Intrinsic value of Northern Oil&Gas - NOG

Previous Close

$2.73

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.73

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of NOG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  44.50
  40.55
  37.00
  33.80
  30.92
  28.32
  25.99
  23.89
  22.00
  20.30
  18.77
  17.40
  16.16
  15.04
  14.04
  13.13
  12.32
  11.59
  10.93
  10.34
  9.80
  9.32
  8.89
  8.50
  8.15
  7.84
  7.55
  7.30
  7.07
  6.86
Revenue, $m
  302
  424
  581
  778
  1,019
  1,307
  1,647
  2,040
  2,489
  2,995
  3,557
  4,175
  4,850
  5,579
  6,363
  7,198
  8,085
  9,022
  10,008
  11,042
  12,125
  13,255
  14,433
  15,660
  16,936
  18,264
  19,643
  21,076
  22,566
  24,114
Variable operating expenses, $m
  781
  1,097
  1,503
  2,011
  2,633
  3,379
  4,257
  5,274
  6,434
  7,741
  9,194
  10,793
  12,537
  14,423
  16,447
  18,607
  20,900
  23,321
  25,870
  28,544
  31,342
  34,264
  37,310
  40,481
  43,781
  47,211
  50,777
  54,482
  58,332
  62,334
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  781
  1,097
  1,503
  2,011
  2,633
  3,379
  4,257
  5,274
  6,434
  7,741
  9,194
  10,793
  12,537
  14,423
  16,447
  18,607
  20,900
  23,321
  25,870
  28,544
  31,342
  34,264
  37,310
  40,481
  43,781
  47,211
  50,777
  54,482
  58,332
  62,334
Operating income, $m
  -479
  -673
  -922
  -1,233
  -1,614
  -2,072
  -2,610
  -3,234
  -3,945
  -4,746
  -5,637
  -6,618
  -7,687
  -8,843
  -10,085
  -11,409
  -12,815
  -14,300
  -15,862
  -17,502
  -19,217
  -21,009
  -22,876
  -24,821
  -26,844
  -28,948
  -31,134
  -33,406
  -35,767
  -38,220
EBITDA, $m
  -417
  -587
  -804
  -1,075
  -1,408
  -1,806
  -2,276
  -2,820
  -3,440
  -4,139
  -4,916
  -5,771
  -6,703
  -7,711
  -8,794
  -9,949
  -11,174
  -12,469
  -13,832
  -15,261
  -16,757
  -18,319
  -19,948
  -21,644
  -23,408
  -25,242
  -27,148
  -29,129
  -31,188
  -33,328
Interest expense (income), $m
  60
  77
  54
  79
  112
  152
  202
  261
  332
  413
  506
  610
  726
  854
  994
  1,144
  1,306
  1,479
  1,662
  1,856
  2,059
  2,273
  2,497
  2,730
  2,974
  3,227
  3,491
  3,765
  4,050
  4,347
  4,654
Earnings before tax, $m
  -555
  -727
  -1,001
  -1,345
  -1,767
  -2,274
  -2,872
  -3,565
  -4,358
  -5,252
  -6,248
  -7,344
  -8,541
  -9,837
  -11,229
  -12,715
  -14,293
  -15,962
  -17,718
  -19,561
  -21,491
  -23,506
  -25,607
  -27,795
  -30,072
  -32,439
  -34,899
  -37,456
  -40,113
  -42,875
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -555
  -727
  -1,001
  -1,345
  -1,767
  -2,274
  -2,872
  -3,565
  -4,358
  -5,252
  -6,248
  -7,344
  -8,541
  -9,837
  -11,229
  -12,715
  -14,293
  -15,962
  -17,718
  -19,561
  -21,491
  -23,506
  -25,607
  -27,795
  -30,072
  -32,439
  -34,899
  -37,456
  -40,113
  -42,875

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  912
  1,282
  1,757
  2,351
  3,077
  3,949
  4,975
  6,164
  7,520
  9,047
  10,745
  12,615
  14,653
  16,856
  19,222
  21,747
  24,426
  27,256
  30,235
  33,360
  36,630
  40,045
  43,605
  47,311
  51,168
  55,177
  59,344
  63,674
  68,174
  72,851
Adjusted assets (=assets-cash), $m
  912
  1,282
  1,757
  2,351
  3,077
  3,949
  4,975
  6,164
  7,520
  9,047
  10,745
  12,615
  14,653
  16,856
  19,222
  21,747
  24,426
  27,256
  30,235
  33,360
  36,630
  40,045
  43,605
  47,311
  51,168
  55,177
  59,344
  63,674
  68,174
  72,851
Revenue / Adjusted assets
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
Average production assets, $m
  613
  861
  1,180
  1,579
  2,067
  2,652
  3,341
  4,140
  5,051
  6,076
  7,217
  8,472
  9,841
  11,321
  12,910
  14,605
  16,404
  18,305
  20,306
  22,404
  24,601
  26,894
  29,285
  31,774
  34,364
  37,057
  39,855
  42,764
  45,786
  48,927
Working capital, $m
  -134
  -189
  -259
  -346
  -453
  -582
  -733
  -908
  -1,108
  -1,333
  -1,583
  -1,858
  -2,158
  -2,483
  -2,831
  -3,203
  -3,598
  -4,015
  -4,453
  -4,914
  -5,395
  -5,898
  -6,423
  -6,969
  -7,537
  -8,127
  -8,741
  -9,379
  -10,042
  -10,731
Total debt, $m
  707
  1,040
  1,467
  2,002
  2,656
  3,440
  4,364
  5,434
  6,654
  8,029
  9,557
  11,239
  13,074
  15,057
  17,186
  19,458
  21,869
  24,417
  27,098
  29,910
  32,853
  35,926
  39,130
  42,466
  45,937
  49,545
  53,296
  57,193
  61,243
  65,452
Total liabilities, $m
  821
  1,154
  1,581
  2,115
  2,769
  3,554
  4,478
  5,547
  6,768
  8,142
  9,671
  11,353
  13,187
  15,171
  17,300
  19,572
  21,983
  24,531
  27,211
  30,024
  32,967
  36,040
  39,244
  42,580
  46,051
  49,659
  53,410
  57,307
  61,357
  65,566
Total equity, $m
  91
  128
  176
  235
  308
  395
  498
  616
  752
  905
  1,075
  1,261
  1,465
  1,686
  1,922
  2,175
  2,443
  2,726
  3,023
  3,336
  3,663
  4,004
  4,360
  4,731
  5,117
  5,518
  5,934
  6,367
  6,817
  7,285
Total liabilities and equity, $m
  912
  1,282
  1,757
  2,350
  3,077
  3,949
  4,976
  6,163
  7,520
  9,047
  10,746
  12,614
  14,652
  16,857
  19,222
  21,747
  24,426
  27,257
  30,234
  33,360
  36,630
  40,044
  43,604
  47,311
  51,168
  55,177
  59,344
  63,674
  68,174
  72,851
Debt-to-equity ratio
  7.750
  8.110
  8.350
  8.520
  8.630
  8.710
  8.770
  8.820
  8.850
  8.870
  8.890
  8.910
  8.920
  8.930
  8.940
  8.950
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -555
  -727
  -1,001
  -1,345
  -1,767
  -2,274
  -2,872
  -3,565
  -4,358
  -5,252
  -6,248
  -7,344
  -8,541
  -9,837
  -11,229
  -12,715
  -14,293
  -15,962
  -17,718
  -19,561
  -21,491
  -23,506
  -25,607
  -27,795
  -30,072
  -32,439
  -34,899
  -37,456
  -40,113
  -42,875
Depreciation, amort., depletion, $m
  61
  86
  118
  158
  207
  265
  334
  414
  505
  608
  722
  847
  984
  1,132
  1,291
  1,461
  1,640
  1,831
  2,031
  2,240
  2,460
  2,689
  2,928
  3,177
  3,436
  3,706
  3,986
  4,276
  4,579
  4,893
Funds from operations, $m
  -494
  -640
  -883
  -1,187
  -1,560
  -2,008
  -2,537
  -3,151
  -3,853
  -4,644
  -5,526
  -6,497
  -7,557
  -8,705
  -9,938
  -11,255
  -12,653
  -14,131
  -15,687
  -17,321
  -19,030
  -20,816
  -22,678
  -24,618
  -26,635
  -28,733
  -30,914
  -33,180
  -35,535
  -37,982
Change in working capital, $m
  -41
  -54
  -70
  -87
  -107
  -128
  -151
  -175
  -200
  -225
  -250
  -275
  -300
  -325
  -349
  -372
  -395
  -417
  -439
  -460
  -482
  -503
  -524
  -546
  -568
  -591
  -614
  -638
  -663
  -689
Cash from operations, $m
  -453
  -586
  -813
  -1,099
  -1,453
  -1,880
  -2,386
  -2,976
  -3,653
  -4,420
  -5,276
  -6,222
  -7,257
  -8,380
  -9,590
  -10,883
  -12,258
  -13,714
  -15,249
  -16,860
  -18,549
  -20,313
  -22,154
  -24,072
  -26,067
  -28,143
  -30,300
  -32,542
  -34,872
  -37,293
Maintenance CAPEX, $m
  -42
  -61
  -86
  -118
  -158
  -207
  -265
  -334
  -414
  -505
  -608
  -722
  -847
  -984
  -1,132
  -1,291
  -1,461
  -1,640
  -1,831
  -2,031
  -2,240
  -2,460
  -2,689
  -2,928
  -3,177
  -3,436
  -3,706
  -3,986
  -4,276
  -4,579
New CAPEX, $m
  -188
  -248
  -319
  -399
  -488
  -585
  -689
  -798
  -911
  -1,025
  -1,141
  -1,255
  -1,369
  -1,480
  -1,589
  -1,695
  -1,799
  -1,901
  -2,001
  -2,099
  -2,196
  -2,293
  -2,391
  -2,489
  -2,590
  -2,693
  -2,799
  -2,908
  -3,022
  -3,141
Cash from investing activities, $m
  -230
  -309
  -405
  -517
  -646
  -792
  -954
  -1,132
  -1,325
  -1,530
  -1,749
  -1,977
  -2,216
  -2,464
  -2,721
  -2,986
  -3,260
  -3,541
  -3,832
  -4,130
  -4,436
  -4,753
  -5,080
  -5,417
  -5,767
  -6,129
  -6,505
  -6,894
  -7,298
  -7,720
Free cash flow, $m
  -683
  -896
  -1,218
  -1,616
  -2,099
  -2,672
  -3,341
  -4,109
  -4,978
  -5,950
  -7,024
  -8,199
  -9,473
  -10,844
  -12,311
  -13,869
  -15,518
  -17,255
  -19,080
  -20,990
  -22,985
  -25,067
  -27,234
  -29,490
  -31,835
  -34,272
  -36,804
  -39,436
  -42,170
  -45,013
Issuance/(repayment) of debt, $m
  -302
  333
  427
  534
  654
  784
  924
  1,070
  1,221
  1,374
  1,529
  1,682
  1,834
  1,983
  2,129
  2,272
  2,411
  2,547
  2,681
  2,813
  2,943
  3,073
  3,204
  3,336
  3,471
  3,608
  3,750
  3,897
  4,050
  4,209
Issuance/(repurchase) of shares, $m
  1,138
  764
  1,048
  1,404
  1,839
  2,361
  2,974
  3,684
  4,494
  5,405
  6,417
  7,531
  8,745
  10,057
  11,466
  12,968
  14,561
  16,245
  18,016
  19,874
  21,818
  23,847
  25,963
  28,166
  30,457
  32,840
  35,316
  37,889
  40,563
  43,342
Cash from financing (excl. dividends), $m  
  836
  1,097
  1,475
  1,938
  2,493
  3,145
  3,898
  4,754
  5,715
  6,779
  7,946
  9,213
  10,579
  12,040
  13,595
  15,240
  16,972
  18,792
  20,697
  22,687
  24,761
  26,920
  29,167
  31,502
  33,928
  36,448
  39,066
  41,786
  44,613
  47,551
Total cash flow (excl. dividends), $m
  152
  201
  258
  322
  394
  473
  557
  645
  736
  829
  922
  1,015
  1,106
  1,196
  1,284
  1,370
  1,454
  1,536
  1,617
  1,696
  1,775
  1,854
  1,933
  2,012
  2,093
  2,176
  2,262
  2,351
  2,443
  2,539
Retained Cash Flow (-), $m
  -1,138
  -764
  -1,048
  -1,404
  -1,839
  -2,361
  -2,974
  -3,684
  -4,494
  -5,405
  -6,417
  -7,531
  -8,745
  -10,057
  -11,466
  -12,968
  -14,561
  -16,245
  -18,016
  -19,874
  -21,818
  -23,847
  -25,963
  -28,166
  -30,457
  -32,840
  -35,316
  -37,889
  -40,563
  -43,342
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  3
  5
  7
  9
  12
  16
  21
  26
  33
  40
  48
  57
  67
  78
  89
  102
  115
  129
  144
  160
  177
  194
  212
  231
  251
  271
  292
  314
  337
  361
Cash available for distribution, $m
  -985
  -563
  -791
  -1,082
  -1,445
  -1,888
  -2,417
  -3,039
  -3,758
  -4,576
  -5,495
  -6,517
  -7,639
  -8,861
  -10,181
  -11,597
  -13,107
  -14,708
  -16,399
  -18,177
  -20,042
  -21,993
  -24,030
  -26,154
  -28,364
  -30,663
  -33,054
  -35,538
  -38,120
  -40,804
Discount rate, %
  14.10
  14.81
  15.55
  16.32
  17.14
  18.00
  18.90
  19.84
  20.83
  21.87
  22.97
  24.12
  25.32
  26.59
  27.92
  29.31
  30.78
  32.32
  33.93
  35.63
  37.41
  39.28
  41.25
  43.31
  45.47
  47.75
  50.13
  52.64
  55.27
  58.04
PV of cash for distribution, $m
  -864
  -427
  -513
  -591
  -655
  -699
  -720
  -714
  -684
  -633
  -565
  -488
  -406
  -327
  -253
  -190
  -137
  -95
  -64
  -41
  -25
  -15
  -9
  -5
  -2
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  5.3
  0.6
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Northern Oil and Gas, Inc. is an independent energy company. The Company is engaged in the acquisition, exploration, development and production of oil and natural gas properties, primarily in the Bakken and Three Forks formations within the Williston Basin in North Dakota and Montana. The Company holds working interests in over 2,630 gross (204.3 net) producing wells, including over 2,630 wells targeting the Bakken and Three Forks formations and over two wells targeting other formations. The Company leases approximately 165,910 net acres, all located in the Williston Basin. The Company engages in oil exploration and production through non-operated working interests in wells drilled and completed in spacing units that include its acreage. The Company's proved reserves are approximately 65.3 million barrels of oil equivalent (MMBoe).

FINANCIAL RATIOS  of  Northern Oil&Gas (NOG)

Valuation Ratios
P/E Ratio -0.6
Price to Sales 1.2
Price to Book -0.4
Price to Tangible Book
Price to Cash Flow 1.7
Price to Free Cash Flow 19.2
Growth Rates
Sales Growth Rate -47.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -67.8%
Cap. Spend. - 3 Yr. Gr. Rate -23.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity -171%
Total Debt to Equity -171%
Interest Coverage -4
Management Effectiveness
Return On Assets -40.5%
Ret/ On Assets - 3 Yr. Avg. -32.4%
Return On Total Capital -59.6%
Ret/ On T. Cap. - 3 Yr. Avg. -45.3%
Return On Equity 85.5%
Return On Equity - 3 Yr. Avg. -77.1%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 57.9%
Gross Margin - 3 Yr. Avg. 71.5%
EBITDA Margin -120%
EBITDA Margin - 3 Yr. Avg. -132.4%
Operating Margin -157.9%
Oper. Margin - 3 Yr. Avg. -171.2%
Pre-Tax Margin -203.4%
Pre-Tax Margin - 3 Yr. Avg. -195.9%
Net Profit Margin -202.1%
Net Profit Margin - 3 Yr. Avg. -176.4%
Effective Tax Rate 0.7%
Eff/ Tax Rate - 3 Yr. Avg. 18.5%
Payout Ratio 0%

NOG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NOG stock intrinsic value calculation we used $209 million for the last fiscal year's total revenue generated by Northern Oil&Gas. The default revenue input number comes from 2017 income statement of Northern Oil&Gas. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NOG stock valuation model: a) initial revenue growth rate of 44.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 14.1%, whose default value for NOG is calculated based on our internal credit rating of Northern Oil&Gas, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Northern Oil&Gas.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NOG stock the variable cost ratio is equal to 258.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NOG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7.6% for Northern Oil&Gas.

Corporate tax rate of 27% is the nominal tax rate for Northern Oil&Gas. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NOG stock is equal to 1.6%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NOG are equal to 202.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Northern Oil&Gas operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NOG is equal to -44.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-491 million for Northern Oil&Gas - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 62 million for Northern Oil&Gas is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Northern Oil&Gas at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Northern Oil and Gas: 2Q Earnings Snapshot   [06:19AM  Associated Press]
▶ 5 Breakout Stocks Offering Stellar Returns   [Jul-27-18 08:41AM  Zacks]
▶ 5 Knockout Stocks to Play the World Cup Fever   [Jun-28-18 12:50PM  InvestorPlace]
▶ Here's Why You Should Buy Northern Oil Stock   [Jun-22-18 04:58PM  Zacks]
▶ Northern Oil and Gas, Inc. Announces Further Debt Reduction   [Jun-12-18 09:00AM  Business Wire]
▶ 7 Cheap Stocks With Strong Technical Signals   [May-07-18 03:41PM  InvestorPlace]
▶ Northern Oil and Gas: 1Q Earnings Snapshot   [06:37AM  Associated Press]
▶ New Strong Buy Stocks for March 22nd   [Mar-22-18 10:29AM  Zacks]
▶ Northern Oil and Gas, Inc. to Host Earnings Call   [Feb-23-18 08:00AM  ACCESSWIRE]
▶ Northern Oil and Gas reports 4Q loss   [Feb-22-18 08:01PM  Associated Press]
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