Northern Oil & Gas (NOG) risk factors, FY2024 10-K

Risks Related to Our Business and the Oil, Natural Gas and NGL Industry

1. 01Oil and natural gas prices are volatile. Extended declines in oil and natural gas prices have adversely affected, and could in the future adversely affect, our business, financial position, results of operations and cash flow
2. 02Drilling for and producing oil, natural gas and NGLs are high risk activities with many uncertainties that could adversely affect our financial condition or results of operations
3. 03Due to previous declines in oil and natural gas prices, we have in the past taken significant writedowns of our oil and natural gas properties. We may be required to record further writedowns of our oil and natural gas properties in the future
4. 04Our estimated reserves are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves
5. 05Our future success depends on our ability to replace reserves that our operators produce
6. 06The present value of future net cash flows from our proved reserves is not necessarily the same as the current market value of our estimated proved reserves
7. 07Our business depends on third-party transportation and processing facilities and other assets that are owned by third parties
8. 08Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established or operations are commenced on units containing the acreage or the leases are extended
9. 09Seasonal weather conditions adversely affect operators’ ability to conduct drilling activities in some of the areas where our properties are located
10. 10We are subject to physical risks arising from climate change, which may have a negative impact on our business and results of operations
11. 11As a non-operator, our development of successful operations relies extensively on third parties, which could have a material adverse effect on our results of operation
12. 12The inability of one or more of our operating partners to meet their obligations to us may adversely affect our financial results
13. 13Continuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise
14. 14We could experience periods of higher costs as activity levels fluctuate or if commodity prices rise. These increases could reduce our profitability, cash flow, and ability to complete development activities as planned
15. 15We depend on computer and telecommunications systems, and failures in our systems or cybersecurity attacks could significantly disrupt our business operations
16. 16The development of our proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our undeveloped reserves may not be ultimately developed or produced
17. 17Our acquisition strategy will subject us to certain risks associated with the inherent uncertainty in evaluating properties for which we have limited information
18. 18We may be unable to successfully integrate recently acquired assets or any assets we may acquire in the future into our business or achieve the anticipated benefits of such acquisitions
19. 19Our future results will suffer if we do not effectively manage our expanded operations
20. 20The loss of any member of our management team, upon whose knowledge, relationships with industry participants, leadership and technical expertise we rely could diminish our ability to conduct our operations and harm our ability to execute our business plan
21. 21Our ability to operate our business effectively could be impaired if we fail to attract and retain key personnel, which could have a material adverse effect on our business and results of operations
22. 22Deficiencies of title to our leased interests could significantly affect our financial condition
23. 23We conduct business in a highly competitive industry
24. 24Our derivatives activities could adversely affect our cash flow, results of operations and financial condition
25. 25Decommissioning costs are unknown and may be substantial. Unplanned costs could divert resources from other projects
26. 26Increased scrutiny and changing stakeholder expectations with respect to environmental, social and governance (“ESG”) matters may impact our business and expose us to additional risks

Risks Related to Our Financing and Indebtedness

1. 27Any significant reduction in our borrowing base under our Revolving Credit Facility will negatively impact our liquidity and could adversely affect our business and financial results
2. 28Our Revolving Credit Facility and other agreements governing indebtedness contain operating and financial restrictions that may restrict our business and financing activities
3. 29We may not be able to generate enough cash flow to meet our debt obligations
4. 30Our ability to pay dividends to our stockholders is restricted by applicable laws and regulations and requirements under certain of our debt agreements, including our Revolving Credit Facility and the Senior Notes Indentures
5. 31Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly
6. 32A downgrade in our credit rating could negatively impact our cost of and ability to access capital and our liquidity
7. 33We may be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial indebtedness
8. 34Our business plan requires significant capital expenditures, which we may be unable to obtain on favorable terms or at all
9. 35The capped call transactions may affect the value of the Convertible Notes and our common stock
10. 36We are subject to counterparty risk with respect to the capped call transactions, and the capped call may not operate as planned
11. 37The Convertible Notes may have a material effect on our reported financial results
12. 38The conditional conversion feature of the Convertible Notes, if triggered, could adversely affect our financial position and liquidity
13. 39Provisions in the indenture governing the Convertible Notes could delay or prevent an otherwise beneficial takeover of us

Risks Related to Legal and Regulatory Matters

1. 40The executive branch and/or Congress could enact additional rules and regulations that restrict our ability to acquire federal leases in the future and/or impose more onerous permitting and other costly environmental, health and safety requirements
2. 41Our ability to use net operating loss carryforwards to offset future taxable income may be subject to certain limitations
3. 42Certain U.S. federal income tax deductions currently available with respect to natural gas and oil exploration and development may be eliminated as a result of future legislation
4. 43The enactment of new or increased severance taxes and impact fees on natural gas production could negatively impact our assets in the Marcellus Shale formation
5. 44Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations
6. 45Changes to applicable tax laws and regulations may result in our incurring increased administrative and compliance costs and additional income tax liabilities, which could have an adverse effect on our business, results of operations and financial condition
7. 46We are subject to a 1% U.S. federal excise tax in connection with repurchases of our shares by us
8. 47Our business involves the selling and shipping by rail of crude oil, which involves risks of derailment, accidents and liabilities associated with cleanup and damages, as well as potential regulatory changes that may adversely impact our business, financial condition or results of operations
9. 48Our derivative activities expose us to potential regulatory risks
10. 49Legislative and regulatory developments could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business
11. 50Our business is subject to complex federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of doing business
12. 51Failure to comply with federal, state and local environmental laws and regulations could result in substantial penalties and adversely affect our business
13. 52Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays
14. 53The adoption of climate change legislation or regulations restricting or relating to emissions of GHGs could result in increased operating costs and reduced demand for the oil and natural gas we produce
15. 54We have relied on an exception from the definition of “investment company” under the Investment Company Act of 1940, as amended, and the rules and regulations thereunder (the “ICA”) in order to avoid being subject to the ICA

Risks Related to Our Common Stock

1. 55There may be future sales or issuances of our common stock, including issuances in connection with our incentive plans, acquisitions or otherwise, which will dilute the ownership interests of stockholders and may adversely affect the market price of our common stock
2. 56Our certificate of incorporation, bylaws, and Delaware state law contain provisions that may have the effect of delaying or preventing a change in control and may adversely affect the market price of our capital stock
3. 57The availability of shares for sale or other issuance in the future could reduce the market price of our common stock
4. 58Investors in our common stock may be required to look solely to stock appreciation for a return on their investment in us