Northern Oil & Gas (NOG) Update - Feb 16
Posted: Tue Feb 16, 2021 10:08 am
I will be adding NOG to our Small-Cap Growth Portfolio in my next newsletter, which I plan to publish on March 2.
At the time of this post, NOG is trading at $12.67. My valuation is $21.00.
Northern Oil and Gas, Inc. (NOG, $11.76, Buy; Target $15.00)
Stifel on 2/16/2021 - Updating estimates for announced senior notes pricing and upsizing - Derrick Whitfield
We are updating our model to reflect Northern's announcement on February 9, 2021 that it has priced an upsized private placement of $550 million in aggregate principal amount of new 8.125% senior notes due 2028.
NOG recently announced a significant acquisition in Appalachia (Marcellus/Utica) that will increase their production from ~36,000 BOE per day to 55,000 Boepd (~55% oil and ~45% natural gas and NGLs). I like the more balanced production mix. Based on my forecast/valuation model, NOG should generate ~$7.00 of operating cash flow per share this year. My valuation of 3X operating CFPS seems reasonable and the multiple will go higher if their guidance for 2021 confirms my forecast model assumptions. Based on the Company's guidance, NOG should report a significant increase in production from Q3 to Q4 2020.
At the time of this post, NOG is trading at $12.67. My valuation is $21.00.
Northern Oil and Gas, Inc. (NOG, $11.76, Buy; Target $15.00)
Stifel on 2/16/2021 - Updating estimates for announced senior notes pricing and upsizing - Derrick Whitfield
We are updating our model to reflect Northern's announcement on February 9, 2021 that it has priced an upsized private placement of $550 million in aggregate principal amount of new 8.125% senior notes due 2028.
NOG recently announced a significant acquisition in Appalachia (Marcellus/Utica) that will increase their production from ~36,000 BOE per day to 55,000 Boepd (~55% oil and ~45% natural gas and NGLs). I like the more balanced production mix. Based on my forecast/valuation model, NOG should generate ~$7.00 of operating cash flow per share this year. My valuation of 3X operating CFPS seems reasonable and the multiple will go higher if their guidance for 2021 confirms my forecast model assumptions. Based on the Company's guidance, NOG should report a significant increase in production from Q3 to Q4 2020.