Intrinsic value of Northern Oil&Gas - NOG

Previous Close

$2.80

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.80

 
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 0001), $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 0.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.00
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
Revenue, $m
  216
  222
  230
  238
  247
  256
  266
  277
  289
  301
  314
  328
  342
  357
  374
  391
  409
  428
  448
  469
  492
  515
  540
  566
  593
  622
  653
  684
  718
  753
Variable operating expenses, $m
  557
  575
  594
  615
  638
  662
  689
  716
  746
  778
  811
  847
  884
  924
  966
  1,010
  1,057
  1,106
  1,158
  1,213
  1,271
  1,331
  1,395
  1,463
  1,533
  1,608
  1,686
  1,768
  1,855
  1,946
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
  557
  575
  594
  615
  638
  662
  689
  716
  746
  778
  811
  847
  884
  924
  966
  1,010
  1,057
  1,106
  1,158
  1,213
  1,271
  1,331
  1,395
  1,463
  1,533
  1,608
  1,686
  1,768
  1,855
  1,946
Operating income, $m
  -342
  -352
  -364
  -377
  -391
  -406
  -422
  -439
  -457
  -477
  -497
  -519
  -542
  -566
  -592
  -619
  -648
  -678
  -710
  -743
  -779
  -816
  -855
  -897
  -940
  -986
  -1,034
  -1,084
  -1,137
  -1,193
EBITDA, $m
  -280
  -289
  -299
  -309
  -320
  -333
  -346
  -360
  -375
  -391
  -407
  -425
  -444
  -464
  -485
  -507
  -531
  -556
  -582
  -609
  -638
  -669
  -701
  -735
  -770
  -808
  -847
  -888
  -932
  -977
Interest expense (income), $m
  60
  77
  36
  37
  39
  41
  42
  44
  46
  49
  51
  54
  56
  59
  62
  65
  69
  72
  76
  80
  84
  88
  93
  98
  103
  108
  114
  120
  126
  133
  140
Earnings before tax, $m
  -418
  -388
  -402
  -416
  -432
  -449
  -466
  -486
  -506
  -528
  -551
  -575
  -601
  -628
  -657
  -688
  -720
  -754
  -790
  -827
  -867
  -909
  -953
  -999
  -1,048
  -1,100
  -1,154
  -1,210
  -1,270
  -1,333
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
  -418
  -388
  -402
  -416
  -432
  -449
  -466
  -486
  -506
  -528
  -551
  -575
  -601
  -628
  -657
  -688
  -720
  -754
  -790
  -827
  -867
  -909
  -953
  -999
  -1,048
  -1,100
  -1,154
  -1,210
  -1,270
  -1,333

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
  651
  672
  695
  720
  746
  775
  805
  838
  872
  909
  948
  990
  1,034
  1,080
  1,129
  1,181
  1,236
  1,293
  1,354
  1,418
  1,485
  1,557
  1,631
  1,710
  1,793
  1,880
  1,971
  2,068
  2,169
  2,275
Adjusted assets (=assets-cash), $m
  651
  672
  695
  720
  746
  775
  805
  838
  872
  909
  948
  990
  1,034
  1,080
  1,129
  1,181
  1,236
  1,293
  1,354
  1,418
  1,485
  1,557
  1,631
  1,710
  1,793
  1,880
  1,971
  2,068
  2,169
  2,275
Revenue / Adjusted assets
  0.332
  0.330
  0.331
  0.331
  0.331
  0.330
  0.330
  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
  438
  452
  467
  484
  502
  521
  541
  563
  587
  611
  638
  666
  695
  726
  759
  794
  831
  870
  911
  954
  999
  1,047
  1,097
  1,150
  1,206
  1,264
  1,326
  1,391
  1,459
  1,530
Working capital, $m
  -56
  -58
  -60
  -62
  -64
  -67
  -69
  -72
  -75
  -78
  -82
  -85
  -89
  -93
  -97
  -102
  -106
  -111
  -117
  -122
  -128
  -134
  -140
  -147
  -154
  -162
  -170
  -178
  -187
  -196
Total debt, $m
  473
  491
  512
  534
  558
  584
  611
  640
  671
  705
  740
  777
  817
  858
  903
  949
  998
  1,050
  1,105
  1,163
  1,223
  1,287
  1,355
  1,425
  1,500
  1,578
  1,661
  1,747
  1,838
  1,934
Total liabilities, $m
  586
  605
  625
  648
  671
  697
  725
  754
  785
  818
  853
  891
  930
  972
  1,016
  1,063
  1,112
  1,164
  1,219
  1,276
  1,337
  1,401
  1,468
  1,539
  1,613
  1,692
  1,774
  1,861
  1,952
  2,048
Total equity, $m
  65
  67
  69
  72
  75
  77
  81
  84
  87
  91
  95
  99
  103
  108
  113
  118
  124
  129
  135
  142
  149
  156
  163
  171
  179
  188
  197
  207
  217
  228
Total liabilities and equity, $m
  651
  672
  694
  720
  746
  774
  806
  838
  872
  909
  948
  990
  1,033
  1,080
  1,129
  1,181
  1,236
  1,293
  1,354
  1,418
  1,486
  1,557
  1,631
  1,710
  1,792
  1,880
  1,971
  2,068
  2,169
  2,276
Debt-to-equity ratio
  7.260
  7.310
  7.370
  7.420
  7.480
  7.530
  7.590
  7.640
  7.700
  7.750
  7.800
  7.850
  7.900
  7.950
  7.990
  8.040
  8.080
  8.120
  8.160
  8.200
  8.240
  8.270
  8.300
  8.340
  8.370
  8.400
  8.420
  8.450
  8.480
  8.500
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
  -418
  -388
  -402
  -416
  -432
  -449
  -466
  -486
  -506
  -528
  -551
  -575
  -601
  -628
  -657
  -688
  -720
  -754
  -790
  -827
  -867
  -909
  -953
  -999
  -1,048
  -1,100
  -1,154
  -1,210
  -1,270
  -1,333
Depreciation, amort., depletion, $m
  62
  64
  66
  68
  71
  73
  76
  79
  83
  86
  90
  94
  98
  102
  107
  112
  117
  123
  128
  134
  141
  147
  155
  162
  170
  178
  187
  196
  205
  216
Funds from operations, $m
  -357
  -325
  -336
  -348
  -361
  -375
  -390
  -406
  -423
  -442
  -461
  -481
  -503
  -526
  -550
  -576
  -603
  -631
  -661
  -693
  -726
  -762
  -799
  -837
  -878
  -921
  -967
  -1,014
  -1,064
  -1,117
Change in working capital, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
Cash from operations, $m
  -355
  -323
  -334
  -346
  -359
  -373
  -388
  -403
  -420
  -438
  -458
  -478
  -499
  -522
  -546
  -571
  -598
  -626
  -656
  -688
  -721
  -756
  -792
  -831
  -871
  -914
  -959
  -1,006
  -1,056
  -1,108
Maintenance CAPEX, $m
  -60
  -62
  -64
  -66
  -68
  -71
  -73
  -76
  -79
  -83
  -86
  -90
  -94
  -98
  -102
  -107
  -112
  -117
  -123
  -128
  -134
  -141
  -147
  -155
  -162
  -170
  -178
  -187
  -196
  -205
New CAPEX, $m
  -13
  -14
  -15
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -56
  -59
  -62
  -65
  -68
  -72
Cash from investing activities, $m
  -73
  -76
  -79
  -83
  -86
  -90
  -94
  -98
  -102
  -108
  -112
  -118
  -124
  -129
  -135
  -142
  -149
  -156
  -164
  -171
  -179
  -189
  -197
  -208
  -218
  -229
  -240
  -252
  -264
  -277
Free cash flow, $m
  -428
  -399
  -413
  -428
  -445
  -463
  -481
  -502
  -523
  -546
  -570
  -596
  -623
  -651
  -681
  -713
  -747
  -782
  -820
  -859
  -900
  -944
  -990
  -1,038
  -1,089
  -1,142
  -1,199
  -1,258
  -1,320
  -1,385
Issuance/(repayment) of debt, $m
  -537
  19
  20
  22
  24
  26
  27
  29
  31
  33
  35
  37
  40
  42
  44
  47
  49
  52
  55
  58
  61
  64
  67
  71
  74
  78
  82
  87
  91
  96
Issuance/(repurchase) of shares, $m
  974
  390
  404
  419
  434
  451
  469
  489
  509
  531
  555
  579
  605
  633
  662
  693
  725
  760
  796
  834
  874
  916
  961
  1,007
  1,057
  1,108
  1,163
  1,220
  1,280
  1,343
Cash from financing (excl. dividends), $m  
  437
  409
  424
  441
  458
  477
  496
  518
  540
  564
  590
  616
  645
  675
  706
  740
  774
  812
  851
  892
  935
  980
  1,028
  1,078
  1,131
  1,186
  1,245
  1,307
  1,371
  1,439
Total cash flow (excl. dividends), $m
  9
  11
  12
  13
  13
  14
  15
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
  44
  47
  49
  51
  54
Retained Cash Flow (-), $m
  -974
  -390
  -404
  -419
  -434
  -451
  -469
  -489
  -509
  -531
  -555
  -579
  -605
  -633
  -662
  -693
  -725
  -760
  -796
  -834
  -874
  -916
  -961
  -1,007
  -1,057
  -1,108
  -1,163
  -1,220
  -1,280
  -1,343
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
  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 available for distribution, $m
  -965
  -380
  -392
  -406
  -421
  -437
  -454
  -472
  -492
  -513
  -535
  -558
  -583
  -609
  -637
  -667
  -698
  -730
  -765
  -801
  -840
  -880
  -923
  -967
  -1,014
  -1,064
  -1,116
  -1,171
  -1,229
  -1,289
Discount rate, %
  14.60
  15.33
  16.10
  16.90
  17.75
  18.63
  19.57
  20.54
  21.57
  22.65
  23.78
  24.97
  26.22
  27.53
  28.91
  30.35
  31.87
  33.46
  35.14
  36.89
  38.74
  40.68
  42.71
  44.84
  47.09
  49.44
  51.91
  54.51
  57.23
  60.10
PV of cash for distribution, $m
  -842
  -286
  -251
  -217
  -186
  -157
  -130
  -106
  -85
  -67
  -51
  -38
  -28
  -20
  -14
  -10
  -6
  -4
  -3
  -2
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  7.1
  1.0
  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 19.7
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 $209.319669 million for the last fiscal year's total revenue generated by Northern Oil&Gas. The default revenue input number comes from 0001 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 3% 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 14.6%, 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 258.4%.

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 0%.

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 203.2%.

Life of production assets of 7.1 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 -26%. 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 - $-490.84055 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 296.693 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 $0.8 billion.

RELATED COMPANIES Price Int.Val. Rating
OAS Oasis Petroleu 8.49 2.65  str.sell
AXAS Abraxas Petrol 1.75 0.16  str.sell
CLR Continental Re 48.00 3.41  str.sell
WLL Whiting Petrol 33.27 10.77  str.sell
EOG EOG Resources 101.59 306.71  str.buy
BCEI Bonanza Creek 27.51 0.23  str.sell
NFX Newfield Explo 19.71 1.76  str.sell
MRO Marathon Oil 17.15 3.39  str.sell

COMPANY NEWS

▶ Northern Oil and Gas: 3Q Earnings Snapshot   [05:50PM  Associated Press]
▶ Oil Prices Touch 2-Month High: 5 Best Picks   [Sep-20-18 08:09AM  Zacks]
▶ Best Energy ETFs and Stocks of Last Week   [Aug-27-18 01:50PM  InvestorPlace]
▶ Northern Oil and Gas: 2Q Earnings Snapshot   [06:19AM  Associated Press]
▶ 5 Breakout Stocks Offering Stellar Returns   [Jul-27-18 08:41AM  Zacks]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.