Northern Oil & Gas (NOG) Valuation Update - June 8
Posted: Wed Jun 08, 2022 10:05 am
I have updated my forecast/valuation model for NOG, adjusting for the bolt-on acquisition they announced yesterday and for my increased oil & gas price deck that I announced on last Saturday's podcast. If you have not watched the podcast, you can watch it directly from the EPG website home page.
At the time of this post NOG was trading at $38.57.
My current valuation increases by $1 to $61.00.
NOG has been in "Aggressive Growth" mode since April 2021. They have closed four significant acquisitions since April 1, 2021.
> Production increased 62.4% year-over-year in 2021
> Based on the midpoint of their fresh guidance, production should be up another ~40% YOY in 2022 to 75,000 Boepd.
> They do hedge ~65% of their production, which is a wise thing to do when you are making large acquisitions.
The Wall Street Gang is "behind the curve" on this one. Based on my forecast model, NOG's adjusted operating cash flow per share should increase from $2.81 in Q1 to $3.76 in Q2, which compares to TipRanks' CFPS estimate of $2.66 for Q2.
For the year 2022 my forecast is operating cash flow of $1,168.9 million ($15.13/share), which compares to TipRanks' full-year forecast of $10.44 CFPS.
Note that my valuation above is just 4X current year operating cash flow per share.
NOG is generating a lot of FCF to fund acquisitions; ~$700 million this year.
At the time of this post NOG was trading at $38.57.
My current valuation increases by $1 to $61.00.
NOG has been in "Aggressive Growth" mode since April 2021. They have closed four significant acquisitions since April 1, 2021.
> Production increased 62.4% year-over-year in 2021
> Based on the midpoint of their fresh guidance, production should be up another ~40% YOY in 2022 to 75,000 Boepd.
> They do hedge ~65% of their production, which is a wise thing to do when you are making large acquisitions.
The Wall Street Gang is "behind the curve" on this one. Based on my forecast model, NOG's adjusted operating cash flow per share should increase from $2.81 in Q1 to $3.76 in Q2, which compares to TipRanks' CFPS estimate of $2.66 for Q2.
For the year 2022 my forecast is operating cash flow of $1,168.9 million ($15.13/share), which compares to TipRanks' full-year forecast of $10.44 CFPS.
Note that my valuation above is just 4X current year operating cash flow per share.
NOG is generating a lot of FCF to fund acquisitions; ~$700 million this year.