NOG Q2 2026 Earnings: Gas Growth Offset Lower Oil Volumes

Northern Oil and Gas (NYSE: NOG) reported Q2 2026 oil and gas sales of $670.8 million, up about 17% from $574.4 million a year earlier, while GAAP diluted EPS rose to $2.19 from $1.00. Total production increased 9% to 145,659 Boe per day as record natural gas output offset lower oil volumes. Adjusted EBITDA reached $401.0 million, up 17% sequentially, and free cash flow was $159.0 million.

Core earnings results

Sales grew faster than production because NOG’s unhedged realized commodity price increased 24% to $50.61 per Boe. GAAP earnings also benefited from a $156.5 million noncash mark-to-market gain on derivatives and the absence of the impairment and legal settlement expenses recorded in the prior-year quarter.

The main quarterly figures for the three months ended June 30 were:

On a non-GAAP basis, adjusted net income was $122.5 million, or $1.13 per adjusted diluted share. Adjusted EBITDA’s 17% sequential increase was driven primarily by a 13% improvement in realized commodity pricing per Boe from Q1 2026.

Business and production performance

Natural gas supplied the quarter’s production growth. Output reached a record 464,330 Mcf per day, supported by another production record in Appalachia. NOG’s West Virginia joint development program contributed through the middle of the quarter, while its Utica joint development contributed a full quarter of production. The company also said its Uinta assets exceeded internal expectations for both legacy output and the 2026 development program.

Oil production fell 11% to 68,275 barrels per day and represented approximately 47% of total output. NOG attributed the decline partly to about 7,000 Boe per day of well shut-ins and three deferred turn-in-lines on certain Permian assets during April, May and part of June. The shut-in wells have returned to production, while the delayed wells are expected to turn in line during Q3.

NOG added 12.7 net wells to production, compared with 13.5 net wells excluding major acquisitions a year earlier. Management expects turn-in-line activity to accelerate during the second half of 2026.

Hedging cut cash realization while mark-to-market gains supported GAAP income

NOG’s unhedged realized oil price increased 54% to $90.02 per barrel, while its average differential to WTI improved 43% to negative $3.03 per barrel. Natural gas and NGL realization declined 9% to $2.64 per Mcf, reflecting weak Waha pricing for much of the quarter, although management said conditions began improving in late June.

The benefit of stronger unhedged pricing did not fully reach cash realization. Settled derivatives reduced the average realized price by $6.51 per Boe, compared with a positive contribution of $4.99 per Boe a year earlier. NOG paid a net $86.3 million on settled derivatives because gains on natural gas hedges were more than offset by losses on crude oil hedges.

At the same time, the company recorded a $156.5 million noncash mark-to-market gain. The combination produced a net commodity derivative gain of $70.2 million, explaining why GAAP earnings and cash commodity realization moved in different directions during the quarter.

Profitability, cash flow and the balance sheet

Production expenses were $127.1 million, or $9.59 per Boe. The per-unit figure declined 4% year over year, helping offset some of the pressure from the production mix. Production taxes rose to $45.7 million from $35.6 million because of higher oil prices.

G&A expense increased to $24.5 million, or $1.85 per Boe, from $1.28 per Boe. The increase primarily reflected $7.7 million of transaction costs, mainly related to the Duvernay acquisition completed in June. Excluding acquisition costs and noncash share-based compensation, adjusted cash G&A was $12.4 million, or $0.94 per Boe.

Cash flow from operations was $321.6 million, rising to $353.7 million before changes in net working capital. Together with $195.8 million of budgeted capital expenditures, this supported company-defined free cash flow of $159.0 million—up 26% year over year and 424% sequentially.

Budgeted capital spending consisted of $151.0 million for organic drilling and completions and $44.7 million for Ground Game activity, including associated development costs. Separately, NOG completed the Duvernay Light Oil Joint Development for total consideration of $262.1 million. Average normalized well costs increased modestly to $761 per lateral foot from $749 in Q1.

NOG ended June with approximately $1.0 billion of liquidity, including $975.0 million of committed revolver availability and $47.6 million of cash. It repurchased 2.95 million shares during the quarter at an average price of $20.37 and subsequently increased its remaining authorized repurchase capacity to approximately $243.0 million.

2026 guidance

NOG retained its principal production, drilling and capital-spending targets while making modest improvements to several cost and pricing assumptions. The unchanged annual oil target is notable because Q2 oil production was below that range, making the return of shut-in wells and second-half turn-in-line acceleration important to execution.

Recent insider transactions

The supplied insider dataset contains a discrepancy: its six-month summary reports zero purchase transactions, while the detailed transaction log records two director purchases. The detailed entries are presented objectively below without drawing a conclusion about insider sentiment.

Risks investors should monitor

• Oil-volume execution: Q2 oil production declined 11%, and the annual oil target remains unchanged. Meeting that target depends partly on delayed Permian wells entering production and broader turn-in-line activity accelerating during the second half.
• Commodity and regional pricing: Weak Waha pricing pressured natural gas realization for most of the quarter. Further basis weakness could reduce revenue from NOG’s growing gas production.
• Hedge-related cash losses: Settled oil derivatives more than offset gains from gas hedges, producing an $86.3 million net cash outflow. Similar pricing conditions could continue to limit cash realization relative to unhedged prices.
• Acquisition and development costs: The Duvernay transaction added $7.7 million of acquisition-related G&A, while normalized well costs rose modestly. Integration, development timing and further cost increases could affect future returns and cash flow.

Summary

NOG’s Q2 2026 results combined higher total production and stronger unhedged commodity pricing with a temporary decline in oil volumes. Record gas production, lower production expense per Boe and improved cash generation supported the quarter, while settled hedge losses created a gap between market pricing and cash realization. The main next-quarter indicators are the recovery of Permian oil volumes, the expected acceleration in new wells entering production and execution against unchanged full-year production and capital-spending targets.