Northern Oil & Gas (NOG) Valuation Update - July 31

[dan_s]

I have updated my forecast/valuation model for NOG for their outstanding Q2 results that beat my forecast and their updated guidance. NOG is going to close two accretive acquisitions in mid-September and early October that should increase the Company's production by more than 13,000 Boepd (~75% oil). I am using the top of their updated production guidance for 2024 (125,000 Boepd) because they consistently produce more than their guidance. The 2024 exit rate should be close to 135,000 Boepd. My 2025 forecast is based on production of 140,000 Boepd (63% oil).

Note that NOG reports natural gas & NGL production on a combined basis. They have more than 65% of their dry gas hedged at an average price over $3.25. They also have good ngas hedges in place for 2025.

My valuation increases $2 to $67/share. < 4.5 X annualized operating cash flow, which IMO is a conservative multiple.

NOG is an Aggressive Growth company, but it does pay a decent dividend (~3.8% yield) and it has a stock buyback underway.

We will be publishing an updated profile on NOG next week.