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Why Is Northern Oil and Gas (NOG) Up 18% Since Last Earnings Report?

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A month has gone by since the last earnings report for Northern Oil and Gas (NOG - Free Report) . Shares have added about 18% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Northern Oil and Gas due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Northern Oil and Gas Q2 Earnings & Sales Outperform Estimates

Northern Oil and Gas the independent oil and gas producer, reported second-quarter 2022 adjusted earnings per share (EPS) of $1.72, beating the Zacks Consensus Estimate of $1.57, primarily attributable to greater net production and much higher commodity prices compared with the last quarter.  Moreover, the bottom line improved considerably from the year-ago profit of 92 cents.

The company's oil and natural gas sales of $549.6 million beat the Zacks Consensus Estimate of $410 million. The top line also skyrocketed from the year-ago figure of $225.7 million.

In good news for investors, Northern instituted a 36% dividend hike compared with the previous quarter. It declared a regular quarterly cash dividend for NOG’s common stock of 19 cents per share for stockholders of record as of Jun 29, 2022. Its adjusted EBITDA rose about 6.2% sequentially to $272.5 million.

Production & Price Realizations

The second-quarter production (comprising 57.5% oil) surged about 33% from the year-ago level to 72,689 barrels of oil equivalent per day (Boe/d) and surpassed the Zacks Consensus Estimate of 71,133 Boe/d. While the oil volume came in at 41,777 barrels per day (up 25.3% year over year), natural gas totaled 185,478 thousand cubic feet per day (up 45.3%).

The average sales price for crude oil in the second quarter was $106.26 per barrel, reflecting a 75% hike from the prior-year realization of $60.73. The average realized natural gas price was $8.63 per thousand cubic feet compared with $3.57 in the year-earlier period.

Financial Position

Excluding working capital, cash flow from operations jumped 7% from the last quarter’s figure to $252.2 million, while Northern's organic drilling and development capital expenditure totaled $119.1 million. The company's free cash flow for the quarter was $114.3 million.

As of Jun 30, the owner of non-operating, minority interests in thousands of oil and gas wells had $1.47 million in cash and cash equivalents. The company had long-term debt of $1.1 billion.

Guidance

Northern's output for 2022 is now anticipated in the 73,000-77,000 Boe/d range compared with the previous guidance in the band of 71,000-76,000 Boe/d.

NOG updated its total capital spending guidance for 2022 from the $350-$415 million range to the $405-$470 million band.

However, the company maintained this year's oil-mix guidance of 59.5-61.5%.

 



 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Northern Oil and Gas has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Northern Oil and Gas has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Northern Oil and Gas belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Continental Resources , has gained 5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.

Continental Resources reported revenues of $2.65 billion in the last reported quarter, representing a year-over-year change of +114.6%. EPS of $3.47 for the same period compares with $0.91 a year ago.

Continental Resources is expected to post earnings of $3.20 per share for the current quarter, representing a year-over-year change of +166.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.7%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Continental Resources. Also, the stock has a VGM Score of A.


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