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Greetings and welcome to the NOG Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It’s now my pleasure to introduce your host, Evelyn Infurna, Vice President, Investor Relations. Thank you. You may begin.

Thanks Nick. In the third quarter, we saw an acceleration of activity on all fronts, setting up for a solid 2024 campaign. I’ll start by reviewing this quarter’s operations and then turn to the M&A landscape and our business development efforts. During the third quarter, turned in-lines rebounded to a company record of 22.6 net wells, a 64% increase quarter-over-quarter. Our organic assets did the heavy lifting with 18.9 net well additions, while our Ground Game turned in-line 3.7 net wells, the majority of which came online towards the end of the quarter. Activity had a healthy balance between the Williston and the Permian, and as we enter the fourth quarter, we expect to see elevated turned in-lines before seasonal easing during the winter period. Well performance has been encouraging as our Mascot prospect continues to outperform expectations, and while it is early, our new operating partners in vital, Earthstone, and soon-to-be Permian Resources have all been making improvements to our recently acquired co-developed assets. Continuing with the theme of acceleration, our wells in process again grew to an all-time high as we ended the quarter at 74.2 net wells, a nearly 10% increase quarter-over-quarter. Driving activity levels, our organic acreage added 14.6 net wells and accounted for one-third of our Permian activity as our acquired acreage over the last two years continues to show its value. We added another 9.3 net wells from the closing of our Novo transaction, and the Ground Game accounted for an additional 5.5 net wells. In total, the Williston and Permian combined to account for nearly 80% of our wells in process, while the Permian has grown to 60% of our oil-weighted wells on the D&C List. As we have taken market share, we’ve also seen our average working interest grow to 13% from under 10%. This is a 34% increase relative to our producing wells, which will enable us to do more with less rig activity if we so choose. In-bound well proposals also saw an acceleration as we reviewed 194 AFEs, up from 140 proposals in the second quarter. This was driven by the Permian, where activity levels more than doubled from Q2 to Q3 and also accounted for the highest number of net wells evaluated during the year. Our Williston activity has remained stable and consistent as we have seen over 100 well proposals in every quarter this year. While activity levels have increased across the board, the quality of wells continues to be strong with the expected rates of return far exceeding our hurdle rate even as we sensitize our evaluations for a lower commodity price environment. This translated to a greater than 95% consent rate during the quarter as we partner with our top-tier operators. Turning to well costs, we saw absolute well costs rise this quarter, primarily from higher cost Permian wells making up a much greater proportion of the total activity. Normalizing for lateral length and basin, estimated well costs were relatively flat quarter-over-quarter. Given the volatility in commodity markets, we remain conservative in our views on costs as we plan for 2024. We continue to have conversations with our operating partners and we’ve seen some of our larger operators along with some of our more adept operators drive costs down while seeing others get squeezed as contracts roll off. Moving on to our business development efforts and the M&A landscape, we continue to adapt to the ebbs and flows of the market. As I alluded to on our second quarter call, there was a bit of a low in quality large-scale assets in the market over the past few months. During that time, we were able to pivot early in the quarter and capitalize on the dislocation we observed with lower commodity prices and stayed busy with our Ground Game. We closed on 8 transactions, adding an estimated 5.7 net wells in process and 514 net acres weighted towards the Permian. This brings our year-to-date activity to 31 transactions for an estimated 24.9 current or future net wells and approximately 1,800 net acres. Since the beginning of the year, we have reviewed over 400 Ground Game deals and continue to leverage our proprietary technology and data to run these evaluations. This has afforded us the ability to focus on only the high quality transactions, which is translated to an expected ROCE north of 30% on our 2023 Ground Game. As I mentioned earlier, we closed our Novo transaction in the middle of the quarter and are excited to get to work with our new operating partner, Permian Resources. We know the Permian Resources team well, and having greater exposure to PR will provide incremental benefits from their increased scale and cost synergies. Governance through our joint operating agreement and our area of mutual interest with Earthstone remain intact and we expect nearly a decade of self-funding continuous development within our Tier 1 inventory. Through leveraging partnerships with our operators, we have been able to aggregate in high quality areas while gaining line of sight to development. We continue to reap the benefits of more opportunities to deploy capital to accretive transactions as we scale the business with resilient assets. In the past 12 months, we have added over 25,000 net acres in the Permian, more than tripling our position. Looking ahead, there are a number of high quality prospects that we are reviewing, ranging from traditional non-op packages to minority interest sell-downs from operators to joint development programs. Put simply, we estimate that the universe of on- and off-market opportunities that are available to us has never been broader. However, we will remain consistent in our underwriting, focusing only on potential transactions that will benefit the business for the long term and that generate superior returns that our investors expect. With that, I’ll turn it over to Chad.

Thanks Adam. I’ll start by reviewing our third quarter results and provide additional color on the operating update we released on October 25th. Our Q3 average daily production topped 100,000 Boe per day for the first time in company history, a 13% increase compared to last quarter. Oil volumes were up 16% over Q2 as we rolled in our Forge and Novo acquisitions and benefited from the reversal of most of the prior deferments in the back half of the quarter, but the real story is the addition of record levels of turned in-line wells and the continued strong well performance across all of our basins. Our adjusted EBITDA was $385.5 million in Q3, up 32% over the same period last year, and our third quarter free cash flow was $127.8 million despite continued elevated levels of organic and inorganic investment, commodity price volatility, and to a lesser extent TIL deferrals. Adjusted EPS was $1.73 per diluted share. Oil realizations were better than internally expected due to continued strong in-basin pricing and a higher percentage of barrels coming from the Permian, which is typically priced tighter than the Williston. Natural gas realizations were 82% of benchmark prices for the third quarter, below our year-to-date run rate, with realized actuals in the Marcellus down over 30% from last quarter as basis spreads widened for the shoulder season. The biggest driver is the NGL to natural gas ratio, which moved back to more normalized levels in the quarter as NGL prices were relatively flat quarter-over-quarter and natural gas prices were higher. LOE came in at $8.76 per Boe, below our annual guidance range, driven primarily by increased Permian volumes, which have a lower cost structure than the Williston. On the CapEx front, we invested $216.6 million in drilling, development, and ground game capital in the third quarter, with roughly two-thirds allocated to the Permian and one-third to the Williston. We had previously expected our CapEx cadence for the second half of the year would be equally weighted between Q3 and Q4. However, as a result of having access to high-quality opportunities, success on the ground game, along with the pull-forward of organic activity on higher commodity prices, we shifted more investment into the third quarter. This shift in spend led us to adjust our full-year CapEx guidance, which I’ll discuss shortly. After quarter end, we took the opportunity to further enhance our balance sheet. In early October, we completed a $290 million equity offering, priced down just 475 basis points from the closing price, truly highlighting our access to capital. More importantly, it was done in a manner that had minimal effect on our existing investors and provides us with capital to pursue significant M&A opportunities within the confines of our stated leverage goals. Our expectation is that the near-term dilution from the offering can be more than offset over time through value-enhancing acquisitions. In the meantime, we have accelerated a path towards our stated leverage target. Now turning to annual guidance, we have made a few adjustments, which are highlighted on Page 16 of our earnings presentation. We are tightening our annual production guidance to $97,000 to $99,000 Boe per day. The main drivers for Q4 will be the timing of completions, giving a record number of net wells in process, and seasonal factors, particularly in the Williston, where well timing can be highly sensitive to weather. We now expect net well spuds for the year in the range of 76 to 79 net wells, which along with our TIL guidance should assist in modeling. The higher level of net wells explain the bulk of the move in the CapEx, which is ultimately just growing 2024 activity stacked under this year’s capital. Our annual CapEx guidance has been revised to a range of $790 million to $820 million, reflecting year-to-date investment activity ahead of our prior forecast and, as I just mentioned, the increased spud count. Our full year gas realization guidance has been improved to a range of 95% to 105% of Henry Hub to reflect year-to-date realizations, which implies more typical levels for the remainder of the year. And lastly, we have also tightened the expectations for oil differentials to a range of $3 to $3.75 for the year. As we exit driving season and oil prices have increased, we began to see seasonally wider oil differentials starting at the end of the third quarter and expect that trend to continue through the winter. As we finish out 2023, we are extremely well positioned for another year of strong growth in 2024 given our recent acquisitions and record wells in process. We are still working through our 2024 budget and look forward to providing guidance details on our year-end call. With that, I’ll turn it back over to the operator for Q&A.

Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] And our first question came from Scott Hanold, RBC Capital Markets. Please sir, go ahead.

I think it touched on the majority of it, scale begets opportunity, right, and I believe I touched on it in my prepared remarks in terms of kind of the different structures that are now available to us. I think that gives us the optionality to deploy capital where we see fit. If you rewind five years ago, it was really just the ground game and the non-op packages that we’re beholden to, and now we’re looking at co-bidding exercises, minority interest buy-downs, joint development agreements, and all of that is at scale, right. And so I think we are a much larger and better capital provider and partner to a lot of our other operating partners that gives us significantly more opportunity.

Yes, performance is kind of at 13% better overall versus kind of our forecast, Scott. And as far as kind of the modified schedule goes that we discussed last quarter, we’d expect production to decline a little bit in the fourth and the first quarter, and then begin ramping materially in late March. So, to Nick’s point, that’s when the larger batch of wells come online.

Right. Okay, thank you.

Our next question came from Neal Dingmann, Truist Securities.

Yes, I mean, as far as the criteria qualitatively, I think, we’re relatively agnostic in terms of overall structure. It’s really going to boil down to the overall rate of return and asset level returns there. So, we are never going to change our stripes in that regard. Big deal, small deal all take the same amount of time. And so, I think where that probably comes into play a little bit more is the ground gain side, right, is a 1% working interest really going to move the needle for us? And frankly, when you get into the larger ground game deals, the higher concentration the competition is relatively limited, right, when you think about your competition and what their capital pool is and how they want to diversify kind of their capital allocation. So, we’ve definitely stepped up in that regard. But as far as overall structure or quality, those types of things, I think, we are going to continue to just stay the course with what we’ve done in the past. And as far as where those opportunities are located, let’s say primarily that’s going to be in the basins where we are at. Permian, obviously, with the rig level activities there and the Delaware, to be a bit more specific is generally where we are seeing those opportunities. But we’ve been surprised about some of the things that have come to market and we’ve been approached on in the Appalachia, as well as the Bakken.

Okay.

Perfect. Thanks, guys.

And our next question comes from John Abbott, Bank of America. Please, sir, go ahead.

That’s the reason why we focus on partnering with the larger operators. The conversations that we’re having right now and you’ve seen the rig levels fall. A lot of those guys are going back to these service providers, laying down rigs in an effort to kind of keep cost low. And if you’re running 17 to 20 rigs or whatever it might be, you can still keep and maintain your operations plan, but still be able to kind of flex your muscle. And we’ve got to manage the volatility. I think Nick mentioned it last quarter on the call. If commodity prices go higher, then we’ll expect to see well costs do the same. And likewise we see a gap down then something’s got to give there. And I think as we manage all of this volatility, we’re going to stay conservative, especially as we’re going into 2024 planning.

Appreciate it. And then for our follow up question, I think this is for you there, Chad, is just with the acquisition, with the deals that you’ve done, how do you see the trajectory of cash taxes over a multi-year basis at this period of time for Northern?

Yes. I talked a little bit about it on the last call, addressed in my prepared remarks. I mean, it hasn’t really moved. We contemplated Novo in that – in that last year. We kind of knew what we had. So I think it’s still a 2024 item. It’s going to be to a lesser extent in 2024, and then obviously, it’s going to be a bit more fully loaded in 2025 and beyond.

[Operator Instructions] We will move on to our next question, which comes from the line of Paul Diamond with Citi. Please proceed with your question.

Thank you. We’ll move on to our next question, which is coming from the line of Charles Meade with Johnson Rice. Please proceed with your question.

Thank you. Our next question is coming from the line of Donovan Schafer with Northland Capital Markets. Please proceed with your question.

Hey guys, thanks for taking the questions. I want to start off with the Ground Game. So it seems like you see simultaneously a lot of opportunity there, while also not a lot of competition. So it sets kind of the economics and opportunities up really attractively while at the same time like what we’ve talked about with kind of more of a lull and larger package deals and some of this Bid/Ask spread stuff on larger probably M&A. So I’m curious, like, so my understanding is maybe what’s going on with the Ground Game is it’s like, people get an AFE [ph] and they’ve got to make a decision quickly. And if it’s an operator or someone with a lot of kind of different irons in the fire and a limited budget they planned for this year. If there’s an acceleration in activity, then they’re not ready to pull the trigger on all those AFEs or consent to them? And so it kind of becomes almost like a scramble and so maybe there’s more this scramble that’s relevant to like the Ground Game kind of AFE market? And then people dealing with limited budgets, maybe some of that runs-up against ESG stuff where less capital is maybe not as quick to respond to better commodity prices and all? So that’s kind of my understanding. So, just can you confirm, like, is that what you’re seeing and that’s kind of what is happening with the Ground Game or are there other dynamics that are making it so particularly strong right now?

Thank you. Our next question is coming from the line of Charles Meade with Johnson Rice. Please proceed with your question.

Got it. I appreciate that in detail. Thanks, guys.