Opinion on  Northern Oil & Gas Inc (NOG)
NOG going to $24

Northern Oil and Gas is an exploration stage company that is involved in the acquisition, exploration, exploitation, development, and production of oil and natural gas properties primarily in the Rocky Mountain Region of the United States. It owns various oil leases covering approximately 20,000+ acres in Sheridan County, Montana.   The company also holds approximately 62,000 net mineral acres in the Bakken region.

Northern Oil's (NOG) core focus is the Middle Bakken resource formation in the Williston Basin of Montana and North Dakota.  The company controls a significant leasehold position in Mountrail County, North Dakota, directly adjacent to EOG Resources' Parshall Field which has yielded a large amount of output. The Parshall Field is the largest Bakken reservoir found to date.

As of June  Northern and its partners had completed four wells, most of which were put online in the first quarter. Northern Oil realized an average sale price of $92.10/bbl of oil during the quarter. Since the end of the quarter, Northern Oil has added production from two additional Bakken wells, is completing two additional Bakken wells and is currently drilling six Bakken wells. Northern is also participating in an additional well in Sheridan County, Montana, targeting the Red River formation.

We expect that NOG will be involved in approximately 15 wells by end of 2008 and 30 by 2009.  Given the success of other players such as EOG in close proximity to the NOG assets, we are confident that a good number of these will be producing wells.

In addition, Northern further strengthened its cash position by accelerating the exercise of outstanding warrants held by institutional investors in late April, increasing the company's cash position by nearly $10 million.   This should help fund operations for the next 6-12 months.

As of this posting, the market cap of approx $450 million,  they would need a value of approximately $7000 leased per acre on their land holdings to justify the market cap.     We see the number of acres leased and cost per acre will continue to climb as well as incremental oil share revenue which could be ramping up by the end of 2008.    I wouldn't be surprised if this hits $35 by 2009 but for now I believe $24 is very achievable in the next 6 months.

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