Why Is Northern Oil and Gas (NOG) Down 7.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Northern Oil and Gas (NOG). Shares have lost about 7.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Northern Q2 Earnings & Revenues Outpace Estimates
Northern Oil and Gas reported second-quarter 2024 adjusted earnings per share of $1.46, which beat the Zacks Consensus Estimate of $1.20. The outperformance reflects strong production. However, the bottom line declined from the year-ago adjusted profit of $1.49 due to weaker natural gas prices and a 41.4% increase in operating expenses.
The oil and natural gas sales of $561 million beat the Zacks Consensus Estimate of $538 million. The top line increased from the year-ago figure of $416.5 million.
Adjusted EBITDA came in at $413.1 million compared with $315.5 million in the year-ago period.
The oil and gas exploration and production company repurchased 895,076 shares of common stock at an average price of $38.96 per share during this quarter. Additionally, the company announced a joint acquisition of Uinta Basin properties from XCL Resources, in partnership with SM Energy Company , for $510 million net to NOG.
On Jul 29, NOG’s management announced its intention to get approval from the board of directors for a 5% increase in the quarterly dividend, raising it by 2 cents to 42 cents per share for the third quarter. The board of directors has also approved a new $150 million share repurchase authorization.
The company recently announced a joint acquisition of Delaware Basin properties from Point Energy Partners, in collaboration with Vital Energy for $220 million net to NOG.
Realizations
The second-quarter production increased 36% year over year to 123,342 barrels of oil equivalent per day (Boe/d). Additionally, the figure beat our estimate of 119,000 Boe/d.
While oil volume totaled 69,645 barrels per day (up 27% year over year), natural gas (and NGLs) amounted to 322,183 thousand cubic feet per day (up 49%). Our model estimate for oil volume and natural gas production was pegged at 70,200 Boe/d and 294,800 thousand cubic feet per day, respectively.
The average sales price for crude was $77.11 per barrel, indicating a 9% increase from the prior-year quarter’s level of $71.03. However, the figure missed our expectation of $77.8 per barrel.
The average realized natural gas price was $2.47 per thousand cubic feet compared with $3.18 in the year-earlier period. Our model estimate for the same was pinned at $1.5 per thousand cubic feet.
Costs & Expenses
Total operating expenses in the quarter rose to $341.8 million from $241.8 million in the year-ago period. This was mainly on account of a surge in production expenses, production taxes and General and Administrative expenses, depletion, depreciation, amortization and accretion (DD&A) and other expenses. However, the figure was marginally higher than our projection of $341.4 million.
In particular, the company’s lease operating expenses decreased to $8.99 per Boe from the year-ago figure of $10.2. Meanwhile, depreciation outlay increased 22% year over year on a per-barrel basis.
Financial Position
Cash flow from operations totaled $340.5 million. When excluding changes in net working capital, cash flow from operations amounted to $374.2 million, up 33% from that recorded a year ago. The company’s free cash flow for the quarter totaled $133.7 million.
As of Jun 30, Northern had $7.8 million in cash and cash equivalents. The company had a long-term debt of $1.9 billion, with a debt-to-capitalization of 47.5%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Northern Oil and Gas has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 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.
Performance of an Industry Player
Northern Oil and Gas is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, CNX Resources Corporation. (CNX), a stock from the same industry, has gained 4.1%. The company reported its results for the quarter ended June 2024 more than a month ago.
CNX Resources reported revenues of $346 million in the last reported quarter, representing a year-over-year change of +2.7%. EPS of $0.36 for the same period compares with $0.29 a year ago.
CNX Resources is expected to post earnings of $0.15 per share for the current quarter, representing a year-over-year change of -57.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -32.4%.
CNX Resources has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Northern Oil and Gas, Inc. (NOG) : Free Stock Analysis Report
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