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Buyout of Williston Basin Assets to Aid Northern Oil and Gas

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Northern Oil and Gas, Inc.NOG recently agreed to buy some significant properties located in Williston Basin, ND from Pivotal Petroleum Partners, which focuses on non-operating stakes in various prolific basins

The deal incorporates several active wells, which produces more than 4,100 barrels of oil equivalent per day (Boe/d). Northern Oil and Gas is expected to pay $68.4 million in cash and 25.75 million shares for the assets. The deal, which has an effective date of Jun 1, is estimated to close within two months.

Acquisition Rationale

Northern Oil and Gas expects the acquisition to improve the cash flow situation in the coming quarters. In the twelve months ending Mar 31, the company faced a cash flow shortfall (negative free cash flow) of 68 million. Per the company, the acquisition is anticipated to generate around $56 million of operating cash flow in the next 12 months. Moreover, with the closing of the deal, cash flow is promptly expected to become positive.

The move can help the company reduce its debt burden, which is currently at 199.3% (total debt-to-capital). Additionally, Northern Oil and Gas expects the acquisition to help improve earnings per share through 2020. Notably, the company is expected to report second-quarter earnings on Aug 14. The Zacks Consensus Estimate for earnings is pegged at 7 cents. Moreover, for the whole year, earnings per share is expected to surge 164.3% to 37 cents.

Price Performance

Minnetonka, MN-based Northern Oil and Gas has gained 200% in the past year compared with 18.2% rally of the industry it belongs to.

Zacks Rank and Other Stocks to Consider

Currently, Northern Oil and Gas sports a Zacks Rank #1 (Strong Buy). Investors interested in the Energy sector can also opt for other top-ranked stocks like BP p.l.c. BP , EOG Resources, Inc. EOG and Delek US Holdings, Inc. DK , each sporting a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

London-based BP is an integrated energy company. The company's top line for 2018 is anticipated to improve 12.6% year over year, while its bottom line is expected to increase 77.7%.

Houston, TX-based EOG Resources is an upstream energy company. The company's top line for 2018 is anticipated to improve 41.4% year over year. In the last four reported quarters, the company recorded an average positive earnings surprise of 30.1%.

Brentwood, TN-based Delek is an energy company. The company's top line for 2018 is likely to improve 39.3% year over year, while its bottom line is expected to increase more than 270%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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