Northern Oil And Gas (NOG -11.12%), an independent owner of non-operated oil and gas properties, reported its financial results for the second quarter of fiscal 2025 on July 31, 2025. Revenue was $574.4 million. Revenue exceeded analyst expectations of $526.46 million (GAAP). However, GAAP net income slid to $99.6 million, reflecting both softer commodity prices and a non-cash asset impairment. Overall, the quarter showed outperformance on revenue, robust cash flow, and continued investment in shareholder returns, although profits (GAAP) slipped compared to the previous year as industry headwinds persisted.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.37 | $0.97 | $1.46 | (6.2%) |
| Revenue (GAAP) | N/A | $526.5 million | N/A | N/A |
| Adjusted EBITDA | $440.4 million | $413.1 million | 6.6% | |
| Net Income (GAAP) | $99.6 million | $138.6 million | (28.1%) |
Source: Analyst estimates for the quarter provided by FactSet.
Northern Oil And Gas: Business Model and Strategic Priorities
Northern Oil And Gas is one of the largest independent acquirers of non-operated working interests in U.S. oil and gas assets. It holds positions in various prolific basins, including Williston, Permian, Appalachian, and Uinta, acting as a financial partner rather than an operator of wells.
The company's core strategy relies on finding and acquiring interests in high-quality wells while maintaining diversification across multiple geographic regions and commodity mixes. Disciplined capital allocation, active risk management through hedging, and a focus on returns per share are central to its approach.
Quarter Highlights: Production, Acquisitions, and Financial Trends
Total company production increased 9% compared to Q2 2024, reaching 134,094 barrels of oil equivalent (Boe) a day. Oil production was up 10.5% to 76,944 barrels per day, with natural gas output also growing steadily. The Uinta Basin experienced sequential double-digit growth, while Appalachian natural gas volumes reached a record level. However, oil output dipped 2% from the prior quarter as activity waned in the Williston Basin, and shut-ins by some operators affected volumes.
Development activity showed some moderation. Only 20.8 net wells were added to production, a reduction from the previous quarter due to lower drilling cadence in the Williston. However, the company still maintained a record 53.2 net wells in process. Acquisitions remained a priority: the quarter saw the closing of a $61.7 million deal in Upton County, Texas, and 22 smaller "ground game" transactions adding approximately 2,600 net acres and 4.8 net wells. Management emphasized an “all-time peak” in the pipeline of potential acquisitions, underlining the company’s role in industry consolidation and diversified asset growth.
Financially, GAAP revenue results exceeded analyst estimates by 9.1%, aided by hedging gains of $60.9 million that offset weaker realized commodity prices. Oil net of hedges fetched $64.58 per barrel, but unhedged realized oil prices dropped 24% from the prior year. The company’s systematic hedging program cushioned these effects, but GAAP net income was impacted by a $115.6 million non-cash impairment due to lower oil prices.
On the cost side, lease operating expenses climbed to $9.95 per Boe, rising 6% sequentially and 11% year over year. These increases reflected higher saltwater disposal costs and less volume from key basins to spread out fixed expenses. General and administrative expenses ticked up as well. Capital spending outside of acquisitions decreased 12% year-over-year, as management emphasized discipline and returns-focused deployment.
The company continued to deliver shareholder returns, buying back 1.1 million shares at an average price of $31.15 each. The board also raised the quarterly dividend by 7% to $0.45 per share. Liquidity stood strong, with more than $1.1 billion of available borrowing and cash at period end. In addition, a $48.6 million legal settlement will boost cash in the third quarter. Fitch Ratings upgraded the company’s debt credit to BB-.
Looking Ahead: Guidance, Risks, and Shareholder Returns
The company trimmed its full-year 2025 production and capital expenditure forecasts with the latest update. The company now expects average annual production of 130,000–133,000 Boe per day, down from a prior midpoint of 132,500, and oil production guidance has narrowed to 74,000–76,000 barrels per day. Estimated capital expenditures are now $925–$1,050 million, reduced by $125–$150 million from previous guidance. The company also raised its per-unit production cost outlook slightly. but cut its projected production tax rate, in line with expectations for lower commodity prices and fewer economic wells to drill.
Management stated the reduction in spending and well activity reflects a deliberate shift in response to volatile commodity pricing. Priority will be given to acquisition of existing production and inventory opportunities, rather than organic drilling, to maximize risk-adjusted returns. This approach aims to preserve flexibility and capitalize on opportunistic deals across oil and gas basins. No formal guidance was provided for fiscal 2026 or beyond, but commentary indicates that growth and capital deployment will remain tuned to prevailing commodity prices and the returns available, both in acquisitions and organic projects.
The quarterly dividend was raised 7% to $0.45 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
