Northern Oil & Gas (NOG) Valuation Update - April 30

[dan_s]

At the time of this post NOG was trading at $24.46.

I have updated my forecast/valuation model for their strong Q1 results and their updated guidance, which is unchanged from what it was in February.

My current valuation is now $53/share, which is $3 lower than what is in yesterday's newsletter.
The ONLY REASON for the reduced valuation is because I have lowered the valuation multiple that I am using from 3.75 to 3.5 times annualized operating cash flow. The lower multiple is only because of the uncertainty in the macro outlook for oil & gas prices. In "Post Tariff War World" I do expect WTI oil to stabilize at more than $70/bbl and HH natural gas to stabilize at more than $4.00/mcf.

TipRanks: "In the last 3 months, 11 ranked analysts set 12-month price targets for NOG. The average price target among the analysts is $37.95." < The 11 price targets range from $27 to $50. < This wide price target range for a company of this size is due to the macro uncertainty and the difficulty in modeling a Non-Op company. Half of the Wall Street Gang analysts are using low oil and gas prices in their models.

My full year financial forecast actually went up.
> NOG has more than 65% of their oil production hedged Q2 thru Q4 2025 at prices well above the NYMEX strip for WTI.
> NOG's production increased 25.7% year-over-year in 2024 and should increase more than 8% YOY in 2025.
> Production is expected to decline slightly from Q1 to Q2, then stabilize in Q3 and ramp to an exit rate of more than 136,000 Boepd in December.
> I do expect their production to be more "gassy" in 2H 2025, which is a good thing this year.

Bottomline: NOG is grossly oversold; trading today at less than 2X TipRanks' operating cash flow forecast of $14.50 per share. My CFPS forecast is slightly higher at $14.74. My updated forecast/valuation model will be posted to the EPG website this afternoon.

We will publish an updated profile on NOG next week. I want to see more of the Wall Street Gang price targets updated. I do need to get their 10-Q in order to tweak a few numbers in the forecast model. I do have large "cushions" in my Q3 and Q4 forecasts.