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Investing.com -- Fitch Ratings has upgraded Northern Oil and Gas, Inc.’s Long-Term Issuer Default Rating to ’BB-’ from ’B+’ with a Stable Outlook.
The rating agency affirmed the company’s reserve-based lending credit facility at ’BB+’ with a Recovery Rating of ’RR1’, while also affirming the senior unsecured notes and convertible notes at ’BB-’ with a revised Recovery Rating of ’RR4’ from ’RR3’.
The upgrade reflects Fitch’s expectation that Northern Oil and Gas will continue credit-friendly merger and acquisition activity, generate positive free cash flow backed by a strong hedging program, and reduce gross debt, leading to improved credit metrics and liquidity.
Northern Oil and Gas has funded its acquisitions through April 2025 using a mix of common equity, cash on hand, and modest borrowings under its reserve-based lending facility. In June 2025, the company increased its senior unsecured convertible notes to $700 million from $500 million to term out part of its RBL borrowings.
Fitch views the company’s recent joint venture acquisitions positively, noting they provide more involvement with proven operators and visibility into future development opportunities. These five acquisitions - MPDC, Forge, Novo, Point, and XCL - now account for approximately 25% of 2025 production.
The rating agency forecasts positive free cash flow of approximately $100 million in 2025 and $70 million in 2026, assuming West Texas Intermediate oil prices of $65/bbl and $60/bbl, respectively. Fitch expects EBITDA leverage to moderate to around 2.0x over the forecast period.
Northern Oil and Gas has increased its quarterly dividend from $0.03/share in the second quarter of 2021 to $0.45/share in the first quarter of 2025. The company has also completed share buybacks of approximately $50 million in the first half of 2025 and $94 million in 2024.
As a non-operator exploration and production company focused in the Permian, Williston, Appalachia, and Uinta Basins, Northern Oil and Gas reported first quarter 2025 production of approximately 135 thousand barrels of oil equivalent per day following recent acquisitions.
The company maintains a strong hedging program with about 70% of oil production hedged at an average price of $71.69/bbl for the remainder of 2025 and around 60% of gas production hedged at an average price of $3.81/MMBtu.
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