NOG Q3 2026 Earnings: Record Production Lifts Adjusted EBITDA

Northern Oil and Gas (NYSE: NOG) reported Q3 2026 oil and natural gas sales of $697.7 million and a GAAP diluted loss of $1.06 per share for the quarter ended September 30, 2026. Record production of 156,239 Boe per day lifted adjusted EBITDA to a record $444.5 million and supported $148.6 million of free cash flow. A $308.0 million noncash derivative mark-to-market loss was the main reason GAAP results remained negative despite higher production and adjusted earnings.

Core Earnings Data

The quarter’s operating improvement was primarily volume-driven, with production increasing 19% year over year and 7.3% sequentially. GAAP and adjusted results diverged sharply because changes in the value of NOG’s derivative portfolio produced a large noncash loss.

Adjusted net income, adjusted EBITDA, and free cash flow are company-defined non-GAAP measures.

Production and Basin Performance

Natural gas accounted for most of the production increase. Gas volumes rose 39% year over year, while oil production increased 3%, leaving oil at approximately 48% of total output.

NOG added 23.9 net wells to production during the quarter, up from 12.7 in Q2, excluding major acquisitions. Appalachian production reached another record as wells from the West Virginia joint development program outperformed and Utica activity accelerated. The company also said both legacy production and its 2026 development program in the Uinta Basin exceeded internal estimates.

Derivative Losses Obscured Higher Production and Pricing

Unhedged commodity pricing improved, but hedge losses reduced the benefit recognized in reported results. NOG’s realized price excluding settled derivatives increased 20% year over year to $48.54 per Boe. After settled derivatives, realized pricing was $44.96 per Boe, nearly unchanged from $45.08 a year earlier.

The company recorded $51.4 million of cash losses on settled derivatives, as gains from natural gas hedges were more than offset by crude oil hedge losses. It also recognized a $308.0 million noncash mark-to-market loss on open derivatives. This combination explains why NOG produced record adjusted EBITDA and higher cash flow while reporting a GAAP net loss.

Underlying commodity realizations were favorable. The unhedged realized oil price increased 36% year over year to $82.83 per barrel, while the oil differential improved to $2.84 below WTI. The unhedged realized gas price rose 13% to $2.84 per Mcf, equal to 98% of Henry Hub pricing, as Waha pricing normalized and NGL realizations remained favorable.

Costs, Cash Flow, and the Balance Sheet

Lease operating expenses were $143.5 million, or $9.98 per Boe, with the per-unit figure rising 2% year over year partly because of higher processing costs. Production taxes increased to $48.3 million from $28.7 million as oil-price-related revenue and gas volumes increased. G&A expense was $18.0 million, or $1.25 per Boe, compared with $1.17 per Boe a year earlier, reflecting additional corporate costs associated with growth initiatives.

Quarterly capital expenditures were $247.3 million, excluding non-budgeted acquisitions and other spending. This included $190.7 million for organic drilling and completions and $56.5 million for Ground Game transactions and associated development costs. Normalized well costs improved 2.9% sequentially to approximately $739 per lateral foot.

NOG ended September with $1.6 billion of liquidity, including $26.4 million of cash and $1.577 billion of available revolving credit capacity. The company retired more than $100 million of total debt and reduced net debt to 1.47 times annualized adjusted EBITDA. It also issued $500 million of 7.5% senior notes due in 2034, using the proceeds partly to reduce borrowings under its revolving credit facility.

Capital returns included the repurchase of 667,989 shares at an average price of $23.96, including commissions. The company also maintained its quarterly dividend at $0.45 per share.

2026 Guidance

NOG raised full-year production guidance following third-quarter outperformance while leaving its capital budget unchanged. Management expects capital spending to trend toward the high end of the existing range, meaning the higher production outlook does not require an increase in the stated budget.

The guidance changes point to better production and commodity realizations, partly offset by a modestly higher expected range for per-unit operating costs.

Risks Investors Should Watch

• Commodity and derivative exposure: The $51.4 million realized hedge loss and $308.0 million noncash mark-to-market loss show that derivatives can materially affect both cash realizations and GAAP earnings.
• Operating-cost pressure: Lease operating costs per Boe increased, and the full-year cost range was raised. Further processing or corporate cost increases could offset some benefit from higher volumes.
• Capital intensity: NOG expects annual capital spending near the high end of its $850-$900 million range. Continued development and acquisition spending will influence free cash flow, debt reduction, and capital returns.
• Gas-heavy production growth: Natural gas drove most of the quarterly volume increase. Future results are therefore increasingly sensitive to gas pricing, regional differentials, infrastructure conditions, and partner-operated development activity.

Summary

NOG’s third quarter combined record production, adjusted EBITDA, and higher free cash flow with a GAAP loss caused mainly by derivative accounting. Appalachian and Uinta performance supported a higher full-year production target without an increased capital budget, while debt reduction improved leverage. The main items to monitor are hedge effects, operating costs, capital spending near the top of guidance, and whether gas-led production growth continues to translate into cash flow.