Watch List: NOG

[dan_s]

I have updated my forecast model for Northern Oil & Gas (NOG). I sent it to Kim and she should be posting it to the website later today.

My revised Fair Value estimate for NOG is $26/share.

2nd quarter results will come in slightly under the First Call estimate. However, reported earnings should include a positive mark-to-market adjustment on their hedges so that may push it over. [Note: First Call EPS forecasts do not include mark-to-mark adjustments on hedges. They know those adjustments are nonsense but investors still react to reported earnings over or under the First Call estimates.]

2nd quarter production will be up but not as much as the market hoped for due to very wet weather in North Dakota. Not only did the flooding delay completions but it caused shut-ins on wells not connected to pipelines. Trucks could not get in to haul off the oil. Conditions are rapidly improving on the ground and all of the Bakken companies will show a lot of improvement in Q3 and Q4. NOG's first quarter production was 3,962 boepd and they are still on-track to exit this year over 10,000 boepd. That is their official guidance.

NOG has a strong Balance Sheet and access to capital, enough to carry out their capital program.

[dan_s]

June 15: Rodman & Renshaw (a firm I have great respect for) has initiated coverage on NOG with a "Market Outpreform" rating.

IMO this is very bullish.