Good morning. Welcome to NOG's first quarter 2026 earnings conference call.

Yesterday, after the close, we released our financial results. You can access our earnings release and presentation in the Investor Relations section of our website at noginc.com.

We will be filing our March 31st, 2026 10-Q with the SEC within the next few days. I'm joined this morning by our Chief Executive Officer, Nick O'Grady, our President, Adam Dirlam, our Chief Financial Officer, Chad Allen, and our Chief Technical Officer, Jim Evans.

Our agenda for today's call is as follows: Nick will provide introductory remarks, followed by Adam, who will share an overview of NOG's operations and business development activities, and Chad will review our financial results. After our prepared remarks, the team will be available to answer your any questions.

Before we begin, let me remind you of our safe harbor language. Please be advised that our remarks today, including the answers to your questions, they include forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by our forward-looking statements. Those risks include, among others, matters that we have described in our earnings release as well as in our filings with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q.

We disclaim any obligation to update these forward-looking statements. During today's call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income, and free cash flow.

Reconciliations of these measures to the closest GAAP measures can be found in our earnings release. With that, I'll turn the call over to Nick.

Thank you, Evelyn. Welcome and good morning, everyone, and thank you for your interest in our company.

I'll be very brief this quarter by highlighting nine key points. Number one: business activity remains stable, with few observable changes since we last reported.

Number two: potential changes to activity in 2026 remain a TBD for us as the effect of the Iran war is only now going to be potentially seen in AFE activity. We will update our investors accordingly throughout the year.

Number three: the higher long-dated pricing stays, the more likely we see a sustained change in activity, especially as we head into 2027. Number four: in the meantime, we've seen a reversal of curtailments in the Williston, and this will drive better capital efficiency throughout 2026.

Number five: it was a banner first quarter for our ground game, with an incredible 41 deals done while overall capital remains controlled. Number six: the current geopolitical storm is showing some key benefits and a few negatives to the business.

We are seeing wide swings in oil differentials, which are likely benefiting our realizations materially, some in the Permian, but particularly in the Williston. On the gas front, Permian production remains hamstrung by limited takeaway for the time being, but we remain financially well insulated with significant basis hedges at less than $1 off Henry Hub.

Number seven: our leasing program remains materially underappreciated, as through this effort we've added over 70 net locations in the last year. Free cash flow yields aren't free when comparing us to peers that are just depleting away their inventory.

Number eight: while all eyes are on Iran and the wide swings in spot prices, it is the longer-dated strip that matters. The improvement in the 2027 and 2028 strip are what drive growth in undeveloped activity and in asset prices, and these improvements should help stabilize activity going forward, lubricate the M&A market, reduce bid-ask spreads, and drive up our competitiveness.

We have several exciting large-sized package prospects in evaluation and more coming as the M&A market heats up. The backlog has improved in both size and quality, which is highly encouraging for our business model.

Number nine: regardless of what happens in Iran, we believe things have been set in motion that will materially improve the long-term strip's outlook, absent significant economic turmoil. That bodes well for activity, acquisitions, and for our investors.

Given our hefty free cash flow generation, despite adding inventory, our improved balance sheet, and our reputation in the marketplace, there is a huge opportunity for our business to find meaningful growth paths. Again, thank you for your interest in our company.

We remain focused on growing our enterprise the right way, and as always, are a company run by investors, for investors. With that, I'll turn it over to Adam.

Thank you, Nick. As a whole, Q1 activity was in line with expectations.

Production was strong, particularly in Appalachia, where we continued to see promising results from our growing asset base and with our Q1 program right on plan, showing strong IPs. The Williston also outperformed as multiple operators contributed meaningful return to sales volumes from prior curtailments, along with performance gains from recent IPs.

The Uinta and Permian rounded out the quarter with performance in line with expectations. We ended the quarter with 43.7 net wells in process and 9.2 net AFEs, with the Permian representing roughly a third of our wells in process and approximately 60% of AFE inventory.

Proposals have held steady at 216 consents, squarely in the 200 to 230 range we saw throughout 2025, and based on our conversations with operators, our forward activity view is unchanged from what we laid out on the fourth quarter call. However, the next few months will be instructive for activity changes as it pertains to the expectations for the remainder of the year and 2027.

On the ground game, we set a new quarterly record with 41 transactions in Q1, adding over 5,100 net acres and six net wells. Our Appalachian leasing program continues to perform well, but we were also able to close deals across all of our respective basins.

Most transactions occurred early in the quarter, ahead of rising commodity prices, and our pipeline continues to deliver as we diligently evaluate opportunities. Our ground game will stay central as we leverage NOG's proprietary infrastructure to grow our portfolio through smaller acquisitions and evaluate further joint development opportunities.

Larger M&A opportunities have also picked up, and we are evaluating over $10 billion in assets across eight transactions that are currently in the market. As expected in this environment, there's a fair amount of variability in asset quality, but it has been encouraging to see higher-quality assets coming to the forefront.

Given the consistent number of opportunities afforded to us, we remain discerning, and as always, will prioritize packages that are resilient in any commodity environment and those that create long-term value. With that, I'll turn it over to Chad.

Thanks, Adam. In the interest of time and to avoid repeating standard financial metrics available in our release and presentation, I will focus my comments on the overall performance drivers and outliers encountered in the quarter.

Our first quarter financial results and production cadence were largely in line with internal expectations, with no major disruptions. Despite the persistent macro volatility faced by the industry, NOG's diversified and scaled platform continued to deliver, outperforming internal estimates on production and EBITDA for the quarter.

First quarter total average daily production was over 148,000 BOE per day, up 6% sequentially, a record for our company. Our oil-to-gas ratio was an even 50/50 split as our Appalachian JV reached its peak in terms of well deliveries.

GAAP net income was impacted by two non-cash items. The first was a non-cash mark-to-market loss on derivatives of approximately $521 million, which was the result of a huge run-up in oil prices during the quarter due to the war in Iran.

Hedges settled in the quarter was only a $17.6 million loss, comprised of an $11 million gain in natural gas hedges offset by a $28 million loss on our oil hedges. The second item impacting net income was a non-cash impairment charge of $268 million.

As we have discussed on prior calls, NOG accounts for its assets under the full cost method as opposed to the successful efforts method, which does not perform historical price-based asset tests. We are one of the only companies among our peers that utilize the full cost method.

I should mention, given the recent change in oil prices, if they stay at current levels, this should be the last impairment charge for the year. We also continue to evaluate a potential shift to successful efforts longer term to avoid such optics.

Moving on to pricing, natural gas realizations have continued to be weak in the first quarter, coming in at 72% of benchmark prices, reflecting ongoing Waha market weakness due to constraints in the Permian. We expect gas realizations, specifically in the Permian, to remain weak for at least the next couple of quarters until planned infrastructure projects come online in the back half of 2026.

I do want to point out that inclusive of our Waha basis hedges, our gas realizations in the Permian were 53% or $1.86 per MCF versus the negative 1% or negative 2 cents per MCF that are included in our corporate gas realizations. We are well insulated from a risk management perspective for the rest of the year.

CapEx in the quarter, excluding non-budget acquisitions and other, was $270 million, which includes the success we had in our ground game. The $270 million of capital was very balanced, with 31% to the Permian, 27% to Appalachia, 24% to the Williston, and 17% in the Uinta Basin.

Approximately $227 million of the total spend in the quarter was allocated to organic development capital. We still expect CapEx cadence to track an approximately 60/40 split between the first half and the second half of the year, subject to change with activity behavior from our operating partners.

After closing our joint Utica acquisition during the quarter, we exit the quarter with debt well within our comfort zone, and our balance sheet remains in a healthy spot. Our leverage and liquidity were further enhanced by the nearly $230 million equity offering we completed late in the first quarter.

We currently have over $1.2 billion of liquidity available to us, with an additional $175 million of untapped liquidity. Given all the work we've done on the maturity wall last year, we have plenty of runway to execute for years to come.

With respect to our 2026 guidance, we have not made any updates given the significant level of volatility in commodity prices, our industry, and in the macro generally. Directionally, we are currently trending towards the higher end of the low activity scenario we laid out last quarter, but we still got a wide range of potential outcomes for the year.

I'd anticipate that we'll be able to start tightening those ranges and narrowing our 2026 guidance by our second quarter call. That concludes our prepared remarks.

Operator, please open up the line for Q&A.

Morning, guys. For all the details.

Nick, my first question is just on incremental activity, specifically, you all mentioned in your prepared remarks and release that you suggested operator activity has remained flat, but I'm just wondering based on your recent conversations and what you've seen sort of happen historically, both this period and not prior, what, in addition to the 12-month now surpassing $80, do you think has to happen in order to see what I'd call more sustainable change in activity and, when and if this happens, do you believe it occurs sort of equally in your Bakken, Permian, and Uinta plays?

Yeah. Thanks, Neal.

Good morning. I'd say this: one, when you think about our original guidance, it didn't contemplate a war, right?

It really comes into the fact that we're seeing obviously a huge surge in short-term prices, a decent surge in the long-term strip, but because it's being driven by geopolitical things, I think you're seeing a little bit more caution than you normally would from operators. One of the reasons we haven't made any substantive changes to guidance just yet is just that there is a lag factor, which is that, I do think, as I mentioned in my prepared comments, it's likely that we will see an increase in activity over time, and that's really going to be driven by the long-term strip.

The average spud-to-sale time is it can be faster, but I'd say on average it's sometimes around 150, 160 days. When you're making that decision today to pick up a rig to drill an additional pad, you're not capturing $100 spot oil, right?

You have to make those decisions based on the future. I think nobody from our operators, they don't want to have egg on their face and commit to a bunch of new activity, sign up for a bunch of stuff, and then have some resolution in the Gulf and suddenly they feel like they're falling on their face.

That being said, as we continue to draw oil out of storage, I think what's inevitable is that the long-term strip is going to have to reflect that, right? As it's around $70 on a two-year basis today, I think the reality is that's probably enough in order to certainly incentivize activity, M&A, all those sort of things.

I think you may see it creep higher just to really give people a buffer to ensure they can feel good about making those investments, because that's really what drives that. For us, I think, frankly, just right now, what happened in early March really only starts to affect us in it right now, and we really just asking for some grace to really see over the next several months of how this plays out.

I do think, look, I think we've talked about this from a guidance perspective. I think we're certainly confident in the high end of the low end, and I think from there, I think we just want a little bit more time in order to narrow that band.

I think we'll certainly get it done by call it the second quarter.

That's more than fair. Then my second question, pivot on capital allocation.

Specifically, I know, talking to some of the operators, they seem to simply look at often times just sort of mid-cycle pricing assumptions as what I'd call a primary driver between deciding if they're just leaning into share buybacks or more, I guess ground game and M&A. Again, you all seem unique because you seem to have more ground game opportunities than most.

Again, I'm just thinking when it comes to capital allocation, is it simply looking at a mid-cycle price and how cheap your shares are or versus a ground game return or what's involved in that?

That's right. I think what I what I'd tell you is that, we when we have to we have to manage a bunch of things, right, which is that like at the end of the day, a share buyback is is a high-return proposition, especially when prices were low and and and we did do some buybacks at the end of last year.

I'd also tell you that one of our one of our goals as a company, one of the long-term goals is you really have to you have to grow your business over time, and that's it's not what a share a share buyback does, right? You just now own more of the same thing.

Ultimately the opportunity when prices are low countercyclically to acquire assets, which is why we were really so busy in January and February, ultimately can provide some of the best long-term value. When you talk about that mid-cycle, I mean I think oil was $57 in January or February, right?

That's certainly below what we would view as a mid-cycle oil price, and so anything you're acquiring during that period of time is likely to deliver a really high return as as do buybacks, and and I think it can all be part of the mix, but it's really about that balance.

You got it. Thanks, Nick, very much.

You bet.

good morning, and thanks for taking my question. From the previous quarter, you guys kind of beat on natural gas pricing, specifically in Appalachia.

I was just curious if that's going to be an ongoing trend both for next quarter and the second half of the year. I know the strip for natural gas hasn't looked all too strong in the past couple months, just curious what your thoughts are on that.

As a two-stream reporter, it's a little bit different, right, because our NGL yield's in there. What I would tell you is that as it pertains specifically to Appalachia, some of our Appalachian gas is getting kind of on-water NGL prices, right?

We're certainly getting a huge benefit there. Appalachian differentials, the bulk of our price is at M2 and M2 has certainly been better.

It's one of the few basis areas where we're actually losing money on our hedges. M2 has been sort of tighter, and it appears, [laughs?]

it obviously tends to dip seasonally, but it's certainly been better than what the averages have been for the last several years. We're definitely seeing an improvement there.

In terms of our overall differentials, I think Chad talked a little bit about this in guidance, but I would tell you that we're seeing likely significantly better-than-expected oil differentials, which is really the biggest driver to our revenue given it's about 80% of our revenue. Then we're seeing in aggregate worse gas differentials, and that's 100% driven by Waha pricing.

At the financial level, it's not having as much of an effect at the bottom line because of our hedge position. At the end of the day, at the actual spot realizations, I think there's probably downward pressure in the short term.

Obviously I think there's something like 4 BCF a day of expansions going on in the Permian, so, I think it certainly will improve from some of the doldrums we've seen in April, but that's going to take some time this year.

Perfect. I was also curious, you mentioned y'all are evaluating, call it $10 billion in potential large M&A transactions.

Curious what the locations of those might be, along with just give us some characteristics that you guys are looking for on those opportunities.

Yeah. I'll set the table, I'll let Adam finish it, but I'd say this: one, it it it's been, and consistent with the last several years, it's definitely more diversified.

There's stuff all over the place. As our capabilities have expanded, obviously we see more than we ever have from, call it Canada to every single sub-basin in the US.

What I would tell you is that we are seeing in typically people are willing to sell PDP-laden properties even in low-price environments, especially in in in the days of ABS and things like that where they view they're getting relatively good prices for them. When the long-dated strip was $57 coming into this year, people that's that, if you think about a DCF exercise, that's what drives the value of undeveloped inventory.

Assets with strong undeveloped inventory, which are the characteristics we're looking for, really were starting to dry up on the oil side. That is obviously inverted completely.

We're seeing higher-quality Permian assets in particular coming to market, and so I think for us you you are right now at a little bit of a It might seem counterintuitive given how high spot prices are, but with with the strip closer to what we would view as a mid-cycle price today, it really does help the long-dated M&A. My point would be, if oil prices went from $100 to 75 in the spot market today, it's not going to have as much of an impact on the value of those assets versus that long-dated strip being stickier.

Adam, I don't know if you want to add to that.

That's right. I think the biggest difference that we're seeing between kind of 2025 and where we stand today has been kind of a pivot from the gas-weighted quality assets that we were looking at last year to more of the oil-weighted, which is obviously expected.

I think you've got a number of operators post-consolidation now starting to kind of socialize their assets. You've got private equity groups that are obviously taking a look at the strip and coming to market.

Based on my prepared remarks, you're certainly seeing a fair amount of variability, but the quality is starting to improve, especially on the oil side.

All right, excellent. Thank you guys for taking my question.

That's all for me.

thank you, good morning, all. Thanks for taking the call.

I just wanted to quickly touch on your guys's hedge book. Look forward to the curve, and the, I guess big lug of swaptions you guys hold.

How should we think about any strategic shifts for the rest of the year given the volatility and, as you said before, the war that no one expected?

I don't think that you'll see much in terms of fireworks in terms of the swaptions. We don't really have that many swaptions remaining this year, to be candid.

What few ones we have will either be exercised or roll forward. I wouldn't expect any major shifts to our hedge book specifically for this year, and then for next year, we've started hedging, Paul, but not in a significant fashion at this point.

I think we're just trying to be patient. We really want to see the conclusion of what happens in the Middle East before we really make a call in 2027.

Understood, makes perfect sense. Then, as you guys talked about the net wells in process, the current split is a third Permian, third Williston, and then split pretty evenly otherwise.

Any reason to think, with what you see downrange right now, does that shift, or should we think about that as more locked in for the next year or so?

I

guess what I would be looking towards is probably more the election activity, right? If you look at that, you'd see about two-thirds related to the Permian, and you're starting to see a fair amount of Williston acceleration as well.

I would expect kind of the Permian and the Williston to be the front-runners. Obviously, we've got a fair amount of activity in Appalachia, and that'll also be dependent on obviously the transaction that we just closed, as well as the ground game leasing program that we've got in place.

Then the Uinta is really just kind of steady as it goes. Permian and Williston is probably where I'd be looking to.

I'd say I think my guess would be just given the gas situation in the Permian right now that the acceleration you see there really is probably later in the year just as you get closer to a resolution there. On the Uinta, I think there are some options for some accelerations, but we'll have to see.

Got it, appreciate the time, I'll hold it there.

Hi, good morning. I was wondering, and it's definitely interesting to hear about the different parties, the private side coming to the table and so forth.

I was wondering, for operators, where do you think things stand now around sort of basin rationalization, in the wake of some of the big transactions of the last year or so now being fully digested? I guess I was just curious if you think overall across your basins, you're seeing operators more inclined to sort of expand their footprints or sort of core up and narrow them down right now?

I don't know if I want to speak for them completely. I would say this: that Adam had talked extensively last year about that he thought that post a lot of this consolidation, we would see rationalization.

We are starting to see that, we're seeing several large companies put packages of non-core assets, sometimes in good basins, to sale. I do think we're seeing some rationalization.

We've seen that in the Permian, the Eagle Ford, trying to think of where else, I think there's a large Williston package coming at some point this year. We're definitely seeing that to some degree.

I think, look, consolidation is a trend that I think continues. It both benefits and hurts us sometimes.

Obviously, it tends to hurt us in the sense that you probably have less aggregate activity, but it helps us from a cost efficiency and from a returns perspective. I don't know if you want to add to that, Adam.

Going back to your initial question, I would just say that two things can be true at the same time, and ultimately it's going to be dependent on the philosophical approach from the operator, right? Who did they consolidate with, where are those positions, and then ultimately, what does that integration difficulty look like?

Because from our experience and talking with our operating partners who have gone through this, some can go very smoothly, and others cannot. I think you're going to see some large asset packages, but then you're also going to see other operators that might take small pieces, non-op and just kind of layer that out into the market as they go.

I think you're going to see a little bit of everything.

Got it. I'm just wondering, are you seeing anything happening kind of in the sort of off-the-beaten-path gas plays?

I'm thinking a little bit about Mid-Con, Rockies, just as people look ahead to longer-term supply lines, sort of thinking about underutilized infrastructure and so forth, and maybe some capital finding its way there?

Look, there've been some major consolidations on the private side in Rockies gas and some of the legacy assets, and there've been some companies that have put together some really good assets. In some cases, some of the wild swings in differentials out there over the last couple years have made those really, really sound investments.

I'm not sure that's necessarily something for us per se. I say I'm not sure, we really haven't evaluated a ton of it, things like the San Juan gas basin or the Piceance, we've never really evaluated them at any extent.

I can't really speak to them. I'd say this in general, though.

If you think about the life cycle of shale, and this is consistent with my public comments everywhere, in general, there is more life in the core basins of gas in the US than there is in the core basins in oil. I think the necessity to really step out isn't quite there.

We have decades of gas inventory internally here alone. We don't really, right, in our core basins.

I don't know if you'd want to add to that. No,

I think the only other thing I would add is you obviously see kind of the ABS market come into play with maybe some more PDP-heavy type assets, Mid-Con, Eagle Ford, things like that, and typically not the sandbox that we play in, but we're always having conversations about how we could potentially be helpful there, I think we'll continue to explore it,

so. As we don't have any assets in the Mid-Con.

We've done dozens of evaluations to this point, and it's just a more complex area. It's not really as uniform, and so it doesn't mean it's bad, but I think we'd have to be really highly selective if we ever entered that basin, and most likely, we would do it with an operating partner.

Then

what are we looking at relative to what's in our own backyard?

Correct. Far it has sort of lost in the tug-of-war from a return on capital perspective.

It will forever. Just we have yet to find an asset that really can

compete,

that's right.

Terrific. Thanks a lot.

Yep,

you bet, Noel.

thanks for the time. Just wanted to follow up on the earlier question about the oil swaptions and just ask about some of the accounting nuances for those swaptions.

I think most of us understand that the vast majority of those swaptions that expire at the end of this year are required to be listed for 2026, even though the majority of them would actually turn into swaps for '27 or even beyond rather than this year if they're ultimately exercised. I guess I understand that nuance, but I just kind of wanted to square that with the makeup of the hedge liability on the balance sheet where it looks like close to 65% of the hedge liability is classified as current.

That's because of the expiry, right? Just as you stated, Phillips, right?

We have to, because of when that expiry is being in some instances or most instances 12/31/2026, it's got to sit into the current bucket there.

That makes sense. It's basically the same.

For accounting purposes, it's got to be treated for the bank's counterparty election date.

It's not really how it works.

It's that's not how it works, no. What you'll see in our you'll see in our 10-K, or 10-Q, sorry, some some updated disclosures with respect to kind of how how the swaptions roll out, but again, like what we've mentioned before, Phillips, we we certainly that's we actively manage this portfolio.

Yeah. It's a nothingburger, yeah, to be candid.

It is.

Cool. Just checking on that.

Thanks very much, guys.

Yep,

makes sense.

Thanks.

Thanks very much for your time this morning. We look forward to talking to you in the coming weeks.

Appreciate it.