Northern Oil and Gas, Inc. (NYSE:NOG) Q1 2023 Earnings Call Transcript

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And I think I remember on a prior call saying, hey, building a steel pipe or sand or not, things that are going to be in long-term short, it’s just going to take time and those thing. Those logistical things and shortages of materials have largely passed. I think where it goes from here is really going to be determined by as dumb as it may sound. It’s going be determined by the price of crude. What you find is that overall EP margins stay relatively static over time, whether oil’s a 100 or if it’s 65. And so, if oil prices are to materially weaken, I would expect over time, you’re going to see material reductions to margins for service providers as that overall activity falls. If prices hang in there and do their thing where they are today, I still think through drilling efficiencies, we continue to see operators drilling longer and longer laterals and larger amounts of wells at a pad level at any given time.

And those will add up to material kind of collateral foot savings over time. And so, I would expect you probably can see some relief as time goes on. And, yes, I think as our program moves to be more balanced over the year, I think you’ve definitely seen a material slowdown in the Permian specifically in inflation of well cost. And so, I think that will ease it over time. I think to the extent that we’re going to see any relief is going to — we’re going to have to wait and see over time. I think, you know, everyone from a service provider to and an operating group are going to have their chest puffed out when you see periods of volatility, and we’ll see how that plays out.

Adam Dirlam: Yes. John, I think the only other dynamics that I’d add to that is just kind of operator kind of cadence and flow. And you mentioned the Williston, Continental and Conoco, we’ve seen the most activity within the quarter and just looking at kind of their weighted average AFPs, it’s certainly encouraging. And Continental being one of our most active operators and being ratably lower than the overall based on average.

John Freeman: Great. And then just my follow-up. Adam, you kind of gave us an idea of how the production cadence kind of looks over these next few quarters and gotten clear on sort of the CapEx breakdown of that 60% in the first half of the year. But I was hoping to maybe get a little bit more color on the till cadence, obviously last year, it was sort of averaged 10 TILs the first half of the year and had the big step up in the second half of the year. And then, this year, it sounds like a kind of build that you go throughout the year. Can we get any more of a breakdown on how you kind of get to that 80 to 85 TIL guidance for the full year? Kind of how the remaining quarters look, just rough numbers?

Nick O’Grady: Yes. I mean, without going specifically into the numbers, John, just because I don’t have those sitting right in front of me. But I would expect you’ll see consistent to slightly higher activity this quarter, and that should generate some modest growth in the third quarter. Obviously, you really — early third quarter, you should have the bulk of the first wave of Mascot wells on, so you’re going to have a material step up in the third quarter. And the CapEx doesn’t really track our TILs. Like, the money we spent this quarter for 13 TILs isn’t really necessarily going to those wells. Those wells were largely — that money was spent last year. And so that’s why the waiting is upfront, because the way we accrue on a on a percentage of completion basis, right, the TIL is just sort of the icing on the cake at the end.

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