Northern Oil and Gas Q4 2025: WTI Triggers for Activity Shift

Analysis of WTI Price or Timing Trigger for Transition from Low-Activity to High-Activity Case for Northern Oil and Gas, Inc. (NOG)

Northern Oil and Gas, Inc. (NOG) presents two primary operational scenarios for 2026 in their Q4 2025 earnings call: a low-activity case and a high-activity case. The user is asking for the exact WTI price level or timing that would trigger movement from the low-activity case scenario to the high-activity case scenario.

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Key Points from Management Commentary

1. No Explicit Single WTI Price Trigger Provided
   The company does not disclose an exact WTI price at which they would definitively shift from the low-activity to high-activity case. Instead, they describe a process that is influenced by duration of price changes and broader market conditions, rather than a simple price threshold:

   "You watch the price of oil and expect behavior to change accordingly. And it does, but it takes a little bit more time... you need duration." ¹

2. Coiled Spring Effect and $65 WTI Reference
   In discussing cash flow and activity upside, NOG referenced that a $65 WTI price (roughly $5 above the current strip at that time) could generate an additional $130-150 million in free cash flow, which correlates with a shift into higher activity:

   "... in the $65 world, about $5 delta on strip today, that's $130 million to $150 million a year of extra cash for us alone." ²

   This implies that the $65 per barrel WTI price is an approximate breakeven or inflection point where the company expects a significant increase in activity and capital deployment.

3. Commodity Price Triggers in Joint Development Agreements
   NOG mentions that almost all of their large joint development agreements have explicit commodity price triggers, but at the time of the call, those price triggers had not been met to activate additional activity:

   "We have commodity price triggers in almost all of our large joint development agreements. We haven't hit those price triggers... " ³

   While the exact price levels are not disclosed, this suggests that contractual price triggers lie above current price levels and are part of the mechanism determining activity.

4. Role of Operator Behavior and Ground Game
   Operators (especially private ones) have deferred or curtailed activity based on current prices, and NOG expects behavior to normalize with higher prices, but timing remains uncertain:

   "Operators... would rather defer those to a better day... this is an ROI game... You can't eat IRR." ⁴

   Additionally, NOG’s "ground game" investments act as a bridge between low and high activity scenarios, allowing some flexible capital deployment regardless of short-term price volatility.

5. Timing and Market Recovery Outlook
   NOG expects the oil market to fully recover perhaps only by late 2026, with the market and operators likely reacting well before full recovery:

   "It could take much of 2026 for the oil markets to fully recover. But... the market will be well ahead of that." ⁵⁶

   Hence, even as the company waits for price and duration confirmation, activity is expected to ramp gradually rather than abruptly.

6. CapEx Ranges Reflect Uncertainty
   The company avoided providing a precise count of new wells or CapEx split between low and high cases, reflecting the uncertainty:

   "The range is obviously anywhere from 70 to almost 90 wells this year, which is really wide." ⁷

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Summary and Conclusion

• No exact WTI price or date is explicitly stated as the definitive trigger for moving from low to high activity.
• From the discussion, $65 WTI appears to be a meaningful price level where increased free cash flow and activity acceleration are expected, relative to the then-current strip prices.
• Activation of higher activity depends not only on price levels but on duration of sustained price improvement and operator confidence, especially private operators.
• Contractual price triggers exist but are not publicly disclosed, and have not been met at the time of the call.
• Ground game investments and shut-in volumes provide flexibility, smoothing timing differences in activity changes.
• Management emphasizes communication and incremental updates as the year progresses to clarify which scenario will prevail.

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In a concise statement:

The transition from the low-activity to the high-activity case for NOG is most likely to be triggered by sustained WTI prices in the vicinity of $65 per barrel, approximately $5 above their then-current strip pricing, combined with sufficient market confidence and operator behavior aligning with economic returns. Timing remains uncertain and depends on the duration of price stability and real-time operator decisions, with the market outlook suggesting a gradual recovery through 2026 rather than an immediate switch ¹²⁵⁶³.

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This analysis should aid in understanding how NOG plans to react to commodity price movements impacting their activity levels, although exact price or timing triggers remain approximate and subject to operator discretion and market dynamics.