Northern Oil & Gas (NOG) PT Update - Aug 18

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Northern Oil & Gas (NOG) PT Update - Aug 18

Post by dan_s »

Note below is from the team at Raymond James

Northern Oil & Gas Inc.
Howard County Purchase Impresses, Reiterate Strong Buy with an updated price target of $55.00

We're updating estimates post 2Q results and yesterday’s Permian acquisition. As a
reminder, NOG posted a solid quarter, beating on EBITDA and EPS by 8% and 6%,
respectively, vs. the Street while posting an in-line production figure despite significant
downtime in the Williston Basin. NOG also increased its base dividend by 32% to $0.25/
share. Moving to M&A, we like NOG’s Howard County purchase. The area is oil-heavy (86%)
and was purchased at 2.3x cash flow, a solid price for the Permian. We view the deal as
immediately accretive, with our pro-forma model seeing a 2% increase to NOG’s 2023 FCF
yield to a massive 37%.
Despite the $110M cash purchase price (revolver + cash on hand),
we still have NOG finishing 2022 at ~1x leverage. NOG’s unique non-op strategy allows it to
avoid traditional small-cap project execution worries. Not to mention, it remains the only
public non-op company, so deal flow remains robust. We reiterate our Strong Buy rating
and raise target price to $55/share
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Northern Oil & Gas (NOG) PT Update - Aug 18

Post by dan_s »

Note from Truist Financial with raised the price target by $2 to $63

Northern Oil and Gas, Inc. (NOG, $28.32, Buy) - Another Highly
Accretive Deal Put on the Board with Likely More to Come -
NOG’s ground game continues with the latest acquisition of a
Midland non-op bolt-on operated by SM Energy (SM, Not Rated)
in Howard County at an attractive ~30% unhedged FCF yield,
adding ~9.6 future locations. There is solid activity currently on
the assets with a rig running, which the company expects to
have a <$40/b breakeven and lower operating costs than NOG’s
existing assets. While we do not believe the deal is large enough
to materially move the stock, we view this as another positive
boost in scale and FCF, which increases NOG’s optionality for
additional transactions down the line. - Neal Dingmann
Dan Steffens
Energy Prospectus Group
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