Northern Oil reports gain in adjusted net earnings [Star Tribune (Minneapolis)]

Nov. 08--A Wayzata company with a major stake in the North Dakota oil and gas fields on Thursday reported record oil production and an increase in adjusted net income.

Northern Oil and Gas, which is focused on the Williston Basin, said it earned $16.7 million in adjusted net income in the third quarter, or 27 cents per share, compared with 22 cents per share a year ago.

Analysts had expected the company to earn 26 cents per share in adjusted earnings.

Oil production from the company's share of 1,104 wells rose 94 percent during the three months, compared with the third quarter a year ago, and natural gas and related liquids production more than doubled, the company said.

Northern Oil's adjusted earnings don't include two non-cash items, a hedging loss and $4.3 million in share-based compensation paid to its former president. When those items are included under generally approved accounting principles, the company had a net income of $300,161 and no earnings per share.

CEO Michael Reger told analysts on a conference call that he expects to see lower drilling expenses in the future because of innovations such as drilling pads capable of boring several wells from the same location. However, Reger said the company is not yet ready to offer earnings guidance for 2013.

Northern Oil doesn't operate drilling rigs. Instead, it buys minority interests in oil and gas fields and pays a proportionate share of the drilling costs and gets its share of the proceeds from the sale of oil and gas.

Its shares slipped 40 cents or 2.5 percent to $14.65 in mid-morning trading. The stock has been trading below $16 for the past two weeks. It traded at more than $27 in January.

David Shaffer --612-673-7090 --@ShafferStrib

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