Updates
May 13, 2011: On wives, friends, and beauticians.
March 29, 2011: NOG bounces back.
March 28, 2011: NOG provides operational update. Responds to recent "bear raid."
March 28, 2011: SeekingAlpha.com replies. All smoke, no gun.
March 24, 2011: NOG has leveled off; now going back up.
March 24, 2011: Bakken Shale Discussion Group weighs in.
March 24, 2011: My hunch -- a lot of folks are waiting for NOG to level off and then they will buy back in. Traders only make money with volatility. This will be very interesting to follow.
March 24, 2011: The Wall Street Journal weighs in. Be sure to read the comments.
March 23, 2011: Motley Fool says "no" to NOG.
March 23, 2011: It appears the article has its intended effects. It will be interesting to see how this all plays out. I would think that if the stock is oversold, the company would go back in and aggressively buy back stock, or there would be increased insider buying. If not, one has to wonder how relevant the research is. Regardless, it was good to see this happen: it keeps folks like me who are inappropriately exuberant about the Bakken grounded, cautious, and diversified. The next three quarters will be the most important quarters in NOG's relatively young history as a billion-dollar market cap company. My enthusiasm for NOG's unique business model has not waned one iota.
March 22, 2011, 2200 hrs: here's another blog that has piggy-backed unto the original Street Sweeper blog questioning the valuation of NOG, and shorting the stock. The blog appears to be coming out of Australia, and it sounds like in addition to questioning NOG, he questions the entire Bakken. Again, I am glad the article on NOG came out: it keeps me grounded, cautious, and diversified. Also, if NOG pulls back significantly, it provides another opportunity to accumulate more shares.
ORIGINAL POST
Someone alerted me to this 2-part story regarding the valuation of NOG:
http://thestreetsweeper.org/undersurveillance.html?i=1665
http://thestreetsweeper.org/undersurveillance.html?i=1671
The story was picked up by a contributor to SeekingAlpha.com and can be found here:
http://seekingalpha.com/article/259340-will-growth-spurt-last-for-northern-oil-and-gas?source=yahoo
I have always been a fan of NOG's business model. It will be interesting to see how this plays out.
The contention is that NOG is not accounting for the huge decline rates in Bakken wells. The articles do not discuss the effect $100 oil has on the company, or the valuation. I would suspect many of these companies are being valuated on $60 or $75 oil at a time when more and more pundits see $100 oil for the foreseeable future.
Update: for traders, this may be an opportunity to sell and buy back in when NOG settles at its new "floor."
For long term investors, this could be typical volatility that will work itself out over time.
