31, 2024
   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.)
4350 Baker RoadSuite 400
Minnetonka, Minnesota 55343
(Address of Principal Executive Offices)
(952) 476-9800
(Registrant’s Telephone Number, Including Area Code)

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 $0.001NOGNew York Stock Exchange
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 April 26, 2024, there were 101,055,323 shares of our common stock, par value $0.001, outstanding.


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.

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.

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.
i

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 a new field or to find a new reservoir in a field previously found to be productive of oil or natural gas in another reservoir. Generally, an exploratory well is any well that is not a development well, an extension well, a service well, or a stratigraphic test well.

Extension well.” An extension well is a well drilled to extend the limits of 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.

“Service well.” A service well is drilled or completed for the purpose of supporting production in an existing field. Wells in this class are drilled for the following specific purposes: gas injection, water injection, steam injection, air injection, salt-water disposal, water supply for injection, observation, or injection for in-situ combustion.

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.
ii

Stratigraphic test well.” A stratigraphic test well is a drilling effort, geologically directed, to obtain information pertaining to a specific geologic condition. Such wells customarily are drilled without the intent of being completed for hydrocarbon production. The classification also includes tests identified as core tests and all types of expendable holes related to hydrocarbon exploration. Stratigraphic tests are classified as “exploratory type” if not drilled in a known area or “development type” if drilled in a known area.

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:

Developed Oil and Gas Reserves.” Oil and natural gas reserves of any category that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well.

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 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 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.

iii

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.

(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 as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establish a lower contact with reasonable certainty.

(iii)    Where direct observation from well penetrations has defined a highest known oil 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.

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.

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.

“Reserves.” Estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

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.

iv

Undeveloped Oil and Gas Reserves.” Oil and natural gas reserves of any category that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.


v

NORTHERN OIL AND GAS, INC.
FORM 10-Q

March 31, 2024

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 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5.Other Information
 
Item 6.Exhibits
 
Signatures

1

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)March 31, 2024December 31, 2023
Assets(Unaudited)
Current Assets:  
Cash and Cash Equivalents$32,468 $8,195 
Accounts Receivable, Net331,119 370,531 
Advances to Operators6,794 49,210 
Prepaid Expenses and Other2,566 2,489 
Derivative Instruments36,710 75,733 
Income Tax Receivable3,139 3,249 
Total Current Assets412,796 509,407 
Property and Equipment:  
Oil and Natural Gas Properties, Full Cost Method of Accounting  
Proved8,877,966 8,428,518 
Unproved34,507 36,785 
Other Property and Equipment8,120 8,069 
Total Property and Equipment8,920,593 8,473,372 
Less – Accumulated Depreciation, Depletion and Impairment(4,715,097)(4,541,808)
Total Property and Equipment, Net4,205,496 3,931,563 
Derivative Instruments1,070 10,725 
Acquisition Deposit 17,094 
Other Noncurrent Assets, Net14,439 15,466 
Total Assets$4,633,801 $4,484,255 
Liabilities and Stockholders’ Equity
Current Liabilities:  
Accounts Payable$156,233 $192,672 
Accrued Liabilities161,507 147,943 
Accrued Interest28,044 26,219 
Derivative Instruments80,290 16,797 
Other Current Liabilities1,936 2,130 
Total Current Liabilities428,010 385,761 
Long-term Debt, Net1,938,731 1,835,554 
Deferred Tax Liability71,249 68,488 
Derivative Instruments151,308 105,831 
Asset Retirement Obligations39,899 38,203 
Other Noncurrent Liabilities2,625 2,741 
Total Liabilities$2,631,822 $2,436,578 
Commitments and Contingencies
Stockholders’ Equity  
2

Common Stock, Par Value $.001; 135,000,000 Shares Authorized;
101,044,071 Shares Outstanding at 3/31/2024
100,761,148 Shares Outstanding at 12/31/2023
503 503 
Additional Paid-In Capital2,067,660 2,124,963 
Retained Deficit(66,183)(77,790)
Total Stockholders’ Equity2,001,980 2,047,676 
Total Liabilities and Stockholders’ Equity$4,633,801 $4,484,255 
______________
The accompanying notes are an integral part of these condensed financial statements.


3

NORTHERN OIL AND GAS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
(In thousands, except share and per share data)20242023
Revenues  
Oil and Gas Sales$532,041 $426,234 
Gain (Loss) on Commodity Derivatives, Net(138,531)153,656 
Other Revenues2,838 2,324 
Total Revenues396,348 582,214 
Operating Expenses 
Production Expenses105,447 78,088 
Production Taxes51,210 34,918 
General and Administrative Expenses11,393 13,000 
Depletion, Depreciation, Amortization and Accretion173,958 94,618 
Other Expenses2,019 1,001 
Total Operating Expenses344,027 221,625 
Income From Operations52,321 360,589 
Other Income (Expense)  
Interest Expense, Net of Capitalization(37,925)(30,143)
Loss on Unsettled Interest Rate Derivatives, Net (1,017)
Gain on Extinguishment of Debt, Net 659 
Contingent Consideration Gain 6,176 
Other Income (Expense)56 4,619 
Total Other Income (Expense)(37,869)(19,706)
Income Before Income Taxes14,452 340,883 
Income Tax Expense2,846 692 
Net Income$11,606 $340,191 
Net Income Per Common Share – Basic$0.12 $4.01 
Net Income Per Common Share – Diluted$0.11 $3.98 
Weighted Average Common Shares Outstanding – Basic100,442,472 84,915,729 
Weighted Average Common Shares Outstanding – Diluted101,636,132 85,407,197 
______________
The accompanying notes are an integral part of these condensed financial statements.
4

NORTHERN OIL AND GAS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
(In thousands)20242023
Cash Flows from Operating Activities  
Net Income$11,606 $340,191 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:  
Depletion, Depreciation, Amortization, and Accretion173,958 94,618 
Amortization of Debt Issuance Costs2,203 1,751 
Gain on Extinguishment of Debt (659)
Amortization of Bond Premium/Discount on Long-term Debt(284)(510)
Deferred Income Taxes2,760 692 
Unrealized (Gain) Loss of Derivative Instruments157,648 (138,970)
Gain on Contingent Consideration (6,176)
Stock-Based Compensation Expense2,274 2,151 
Other2,316 3,084 
Changes in Working Capital and Other Items:  
Accounts Receivable, Net39,719 (2,866)
Prepaid and Other Expenses(78)(314)
Accounts Payable2,641 (11,903)
Accrued Interest1,793 (8,915)
Accrued Liabilities and Expenses(4,409)(2,866)
Net Cash Provided by Operating Activities392,147 269,308 
Cash Flows from Investing Activities  
Capital Expenditures on Oil and Natural Gas Properties(407,006)(460,982)
Purchases of Other Property and Equipment(50)(238)
Net Cash Used for Investing Activities(407,056)(461,220)
Cash Flows from Financing Activities  
Advances on Revolving Credit Facility180,000 337,000 
Repayments on Revolving Credit Facility(78,000)(87,000)
Repurchase of Senior Notes Due 2028 (18,436)
Debt Issuance Costs Paid (32)
Repurchases of Common Stock(20,007)(8,004)
Restricted Stock Surrenders - Tax Obligations(2,712)(2,616)
Common Dividends Paid(40,099)(25,454)
Net Cash Provided by Financing Activities39,183 195,458 
Net Increase in Cash and Cash Equivalents24,273 3,545 
Cash and Cash Equivalents - Beginning of Period8,195 2,528 
Cash and Cash Equivalents - End of Period32,468 6,073 
______________
The accompanying notes are an integral part of these condensed financial statements.
5

NORTHERN OIL AND GAS, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)

(In thousands, except share data)Common StockPreferred StockAdditional Paid-InRetained
Earnings
Total Stockholders’
Equity
 SharesAmountSharesAmountCapital(Deficit)(Deficit)
December 31, 2023100,761,148 $503  $ $2,124,963 $(77,790)$2,047,676 
Issuance of Common Stock139,873 — — — — — — 
Share Based Compensation— — — — 2,296 — 2,296 
Restricted Stock Surrenders - Tax Obligations(71,548)— — — (2,712)— (2,712)
Acquisitions of Oil and Natural Gas Properties107,657 — — — 3,737 — 3,737 
Issuance of Common Stock in Exchange for Warrants656,297 1 — — (1)—  
Repurchases of Common Stock(549,356)(1)— — (20,206)— (20,207)
Common Stock Dividends Declared— — — — (40,418)— (40,418)
Net Income— — — — — 11,606 11,606 
March 31, 2024101,044,071 $503  $ $2,067,660 $(66,183)$2,001,980 

(In thousands, except share data)Common StockPreferred StockAdditional Paid-InRetained
Earnings
Total Stockholders’
Equity
 SharesAmountSharesAmountCapital(Deficit)(Deficit)
December 31, 202285,165,807 $487  $ $1,745,532 $(1,000,759)$745,260 
Issuance of Common Stock193,293 — — — — — — 
Restricted Stock Forfeitures(6,854)— — — (54)— (54)
Share Based Compensation— — — — 2,316 — 2,316 
Restricted Stock Surrenders - Tax Obligations(98,052)— — — (2,616)— (2,616)
Issuance of Common Stock in Exchange for Warrants403,780 — — — — — — 
Repurchases of Common Stock(287,751)— — — (8,004)— (8,004)
Common Stock Dividends Declared— — — — (29,026)— (29,026)
Net Income— — — — — 340,191 340,191 
March 31, 202385,370,223 $487  $ $1,708,147 $(660,568)$1,048,067 

___________
The accompanying notes are an integral part of these condensed financial statements.

6

NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2024
(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, development and production of oil and natural gas properties in the United States, primarily in the Williston Basin, the Permian Basin and the Appalachian Basin. The Company’s common stock trades on the New York Stock Exchange under the symbol “NOG”.

The Company’s principal business is crude oil and natural gas exploration, development, and production with operations in the United States. The Company’s primary strategy is investing in non-operated minority working and mineral interests in oil and gas properties, with a core area of focus in three premier basins within the United States.


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, 2023 has been derived from the Company’s audited financial statements for the year ended December 31, 2023. However, such information includes all adjustments (consisting of normal recurring adjustments) 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, 2023, which were included in the Company’s 2023 Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Use of Estimates

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, which includes limited control over future development plans as a non-operator, 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 crude oil and natural gas properties, asset retirement obligations and deferred income taxes.

Management’s estimates and assumptions were based on historical data and consideration of future market conditions. Given the uncertainty inherent in any projection, actual results may differ from the estimates and assumptions used, and conditions may change, which could materially affect amounts reported in the unaudited condensed financial statements.

Adopted and Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

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 crude oil and natural gas in the period that its performance obligations are
7

satisfied. Performance obligations are satisfied when the customer obtains control of the 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, which 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 contract 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 months ended March 31, 2024 and 2023, 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.

The Company’s disaggregated revenue has two primary sources: oil sales and natural gas and NGL sales. Substantially all of the Company’s oil and natural gas sales come from three geographic areas in the United States: the Williston Basin (North Dakota and Montana), the Permian Basin (New Mexico and Texas), and the Appalachian Basin (Ohio and Pennsylvania). The following table presents the disaggregation of the Company’s oil revenues and natural gas and NGL revenues by basin for the three months ended March 31, 2024 and 2023.

 Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2023
(In thousands)Williston Permian Appalachian TotalWilliston Permian Appalachian Total
Oil Revenues$221,375 $244,180 $124 $465,679 $212,723 $142,655 $ $355,378 
Natural Gas and NGL Revenues25,043 29,370 11,949 66,362 32,423 23,104 15,329 70,856 
Other 2,838  2,838  2,324  2,324 
Total$246,418 $276,388 $12,073 $534,879 $245,146 $168,083 $15,329 $428,558 

Concentrations of Market, Credit Risk and Other Risks

The future results of the Company’s crude oil and natural gas operations will be affected by the market prices of crude oil and natural gas.  The availability of a ready market for crude oil and natural gas products in the future will depend on numerous factors beyond the control of the Company, including weather, imports, marketing of competitive fuels, proximity and capacity of crude oil and natural gas pipelines and other transportation facilities, any oversupply or undersupply of crude oil, natural gas and liquid products, the regulatory environment, the economic environment, and other regional and political events, none of which can be predicted with certainty.

The Company operates in the exploration, development and production sector of the crude oil and natural gas industry.  The Company’s receivables include amounts due, indirectly via the third-party operators of the wells, from purchasers of its crude oil and natural gas production.  While certain of these customers, as well as third-party operators of the wells, are affected by periodic downturns in the economy in general or in their specific segment of the crude oil or natural gas industry, the Company believes that its level of credit-related losses due to such economic fluctuations have been immaterial.

As a non-operator, 100% of the Company’s wells are operated by third-party operating partners. As a result, the Company is highly dependent on the success of these third-party operators. If they are not successful in the exploration, development and production activities relating to the Company’s leasehold interests, or are unable or unwilling to perform, the Company’s
8

financial condition and results of operation could be adversely affected. These risks are heightened in a low commodity price environment, which may present significant challenges to these third-party operators. The Company’s third-party operators will make decisions in connection with their operations that may not be in the Company’s best interests, and the Company may have little or no ability to exercise influence over the operational decisions of its third-party operators. For the three months ended March 31, 2024, the Company’s top four operators made up 37% of total oil and natural gas sales, with one operator comprising of more than 10% but less than 15%. For the three months ended March 31, 2023, the Company’s top four operators made up 38% of total oil and natural gas sales, with two operators comprising of more than 10% but less than 15%.

The Company faces concentration risk due to the fact that substantially all of its oil and natural gas revenue is sourced from a limited number of geographic areas of operations. As a result, the Company is disproportionately exposed to risks that affect one or more of those areas in the Williston Basin (North Dakota and Montana), the Permian Basin (New Mexico and Texas), and the Appalachian Basin (Ohio and Pennsylvania).

The Company manages and controls market and counterparty credit risk. In the normal course of business, collateral is not required for financial instruments with credit risk. Financial instruments which potentially subject the Company to credit risk consist principally of cash balances and derivative financial instruments. The Company maintains cash and cash equivalents in bank deposit accounts which, at times, may exceed the federally insured limits. The Company has not experienced any significant losses from such investments. The Company attempts to limit the amount of credit exposure to any one financial institution or company. The Company believes the credit quality of its counterparties is generally high. In the normal course of business, letters of credit or parent guarantees may be required for counterparties which management perceives to have a higher credit risk.

Net Income (Loss) Per Common Share

Basic earnings per share (“EPS”) are computed by dividing net income (loss) attributable to common stockholders (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) attributable to common stockholders by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include shares issuable upon exercise of stock options or warrants and vesting of restricted stock awards, and shares issuable upon conversion of the Convertible Notes (see Note 4). The number of potential common shares outstanding are calculated using the treasury stock or if-converted method.

In those reporting periods in which the Company has reported net income available to common stockholders, anti-dilutive shares generally are comprised of the restricted stock that has average unrecognized stock compensation expense greater than the average stock price. In those reporting periods in which the Company has a net loss, anti-dilutive shares are comprised of the impact of those number of shares that would have been dilutive had the Company had net income plus the number of common stock equivalents that would be anti-dilutive had the company had net income.

Restricted stock awards are excluded from the calculation of basic weighted average common shares outstanding until they vest. For restricted stock awards that vest based on achievement of performance and/or market conditions, the number of contingently issuable common shares included in diluted weighted-average common shares outstanding is based on the number of common shares, if any, that would be issuable under the terms of the arrangement if the end of the reporting period were the end of the contingency period, assuming the result would be dilutive.

The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the three months ended March 31, 2024 and 2023 are as follows:
9

 Three Months Ended
March 31,
(In thousands, except share and per share data)20242023
Net Income$11,606 $340,191 
Weighted Average Common Shares Outstanding:
Weighted Average Common Shares Outstanding – Basic100,442,472 84,915,729 
Plus: Dilutive Effect of Restricted Stock, Convertible Notes and Common Stock Warrants 1,193,660 491,468 
Weighted Average Common Shares Outstanding – Diluted101,636,132 85,407,197 
Net Income per Common Share:
Basic$0.12 $4.01 
Diluted$0.11 $3.98 
Shares Excluded from EPS Due to Anti-Dilutive Effect:
Restricted Stock5,315 610 

Supplemental Cash Flow Information

The following reflects the Company’s supplemental cash flow information:
Three Months Ended
March 31,
(In thousands)20242023
Supplemental Cash Items:
Cash Paid During the Period for Interest, Net of Amount Capitalized$35,981 $28,878 
Cash Paid (Refunded) During the Period for Income Taxes(25) 
Non-cash Investing Activities:
Capital Expenditures on Oil and Natural Gas Properties Included in Accounts Payable and Accrued Liabilities211,287 217,065 
Capitalized Asset Retirement Obligations1,890 962 
Compensation Capitalized on Oil and Gas Properties22 111 
Non-cash Financing Activities:
Issuance of Common Stock in Exchange for Warrants23,338 13,328 
Common Stock Dividends Declared, But Not Paid40,418 29,021 
Repurchases of Common Stock - Excise Tax200  


NOTE 3     CRUDE OIL AND NATURAL GAS PROPERTIES

The Company follows the full cost method of accounting for crude oil and natural gas operations whereby all costs related to the exploration and development of crude oil and natural gas properties are capitalized into a single cost center (“full cost pool”).  Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling directly related to acquisition, and exploration activities.  Internal costs that are capitalized are directly attributable to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead or similar activities.  Costs associated with production and general corporate activities are expensed in the period incurred.

10

Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter.  The test determines a limit, or ceiling, on the book value of the proved oil and gas properties.  Net capitalized costs are limited to the lower of unamortized cost net of deferred income taxes, or the cost center ceiling. The Company did not have any impairment of its proved oil and gas properties for the three months ended March 31, 2024 and 2023.

The book value of the Company’s crude oil and natural gas properties consists of all acquisition costs (including cash expenditures and the value of stock consideration), drilling costs and other associated capitalized costs.  Acquisitions are accounted for as purchases and, accordingly, the results of operations are included in the accompanying condensed statements of operations from the closing date of the acquisition.  Acquired assets and liabilities assumed are recorded based on their estimated fair value at the time of the acquisition.  

2024 Acquisitions

In addition to the closing of the Delaware Acquisition (as defined below), during the three months ended March 31, 2024, the Company acquired oil and natural gas properties through a number of smaller independent transactions for a total of $4.9 million.

Delaware Acquisition

In January 2024, the Company completed its acquisition of certain oil and gas properties, interests and related assets in the Delaware Basin from a private seller, effective as of November 1, 2023 (the “Delaware Acquisition”).

The total consideration paid to the seller at closing included 107,657 shares of common stock and $147.8 million in cash, a portion of which was funded by a $17.1 million deposit paid at signing in November 2023. As a result of customary post-closing adjustments, the Company increased its proved oil and natural gas properties and total consideration by $4.0 million subsequent to closing.

The results of operations from the acquisition from the January 16, 2024 closing date through March 31, 2024 represented approximately $11.2 million of revenue and $4.7 million of income from operations. The Company incurred $0.6 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s statement of operations. The following table reflects the fair values of the net assets and liabilities as of the closing date of the acquisition:

(In thousands)
Fair value of net assets:
Proved oil and natural gas properties$151,912 
Total assets acquired151,912 
Asset retirement obligations(380)
Net assets acquired$151,531 
Fair value of consideration paid for net assets:
Cash consideration$147,794 
Non-cash consideration3,737 
Total fair value of consideration transferred$151,531 

2023 Acquisitions

During 2023, the Company completed the following larger bolt-on acquisitions (each as defined and described below): the MPDC Acquisition, the Forge Acquisition and the Novo Acquisition (collectively, the “2023 Bolt-on Acquisitions”).

During 2023, in addition to the 2023 Bolt-on Acquisitions, the Company acquired oil and natural gas properties through a number of smaller independent transactions for a total of $277.9 million.

MPDC Acquisition

On January 5, 2023, the Company completed its acquisition (the “MPDC Acquisition”) of certain oil and gas properties, interests and related assets from Midland Petro D.C. Partners, LLC and Collegiate Midstream LLC (collectively, “MPDC”),
11

effective as of August 1, 2022. At closing, the Company acquired a 39.958% working interest in MPDC’s four-unit development project in the Permian Midland Basin, which includes an interest in gathering assets associated with the project.

The total consideration at closing was $319.9 million in cash. As a result of customary post-closing adjustments, the Company reduced its proved oil and natural gas properties and total consideration by $8.2 million subsequent to closing.

The results of operations from the acquisition from the January 5, 2023 closing date through December 31, 2023 represented approximately $157.0 million of revenue and $102.3 million of income from operations. The Company incurred $3.5 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s statement of operations. The following table reflects the fair values of the net assets and liabilities as of the closing date of the acquisition:

(In thousands)
Fair value of net assets:
Proved oil and natural gas properties$320,395 
Total assets acquired320,395 
Asset retirement obligations(451)
Net assets acquired$319,944 
Fair value of consideration paid for net assets:
Cash consideration$319,944 
Total fair value of consideration transferred$319,944 

Forge Acquisition

On June 30, 2023, the Company completed its acquisition (the “Forge Acquisition”) of certain Permian Delaware Basin assets from Forge Energy II Delaware, LLC (“Forge”), effective as of March 1, 2023. At closing, the Company acquired a 30% undivided stake in the assets sold by Forge, with Vital Energy, Inc., an unaffiliated third party, acquiring the other 70% and becoming the operator of the acquired assets.

The total consideration at closing, net to the Company, was $167.9 million in cash. As a result of customary post-closing adjustments, the Company reduced its proved oil and natural gas properties and total consideration by $0.7 million subsequent to closing.

The results of operations from the acquisition from the June 30, 2023, closing date through December 31, 2023 represented approximately $46.0 million of revenue and $29.3 million of income from operations. The Company incurred $2.3 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s statement of operations. The following table reflects the fair values of the net assets and liabilities as of the closing date of the acquisition:

(In thousands)
Fair value of net assets:
Proved oil and natural gas properties$164,925 
Unproved oil and natural gas properties3,892 
Total assets acquired168,817 
Asset retirement obligations(889)
Net assets acquired$167,928 
Fair value of consideration paid for net assets:
Cash consideration$167,928 
Total fair value of consideration transferred$167,928 

12

Novo Acquisition

On August 15, 2023, the Company completed its acquisition (the “Novo Acquisition”) of certain Permian Delaware Basin assets of Novo Oil & Gas Holdings, LLC (“Novo”), effective as of May 1, 2023. At closing, the Company acquired a 33.33% undivided stake in the assets sold by Novo to Earthstone Energy Holdings, LLC (“Earthstone”), an unaffiliated third party, with Earthstone retaining the other 66.67% and becoming operator of the acquired assets.

The total consideration at closing, net to the Company, was $468.4 million in cash. As a result of customary post-closing adjustments, the Company reduced its proved oil and natural gas properties and total consideration by $1.2 million subsequent to closing.

The results of operations from the acquisition from the August 15, 2023 closing date through December 31, 2023 represented approximately $78.5 million of revenue and $40.9 million of income from operations. The Company incurred $4.6 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s statement of operations. The following table reflects the fair values of the net assets and liabilities as of the closing date of the acquisition:

(In thousands)
Fair value of net assets:
Proved oil and natural gas properties$474,417 
Total assets acquired474,417 
Asset retirement obligations(813)
Accrued Liabilities(5,168)
Net assets acquired$468,436 
Fair value of consideration paid for net assets:
Cash consideration$468,436 
Total fair value of consideration transferred$468,436 

Pro Forma Information

The following summarized unaudited pro forma condensed statement of operations information for the three months ended March 31, 2024 and 2023, assumes that the Delaware Acquisition and each of the 2023 Bolt-on Acquisitions occurred as of January 1, 2023. The Company prepared the following summarized unaudited pro forma financial results for comparative purposes only. The summarized unaudited pro forma information may not be indicative of the results that would have occurred had the Company completed the acquisitions as of January 1, 2023, or that would be attained in the future.

Three Months EndedThree Months Ended
(In thousands)March 31, 2024March 31, 2023
Total Revenues$399,298 $713,503 
Net Income (Loss)11,855 433,053 

Unproved Properties

All properties that are not classified as proved properties are considered unproved properties and, thus, the costs associated with such properties are not subject to depletion. Once a property is classified as proved, all associated acreage and drilling costs are subject to depletion.

The Company historically has acquired unproved properties by purchasing individual or small groups of leases directly from mineral owners, landmen, or lease brokers, which leases historically have not been subject to specified drilling projects, and by purchasing lease packages in identified project areas controlled by specific operators.  The Company generally participates in drilling activities on a heads up basis by electing whether to participate in each well on a well-by-well basis at the time wells are proposed for drilling.

13

The Company believes that the majority of its unproved costs will become subject to depletion within the next five years by proving up reserves relating to the acreage through exploration and development activities, by impairing the acreage that will expire before the Company can explore or develop it further or by determining that further exploration and development activity will not occur.  The timing by which all other properties will become subject to depletion will be dependent upon the timing of future drilling activities and delineation of its reserves.

Capitalized costs associated with impaired unproved properties, which includes leases that have expired or have been deemed uneconomic, and capitalized costs related to properties having proved reserves, plus the estimated future development costs and asset retirement costs, are depleted and amortized on the unit-of-production method. Under this method, depletion is calculated at the end of each period by multiplying total production for the period by a depletion rate. The depletion rate is determined by dividing the total unamortized cost base plus future development costs by net equivalent proved reserves at the beginning of the period. The costs of unproved properties are withheld from the depletion base until such time as they are either developed or impaired. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion and full cost ceiling calculations. For the three months ended March 31, 2024 and 2023, unproved properties of $1.1 million and $0.6 million, respectively, were impaired.


NOTE 4     LONG-TERM DEBT

The Company’s long-term debt consists of the following:

March 31, 2024
(In thousands)Principal BalanceUnamortized Premium/DiscountDebt Issuance Costs, NetLong-term Debt, Net
Revolving Credit Facility (1)
$263,000 $ $ $263,000 
Senior Notes due 2028705,108 7,871 (8,802)704,177 
Convertible Notes due 2029500,000  (13,611)486,389 
Senior Notes due 2031500,000 (6,379)(8,455)485,166 
Total$1,968,108 $1,492 $(30,868)$1,938,731 
December 31, 2023
Principal BalanceUnamortized Premium/DiscountDebt Issuance Costs, NetLong-term Debt, Net
Revolving Credit Facility (1)
$161,000 $ $ $161,000 
Senior Notes due 2028705,108 8,376 (9,366)704,117 
Convertible Notes due 2029500,000  (14,214)485,786 
Senior Notes due 2031500,000 (6,600)(8,749)484,651 
Total$1,866,108 $1,776 $(32,330)$1,835,554 
________________
(1)Debt issuance costs related to the Company’s Revolving Credit Facility of $9.9 million and $10.6 million as of March 31, 2024 and December 31, 2023, are recorded in “Other Noncurrent Assets, Net” in the balance sheets.

Revolving Credit Facility

On June 7, 2022, the Company entered into a Third Amended and Restated Credit Agreement (as amended, modified, or supplemented through the date of this filing, the “Revolving Credit Facility”) with Wells Fargo Bank, National Association, as administrative agent and collateral agent (“Agent”), and the lenders from time to time party thereto, which amended and restated the Company’s prior revolving credit facility that was entered into on November 22, 2019. The Revolving Credit Facility is scheduled to mature on June 7, 2027.

The Revolving Credit Facility is comprised of revolving loans and letters of credit and is subject to a borrowing base with maximum loan value to be assigned to the proved reserves attributable to the Company and its subsidiaries’ (if any) oil and gas properties. As of March 31, 2024, the borrowing base was $1.8 billion and the aggregate elected commitment amount was $1.25 billion. On April 29, 2024, the borrowing base was reaffirmed at $1.8 billion and the aggregate elected commitment
14

amount was increased to $1.5 billion. The Company’s borrowing availability under the Revolving Credit Facility is set at the lesser of the borrowing base and the elected commitment amount. The borrowing base will be redetermined semiannually on or around April 1st and October 1st, with one interim “wildcard” redetermination available to each of the Company and the Agent (acting at the direction of the lenders holding at least two-thirds of commitments and loans outstanding under the Revolving Credit Facility) between scheduled redeterminations. Upon an acquisition of oil and gas properties with an aggregate value exceeding 5% of the borrowing base, the Company may request an additional redetermination. The scheduled redeterminations are based on a December 31st or June 30th reserve report, as applicable, prepared under the supervision of the Company’s chief engineer and, in the case of the December 31st reserve report, audited by an approved petroleum engineer (reasonably acceptable to the Agent). The Company has the option to seek commitments for term loans, which such term loans (if obtained) are capped at the least of (i) the borrowing base minus the aggregate elected commitment amount minus the then-outstanding principal amount of term loans, (ii) the aggregate elected commitment amount minus the then-outstanding principal amount of term loans and (iii) $500.0 million. Such term loans are subject to certain other terms of the Revolving Credit Facility.

At the Company’s option, borrowings under the Revolving Credit Facility shall bear interest at the base rate or SOFR plus an applicable margin. Base rate loans bear interest at a rate per annum equal to the greatest of: (i) the Agent bank’s prime rate; (ii) the federal funds effective rate plus 50 basis points; and (iii) the adjusted SOFR rate for a one-month interest period plus 100 basis points. The applicable margin for base rate loans ranges from 125 to 225 basis points, and the applicable margin for SOFR loans ranges from 225 to 325 basis points, in each case depending on the percentage of the borrowing base utilized.

The Revolving Credit Facility contains negative covenants that limit the Company’s ability, among other things, to pay dividends, incur additional indebtedness, sell assets, enter into certain derivatives contracts, change the nature of its business or operations, merge, consolidate, or make certain types of investments. In addition, the Revolving Credit Facility requires that the Company comply with the following financial covenants: (i) as of the date of determination, the ratio of total net debt to EBITDAX (as defined in the Revolving Credit Facility) shall be no more than 3.50 to 1.00, measured on a rolling four quarter basis, and (ii) the current ratio (defined as consolidated current assets including unused amounts of the total commitments, but excluding non-cash assets under FASB Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging (“ASC 815”), divided by consolidated current liabilities excluding current non-cash obligations under ASC 815, current maturities under the Revolving Credit Facility and current maturities of any long-term debt) shall not be less than 1.00 to 1.00. The Company is in compliance with these financial covenants as of March 31, 2024.

The Company’s obligations under the Revolving Credit Facility may be accelerated, subject to customary grace and cure periods, upon the occurrence of certain Events of Default (as defined in the Revolving Credit Facility). Such Events of Default include customary events for a financing agreement of this type, including, without limitation, payment defaults, the inaccuracy of representations and warranties, defaults in the performance of affirmative or negative covenants, defaults on other indebtedness of the Company or its subsidiaries, defaults related to judgments and the occurrence of a Change in Control (as defined in the Revolving Credit Facility).

The Company’s obligations under the Revolving Credit Facility are secured by mortgages on not less than 90% of the value of proven reserves associated with the oil and gas properties included in the determination of the borrowing base. Additionally, the Company entered into a Guaranty and Collateral Agreement in favor of the Agent for the secured parties, pursuant to which the Company’s obligations under the Revolving Credit Facility are secured by a first priority security interest in substantially all of the Company’s assets.

Senior Notes due 2028

On February 18, 2021, the Company and Wilmington Trust, National Association, as trustee, entered into an indenture (the “2028 Notes Indenture”), pursuant to which the Company issued $550.0 million in aggregate principal amount of 8.125% senior unsecured notes due 2028 (the “Original 2028 Notes”). On November 15, 2021, the Company issued an additional $200.0 million aggregate principal amount of 8.125% senior notes due 2028 (the “Additional 2028 Notes” and, together with the Original 2028 Notes, the “Senior Notes due 2028”). The proceeds of the Senior Notes due 2028 were used primarily to refinance existing indebtedness, and for general corporate purposes.

During the three months ended March 31, 2023, the Company repurchased and retired $19.1 million in aggregate principal amount of the Senior Notes due 2028 in open market transactions for a total of $18.4 million in cash, plus accrued interest.

The Senior Notes due 2028 will mature on March 1, 2028. Interest is payable semi-annually in arrears on each March 1 and September 1 to holders of record on the February 15 and August 15 immediately preceding the related interest payment date, at a rate of 8.125% per annum. On or after March 1, 2024, the Company may redeem all or a part of the Senior Notes due 2028 at redemption prices (expressed as percentages of principal amount) equal to 104.063% for the twelve-month period beginning on
15

March 1, 2024, 102.031% for the twelve-month period beginning on March 1, 2025, and 100% beginning on March 1, 2026, plus accrued and unpaid interest to the redemption date.

If a Change of Control Triggering Event (as defined in the 2028 Notes Indenture) occurs, each holder of Senior Notes due 2028 may require the Company to repurchase all or any part of that holder’s the Senior Notes due 2028 for cash at a price equal to 101% of the aggregate principal amount of the Senior Notes due 2028 repurchased, plus any accrued and unpaid interest on the Senior Notes due 2028 repurchased to, but excluding, the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date on or prior to the date of purchase).

The 2028 Notes Indenture contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries, if any, to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends or distributions in respect of equity interests or redeem, repurchase or retire equity securities or subordinated indebtedness; (iii) transfer or sell certain assets; (iv) make investments; (v) create liens to secure indebtedness; (vi) enter into agreements that restrict dividends or other payments from any non-guarantor subsidiary to the Company; (vii) consolidate with or merge with or into, or sell substantially all of the Company’s assets to, another person; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications, and many of these covenants will be terminated if the Senior Notes due 2028 achieve an investment grade rating from either Moody’s Investors Services, Inc. or S&P Global Ratings.

The 2028 Notes Indenture contains customary events of default, including, but not limited to: (i) default for 30 days in the payment when due of interest on the Senior Notes due 2028; (ii) default in payment when due of the principal of, or premium, if any, on the Senior Notes due 2028; (iii) failure by the Company or certain of its subsidiaries, if any, to comply with certain of their respective obligations, covenants or agreements contained in the Senior Notes due 2028 or the 2028 Notes Indenture, subject to certain notice and grace periods; (iv) failure by the Company or any of its restricted subsidiaries to pay indebtedness within any applicable grace period or the acceleration of any such indebtedness if the total amount of such indebtedness exceeds $35.0 million; (v) failure by the Company or any of its restricted subsidiaries that is a Significant Subsidiary (as defined in the 2028 Notes Indenture) to pay final non-appealable judgments aggregating in excess of $35.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vi) except as permitted by the 2028 Notes Indenture, any guarantee of the Senior Notes due 2028 is held in any judicial proceeding to be unenforceable or invalid, or ceases for any reason to be in full force and effect, or is denied or disaffirmed by a Guarantor (as defined in the 2028 Notes Indenture); and (vii) certain events of bankruptcy or insolvency described in the 2028 Notes Indenture with respect to the Company and its restricted subsidiaries that are Significant Subsidiaries.

Convertible Notes due 2029

On October 14, 2022, the Company and Wilmington Trust, National Association, as trustee, entered into an indenture (the “Convertible Notes Indenture”), pursuant to which the Company issued $500.0 million in aggregate principal amount of 3.625% convertible senior notes due 2029 (the “Convertible Notes”). The proceeds of the Convertible Notes were used to refinance existing indebtedness and for other general corporate purposes. The Convertible Notes mature on April 15, 2029, unless earlier repurchased, redeemed or converted. The Convertible Notes accrue interest at a rate of 3.625% per annum, payable semi-annually in arrears on April 15 and October 15 of each year.

Before October 16, 2028, noteholders have the right to convert their Convertible Notes only upon the occurrence of certain events. From and after October 16, 2028, noteholders may convert their Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will have the right to elect to settle conversions either entirely in cash or in a combination of cash and shares of its common stock. However, upon conversion of any Convertible Notes, the conversion value, which will be determined over a period of 40 trading days, will be paid in cash up to at least the principal amount of the Convertible Notes being converted. The initial conversion rate was 26.3104 shares of common stock per $1,000 principal amount of Convertible Notes, which represented an initial conversion price of approximately $38.01 per share of common stock. The conversion rate and conversion price are subject to customary anti-dilution and other adjustments upon the occurrence of certain events. As of March 31, 2024, the conversion rate was 26.5943 shares of common stock per $1,000 principal amount of Convertible Notes, which represented a conversion price of approximately $37.60 per share of common stock. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Convertible Notes Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The Convertible Notes are redeemable, in whole or in part (subject to certain limitations), at the Company’s option at any time, and from time to time, on or after April 15, 2026 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Convertible Notes to be redeemed, plus accrued
16

and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any Convertible Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.

If certain corporate events that constitute a “Fundamental Change” (as defined in the Convertible Notes Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their Convertible Notes at a cash repurchase price equal to the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock.

The Convertible Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Convertible Notes Indenture), which include the following: (i) certain payment defaults on the Convertible Notes (which, in the case of a default in the payment of interest on the Convertible Notes, will be subject to a 30-day cure period); (ii) the Company’s failure to send certain notices under the Convertible Notes Indenture within specified periods of time; (iii) the Company’s failure to comply with certain covenants in the Convertible Notes Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and any subsidiaries that the Company may form or acquire in the future, taken as a whole, to another person; (iv) a default by the Company in certain of its other obligations or agreements under the Convertible Notes Indenture or the Convertible Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Convertible Notes Indenture; (v) certain defaults by the Company or any subsidiaries that the Company may form or acquire in the future with respect to indebtedness for borrowed money of at least $50.0 million; (vi) the rendering of certain judgments against the Company or any of its subsidiaries for the payment of at least $50.0 million, where such judgments are not paid, discharged or stayed within 60 days after the date on which the right to appeal has expired or on which all rights to appeal have been extinguished; and (vii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of the Company’s significant subsidiaries that the Company may form or acquire in the future.

If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to any significant subsidiary that the Company may form or acquire in the future) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee (as defined in the Convertible Notes Indenture), by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of Convertible Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Convertible Notes Indenture consists exclusively of the right of the noteholders to receive special interest on the Convertible Notes for up to 365 days at a specified rate per annum not exceeding 0.25% on the principal amount of the Convertible Notes for the first 180 days and, thereafter, at a specified rate per annum not exceeding 0.50% on the principal amount of the Convertible Notes.

Capped Call Transactions

In October 2022, in connection with the Convertible Notes offering described above, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the initial purchasers of the Convertible Notes and/or their respective affiliates and/or other financial institutions. The Company paid $36.1 million in total consideration to enter into the Capped Call Transactions. The Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Convertible Notes, the number of shares of common stock initially underlying the Convertible Notes. The Capped Call Transactions are expected generally to reduce potential dilution to the common stock upon any conversion of Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the Capped Call Transactions was initially approximately $52.17 per share of common stock, which represents a premium of 75% over the last reported sale price of the common stock of $29.81 per share on October 11, 2022, and is subject to certain customary adjustments under the terms of the Capped Call Transactions. As of March 31, 2024, the cap price of the Capped Call Transactions was approximately $51.61 per share of common stock.

17

Senior Notes due 2031

On May 15, 2023, the Company and Wilmington Trust, National Association, as trustee, entered into an indenture (the “2031 Notes Indenture”), pursuant to which the Company issued $500.0 million in aggregate principal amount of the Company’s 8.750% senior notes due 2031 (the “Senior Notes due 2031”). The proceeds of the Senior Notes due 2031 were used primarily to refinance existing indebtedness, and for general corporate purposes.

The Senior Notes due 2031 will mature on June 15, 2031. Interest is payable semi-annually in arrears on each June 15 and December 15, to holders of record on the June 1 and December 1 immediately preceding the related interest payment date, at a rate of 8.750% per annum. Prior to June 15, 2026, the Company may redeem up to 35% of the aggregate principal amount of Senior Notes due 2031, upon not less than 10 or more than 60 days’ notice, at a redemption price of 108.750% of the principal amount of the Senior Notes due 2031 redeemed, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date), in an amount not greater than the net cash proceeds of one or more equity offerings by the Company, provided that (i) at least 65% of the aggregate principal amount of Senior Notes due 2031 issued under the 2031 Notes Indenture (including any Additional Notes (as defined in the 2031 Notes Indenture) but excluding the Senior Notes due 2031 held by the Company and its Subsidiaries (as defined in the 2031 Notes Indenture)) remains outstanding immediately after the occurrence of such redemption (unless all Senior Notes due 2031 are redeemed substantially concurrently) and (ii) the redemption occurs within 180 days of the date of the closing of each such equity offering. In addition, prior to June 15, 2026, the Company may redeem all or a part of the Senior Notes due 2031, on any one or more occasions, upon not less than 10 or more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Senior Notes due 2031 redeemed, plus an applicable make-whole premium and accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).

On or after June 15, 2026, the Company may redeem all or a part of the Senior Notes due 2031, at redemption prices (expressed as percentages of principal amount) equal to 104.375% for the twelve-month period beginning on June 15, 2026, 102.188% for the twelve-month period beginning on June 15, 2027, and 100% beginning on June 15, 2028, plus accrued and unpaid interest to the redemption date.

If a Change of Control Triggering Event (as defined in the 2031 Notes Indenture) occurs, each holder of Senior Notes due 2031 may require the Company to repurchase all or any part of that holder’s Senior Notes due 2031 for cash at a price equal to 101% of the aggregate principal amount of the Senior Notes due 2031 repurchased, plus any accrued and unpaid interest on the Senior Notes due 2031 repurchased to, but excluding, the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date on or prior to the date of purchase).

The 2031 Notes Indenture contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries, if any, to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends or distributions in respect of equity interests or redeem, repurchase or retire equity securities or subordinated indebtedness; (iii) transfer or sell certain assets; (iv) make investments; (v) create liens to secure indebtedness; (vi) enter into agreements that restrict dividends or other payments from any non-guarantor subsidiary to the Company; (vii) consolidate with or merge with or into, or sell substantially all of the Company’s assets to, another person; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications, and many of these covenants will be terminated if the Senior Notes due 2031 achieve an investment grade rating from either Moody’s Investors Service, Inc. or S&P Global Ratings.

The 2031 Notes Indenture contains customary events of default, including, but not limited to: (i) default for 30 days in the payment when due of interest on the Senior Notes due 2031; (ii) default in payment when due of the principal of, or premium, if any, on the Senior Notes due 2031; (iii) failure by the Company or certain of its subsidiaries, if any, to comply with certain of their respective obligations, covenants or agreements contained in the Senior Notes due 2031 or the 2031 Notes Indenture, subject to certain notice and grace periods; (iv) failure by the Company or any of its restricted subsidiaries to pay indebtedness within any applicable grace period or the acceleration of any such indebtedness if the total amount of such indebtedness exceeds $35.0 million; (v) failure by the Company or any of its restricted subsidiaries that is a Significant Subsidiary (as defined in the 2031 Notes Indenture) to pay final non-appealable judgments aggregating in excess of $35.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vi) except as permitted by the 2031 Notes Indenture, any guarantee of the Senior Notes due 2031 is held in any judicial proceeding to be unenforceable or invalid, or ceases for any reason to be in full force and effect, or is denied or disaffirmed by a Guarantor (as defined in the 2031 Notes Indenture); and (vii) certain events of
18

bankruptcy or insolvency described in the 2031 Notes Indenture with respect to the Company and its restricted subsidiaries that are Significant Subsidiaries.


NOTE 5    COMMON AND PREFERRED STOCK

Common Stock

The Company is authorized to issue up to 135,000,000 shares of common stock, par value $0.001 per share. As of March 31, 2024, the Company had 101,044,071 shares of common stock issued and outstanding.

Preferred Stock

The Company is authorized to issue up to 5,000,000 shares of preferred stock, par value $0.001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of March 31, 2024, the Company had zero shares of preferred stock issued and outstanding.

2024 Activity

Common Stock

During the three months ended March 31, 2024, 71,548 shares of common stock were surrendered by certain employees of the Company to cover tax obligations in connection with their restricted stock awards. The total value of these shares was approximately $5.8 million, which is based on the market prices on the dates the shares were surrendered.

During the three months ended March 31, 2024, the Company issued 656,297 shares of common stock in exchange for the surrender and cancellation of outstanding warrants to purchase common stock, which immediately prior to their cancellation were exercisable for an aggregate of approximately 1,223,963 shares of common stock at an exercise price of $26.3324 per share.

During the three months ended March 31, 2024, the Company issued 107,657 shares of its common stock as partial consideration for the Delaware Acquisition (see Note 3).

Dividends

In February 2024, the Company’s board of directors declared a cash dividend on the Company’s common stock in the amount of $0.40 per share. The dividend was paid on April 30, 2024 to stockholders of record as of the close of business on March 28, 2024.

Stock Repurchase Program

In May 2022, the Company’s board of directors approved a stock repurchase program to acquire up to $150.0 million of the Company’s outstanding common stock.  The stock repurchase program allows the Company to repurchase its shares from time to time in the open market, block transactions and in negotiated transactions.

During the three months ended March 31, 2024, the Company repurchased 549,356 shares of its common stock for $20.2 million (including commissions and $0.2 million in excise tax) under the Company’s current stock repurchase program.

The Company’s accounting policy upon the repurchase of shares is to deduct its par value from common stock and to reflect any excess of cost over par value as a deduction from Additional Paid-in Capital. All repurchased shares are included in the Company’s pool of authorized but unissued shares.


NOTE 6     STOCK-BASED COMPENSATION AND WARRANTS

Stock-Based Compensation

19

The Company maintains the Amended and Restated 2018 Equity Incentive Plan (the “2018 Plan”) for the purpose of making equity-based awards to employees, directors and other eligible persons. As of March 31, 2024, there were 2,864,843 shares available for future awards or settlement of awards under the 2018 Plan.

The Company recognizes the fair value of stock-based compensation awards expected to vest over the requisite service period as a charge against earnings, net of amounts capitalized. The Company’s stock-based compensation awards are accounted for as equity instruments and are included in the “General and administrative expenses” line item in the unaudited statements of operations. The Company capitalizes a portion of stock-based compensation for employees who are directly involved in the acquisition of oil and natural gas properties into the full cost pool. Capitalized stock-based compensation is included in the “Oil and natural gas properties” line item in the unaudited balance sheet.

Issuances made pursuant to the 2018 Plan are summarized as follows:

The Company issues share-based awards in the form of restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and share appreciation awards (“SARs”), subject to various vesting conditions as compensation to executive officers, employees and directors of the Company. Typically, RSAs issued to employees and executive officers contain a service condition only and generally vest over three or four years. Typically, RSUs and SARs contain both a service and market condition. Market conditions can be the Company’s absolute total shareholder return (“TSR”), the Company’s TSR ranking among its peer companies or the Company’s market capitalization growth measured over a defined performance period. Grantees’ continued employment through the end of the performance period is required for such RSUs and SARs to vest. RSAs issued to directors generally vest either immediately or over one year, subject to continued service and provided that any performance and/or market conditions are also met.

For awards subject to service and/or performance vesting conditions, the grant date fair value is established based on the closing price of the Company’s common stock on such date. Stock-based compensation expense for awards subject to only service conditions is recognized on a straight-line basis over the service period. Stock-based compensation expense for awards subject to both service and performance conditions are recognized on a graded basis if it is probable that the performance condition will be achieved. The Company accounts for forfeitures of awards granted under these plans as they occur in determining stock-based compensation expense.

For awards subject to a market condition, the grant date fair value is estimated using a Monte Carlo valuation model. The Company recognizes stock-based compensation expense for awards subject to market-based vesting conditions regardless of whether it becomes probable that these conditions will be achieved or not, and stock-based compensation expense for any such awards is not reversed if vesting does not actually occur. The Monte Carlo model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment. Expected volatility is calculated based on the historical volatility and implied volatility of the Company’s common stock, and the risk-free interest rate is based on U.S. Treasury yield curve rates with maturities consistent with the three-year vesting period.

Service-Based RSAs

The following table reflects the outstanding service-based RSAs and activity related thereto for the three months ended March 31, 2024:

Service-based Awards
Number of SharesWeighted-average Grant Date Fair Value
Outstanding at December 31, 2023497,722 $27.45 
Shares granted139,873 35.39 
Shares forfeited  
Shares vested(157,130)24.04 
Outstanding at March 31, 2024480,465 $35.40 

At March 31, 2024, there was $14.8 million of total unrecognized compensation expense related to unvested RSAs. That cost is expected to be recognized over a weighted average period of 1.84 years. For the three months ended March 31, 2024 and 2023, the total fair value of the Company’s RSAs vested was $5.8 million and $5.5 million, respectively. For the three months ended March 31, 2024, the compensation expenses associated with these awards were $1.5 million.
20

Performance Equity Awards

In April 2022, the Company granted performance equity awards under its 2022 executive compensation program to certain executive officers. The awards were subject to a market condition, which was based on a comparison of the Company versus a defined peer group with respect to TSR based on the last 20 trading days of 2022 compared to the same period of 2021 (“2022 TSR Awards”). Depending on the Company’s TSR relative to the defined peer group, the award recipients in the aggregate could earn between zero and $2.4 million in the form of awards expected to be settled in restricted shares of the Company’s common stock with service-based vesting over three years. In January 2023, the Company issued 74,220 restricted shares of common stock in settlement of these awards, with service-based vesting over three years. The shares are included in the above table.

In December 2023, the Company granted performance equity awards, in the form of RSUs, that are subject to the achievement of either the Company’s absolute TSR or a comparison of the Company’s TSR versus a defined peer group based on the last 20 trading days of 2025 compared to the same period of 2022 (“2023 TSR Awards”). The number of RSUs issued as a target amount on the grant date was 83,710. Depending on the Company’s stock performance, the number of common shares grantees shall be entitled to receive following the end of the performance period on December 31, 2025, can range from zero to 166% of the target amount. The grant date fair value for these awards ranges from $35.73 per share to $52.41 per share. For the three months ended March 31, 2024, the compensation expenses associated with these awards were $0.5 million. As of March 31, 2024, the unrecognized compensation expenses were $3.3 million, which will be amortized over the remaining performance period.

The following table reflects the outstanding 2023 TSR Awards and activity related thereto for the three months ended March 31, 2024:

2023 TSR Awards
Number of UnitsWeighted-average Grant Date Fair Value
Outstanding at December 31, 202383,710 $44.49 
Units granted  
Units forfeited  
Units vested  
Outstanding at March 31, 202483,710 $44.49 

In December 2023, the Company also granted performance equity awards, in the form of SARs, that are subject to the achievement of an annualized adjusted market capitalization appreciation rate measured based on the last 20 trading days of 2027 compared to the same period of 2022 (“2023 SARs Awards”). The final payout (if any) will be a dollar amount, which may be settled in cash, shares or a combination of both at the Company’s option. The Company plans to settle the 2023 SARs Awards by issuing a number of common shares equal to the payout amount divided by the trailing 20-day average price as of the last trading day of 2027. In 2023, the Company issued SARs with an aggregate grant-date fair value of $6.0 million. For the three months ended March 31, 2024, the compensation expenses associated with these awards were $0.4 million. As of March 31, 2024, the unrecognized compensation expenses for these awards were $5.6 million, which will be amortized over the remaining performance period.

The Company used Monte Carlo simulation models, described above, to estimate (i) the fair value of the 2022 TSR Awards and 2023 TSR Awards based on the expected outcome of the Company’s absolute TSR as well as TSR relative to the defined peer group and (ii) the fair value of the SARs based on the expected outcome of the Company’s market capitalization appreciation rate. The assumptions used for the Monte Carlo model were as follows:

20222023
TSR AwardsTSR AwardsSARs Awards
Risk-free interest rate1.69 %4.23 %3.92 %
Dividend yield2.40 % %4.30 %
Expected volatility56.94 %56.40 %72.30 %
Company’s closing stock price on grant date$24.98 $37.07 $37.07 

21

Warrants

In January 2022, as partial consideration for the purchase of certain oil and gas properties, the Company issued warrants to purchase 1,939,998 shares of the Company’s common stock at an exercise price equal to $28.30 per share (subject to certain anti-dilution adjustments) (the “Warrants”).

In March 2023, the Company issued 403,780 shares of common stock in exchange for the surrender and cancellation of a portion of the Warrants. Immediately prior to their cancellation, such Warrants that were surrendered were exercisable for an aggregate of approximately 824,602 shares of common stock at an exercise price of $27.4946 per share. Neither the Company nor the holders paid any cash consideration in the transaction.

In March 2024, the Company issued 656,297 shares of common stock in exchange for the surrender and cancellation of all of the remaining Warrants. Immediately prior to their cancellation, such Warrants that were surrendered were exercisable for an aggregate of approximately 1,223,963 shares of common stock at an exercise price of $26.3324 per share. Neither the Company nor the holders paid any cash consideration in the transaction.

The following table reflects the outstanding warrants and activity related thereto for the three months ended March 31, 2024:

Warrants
Number of WarrantsWeighted-average Exercise Price
Outstanding at December 31, 20231,223,963 $26.33 
Issued   
Anti-Dilution Adjustments for Common Stock Dividends  
Exercised   
Cancelled (1,223,963)26.33 
Expired   
Outstanding at March 31, 2024 $ 


NOTE 7     COMMITMENTS & CONTINGENCIES

Litigation

The Company is engaged in various proceedings incidental to the normal course of business. Due to their nature, such legal proceedings involve inherent uncertainties, including but not limited to court rulings, negotiations between affected parties and governmental intervention.  Based upon the information available to the Company and discussions with legal counsel, it is the Company’s opinion that the outcome of the various legal actions and claims that are incidental to its business will not have a material impact on the Company’s financial position, results of operations or cash flows.  Such matters, however, are subject to many uncertainties, and the outcome of any matter is not predictable with assurance.


NOTE 8     INCOME TAXES

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes for the three months ended March 31, 2024 and 2023 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to the non-deductibility of permanent items, state income taxes, and discrete items during the three months ended March 31, 2024 and the recognition of a full valuation allowance during the three months ended March 31, 2023.

In assessing the realizability of deferred tax assets (“DTAs”), management considers whether it is more likely than not that some portion, or all, of the Company’s DTAs will not be realized. In making such determination, the Company considers all available positive and negative evidence, including (i) its earnings history, (ii) its ability to recover net operating loss carry-forwards, (iii) the projected future income and results of operations, and (iv) its ability to use tax planning strategies. If the
22

Company concludes that it is more likely than not that some portion, or all, of its DTAs will not be realized, the tax asset is reduced by a valuation allowance. The Company assesses the appropriateness of its valuation allowance on a quarterly basis.

The Company’s income tax expense (benefit) was $2.8 million and $0.7 million for the three months ended March 31, 2024 and 2023, respectively. The effective tax rates for the three months ended March 31, 2024 and 2023 were 19.7% and 0.2%, respectively.


NOTE 9     FAIR VALUE

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.  The Company uses a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial Assets and Liabilities

As required, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.  The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2024 and December 31, 2023:

 Fair Value Measurements at March 31, 2024 Using
(In thousands)Quoted Prices In Active Markets for Identical Assets (Liabilities)
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Commodity Derivatives – Current Assets$ $36,710 $ 
Commodity Derivatives – Noncurrent Assets 1,070  
Commodity Derivatives – Current Liabilities (80,290) 
Commodity Derivatives – Noncurrent Liabilities (151,308) 
Total$ $(193,817)$ 

23

 Fair Value Measurements at December 31, 2023 Using
 (In thousands)Quoted Prices In Active Markets for Identical Assets (Liabilities)
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Commodity Derivatives – Current Assets$ $75,733 $ 
Commodity Derivatives – Noncurrent Assets 10,725  
Commodity Derivatives – Current Liabilities (16,797) 
Commodity Derivatives – Noncurrent Liabilities (105,831) 
Total$ $(36,169)$ 

Commodity Derivatives. The Level 2 instruments presented in the tables above consist of commodity derivative instruments (see Note 10).  The fair value of the Company’s commodity derivative instruments is determined based upon future prices, volatility and time to maturity, among other things. Counterparty statements are utilized to determine the value of the commodity derivative instruments and are reviewed and corroborated using various methodologies and significant observable inputs.  The Company’s and the counterparties’ nonperformance risk is evaluated.  The fair value of commodity derivative contracts is reflected in the condensed balance sheet.  The current derivative asset and liability amounts represent the fair values expected to be settled in the subsequent twelve months.

Fair Value of Other Financial Instruments

The carrying amounts of cash equivalents, receivables and payables approximate fair value due to the highly liquid or short-term nature of these instruments.
Long-term debt is not presented at fair value in the balance sheets, as it is recorded at carrying value, net of unamortized debt issuance costs and unamortized premium (see Note 4).  The fair value of the Company’s Senior Notes due 2028, Convertible Notes due 2029 and Senior Notes due 2031 was $714.8 million, $606.2 million and $528.1 million, respectively, at March 31, 2024. These fair values are based on market quotes that represent Level 2 inputs.

There is no active market for the Revolving Credit Facility. The recorded value of the Revolving Credit Facility approximates its fair value because of its floating rate structure based on the SOFR spread, secured interest, and the Company’s borrowing base utilization. The fair value measurement for the Revolving Credit Facility represents Level 2 inputs.

Non-Financial Assets and Liabilities

The Company estimates asset retirement obligations pursuant to the provisions of FASB ASC Topic 410, Asset Retirement and Environmental Obligations.  The initial measurement of asset retirement obligations at fair value is calculated using discounted cash flow techniques and based on internal estimates of future retirement costs associated with oil and natural gas properties.  Given the unobservable nature of the inputs, including plugging costs and reserve lives, the initial measurement of the asset retirement obligations liability is deemed to use Level 3 inputs.  Asset retirement obligations incurred and acquired during the three months ended March 31, 2024 were approximately $1.1 million.

The Company issued common stock warrants in January 2022 as a part of the purchase consideration for certain oil and gas properties acquired by the Company. Upon issuance, the Warrants granted holders the right to purchase 1,939,998 shares of the Company’s common stock at an exercise price equal to $28.30 per share (subject to certain adjustments), generally exercisable from April 27, 2022 until January 27, 2029. A portion of the Warrants were surrendered and cancelled in March 2023, and the remaining Warrants were surrendered and cancelled in March 2024, in each case in exchange for shares of common stock. See Note 6. The fair value of the Warrants consideration was determined by utilizing an Option Pricing Model. These non-recurring fair value measurements are primarily determined using inputs that are observable or can be corroborated by observable market data (Level 2 inputs).

The Company accounts for acquisitions of oil and natural gas properties under the acquisition method of accounting. Accordingly, the Company conducts assessments of net assets acquired and recognizes amounts for identifiable assets acquired and liabilities assumed at the estimated acquisition date fair values, while transaction costs associated with the acquisitions are expensed as incurred. The Company makes various assumptions in estimating the fair values of assets acquired and liabilities
24

assumed. The most significant assumptions relate to the estimated fair value of oil and natural gas properties. The fair value of these properties is measured using a discounted cash flow model that converts future cash flows to a single discounted amount. These assumptions represent Level 3 inputs under the fair value hierarchy. See Note 3 for additional discussion of the Company’s acquisitions of oil and natural gas properties during the three months ended March 31, 2024 and discussion of the significant inputs to the valuations.

Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value.  There were no transfers of financial assets or liabilities between Level 1, Level 2 or Level 3 inputs for the three months ended March 31, 2024.


NOTE 10     DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT

The Company utilizes various commodity price derivative instruments to (i) reduce the effects of volatility in price changes on the crude oil and natural gas commodities it produces and sells, (ii) reduce commodity price risk and (iii) provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending. In addition, from time to time the Company utilizes interest rate swaps to mitigate exposure to changes in interest rates on the Company’s variable-rate indebtedness.

All derivative instruments are recorded in the Company’s balance sheet as either assets or liabilities measured at their fair value (see Note 9).  The Company has not designated any derivative instruments as hedges for accounting purposes and does not enter into such instruments for speculative trading purposes.  If a derivative does not qualify as a hedge or is not designated as a hedge, the changes in the fair value are recognized in the Company’s condensed statements of operations as a gain or loss on derivative instruments.  Mark-to-market gains and losses represent changes in fair values of derivatives that have not been settled.  The Company’s cash flow is only impacted when the actual settlements under the derivative contracts result in making or receiving a payment to or from the counterparty.  These cash settlements represent the cumulative gains and losses on the Company’s derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

The Company has master netting agreements on individual derivative instruments with certain counterparties and therefore the current asset and liability are netted in the balance sheet and the non-current asset and liability are netted in the balance sheet for contracts with these counterparties.

Commodity Derivative Instruments

The following table presents settlements on commodity derivative instruments and unsettled gains and losses on open commodity derivative instruments for the periods presented which is recorded in the revenue section of our condensed financial statements:

 Three Months Ended
March 31,
(In thousands)20242023
Cash Received (Paid) on Settled Derivatives$19,117 $13,670 
Non-Cash Mark-to-Market Gain (Loss) on Derivatives(157,648)139,987 
Gain (Loss) on Commodity Derivatives, Net$(138,531)$153,656 

The following table summarizes open commodity derivative positions as of March 31, 2024, for commodity derivatives that were entered into through March 31, 2024, for the settlement period presented:

25

2024202520262027
Oil:
WTI NYMEX - Swaps:
Volume (Bbl) 7,111,942 3,942,687 1,069,557  
Weighted-Average Price ($/Bbl)$74.47 $73.26 $68.94 $ 
WTI NYMEX - Swaptions(1)(2):
Volume (Bbl) 184,000 4,086,075 3,232,495  
Weighted-Average Price ($/Bbl)$79.00 $72.61 $65.55 $ 
Argus American Crude WTI Midland to WTI NYMEX - Basis Swaps:
Volume (Bbl)4,783,972 4,288,776 2,261,291  
Weighted-Average Price ($/Bbl)$1.15 $1.04 $1.07 $ 
WTI NYMEX - Call Options(1)(2):
Volume (Bbl)