Northern Oil And Gas Up 8% On 3Q Profit Win; Street Sees 247% Upside

Shares of Northern Oil And Gas surged 7.7% in Friday’s extended trading after the energy company’s 3Q earnings of $0.51 per share paced past Street estimates of $0.38 per share. EPS declined 44.6% from the year-ago quarter. Meanwhile, revenues of $47.3 million plunged about 80% year-over-year and fell well below analysts’ expectations of $106.2 million.

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Northern’s (NOG) 3Q production of 29,051 Boe (barrel of oil equivalent) per day came at the high end of the company’s guidance and increased 22% from the second quarter. The company said that the higher production rate was “due to an increase in net completions and a partial return of curtailed production by many of Northern’s operating partners.”

Northern’s CEO Nick O’Grady said “Costs were down, production was up and we generated meaningful free cash flow while continuing to strategically bolt on high return assets.” He added that “As of November 6, 2020, our debt is already down $160 million year-to-date, and our 2021 outlook continues to be focused on delivering more free cash flow, debt reduction and taking advantage of market distress.” (See NOG stock analysis on TipRanks).

For the fourth quarter, the company expects to produce 30,000 to 40,000 Boe per day, despite production curtailments. As for 2021, Northern forecasts total capital expenditures in the range of $190 million – $240 million and production of 37,500 – 42,500 Boe per day.

On Nov. 9, Northland Securities analyst Jeff Grampp maintained a Buy rating on the stock and lowered the price target from $10 to $8 (93% upside potential).

Grampp wrote in a note to investors that “NOG has 69% of oil production hedged and expected to generate $116MM of FCF between now and end of ’21. We think this de-risks the equity to manage through any pricing volatility while it continues to see strong deal flow.”

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 5 unanimous Buys. The average price target of $11.80 implies upside potential of about 247.1% to current levels. Shares have declined 85.5% year-to-date.