On Monday, RBC Capital maintained its Sector Perform stock rating for Northern Oil and Gas (NYSE: NOG) with a steady price target of $45.00. The firm's analysis points to the company's latest partnership, which was announced last week, as a strategic move to expand its presence in the Appalachian region and bolster its natural gas portfolio through 2025.
The undisclosed partnership is expected to be modestly beneficial to Northern Oil and Gas's cash flow per share (CFPS) by approximately 2% for the year 2025. However, RBC Capital notes that free cash flow (FCF) projections for the next year have been adjusted downward. This is attributed to the timing of cash flow advantages, which are anticipated to materialize beyond the upcoming year, while capital expenditures are incurred during the drilling and completion (D&C) phase.
Despite the near-term reduction in FCF, RBC Capital forecasts an 8% increase in FCF for Northern Oil and Gas in 2026. The firm's financial models incorporate the effects of the new partnership solely for the year 2025, based on the announcement indicating that the partnership's activities are confined to that year.
The partnership's details, including the identity of the partner and specific financial terms, remain undisclosed. RBC Capital's analysis, therefore, relies on general economic assumptions for the Appalachian region and assumes a consistent rate of well completions throughout the year.
Northern Oil and Gas's strategic partnership is aimed at enhancing its natural gas exposure and operational footprint in a key energy-producing region. RBC Capital's maintained price target reflects a steady outlook for the company's stock amidst these developments.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.