NOG announced increased dividend despite impact of December severe weather

Northern Oil and Gas, Inc. (NOG)


Despite severe weather problems in the fourth quarter, Northern Oil and Gas, Inc. announced a cash dividend in the amount of 34 cents per share, a 13% increase from the previous quarter.

The increased dividend will be payable on April 28. At the same time, company management indicated it will submit a recommendation to the Board of Directors for a further 9% increase to NOG’s quarterly common stock dividend to 37 cents a share for the second quarter of 2023.

NOG provided an update on recent challenges, noting that severe weather affected production volumes in the Williston and Permian Basins. The company estimated that its December production was impacted by approximately 10,000 Boe per day, with the Williston Basin accounting for approximately 82% of the reduction and the Permian representing approximately 18%.

“While weather issues adversely impacted production late in the fourth quarter of 2022, we remain on a path of significant growth for 2023 and as a result, we have recommended to our Board of Directors an acceleration of our dividend growth plan,” commented Nick O’Grady, NOG’s Chief Executive Officer.

Despite weather related outages, the company expects total 2022 production in the range of 75,250 to 75,550 Boe per day, in line with prior guidance. NOG expects total production volumes to be slightly lower for the fourth quarter of 2022 compared to the third quarter, but with higher average daily oil production than in the third quarter of 2022. Total acquisition and development capital expenditures are expected to be in the range of $143-145 million for the fourth quarter.

Despite the severe weather, the Company turned-in-line 19.9 net wells during the fourth quarter, with 5.9 net wells in late December, building strong momentum into 2023. Operations have substantially returned to normal in January 2023.

Mark-to-market losses on derivatives for the fourth quarter are estimated to be approximately $12.2 million and realized hedge losses are estimated to be approximately $63.0 million.

During the fourth quarter of 2022, NOG repurchased 1,103,178 shares of common stock at a weighted average price of $29.92 per share. For the full year 2022, the Company repurchased 1.91 million common shares at a weighted average price of $28.55 per share, for a total of $54.5 million. Additionally, the Company repurchased and retired $57.5 million of its Series A Perpetual Preferred Stock during 2022, with all remaining shares fully converted to common stock during the fourth quarter.

The Preferred Stock repurchases reduced the fully diluted share count by 2.6 million shares, based on the final conversion ratio. On a combined basis, common and preferred stock repurchases reduced the fully diluted share count by 4.5 million shares in 2022, or approximately 5% of the current shares outstanding. The Company has $95.5 million of availability remaining on its existing common stock repurchase authorization.