nog-20220930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_________________________________

FORM 10-Q

_________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ 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)


Delaware			95-3848122
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

4350 Baker Road – Suite 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 class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001

NOG

New 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 November 7, 2022, there were 77,872,227 shares of our common stock, par value $0.001, outstanding.

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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.

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

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

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

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

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

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

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

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

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

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

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

“NYMEX.” The New York Mercantile Exchange.

“OPEC.” The Organization of Petroleum Exporting Countries.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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NORTHERN OIL AND GAS, INC.

FORM 10-Q

September 30, 2022

C O N T E N T S


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Condensed Financial Statements (unaudited)	2
	Condensed Balance Sheets	2
	Condensed Statements of Operations	4
	Condensed Statements of Cash Flows	5
	Condensed Statements of Stockholders’ Equity	6
	Notes to Condensed Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46

Item 4.	Controls and Procedures	48

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	49

Item 1A.	Risk Factors	49

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 3.	Defaults Upon Senior Securities	49

Item 4.	Mine Safety Disclosures	49

Item 5.	Other Information	49

Item 6.	Exhibits	50

Signatures		52

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PART I - FINANCIAL INFORMATION

Item 1. Condensed Financial Statements.

NORTHERN OIL AND GAS, INC.

CONDENSED BALANCE SHEETS


(In thousands, except par value and share data)	September 30, 2022		December 31, 2021
Assets	(Unaudited)
Current Assets:
Cash and Cash Equivalents	$	9,129	$	9,519
Accounts Receivable, Net	318,139		193,554
Advances to Operators	13,133		6,319
Prepaid Expenses and Other	2,293		3,417
Derivative Instruments	34,000		2,519

Total Current Assets	376,694		215,328

Property and Equipment:
Oil and Natural Gas Properties, Full Cost Method of Accounting
Proved	5,931,821		5,034,769
Unproved	57,775		24,998
Other Property and Equipment	6,857		2,616
Total Property and Equipment	5,996,453		5,062,383
Less – Accumulated Depreciation, Depletion and Impairment	(3,981,393)		(3,809,041)
Total Property and Equipment, Net	2,015,060		1,253,342

Derivative Instruments	35,292		1,863

Acquisition Deposit	28,500		40,650
Other Noncurrent Assets, Net	15,930		11,683

Total Assets	$	2,471,476	$	1,522,866

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts Payable	$	142,678	$	65,464
Accrued Liabilities	114,850		105,590
Accrued Interest	5,967		20,498


Derivative Instruments	113,409		134,283
Contingent Consideration	1,859		—



Other Current Liabilities	2,983		1,722
Total Current Liabilities	381,746		327,557

Long-term Debt, Net	1,169,220		803,437

Derivative Instruments	179,384		147,762


Asset Retirement Obligations	29,913		25,865
Other Noncurrent Liabilities	2,116		3,110

Total Liabilities	$	1,762,379	$	1,307,731

Commitments and Contingencies (Note 8)

Stockholders’ Equity (Deficit)
Preferred Stock, Par Value $.001; 5,000,000 Shares Authorized; 1,643,732 Series A Shares Outstanding at 9/30/2022 2,218,732 Series A Shares Outstanding at 12/31/2021	2		2

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Common Stock, Par Value $.001; 135,000,000 Shares Authorized; 78,879,200 Shares Outstanding at 9/30/2022 77,341,921 Shares Outstanding at 12/31/2021	481		479
Additional Paid-In Capital	1,854,441		1,988,649
Retained Deficit	(1,145,827)		(1,773,996)
Total Stockholders’ Equity	709,097		215,135
Total Liabilities and Stockholders’ Equity	$	2,471,476	$	1,522,866

______________

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

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NORTHERN OIL AND GAS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except share and per share data)	2022		2021		2022		2021
Revenues
Oil and Gas Sales	$	534,050	$	259,670	$	1,540,151	$	642,719
Gain (Loss) on Commodity Derivatives, Net	257,590		(128,163)		(339,995)		(465,010)

Total Revenues	791,640		131,507		1,200,156		177,709

Operating Expenses
Production Expenses	68,478		43,236		187,659		120,246
Production Taxes	42,273		19,932		120,729		51,899
General and Administrative Expense	10,278		5,490		32,155		19,878
Depletion, Depreciation, Amortization and Accretion	65,975		35,885		173,956		98,013


Total Operating Expenses	187,004		104,543		514,499		290,036

Income (Loss) From Operations	604,637		26,964		685,658		(112,327)

Other Income (Expense)
Interest Expense, Net of Capitalization	(20,135)		(14,586)		(56,523)		(43,120)

Gain (Loss) on Unsettled Interest Rate Derivatives, Net	(42)		92		1,772		454
Gain (Loss) on Extinguishment of Debt, Net	339		—		574		(13,087)

Contingent Consideration Gain (Loss)	—		82		—		(292)


Other Income (Expense)	(1)		2		(184)		5
Total Other Income (Expense)	(19,839)		(14,410)		(54,361)		(56,040)

Income (Loss) Before Income Taxes	584,798		12,554		631,296		(168,367)

Income Tax Provision (Benefit)	1,333		—		3,128		—

Net Income (Loss)	$	583,465	$	12,554	$	628,169	$	(168,367)

Cumulative Preferred Stock Dividend	(2,610)		(3,605)		(8,437)		(11,154)

Premium on Repurchase of Preferred Stock	—		—		(25,320)		—

Net Income (Loss) Attributable to Common Stockholders	$	580,855	$	8,949	$	594,412	$	(179,521)

Net Income (Loss) Per Common Share – Basic	$	7.39	$	0.14	$	7.66	$	(2.97)
Net Income (Loss) Per Common Share – Diluted	$	6.77	$	0.13	$	6.92	$	(2.97)
Weighted Average Common Shares Outstanding – Basic	78,589,661		65,856,479		77,632,410		60,404,584
Weighted Average Common Shares Outstanding – Diluted	86,141,293		66,629,566		87,056,158		60,404,584

______________

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

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NORTHERN OIL AND GAS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended September 30,
(In thousands)	2022		2021
Cash Flows from Operating Activities
Net Income (Loss)	$	628,169	$	(168,367)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:
Depletion, Depreciation, Amortization and Accretion	173,956		98,013
Amortization of Debt Issuance Costs	3,316		2,750

(Gain) Loss on Extinguishment of Debt	(574)		13,087
Amortization of Bond Premium on Long-term Debt	(1,599)		(130)
Deferred Income Taxes	805		—
Unrealized (Gain) Loss of Derivative Instruments	(54,163)		373,086

Loss on Contingent Consideration	—		292

Loss on Disposal of Fixed Assets	185		—
Stock-Based Compensation Expense	4,209		2,247


Other	2,165		3,293
Changes in Working Capital and Other Items:
Accounts Receivable, Net	(121,904)		(86,747)
Prepaid and Other Expenses	(1,000)		(975)
Accounts Payable	15,997		21,683
Accrued Interest	(14,154)		(3,965)
Accrued Liabilities and Expenses	5,631		9,098

Net Cash Provided by Operating Activities	641,039		263,365

Cash Flows from Investing Activities
Capital Expenditures on Oil and Natural Gas Properties	(825,462)		(364,478)

Acquisition Deposit	(28,500)		—


Purchases of Other Property and Equipment	(4,580)		(339)
Net Cash Used for Investing Activities	(858,542)		(364,817)

Cash Flows from Financing Activities
Advances on Revolving Credit Facility	830,000		428,000
Repayments on Revolving Credit Facility	(444,000)		(641,000)
Repurchase of Unsecured Notes due 2028	(19,832)		—



Repurchases of Second Lien Notes due 2023	—		(295,918)
Repayment of Unsecured VEN Bakken Note due 2022	—		(130,000)
Debt Issuance Costs Paid	(6,238)		(12,436)


Issuance of Common Stock	—		228,199
Issuance of Unsecured Notes due 2028	—		550,000
Repurchases of Common Stock	(21,500)		—

Repurchases of Preferred Stock	(81,236)		—
Restricted Stock Surrenders - Tax Obligations	(2,206)		(839)
Preferred Dividends Paid	(5,911)		(22,002)
Common Dividends Paid	(31,966)		(1,975)
Net Cash Provided by Financing Activities	217,112		102,029

Net Increase (Decrease) in Cash and Cash Equivalents	(390)		578

Cash and Cash Equivalents - Beginning of Period	9,519		1,428

Cash and Cash Equivalents - End of Period	9,129		2,006

______________

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

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NORTHERN OIL AND GAS, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)


(In thousands, except share data)	Common Stock			Preferred Stock			Additional Paid-In		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Capital		(Deficit)		(Deficit)
December 31, 2021	77,341,921	$	479	2,218,732	$	2	$	1,988,649	$	(1,773,996)	$	215,135

Issuance of Common Stock	15,651	—		—	—		—		—		—
Restricted Stock Forfeitures	(1,815)	—		—	—		—		—		—
Share Based Compensation	—	—		—	—		1,499		—		1,499
Restricted Stock Surrenders - Tax Obligations	(89,620)	—		—	—		(2,206)		—		(2,206)




Issuance of Common Stock Warrants - Acquisitions of Oil and Natural Gas Properties	—	—		—	—		17,870		—		17,870



Repurchases of Preferred Stock	—	—		(362,671)	—		(50,225)		—		(50,225)

Common Stock Dividends Declared	—	—		—	—		(10,815)		—		(10,815)
Net Loss	—	—		—	—		—		(206,560)		(206,560)

March 31, 2022	77,266,137	$	479	1,856,061	$	2	$	1,944,773	$	(1,980,556)	$	(35,302)

Issuance of Common Stock	81,948	—		—	—		—		—		—

Share Based Compensation	—	—		—	—		1,490		—		1,490








Issuance of Common Stock in Exchange for Warrants	2,322,690	2		—	—		(2)		—		—
Repurchases of Common Stock	(447,051)	—		—	—		(12,808)		—		(12,809)
Repurchases of Preferred Stock	—	—		(212,329)	—		(31,011)		—		(31,011)
Preferred Stock Dividends	—	—		—	—		(5,911)		—		(5,911)
Common Stock Dividends Declared	—	—		—	—		(15,071)		—		(15,071)
Net Income	—	—		—	—		—		251,264		251,264

June 30, 2022	79,223,724	$	481	1,643,732	$	2	$	1,881,459	$	(1,729,292)	$	152,650

Issuance of Common Stock	14,544	—		—	—		—		—		—
Restricted Stock Forfeitures	(200)	—		—	—		—		—		—
Share Based Compensation	—	—		—	—		1,389		—		1,389









Repurchases of Common Stock	(358,868)	—		—	—		(8,691)		—		(8,691)


Common Stock Dividends Declared	—	—		—	—		(19,716)		—		(19,716)
Net Income	—	—		—	—		—		583,465		583,465

September 30, 2022	78,879,200	$	481	1,643,732	$	2	$	1,854,441	$	(1,145,827)	$	709,097

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(In thousands, except share data)	Common Stock			Preferred Stock			Additional Paid-In		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Capital		(Deficit)		(Deficit)
December 31, 2020	45,908,779	$	448	2,218,732	$	2	$	1,556,602	$	(1,780,357)	$	(223,304)

Issuance of Common Stock	138,297	—		—	—		—		—		—

Share Based Compensation	—	—		—	—		916		—		916
Restricted Stock Surrenders - Tax Obligations	(60,529)	—		—	—		(837)		—		(837)


Equity Offerings, Net of Issuance Costs	14,375,000	14		—	—		132,885		—		132,900




Net Loss	—	—		—	—		—		(90,357)		(90,357)

March 31, 2021	60,361,547	$	462	2,218,732	$	2	$	1,689,567	$	(1,870,714)	$	(180,682)

Issuance of Common Stock	30,957	—		—	—		—		—		—

Share Based Compensation	—	—		—	—		851		—		851
Restricted Stock Surrenders - Tax Obligations	(82)	—		—	—		(2)		—		(2)


Equity Offerings, Net of Issuance Costs	5,750,000	6		—	—		95,293		—		95,299
Issuance of Common Stock Warrants - Acquisitions of Oil and Natural Gas Properties	—	—		—	—		30,512		—		30,512



Contingent Consideration Settlements	21,977	—		—	—		354		—		354

Preferred Stock Dividends	—	—		—	—		(22,002)		—		(22,002)
Common Stock Dividends Declared	—	—		—	—		(1,985)		—		(1,985)
Net Loss	—	—		—	—		—		(90,563)		(90,563)

June 30, 2021	66,164,399	$	468	2,218,732	$	2	$	1,792,589	$	(1,961,276)	$	(168,217)

Issuance of Common Stock	17,876	—		—	—		—		—		—
Restricted Stock Forfeitures	(14,355)	—		—	—		—		—		—
Share Based Compensation	—	—		—	—		728		—		728







Contingent Consideration Settlements	10,228	—		—	—		189		—		189


Common Stock Dividends Declared, $0.0450 per Share	—	—		—	—		(2,963)		—		(2,963)
Net Income	—	—		—	—		—		12,554		12,554

September 30, 2021	66,178,148	$	468	2,218,732	$	2	$	1,790,542	$	(1,948,723)	$	(157,710)

______________

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

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NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

(UNAUDITED)

NOTE 1 ORGANIZATION AND NATURE OF BUSINESS

Northern Oil and Gas, Inc. (the “Company,” “Northern,” “our” and words of similar import), a Delaware corporation, is an independent energy company engaged in the acquisition, exploration, exploitation, development and production of crude oil and natural gas properties. The Company’s common stock trades on the 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 in 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, 2021 has been derived from the Company’s audited financial statements for the year ended December 31, 2021. 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, 2021, which were included in the Company’s 2021 Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

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. Actual results may differ from those estimates.

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.

Reclassifications

Certain prior period balances in the condensed statements of cash flows have been reclassified to conform to the current year presentation. Such reclassifications had no impact on net income (loss), cash flows or stockholders’ equity (deficit) previously reported.

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

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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 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 in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The exemption, as described in ASC 606-10-50-14(a), applies to variable consideration that is recognized as control of the product is transferred to the customer. Since each unit of product represents a separate performance obligation, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.

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

A wellhead imbalance liability equal to the Company’s share is recorded to the extent that the Company’s well operators have sold volumes in excess of its share of remaining reserves in an underlying property. However, for the three and nine months ended September 30, 2022 and 2021, 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 Appalachian Basin (Pennsylvania), and the Permian Basin (New Mexico and Texas). The following tables present the disaggregation of the Company’s oil revenues and natural gas and NGL revenues by basin for the three and nine months ended September 30, 2022 and 2021.


	Three Months Ended September 30, 2022								Three Months Ended September 30, 2021
(In thousands)	Williston		Permian		Appalachian		Total		Williston		Permian		Appalachian		Total
Oil Revenues	$	262,566	$	113,166	$	—	$	375,732	$	192,424	$	10,810	$	—	$	203,234
Natural Gas and NGL Revenues	75,036		38,320		44,962		158,318		37,653		1,792		16,990		56,436
Total	$	337,602	$	151,486	$	44,962	$	534,050	$	230,077	$	12,602	$	16,990	$	259,669


	Nine Months Ended September 30, 2022								Nine Months Ended September 30, 2021
(In thousands)	Williston		Permian		Appalachian		Total		Williston		Permian		Appalachian		Total
Oil Revenues	$	826,483	$	301,956	$	—	$	1,128,439	$	507,797	$	15,353	$	—	$	523,150
Natural Gas and NGL Revenues	209,969		94,302		107,441		411,712		89,416		2,126		28,025		119,567
Total	$	1,036,452	$	396,258	$	107,441	$	1,540,151	$	597,213	$	17,479	$	28,025	$	642,717

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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 development, exploitation, production and exploration activities relating to the Company’s leasehold interests, or are unable or unwilling to perform, the Company’s 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 and nine months ended September 30, 2022, the Company’s top four operators made up