Northern Oil & Gas (NOG) Update by RBC Capital
Posted: Mon Oct 16, 2023 1:35 pm
October 13, 2023
Northern Oil and Gas, Inc.
Model Update For Equity Offering
RBC's price target is $46 per share.
Our view: Earlier this week, NOG priced a public offering of 6.5 million
shares of common stock at a 5% discount to the prior close. We think
this was an opportunistic raise that will clear its bank revolver and
provide capacity for future acquisition opportunities. We are updating our
estimates to account for the offering.
Key points:
Equity offering. Earlier this week, NOG priced a public offering of 6.5 million
shares of common stock for gross proceeds of $253 million. The offering
was priced at a 5% discount to the prior close. There is also an over-
allotment option to purchase up to an additional 975,000 shares.
Use of proceeds should prepare for opportunities. The stated use of net
proceeds are for general corporate purposes, including the repayment of
a portion of the outstanding borrowings under its revolving credit facility.
The facility balance was $414 million on October 9. We think this will
opportunistically prepare the balance sheet for future M&A opportunities.
Based on our recent conversation with management (note), NOG has seen
the pipeline of M&A activity picking up following a quieter mid-summer,
with opportunities covering the gamut from small traditional non-op to
joint ventures.
Summary of price deck changes (full note). Our 4Q23 HH/WTI forecasts
increase by $0.25/$9.03 to $3.00/Mcf and $86.50/Bbl. Our 2024 HH
forecast was unchanged at $3.50/Mcf, while our WTI expectation increased
by $5.10 to $86.45/Bbl. Our 2025 price assumptions with $3.75/Mcf for HH
and $77/Bbl for WTI.
Northern Oil and Gas, Inc.
Model Update For Equity Offering
RBC's price target is $46 per share.
Our view: Earlier this week, NOG priced a public offering of 6.5 million
shares of common stock at a 5% discount to the prior close. We think
this was an opportunistic raise that will clear its bank revolver and
provide capacity for future acquisition opportunities. We are updating our
estimates to account for the offering.
Key points:
Equity offering. Earlier this week, NOG priced a public offering of 6.5 million
shares of common stock for gross proceeds of $253 million. The offering
was priced at a 5% discount to the prior close. There is also an over-
allotment option to purchase up to an additional 975,000 shares.
Use of proceeds should prepare for opportunities. The stated use of net
proceeds are for general corporate purposes, including the repayment of
a portion of the outstanding borrowings under its revolving credit facility.
The facility balance was $414 million on October 9. We think this will
opportunistically prepare the balance sheet for future M&A opportunities.
Based on our recent conversation with management (note), NOG has seen
the pipeline of M&A activity picking up following a quieter mid-summer,
with opportunities covering the gamut from small traditional non-op to
joint ventures.
Summary of price deck changes (full note). Our 4Q23 HH/WTI forecasts
increase by $0.25/$9.03 to $3.00/Mcf and $86.50/Bbl. Our 2024 HH
forecast was unchanged at $3.50/Mcf, while our WTI expectation increased
by $5.10 to $86.45/Bbl. Our 2025 price assumptions with $3.75/Mcf for HH
and $77/Bbl for WTI.