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Why Is Northern Oil and Gas (NOG) Down 3.3% 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 lost about 3.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Northern Oil and Gas due for a breakout? 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 Q3 Earnings Miss Estimate
Northern Oil and Gas reported third-quarter 2023 adjusted earnings per share (EPS) of $1.73, which lagged the Zacks Consensus Estimate of $1.76. The bottom line also decreased from the year-ago quarter’s level of $1.80. This was primarily due to weaker oil realizations and a 57.4% increase in operating expenses.
Oil and natural gas sales of $511.7 million beat the Zacks Consensus Estimate of $504 million. The top line, however, declined from the prior-year quarter’s figure of $534.1 million.
In good news for investors, Northern Oil instituted a 5% dividend hike compared with the previous quarter’s level. The company declared a regular quarterly cash dividend of 40 cents per share for NOG’s common stock, payable on Dec 1, 2023, to stockholders of record as of Nov 10, 2023. Its adjusted EBITDA rose about 2% sequentially to $385.5 million.
Production & Price Realizations
Third-quarter production (comprising 62% oil) increased 29% from the year-ago level to 102,327 barrels of oil equivalent per day (Boe/d). The figure also surpassed our estimate of 101,012 Boe/d. While oil volume totaled 63,564 barrels per day (up 41% year over year), natural gas (and NGLs) amounted to 232,576 thousand cubic feet per day (up 14%). Our model estimate for oil volume and natural gas production is pegged at 63,683 Boe/d and 223,976 thousand cubic feet per day, respectively.
The average sales price for crude during the third quarter was $79.48 per barrel, indicating a 12% decrease from the prior-year quarter’s level of $90.54. The figure was higher than our expectation of $78.77 per barrel.
The average realized natural gas price was $2.19 per thousand cubic feet compared with $8.43 in the year-earlier period. Our model estimate for the same was pinned at $1.28 per thousand cubic feet.
Costs & Expenses
Total operating expenses in the quarter rose to $271.5 million from $187 million in the year-ago quarter. The figure missed our projection of $273.3 million. This was mainly on account of a surge in depreciation and production expenses.
In particular, the company’s lease operating (or production) expenses decreased to $8.76 per Boe from the year-ago figure of $9.41. Meanwhile, depreciation outlay increased 57% year over year on a per-barrel basis.
Financial Position
Excluding working capital, cash flow from operations went up 29% year over year to $347.0 million, while organic drilling and development capital expenditures totaled $216.6 million. The company’s free cash flow for the quarter amounted to $127.8 million.
As of Sep 30, Northern Oil had $78 million in cash and cash equivalents. It had a long-term debt of $2.1 billion with a debt-to-capitalization of 59.4%.
Guidance
Northern Oil's output is now anticipated in the 96,000-100,000 Boe/d range for 2023 compared with the previous guidance of 97,000-99,000 Boe/d. NOG anticipates growth in its 2023 well spud count in the band of 76-79.
NOG updated its total capital spending projection for 2023 to the $764-$800 million range from the previously estimated band of $790-$820. The company expects this year's oil mix to be in the range of 62-63%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -6.81% due to these changes.
VGM Scores
Currently, Northern Oil and Gas has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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.
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Why Is Northern Oil and Gas (NOG) Down 3.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Northern Oil and Gas (NOG - Free Report) . Shares have lost about 3.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Northern Oil and Gas due for a breakout? 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 Q3 Earnings Miss Estimate
Northern Oil and Gas reported third-quarter 2023 adjusted earnings per share (EPS) of $1.73, which lagged the Zacks Consensus Estimate of $1.76. The bottom line also decreased from the year-ago quarter’s level of $1.80. This was primarily due to weaker oil realizations and a 57.4% increase in operating expenses.
Oil and natural gas sales of $511.7 million beat the Zacks Consensus Estimate of $504 million. The top line, however, declined from the prior-year quarter’s figure of $534.1 million.
In good news for investors, Northern Oil instituted a 5% dividend hike compared with the previous quarter’s level. The company declared a regular quarterly cash dividend of 40 cents per share for NOG’s common stock, payable on Dec 1, 2023, to stockholders of record as of Nov 10, 2023. Its adjusted EBITDA rose about 2% sequentially to $385.5 million.
Production & Price Realizations
Third-quarter production (comprising 62% oil) increased 29% from the year-ago level to 102,327 barrels of oil equivalent per day (Boe/d). The figure also surpassed our estimate of 101,012 Boe/d. While oil volume totaled 63,564 barrels per day (up 41% year over year), natural gas (and NGLs) amounted to 232,576 thousand cubic feet per day (up 14%). Our model estimate for oil volume and natural gas production is pegged at 63,683 Boe/d and 223,976 thousand cubic feet per day, respectively.
The average sales price for crude during the third quarter was $79.48 per barrel, indicating a 12% decrease from the prior-year quarter’s level of $90.54. The figure was higher than our expectation of $78.77 per barrel.
The average realized natural gas price was $2.19 per thousand cubic feet compared with $8.43 in the year-earlier period. Our model estimate for the same was pinned at $1.28 per thousand cubic feet.
Costs & Expenses
Total operating expenses in the quarter rose to $271.5 million from $187 million in the year-ago quarter. The figure missed our projection of $273.3 million. This was mainly on account of a surge in depreciation and production expenses.
In particular, the company’s lease operating (or production) expenses decreased to $8.76 per Boe from the year-ago figure of $9.41. Meanwhile, depreciation outlay increased 57% year over year on a per-barrel basis.
Financial Position
Excluding working capital, cash flow from operations went up 29% year over year to $347.0 million, while organic drilling and development capital expenditures totaled $216.6 million. The company’s free cash flow for the quarter amounted to $127.8 million.
As of Sep 30, Northern Oil had $78 million in cash and cash equivalents. It had a long-term debt of $2.1 billion with a debt-to-capitalization of 59.4%.
Guidance
Northern Oil's output is now anticipated in the 96,000-100,000 Boe/d range for 2023 compared with the previous guidance of 97,000-99,000 Boe/d. NOG anticipates growth in its 2023 well spud count in the band of 76-79.
NOG updated its total capital spending projection for 2023 to the $764-$800 million range from the previously estimated band of $790-$820. The company expects this year's oil mix to be in the range of 62-63%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -6.81% due to these changes.
VGM Scores
Currently, Northern Oil and Gas has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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.