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Northern (NOG) Q2 Earnings Beat, Raises Production Outlook

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Independent oil and gas producer Northern Oil and Gas (NOG - Free Report) reported second-quarter 2021 adjusted earnings per share of 92 cents, comfortably beating the Zacks Consensus Estimate of 69 cents and significantly improving from the year-ago profit of 21 cents. The outperformance can be attributed to higher commodity prices and better-than-expected production.

The company’s oil and gas sales of $225.7 million beat the Zacks Consensus Estimate of $182 million. The top line also skyrocketed from the year-ago figure of $20.7 million.

Northern, which instituted a 50% dividend hike ahead of its earnings release, saw its adjusted EBITDA more than double to $132.8 million.
 

Northern Oil and Gas, Inc. Price, Consensus and EPS Surprise

Northern Oil and Gas, Inc. Price, Consensus and EPS Surprise

Northern Oil and Gas, Inc. price-consensus-eps-surprise-chart | Northern Oil and Gas, Inc. Quote

Production & Price Realizations

Second-quarter production (comprising 61% oil) surged 129% from the year-ago level to 54,623 barrels of oil equivalent per day (Boe/d) and surpassed the Zacks Consensus Estimate of 53,767 Boe/d. While oil volume came in at 33,346 barrels per day (up 83% year over year), natural gas totaled 127,663 thousand cubic feet per day (up 282%).

The average sales price for crude during the second quarter was $60.73 per barrel, reflecting a 250% increase from the prior-year realization of $17.35. The average realized natural gas price was $3.57 per thousand cubic feet compared to a negative $2.67 in the year-earlier period.

Costs & Expenses

Total operating expenses in the quarter plummeted to $99.7 million from the year-ago quarter’s $832.7 million. This was mainly on account of the absence of a massive impairment charge of $762.7 million that Northern had incurred in the second quarter of 2020. The company’s lease operating expenses also fell to $8.59 per barrel of oil equivalent (Boe) from the year-ago figure of $12.30 per Boe. Meanwhile, general and administrative expenses declined by 29% year over year on a per barrel basis.

Financial Position

Excluding working capital, cash flow from operations jumped 123% to $118.4 million, while Northern’s organic drilling and development capital expenditures totaled $41.9 million. The company’s free cash flow for the quarter was $46.2 million.

As of Jun 30, this owner of non-operating, minority interests in thousands of oil and gas wells had $4.8 million in cash and cash equivalents. The company had long-term debt of $802 million.

Guidance

Due to the recent closure of the Permian acquisition, Northern's output for 2021 will now come in at 51,875 Boe/d, as per the midpoint of the latest guidance, up from 50,295.5 Boe/d implied in the previous forecast. The company narrowed this year's oil mix guidance to the range of 63-64% (62-64% previously). On top of this, the energy explorer lowered the bottom end of its annual capital spending guidance by $10 million to $215-$260 million.

Zacks Rank & Stock Pick

Northern Oil and Gas currently carries a Zacks Rank #2 (Buy).

Other top-ranked players in the energy space include Ovintiv (OVV - Free Report) , EOG Resources (EOG - Free Report) and APA Corporation (APA - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Ovintiv has an expected earnings growth rate of 1,177.14% for the current year.

EOG Resources has an expected earnings growth rate of 397.95% for the current year.

APA has an expected earnings growth rate of 386.11% for the current year.