Northern Oil & Gas (NOG) finally got some love from analysts late last week. Down some 40% from its highs earlier in the year, NOG was upgraded from "Accumulate" to "Buy" at Global Hunter Securities. It also upped its price target to $27 a share. This fast growing Bakken producer is giving long term growth investors a solid entry point at current levels.
Northern Oil and Gas is an independent energy company, engages in the acquisition, exploration, development, and production of crude oil and natural gas properties primarily in the Bakken and Three Forks formations within the Williston Basin in North Dakota and Montana.
Six reasons NOG has solid upside ahead of it at $16 a share:
- The stock is selling at the very bottom of its five year valuation range based on P/E, P/CF, P/S and P/B.
- In addition to Global Hunter Securities, Northern was reiterated as a "Buy" by Wunderlich this week. The median price target by the 11 analysts that cover the stock is $27 a share, some 60% above its current price.
- Revenues are exploding at Northern. It is on track to have at least an 80% sales increase in FY2012 and analysts have it pegged for at least another 40% revenue increase in FY2013.
- For an investor that believes in the continuing success of the Bakken, NOG makes an ideal investment vehicle. It has over 170,000 acres in the Bakken and Three Forks regions, increased production by over 100% in 2011 and had a 100% success rate for the 354 wells it completed in 2011.
- Around 90% of Northern's production and reserves are oil based and the majority of production is hedged through 2013. In addition, the company has increased production from just under 51,000 barrels total in FY2008 to almost 1.8mm barrels in FY2011.
- NOG has solid long term technical support at just under these levels, so downside should be limited (See Chart).