Northern Oil and Gas(US:NOG) ZACKS·2024-08-29 16:37Core Viewpoint - Northern Oil and Gas has reported strong second-quarter earnings, but shares have underperformed the S&P 500, raising questions about future performance leading up to the next earnings release [1] Financial Performance - The company reported adjusted earnings per share of $1.46 for Q2 2024, exceeding the Zacks Consensus Estimate of $1.20, although it declined from $1.49 in the previous year due to lower natural gas prices and a 41.4% rise in operating expenses [2] - Oil and natural gas sales reached $561 million, surpassing the Zacks Consensus Estimate of $538 million and increasing from $416.5 million year-over-year [3] - Adjusted EBITDA was $413.1 million, up from $315.5 million in the same period last year [3] Production and Sales - Q2 production increased by 36% year-over-year to 123,342 barrels of oil equivalent per day (Boe/d), exceeding the estimate of 119,000 Boe/d [6] - Oil volume was 69,645 barrels per day, a 27% increase year-over-year, while natural gas production rose by 49% to 322,183 thousand cubic feet per day [6] - The average sales price for crude oil was $77.11 per barrel, a 9% increase from $71.03 in the prior year, but below the expected $77.8 per barrel [7] Costs and Expenses - Total operating expenses rose to $341.8 million from $241.8 million year-over-year, primarily due to increased production expenses and other costs [8] - Lease operating expenses decreased to $8.99 per Boe from $10.2 in the previous year, while depreciation expenses increased by 22% on a per-barrel basis [9] Cash Flow and Financial Position - Cash flow from operations totaled $340.5 million, with a free cash flow of $133.7 million for the quarter [9] - As of June 30, the company had $7.8 million in cash and cash equivalents and long-term debt of $1.9 billion, resulting in a debt-to-capitalization ratio of 47.5% [10] Shareholder Returns and Acquisitions - The company repurchased 895,076 shares at an average price of $38.96 per share during the quarter and announced a joint acquisition of Uinta Basin properties for $510 million [4] - A 5% increase in the quarterly dividend was proposed, raising it to 42 cents per share for Q3, along with a new $150 million share repurchase authorization [5] Market Outlook - Estimates for Northern Oil and Gas have been trending upward, with a Zacks Rank of 3 (Hold), indicating an expectation of in-line returns in the coming months [13] - The company has a strong VGM Score of A, reflecting good growth and value metrics [12]