Northern Oil & Gas Reports Strong Operational Momentum Amidst Non-Cash Impairment Charge

Northern Oil & Gas has released preliminary figures for the fourth quarter of 2025, presenting a mixed financial picture defined by robust operational performance and a significant accounting adjustment. The company's aggressive acquisition strategy and hedging gains stand in contrast to a substantial, non-cash impairment charge on its balance sheet.

Operationally, Northern Oil & Gas demonstrated considerable strength. The final quarter of 2025 saw the company complete 33 separate "Ground Game" acquisition transactions, setting a new quarterly record. An investment of approximately $77 million was deployed to expand its portfolio across four core basins.

For the full 2025 year, the company’s strategic focus on smaller, bolt-on acquisitions remained clear. It invested a total of about $173.5 million across 84 such deals, securing net drilling rights on more than 12,000 acres. This methodical approach is designed to build production potential incrementally without reliance on large, transformative purchases.

Substantial Hedging Provides Forward Price Security

The company's risk management strategy yielded substantial benefits. Management estimates that realized gains from derivative contracts will reach between $70 million and $72 million for Q4 2025. Furthermore, unrealized mark-to-market gains for the quarter are projected to be in the range of $84 million to $88 million.

Should investors sell immediately? Or is it worth buying Northern Oil & Gas?

Looking ahead, Northern Oil & Gas has already secured price protection for a significant portion of its 2026 production. For the first half of the year, over 45,000 barrels of oil per day are hedged. The average hedge volume for the full year 2026 exceeds 40,000 barrels per day, substantially mitigating near-term exposure to volatile commodity prices.

Impairment Charge Reflects Accounting Rules, Not Cash Impact

The preliminary report includes a notable non-cash impairment charge estimated between $260 million and $270 million for the fourth quarter. This accounting entry is a result of the mandatory "ceiling test" under the full-cost accounting method, triggered primarily by lower average oil prices year-over-year.

Key investor takeaway: This impairment is a bookkeeping adjustment that does not affect the company's liquidity or operational cash flow. It serves to align the carrying value of assets on the balance sheet with the current price environment.

Northern Oil & Gas will announce its complete fourth-quarter and full-year 2025 financial and operating results after the market closes on Wednesday, February 25. A webcast to discuss the details is scheduled for the following Thursday.