Northern Oil & Gas (NOG) Valuation Update - Oct 11

[dan_s]

I moved NOG to the top of my list for valuation updates because of the acquisition they announced today.

NOG is a "Non-OP" upstream company that has an Aggressive Growth strategy. Their production increased 62.4% YOY in 2021 and my forecast now shows 41.5% production growth in 2022 and another 21.7% production growth in 2023 even if they don't make any more acquisitions over the next 15 months (highly unlikely).

At the time of this post, NOG was trading at $30.00.
My current valuation increases by $2 to $65.00, primarily because I raised my HH ngas price assumption by $1.50 to $6.50/MMBtu for 2023. NOG's production mix is approximately 61% oil and 39% natural gas and NGLs. They do report natural gas and NGLs on a combined basis, which makes forecasting their actual price per mcfe a bit more difficult.

NOG is free cash flow positive and it has a lot of "running room", which are two of factors in all of my stock valuation.

My updated forecast model will be posted to the EPG website this afternoon.