NOG

[AussieTrader]

NOG

Profile:

Northern Oil and Gas, Inc., formerly Kentex Petroleum, Inc., is an independent energy company engaged in the acquisition, exploration, exploitation and development of oil and natural gas properties, and has focused its activities primarily on projects based in the Rocky Mountain Region of the United States, specifically the Williston Basin. As of March 31, 2008, the Company has completed five successful discoveries, consisting of four targeting the Bakken formation and one targeting a Red River Structure. During the fiscal year ended December 31, 2007, it focused its operations on acquiring leaseholds and drilling exploratory and developmental wells primarily in the Rocky Mountain Region of the United States.
Market Cap: $406.5M
Sector: Energy:  Oil and Gas Operations
Website: http://www.northernoil.com

Trading Idea:

With continued high energy prices probably here to stay and the overall stock market in bear market action I want to add our exposure to a) Energy related stocks and b) Energy related stocks drilling and exploring in the US. Together with GST it will give us exposure to small cap energy explorers who are starting to get drill results and move from start up phase to revenue producing phase. NOG fits this thought process well.

Technical Analysis:

After making all time highs around $16 in June NOG has been in a relatively controlled pullback or consolidation phase finding strong support in the May / June breakout area ($10 to $12 zone). Since finding that support it has reacted nicely to breakout above the pullback descending resistance setting up a potential continuation movement to again challenge the highs.

Fundamentals:

As of Q1 2008 NOG had tiny revenues. They lost $187K or $0.01 per share in the quarter from their operations, however this is not a financials now position. The reasoning for buying NOG is based on their growth potential from their acquisition and drilling of oil rich acreage partrticularly the much hyped Bakken fields. Since end Q1 they have moved more wells in production which should start to show revenues in the Q2 period onwards (Q1 had only small oil revenues right at the quarters end). NOG are aggressively expanding the acreage they own / have drilling rights to and have some significant partnerships with experienced drilling operators such as Brigham Exploration to help maximize their opportunities. I am sure there will be further dilution to help fund expansion plans, but NOG are quite well established with some fields already so they present a good mix of risk / reward as they can show revenue ramping now, healthy ownership of valuable acreage and not just a future promise.

This play is not without speculative risk, but I think NOG is positioned in the right sector, doing the right type of things, at the right time.

We will introduce a stop probably at the next update.

If interested, you can read their Q1 results here;

http://www.sec.gov/Archives/edgar/data/1104485/000110448508000027/form10q.htm

Trading Plan:

Buy NOG at or around the open

[AussieTrader]

Update:

Technically NOG consolidated its position Monday following the support it found in the $11 area. Both volume and price range (difference between high and low) were low which is a good sign in its current pattern.

Now a word of caution, we are entering Q2 earns season, and a relatively volatile stock such as NOG can have significant reactions in this period as well to specific news related items. Unless some external catalyst corrupts the NOG price pattern we will continue holding through earnings because that is the only way to get maximum benefit from these sort of positions. NOG will release earnings probably early to mid August. My expectation is that between then and now we will see a pre earns run start to develop, with the best technical layout being not breaking to all time highs prior to earnings, but doing so on reaction to the news release.

If you like this type of play take a look at KOG Kodiak Oil and Gas. They are somewhat behind NOG in terms of drilling and revenue stream, but they are very much in the same game. Their chart set up technically is quite compelling as well. I am keeping it on close watch.

Right now I won't introduce a hard stop as you can see on the chart NOG is quite capable of putting a quick intraday low test in and then reversing upwards. I don't want our stop hit by that type of action. For now I will just guide that if NOG were to close in the low $11 to sub $11 price range the trade would be under serious review.

Trade Plan:

HOLD NOG

[AussieTrader]

Update:

NOG has disappointed me technically, failing to hold onto its breakout gains and not respecting the support levels I was hoping for.

Being down greater than 10% in just a few days indicates to me I was wrong, I am putting the trade on a very tight rein and putting a stop just below yesterdays low. With oil under further price pressure and futures indicating a weak day ahead I am not prepared to tolerate too much loss here.

Trade Plan:

Hold NOG with Stop at $10.60

[la-onda]

Northern Oil and Gas, Inc. Announces Significant Bakken Discoveries, Three Forks/Sanish Plans, and Updates Accelerated 2008 Drilling Schedule and Capital Position
Monday , July 21, 2008 08:19ET

WAYZATA, Minn., July 21 /PRNewswire-FirstCall/ -- Northern Oil and Gas, Inc. (Amex: NOG) ("Northern Oil") announced today it has recently participated in the successful completion of three wells in the emerging North Dakota Bakken play, bringing to eleven the total number of producing wells in which Northern holds an interest.

In addition, Northern holds a working interest in an additional fourteen wells that are in the drilling or completion stages and is included in nearly 70 permitted or docketed-for-permit drilling locations that are expected to drill between now and early 2009. Northern Oil controls approximately 60,000 net acres in the North Dakota Bakken play, yielding over 90 net well locations based on 640 acre drilling units. In addition, Northern controls approximately 22,000 net acres in Sheridan County, Montana and has successfully completed two wells to the Red River formation.

"Northern's first mover leasing advantage is yielding significant rewards for our stakeholders," said Northern Chief Executive Officer Michael Reger. "We continue to accelerate our participation in successful North Dakota Bakken development, providing solid production results. With over 70 permits pending, our net production should continue to grow at an increasing rate in the second half of the year."

The recently completed Johnson 33 #1H well operated by Brigham Exploration is representative of Northern's growing success in the North Dakota Bakken play. The well flowed at an early rate of 650 BOPD, with sustained production of approximately 560 BOPD. The Johnson well is located significantly north of the Parshall field, representing an important Northern extension of prolific Bakken production. Northern participated in the Johnson 33 #1H with a 16.5% Working Interest.

"With approximately 10,000 net acres near the successful Johnson 33 #1H well, Northern is well positioned to benefit from Brigham's important success," Reger said. "We expect to participate in a number of offset locations to the Johnson 33 well in the coming months." A complete review of current producing wells can be found at the conclusion of this release.

Northern is currently participating in Continental Resources' Skachenko 1-31H well in Dunn County, ND. The well is a direct offset to the Bice 1-29H, also drilled by Continental. The Bice well -- announced in late May -- is among the first Three Forks/Sanish discoveries in the region.

"Northern's first Three Forks/Sanish well is significant in that, if successful, it provides an additional opportunity to grow reserves and production in what we believe is another prolific oil resource within our leasehold position," Reger added.

On June 30, Northern called for conversion the balance of outstanding warrants issued in 2007 in conjunction with the company's private placement offering. As of today, all holders have exercised their warrants resulting in net proceeds to the company of approximately $14.5 Million.

"The conversion of the outstanding warrants provides an influx of capital that will allow us to comfortably accelerate our drilling program in the second half of the year," Reger said. "It also allows us to continue to opportunistically grow our leasehold position as we did last month with the acquisition of an additional 24,000 net acres in Dunn County, North Dakota, which was closed last week."

[AussieTrader]

Update:

Thanks for the news link La-onda. I am liking the business model NOG have here; investing in partnership approaches for drilling and acquiring interest in potential oil rich reserves of land using the financing they have in place. The Bakken fields is a well documented potentially huge oil reserve that NOG seem well placed to be able to benefit hugely from. Don't worry that oil is not at $150 a barrel it is still at a price ($the $100 area) that will make the investments NOG are making worthy when the returns start to flow (and they are starting to see that flow).

Based on potential future oil reserves that NOG have and will have access to, I see this stocks potential well into the $20 area.

That said it is still a risky and volatile play. Based on yesterdays news release, NOG opened too strong, right at the $13 resistance area selling off and then stabilizing around $12. Not great technically, but stil a  near 7% gain on the day.

We have a lot of potential here, but at the same time with oil price dropping we have negative sentiment to oil stocks. This could lead to some volatile price action.

For now I will leave the current stop in place, I do want to balance risk / reward and the reward here can be good, but based on the current market situation I must maintain discipline with stops.

Trading Plan:

Hold NOG with Stop at $10.60

[la-onda]

CEO and CFO have sold some shares, stock down to 10.61 (day low was 10.20, so we are stopped out, or?)

[AussieTrader]

Update:
We have a lot of potential here, but at the same time with oil price dropping we have negative sentiment to oil stocks. This could lead to some volatile price action.
For now I will leave the current stop in place, I do want to balance risk / reward and the reward here can be good, but based on the current market situation I must maintain discipline with stops.

We have indeed stopped out of NOG, the price action is not reflecting the opportunity (yet). The decline in the price of oil is affecting all oil related stocks and NOG is no exception.

Stopped out of NOG $10.60