Debt | Deals - Acquisition, Mergers, Divestitures | Hedging | Capital Markets | 2020 Guidance

Northern Oil Narrows 4Q20 Production Guidance; Updates Hedges

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Northern Oil and Gas, Inc. announced a business and operations update.

Highlights:

• Reaffirms mid-point of 4Q20 production guidance and narrows range to 34,000-36,000 Boepd

• Reiterates 2021 $40+ WTI base case outlook

• $178 million of debt reduction in 2020

• Retired $65 million, or 50%, of the Unsecured VEN Bakken Note on January 4, 2021

• $8.4 million of high return Ground Game acquisitions in Q4, including four Permian transactions

• 20,609 average BOPD hedged for full year 2021 at an average price of $55.09 per barrel

• 8,000 average BOPD hedged for Q1 2022 at an average price of $50.81 per barrel

• 4,798 average BOPD hedged for full year 2022 at an average price of $50.17 per barrel

Ops Update

Northern has seen steady and continued improvement in operations throughout the fourth quarter of 2020. Operators have continued to return shut-in and curtailed production to sales at a steady rate. Northern has also seen increased development and completion activity due in part to improved pricing. Northern's wells in process inventory remains at or near all-time highs, with 28.1 net wells as of December 31, 2020. Given improved pricing and activity levels in November and December, Northern is narrowing its Q4 2020 production guidance from 30,000 - 40,000 Boe per day to 34,000 - 36,000 Boe per day. Additionally, with higher propane and natural gas prices, Northern expects steady improvements to its natural gas realizations, as higher prices absorb fixed gathering and processing fees.

Ground Game Update

Northern has seen an increased backlog of acquisition opportunities, from individual wellbores to large asset packages. As of January 2021, Northern's backlog of acquisition opportunities exceeds $1 billion in potential deal value. Northern retains its strict hurdle rates and any potential transactions must meet its high standards regarding asset quality and total returns. Northern executed on $8.4 million in acquisitions in the fourth quarter, inclusive of $1.8 million in equity-based consideration which was previously disclosed. This resulted in the acquisition of 1.0 net producing well, 3.6 net wells in process, 655 net acres, and 373 net royalty acres (standardized to a 1/8 royalty interest). Across the 11 transactions, four targeted the Permian Basin and accounted for 1.1 net wells in process, 219 net acres and 0.6 net undrilled locations. The table below summarizes Northern's expectations for these acquisitions as a whole:

Balance Sheet Update

Northern reduced its total debt outstanding in 2020 by approximately $178 million, including the retirement of $130.0 million of its Senior Secured Notes. The balance on Northern's Revolving Credit Facility as of December 31, 2020 was $532 million, down $39 million from the third quarter of 2020. Northern exited 2020 with approximately $130 million of liquidity. On January 4, 2021, Northern retired $65 million, or 50%, of its Unsecured VEN Bakken Note with available liquidity and cash on hand. With additional significant free cash flow expected in 2021, Northern anticipates a steady reduction in debt balances and increased liquidity over time.

Nick O'Grady, Chief Executive Officer of Northern, said: "Our team quietly executed throughout even the most challenging periods of 2020, adding high quality inventory and development with strong upfront returns and convexity to better pricing, one small deal at a time. Our work should pay off in 2021, as the positive trajectory throughout Q4 was encouraging and provides strong momentum. We expect even greater free cash flow, growing volumes and stellar capital productivity on the horizon."

Adam Dirlam, Chief Operating Officer of Northern, added: "With the `Shale 3.0' model taking hold for operators, we are seeing enormous opportunities to step into projects as non-operated capital availability remains scarce. These Ground Game opportunities continue to have full-cycle returns well north of our already strong return on capital employed metrics."