Northern's (NOG) Q2 Earnings Preview: Key Things to Consider
Northern Oil and Gas NOG is set to release second-quarter results on Aug 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.54 per share on revenues of $416 million.
Let’s delve into the factors that might have influenced the oil and gas producer’s performance in the June quarter. But it’s worth taking a look at Northern Oil and Gas’ previous-quarter results first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the independent upstream operator beat the consensus mark due to growth in Permian production, which accounted for approximately 35% of volumes. Northern Oil and Gas had reported adjusted earnings per share of $1.76, beating the Zacks Consensus Estimate of $1.54. Oil and natural gas sales of $426.2 million generated by the firm also came 8.2% above the consensus mark.
NOG beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, resulting in an earnings surprise of 4.1%, on average. This is depicted in the graph below:
Northern Oil and Gas, Inc. Price and EPS Surprise
Northern Oil and Gas, Inc. price-eps-surprise | Northern Oil and Gas, Inc. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the second-quarter bottom line has been revised 6.1% downward in the past seven days. The estimated figure indicates a 10.5% fall year over year. Meanwhile, the Zacks Consensus Estimate for revenues suggests a 24.3% increase from the year-ago period.
Factors to Consider
Northern Oil and Gas is expected to have benefited from higher output during the quarter. Considering NOG’s impressive production profile from some of the leading basins of the United States, our expectation for the company’s second-quarter volume is pegged at some 90,577 barrels of oil equivalent per day (Boe/d), up 24.6% from the year-ago quarter’s level of 72,689 Boe/d.
However, lower oil and natural gas realizations are likely to have hurt NOG’s revenues and cash flows. Going by our model, the company’s second-quarter average crude sales price is pegged at $71.60 per barrel — significantly down from the year-earlier level of $106.26. Additionally, our projection for the average realized natural gas prices reflects a 77.5% year-over-year drop.
On a further bearish note, the increase in Northern Oil and Gas’ costs might have dented its to-be-reported bottom line. In particular, our estimate for production cost is pegged at $75.6 million, indicating a 16.9% increase from $64.6 million reported in the year-ago quarter. Our model also predicts the company’s total expenses to rise 30.7% year over year to $223.9 million. The upward cost trajectory could be attributed to the ongoing inflationary environment and tight labor market.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Northern Oil and Gas is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -7.52%.
Zacks Rank: NOG currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Northern Oil and Gas, here are some firms from the energy space that you may want to consider on the basis of our model:
MPLX LP MPLX has an Earnings ESP of +1.01% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
MPLX has a trailing four-quarter earnings surprise of 5.9%, on average. Over the past 60 days, the partnership saw the Zacks Consensus Estimate for 2023 move up 2%. Valued at around $35.6 billion, the partnership has gained 8.6% in a year.
Murphy USA MUSA has an Earnings ESP of +0.20% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 2.
Murphy USA has a trailing four-quarter earnings surprise of 15.6%, on average. Over the past 60 days, MUSA saw the Zacks Consensus Estimate for 2023 move up 7.5%. Valued at around $6.7 billion, the company has gained 5.2% in a year.
Pembina Pipeline Corporation PBA has an Earnings ESP of +1.48% and a Zacks Rank #2. The firm is scheduled to release earnings on Aug 3.
Pembina Pipeline beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two. It has a trailing four-quarter earnings surprise of 30.7%, on average. Valued at around $17.3 billion, PBA has lost 16.5% in a year.
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Northern Oil and Gas, Inc. (NOG) : Free Stock Analysis Report
