Northern Oil & Gas (NOG) Valuation Update - May 27

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dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Northern Oil & Gas (NOG) Valuation Update - May 27

Post by dan_s »

At the time of this post, NOG was trading at $32.41.
I have made some minor changes to my forecast/valuation model, but my current valuation stays at $60/share.
TipRanks as of 5/27/2022: "In the last 3 months, 10 ranked analysts set 12-month price targets for NOG. The average price target among the analysts is $40.90." < most recent price targets range from $35 to $50.

Why is my valuation higher?
> Over the last 12 months ending 3-31-2022 NOG closed four accretive acquisitions.
> The Veritas / Permian Acquistion closed 1-27-2022 and pushes NOG's production to ~73,500 Boepd (60% oil)
> The Company's production increased 62.4% in 2021 and they are guiding for 38% to 40% YOY production growth this year.
> The balance sheet is in good shape and they have no near-term debt issues.
> Based on the current strip prices, NOG's year-end reserve report on 12-31-2022 should show a PV10 Net Asset Value of over $50/share, just for their P1 reserves. This compares to PV10 NAV of P1 as of 12-31-2021 of $31/share using SEC pricing rules.
> Based on my forecast model, NOG's operating cash flow should top $14.50/share in 2022, which compares to $6.24/share operating CFPS in 2021.
> NOG will be raising their quarterly dividend several times this year and they are buying back their preferred stock to retire it.
Dan Steffens
Energy Prospectus Group
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