Northern Oil & Gas (NOG) Update - May 5

[dan_s]

NOG closed today at $24.30 today. My updated valuation is $48.00/share based on just 3.25 X Adjusted Operating Cash flow per share. NOG has free cash flow locked in for 2025 even if WTI oil averages $50/bbl for the rest of the year.

Lower oil prices in 2025 don't have much impact on NOG's operating cash flow.

NOG is a “Growth + Income” stock with annualized dividend yield of ~7.3% as of the date of this report. They also have an active Stock Buyback underway.

FEAR of “Drill Baby Drill”, FEAR of the Tariff War, and most recently OPEC’s decision to increase oil supply quotas have pushed down oil prices. The U.S. natural gas price is up ~63% year-over-year. NOG’s oil hedges and rising natural gas prices have it in much better shape than most of the upstream companies that I follow. Approximately 67% of the Company’s 2025 oil production is hedged at a blended price of ~$71.50 per barrel. Approximately 42% of NOG’s production mix is natural gas and NGLs. During Q1 2025 NOG’s realized natural gas price increased from $2.75/mcfe to $3.90/mcfe. The outlook for North American natural gas price is bullish.

NOG is an Aggressive Growth company. In 2H 2024 the Company closed two large joint acquisitions with other companies that I follow closely; SM Energy (SM) and Vital Energy (VTLE). I expect NOG’s average production in 2025 to be 135,000 Boepd with a mix of 58% crude oil and 42% natural gas & NGLs.

TipRanks: "On April 30th, John M. White from Roth MKM maintained a Buy rating on Northern Oil And Gas (NOG), with a price target of $47.50. 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."