Northern Oil & Gas: Strong Stock, Modest Price
Northern Oil & Gas is a strong stock pick and can stand side by side with the big companies. However, their stock price is a bit more affordable than some of their counterparts. Why not save some money, and make some money? Steve Zachritz describes NOG’s approach and and describes some of their current operations.
NOG buys only a few high quality acres (at high cost) while taking in many more acres of what some refer to as goat pasture. If that were the case, then they would only have a few good wells to talk about, right? So I took it upon myself to do a little well study to see if NOG was in fact drilling a handful of good wells and a plethora of poor ones. In short, this is not the case. NOG’s short lateral core wells (drilled by Slawson) routinely stack up well against Brigham Exploration Company’s (BEXP) core area long lateral, much higher cost wells.
Since Northern is a non-operator, I looked at wells drilled by their biggest operators [Slawson, EOG Resources (EOG), Continental Resources (CLR), Hess (HES), Marathon Oil (MRO), etc.] in which NOG has a working interest. I looked at as much monthly data as is currently available from the North Dakota Industrial Commission (NDIC) and in the end viewed data on over 85 wells. The wells themselves were gleaned from NOG press releases going back a couple of years and while some may say that’s not much since they are in over 400 gross wells, I’d point out that:
- Most companies don’t give you anywhere near that kind of transparency, only talking about a handful of their best wells (and here I have to give a nod to Brigham for showing everyone all of their long lateral wells and as well as all of the wells of Kodiak Oil & Gas (KOG) as an exception to my comment),
- Of the ones NOG does provide, you, in almost all cases, have the name of the well prior to initial production or even the spudding of the well, so it’s not like they are cherry picking which wells to report based on known results.
Due to the fact that Northern Oil & Gas is not an operator, it puts them into a unique group compared to the many oil and gas companies. They have a different approach, which seems to be benefiting them. They have some strong partnerships, which could prove beneficial for investors and the company alike.
Quotes taken from report by Steve Zachrtiz, Read the entire article here.
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