Northern Oil & Gas (NOG): Production-Led Growth with Capital Discipline
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Investment Snapshot
FY’25 production growth supported by acquisitions and increased working interest
FY’26 guidance implies continued scale-up in oil and gas volumes
Adjusted Opex declined excluding impairment-related items
Capital expenditure lower vs FY’24 reflecting disciplined allocation
Key focus remains balancing growth with leverage and funding strategy
FY’25 Results Overview
Total revenue increased by 11.2% YoY to $2.5B, driven by higher revenue from Natural Gas and NGL sales, which grew 78.5% YoY, partially offset by lower revenue from oil sales, which declined by 14.2% YoY. Growth was supported by higher production and positive impact from settled commodity derivatives.
Revenue Breakdown
Oil revenue (78% of total revenue excl. gain/loss on derivatives): Declined by 14.2% YoY to $1.6B from $1.9B in FY’24. The decline was driven by sustained decrease in price of oil, partially offset by higher production of oil, which grew 4.4% YoY to 27.6 MMBbl from 26.5 MMBbl in FY’24.
In 2025, average (avg.) NYMEX WTI pricing was $64.7 per barrel v/s $75.8 per barrel in 2024. The oil prices have declined by 15% YoY due to (1) uncertainty regarding US trade policy and tariffs driving concern over inflation, (2) continued concern over slowing global economic growth and resulting reduction in estimated global oil consumption and (3) decision by OPEC to increase production in May 2025, creating additional global supply and further downward pressure on oil prices.
Natural gas and NGL revenue (22% of total revenue excl. gain/loss on derivatives): Increase by 78.5% YoY to $454M from $254M in FY’24. The increase was driven by higher production of NGL, which increased 15% YoY to 130 Bcf from 113 Bcf in FY’24, coupled with higher avg. NYMEX Henry Hub price, which increased by 50% YoY to $3.6 per MMBtu from $2.4 per MMBtu in 2024.
Underlying Revenue Trend (Ex-Derivatives)
One key thing to note in NOG’s FY’25 results: Oil, natural gas and NGL sales excluding the effect of settled commodity derivatives, decreased 3% YoY to $2.1B from $2.2B in FY’24, due to 14% decrease in realized prices on a per Boe basis, which were partially offset by a 9% increase in production volumes.
Adjusted EBITDA
NOG generated a Credosh adj. EBITDA of $1.6B, 0.5% YoY increase and an EBITDA margin of 65.6% v/s 72.6% in FY’24. The margin compression was primarily driven by lower realized oil prices and changes in product mix, partially offset by production growth.
Free Cash Flow
NOG generated an FCF of $252.8M (15.6% conversion based on Credosh adj. EBITDA), post Capex of ~$1.3B, cash interest of $171M and source of working capital of $70M.
Capital Allocation
Capex was split into drilling and development of $919M and $333M for acquisition of oil & gas properties. Capex as % revenue declined to 50.6% from 75.2% in 2024, primarily because of management focus for capital preservation at times when avg. global oil prices are declining.
Leverage & Liquidity
Gross/net leverage was 1.5x based on CREDOSH Adj. EBITDA of $1.6B. As of April 2026, Net LTV was 48.1%, Liquidity was $1.3B with cash of only $14.3M and $1,332M of availability under RCF. NOG has a DSCR of 10.3x.
FY’26 Guidance
Given the volatile pricing outlook for oil, NOG is providing guidance reflecting a low price/low activity scenario and a high price/high activity scenario.
Low Activity Guidance
NOG expects an annual production of (oil & gas) 141 MBoe/day at midpoint (+4.4% YoY, 135 Mboe/day in FY’25)
Annual oil production of 70 MBbl/day at midpoint (-7.5% YoY, 75.6 MBbl/day in FY’25)
Total budget capital expenditure of $875M at midpoint (-30% YoY)
High Activity Guidance
Annual production of (oil & gas) 146 MBoe/day at midpoint (+8.1% YoY, 135 Mboe/day in FY’25)
Annual oil production of 74 MBbl/day at midpoint (-2.2% YoY, 75.6 MBbl/day in FY’25)
Total budget capital expenditure of $1,050M at midpoint (-16% YoY)
Recent Developments
NOG acquired 40% stake in Ohio Utica Shale Upstream and Midstream Assets from Antero with remaining 60% acquired by Infinity Natural Resources (INR). INR will be the operator for assets.
In October 2025, NOG issued $725M of senior notes due 2033. The proceeds of the senior notes were used primarily to fund the purchase of $705M of senior note due 2028 and for general corporate purposes.
Business Profile
Northern Oil & Gas (NOG) is the largest publicly listed non-operator of oil and natural gas properties.
NOG acquires non-operated minority interest in mineral-rich land properties primarily in Permian (44% of FY’25 Production), Williston (31%), Appalachian (17%) and Uinta (8%) basin in the US by partnering with E&P companies.
Earns revenue from sale of oil (77.7% of FY’25 pre-hedging total revenue), natural gas (21.7%) & other revenue (0.7%).
Sells oil and natural gas produced through its operating partners and has more than 90 operating partners, no single operator represented more than 11% of Q4'25 sales.
NOG uses derivative instruments to hedge future sales prices for (as of FY’25, ~77% & 62% of oil and NGL production was hedged) oil and natural gas production, resulting in predictable cash flows and reducing exposure to price movements.
Bond Details
Rating: CFR [Ba3 (s) / B+ (s)], Tranche [B1/ B+ (4)]
Bond: $725M, Sr. Secured Note
Maturity: Oct-2033
Rate: 7.875%, $103.13 @~(7.324% YTM)
Net Leverage: 1.6x based on $1,625M, FY'25 Credosh adj. EBITDA
Net LTV: 48.1% based on $2.5B Market Cap. (as of 04/17/26)
Credit View
Strong production growth profile
Improving capital discipline
Exposure to commodity prices remains key risk
Hedging strategy provides partial downside protection
Recommendation
We like the credit, given the capex flexibility of the business, its diversified asset base across multiple US basins and partners, historically increasing production, and positive pre-acquisition operating cash flow generation. However, we do note that growth is dependent upon commodity prices (oil and gas), and consider NOG’s use of derivatives as a mitigant to this commodity exposure.
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