Northern Oil Gas in spotlight: Can earnings show recovery?

Northern Oil & Gas Inc. reports first-quarter results Tuesday after market close, with investors focused on whether the non-operated oil producer can demonstrate its Bakken production recovery is gaining traction even as persistently negative natural gas prices weigh on its Permian assets.

Analysts expect earnings of 74 cents per share on revenue of $521.3 million, according to consensus estimates. That would mark a sequential decline from the fourth quarter, when the company earned 83 cents per share on revenue of $610.2 million. Year-over-year comparisons show steeper pressure, with earnings forecast to fall 44% and revenue down 13%.

Analysts rate the stock a Buy with a mean price target of $35.67, implying 33% upside from the current $26.87 price. However, sentiment has deteriorated heading into the report. EPS estimates have declined 21% over the past two months and dropped another 9% in the past week. Revenue estimates have remained more stable, slipping less than 2% over both periods.

The $2.8 billion company trades at a forward price-to-earnings ratio of 8.84, down sharply from its trailing P/E of 73, reflecting expectations for improved profitability ahead despite near-term headwinds.

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Production recovery in the Bakken will be critical, with analysts estimating Northern Oil had curtailed approximately 3.5 thousand barrels of oil equivalent per day due to oil price weakness early in the year. BofA Securities notes that volumes began returning in March, "with April representing the first full month of contribution"—a full quarter earlier than previously expected.

The Permian Basin presents a contrasting challenge. Waha natural gas prices have fluctuated between negative $6 and negative $8 per million British thermal units over the past week amid pipeline flow restrictions. Northern Oil has noted "Permian curtailments driven by weak Waha pricing," which analysts "continue to expect to persist".

Capital allocation and leverage will also be in focus. The company raised approximately $228 million through an equity offering in March and closed its Ohio Utica acquisition in February. BofA Securities now expects leverage to reach 1.5x by year-end 2026, down from a prior 1.8x estimate, helped by the equity issuance and higher oil prices.

Last quarter’s results provided a mixed picture. While the company missed earnings expectations by 14%, it surprised positively on revenue with a 13% beat. The question now is whether improving oil prices and returning Bakken volumes can offset natural gas headwinds and drive better-than-feared results.

With six of ten analysts rating the stock a Buy and recent price target adjustments pointing in both directions, Tuesday’s report will test whether Northern Oil’s non-operated model can navigate the current commodity environment while maintaining its capital discipline and shareholder returns.