Northern Oil and Gas outlines $132,500–$134,000 BOE per day 2025 guidance while expanding multi-basin deal pipeline

Earnings Call Insights: Northern Oil and Gas, Inc. (NOG) Q3 2025

MANAGEMENT VIEW

* CEO Nicholas O'Grady described the business as “very solid” and highlighted stability in activity levels, noting, “Our D&C list has continued to march on with high-quality, low breakeven activity, and we remain on target for the year and expect a strong exit into 2026.” O'Grady emphasized a return-driven capital allocation approach and stated, “We and many of our operators have been cautious and disciplined with our drilling capital... this strategy has proven to be sensible.” He pointed to the recent minerals and royalty deal as “adding long-term growth, low-risk assets into the portfolio that will prove highly resilient to short-term gyrations in the commodity market.”
* O'Grady further stated, “With a tack-on to our convert earlier this year, our recent bond and tender transaction and the recent extension of our bank facility, we will see some substantive benefits to the corporation.” He reported the potential for “more than $300 million of additional liquidity as compared to the beginning of 2025.”
* President Adam Dirlam reported, “Operationally, our assets continue to outperform internal expectations, and we saw this across all of our respective basins. As a result, we've increased annual production guidance while tightening CapEx for the year.” Dirlam also disclosed, “Q3 was one of the busiest periods in company history as we screened more than 14 large asset transactions and over 200 ground game opportunities, up over 20% relative to the second quarter.”
* CFO Chad Allen stated, “Third quarter total average daily production was approximately 131,000 BOE per day, up 8% versus Q3 of 2024, and down 2% from Q2 2025 as expected...” He also reported, “Adjusted EBITDA in the quarter was $387.1 million, and free cash flow was $118.9 million, marking our 23rd consecutive quarter of positive free cash flow, exceeding $1.9 billion over that time period.” Allen noted a net loss of $129 million in the quarter due to a $319 million noncash impairment charge.

OUTLOOK

* The company raised annual production guidance to a range of 132,500 to 134,000 BOE per day. Management expects “adding between 23 and 25 net wells in the fourth quarter, heavy late net well additions and well outperformance in Q3.”
* O'Grady commented, “We haven't seen much change in activity since the prior quarter, which has been relatively flat. And I think that's generally what we would expect as we head into next year.” O'Grady indicated that material gas growth is anticipated for 2026, stating, “I think we're going to see material gas growth next year. I think if we spend a budget similar to this year, we would see probably growth in both commodities.”

FINANCIAL RESULTS

* Third quarter total average daily production was reported at 131,000 BOE per day, oil production at 73,000 barrels per day, and gas production at 352 MMcf per day. Adjusted EBITDA reached $387.1 million and free cash flow was $118.9 million.
* The company reported a net loss of $129 million, reflecting a $319 million noncash impairment charge. Adjusted net income was $102 million or $1.03 per diluted share.
* Lease operating costs per BOE were down marginally from Q2 2025. CapEx, excluding non-budgeted acquisitions and other, was $272 million, and full-year CapEx guidance was tightened to a range of $950 million to $1.025 billion. Liquidity at the end of the quarter stood at $1.2 billion.
* Allen highlighted recent debt management: “In October, we raised $725 million of notes... used those proceeds to retire nearly all of our notes maturing in 2028... we amended and restated our revolving credit facility, which extended the tenure to 2030, and markedly improved our pricing grid by 60 basis points.”

Q&A

* Charles Meade, Johnson Rice: Asked for additional color on the 2026 outlook and industry baseline versus NOG. O'Grady stated, “We haven't seen much change in activity since the prior quarter, which has been relatively flat... to maintain an outlook... similar to where we are this year for our annual guidance, it would require a budget lower... I think we're going to see material gas growth next year.”
* Meade, Johnson Rice: Inquired about Q4 well additions and confidence in sequential production growth. O'Grady responded, “We're right on track... a good portion of... late Q3 deals are going to have some of the biggest impact for Q4, and that's the driving confidence for us in this quarter.”
* Scott Hanold, RBC: Sought comparison of current M&A market to previous years and funding strategy. O'Grady responded, “It's a lot broader than it's been... if you go back a few years ago, it was very Permian-centric... now you're seeing... a really broad and robust backlog of multi-base stuff.” On funding: “We have an incredible amount of liquidity at advantage cost, call it, sub-6% and multiple other avenues should we need to tap those sources, but we'll only do it if it makes sense.”
* Neal Dingmann, William Blair: Queried about oil and gas activity trends given price changes. O'Grady stated, “We haven't really seen much of a change in activity overall since last quarter. We've seen oil activity roughly flat and stable. We have seen gas activity stable to growing.”
* John Freeman, Raymond James: Asked about well cost trends and D&C list cost per foot. Dirlam replied, “The expectation... it's slightly higher... coming in kind of average at $821, give or take.”
* Paul Diamond, Citi: Inquired about well cost reductions and refrac activity. O'Grady said, “The bulk of cost savings of late have been through that lateral length and efficiencies. We haven't seen a huge step down in service costs.” Dirlam added on refracs, “This quarter, we saw some appreciable uplift... operators are moving up into the right.”

SENTIMENT ANALYSIS

* Analysts pressed for detail on well costs, M&A pipeline breadth, production outlook, and capital allocation, with a neutral to cautiously optimistic tone, seeking clarity on execution and future growth drivers.
* Management maintained a confident and measured stance, emphasizing disciplined capital allocation and robust deal flow. Phrases such as “the business remains solid as a rock” and “we have never been busier on the BD front ever” conveyed high confidence during prepared remarks, with a consistent tone when fielding analyst questions.
* Compared to the previous quarter, both analysts and management maintained a steady sentiment, though the current call showed slightly higher confidence in business development and operational execution.

QUARTER-OVER-QUARTER COMPARISON

* The company raised production guidance in Q3, compared to a guidance reduction in Q2. Both quarters emphasized disciplined capital allocation and a focus on value over volume.
* The Q3 transcript reveals increased business development activity, with over 200 ground game opportunities screened, up from 170 in Q2, and a more geographically diverse M&A pipeline.
* Management tone was confident in both quarters but grew more assertive about operational outperformance and the strength of the asset pipeline in Q3. Analyst questions continued to focus on cadence, capital efficiency, and the M&A environment, with a shift toward greater interest in multi-basin opportunities.

RISKS AND CONCERNS

* Management cited ongoing cost pressures, particularly in saltwater disposal and workovers, leading to higher LOE guidance.
* The company reported a $319 million noncash impairment charge as a result of market conditions.
* O'Grady reiterated that activity levels and capital allocation are sensitive to commodity price movements and will remain return-driven.

FINAL TAKEAWAY

Northern Oil and Gas, Inc. signaled robust operational and financial performance in Q3, highlighted by increased annual production guidance, tightened CapEx, and a more diversified M&A pipeline. Management underscored a disciplined, return-oriented approach to capital allocation, an active ground game, and a strengthened balance sheet, positioning the company to capitalize on opportunities across market cycles and deliver value to shareholders as it moves into 2026.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/nog/earnings/transcripts]

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