Northern Oil & Gas (NOG) Price Target Increase

[dan_s]

By RBC Capital Markets.
Price target increased $4 to $46

Our view: The FCF generation power of NOG's scaled and diverse non-operated
portfolio is starting to unfold. FCF should take a meaningful step-up in 2H23
driven by a 20% increase in production and 20% lower capital
spending. On a relative basis this provides the largest inflection relative to
peers. NOG's robust acquisition activity over the past 1-2 years, nine large
deals totaling $2.2 billion, increased production by over 50% and provided
the strong FCF profile. A good portion of FCF likely targets debt reduction
for now, but we expect the company to remain active evaluating ground
game and larger M&A opportunities.

Key points:
Our 2023/2024 EPS/CFPS estimates are generally inline with our prior
model. There were no changes to the overall 2023 outlook, which was
updated in late July that accounted for the two recent acquisitions
and adjustments (deferrals) to the development plan on existing base
properties. At recent strip commodity prices ($77/$2.75 & $76/$3.65), our
2023/2024 estimated EPS/CFPS are flat/5-10% lower at $6.90/$14.34 and
$6.69/$14.54. We increased our price target by $4/share to $46, reflecting
a lower risking for value associated with recent acquisitions.