Northern Oil & Gas (NOG) Valuation Update - Feb 22

[dan_s]

NOG closed at $33.00 on Friday. First Call's price target is $48.54.

I have updated my forecast for their solid Q4 results and updated guidance for 2025. My valuation increases by $2 to $59.00. My valuation is just 3.75 X annualized operating cash flow per share, which is a conservative multiple.

NOG participated in two significant acquisitions that closed late in 2024.
> 20% of the Point Acquisition with Vital Energy that close 9/20/2024
> 20% of the XCL / Unita Basin Acquisition with SM Energy that closed 10/1/2024

NOG is an "Aggressive Growth" company via acquisitions.
Year-over-year production growth:
40.5% in 2022
30.8% in 2023
25.7% in 2024
8.8% in 2025 assuming that they make no acquisitions this year, which is highly unlikely.

2025 production should be ~135,000 Boepd with a mix of 58.5% crude oil and 41.5% natural gas and NGLs, which it reports on a combined basis.

NOG has a good dividend yield of ~5.4% and it has a stock buyback underway.

Reminder: All of the U.S. upstream companies are required to use SEC commodity prices to value their 12-31-2024 proved reserves, which are the average realize prices for the last 12 months. This is causing all of the companies to grossly under value their natural gas and NGL reserves. Canadian companies use future prices, but even those are too conservative.