Northern Oil and Gas announced a price cut on the upcoming acquisition
Northern Oil and Gas, Inc. (NYSE: NOG) is an independent energy company engaged in the acquisition, exploration, development and production of oil and natural gas properties. Its main strategy is to invest in unoperated minority and mineral interests in oil and gas real estate. The oil and gas reserves in the north are mainly located in the major US basins.
On March 10, Northern Oil and Gas announced a price cut for its upcoming acquisition of Marcellus Shale from Reliance Marcellus. The cash purchase price was reduced by $ 48.6 million to reflect approximately 2,200 net acres of foreclosed property or a reduction in assets acquired of approximately 3%. The total purchase price of Northern Oil and Gas increased from $ 175 million to $ 126 million.
In the press release, Northern Oil and Gas highlighted its expectations that the acquired assets will generate cash flow from operating activities of $ 40 to 45 million in 2021, compared to the previous estimate of $ 55 to 60 million. Capital expenditures are now projected to be between $ 20 million and $ 25 million in 2021, compared to the previous estimate of $ 25 million to $ 30 million. Additionally, Northern Oil and Gas CEO stated that he expects the change to have minimal impact on the company’s free cash flow profile.
The NOG share is up around 46% in the 12 months. At a record low in November, the stock was trading at $ 3.34. Since then, the price of Northern Oil and Gas shares has more than tripled. Additionally, the north’s oil and gas stocks are up 60% year-to-date, with the most recent support coming from the 20-day moving average. It’s also worth noting that on the way to trading today, all nine of the covering analysts have a buy or buy recommendation.
Another announcement is that Northern Oil and Gas will publish its fourth quarter results before the market opens on Friday March 12th. NOG has exceeded earnings expectations in two of its four most recent earnings reports.
Some important details about Northern Oil and Gas stock are a price to earnings ratio of 8.83 and a price to book ratio of 1.19. However, NOG has a weak balance sheet with debt of $ 984.53 million and liquidity of only $ 1.8 million. Northern Oil and Gas also saw sales decline more than $ 200 million and lost nearly $ 800 million in net income for the past twelve months. NOG’s net loss now stands at $ 871.8 million.