Boaty and I have been looking at stocks all day and here's our top pick:
🚢 STP Trade Idea: Northern Oil & Gas (NOG)
We are adding a new Short-Term Portfolio hedge-for-our-hedges position in Northern Oil & Gas. NOG is a real, cash-generating oil-and-gas investment platform trading at a very low valuation, with a well-covered dividend, substantial free-cash-flow potential, and meaningful short interest that can add fuel if energy prices and sentiment remain supportive.
This is not a bet that NOG must rally next week. It is a long-duration, premium-financed position designed to make money if NOG goes up, stays in a profitable range, or even drifts lower toward a price where we would be happy to own the shares.
Why NOG
NOG is the largest publicly traded non-operated oil-and-gas investment platform. Rather than running every drilling operation itself, NOG owns interests in wells and acreage alongside experienced operators across several major North American basins. It provides capital, participates in production and cash flow and avoids the large operating overhead of owning every rig, field crew, and drilling organization itself.
The company’s recent numbers are strong:
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- Q2 revenue was about $745 million, above the prior year.
- Free cash flow was $159 million in the quarter, up more than 400% from Q1.
- Production guidance remains 143,000–148,000 BOE/d for 2026.
- Management expects approximately $375–$500 million of 2026 free cash flow while sustaining production.
- The quarterly dividend is $0.45 per share, or $1.80 annualized, and management says it is covered multiple times by expected free cash flow.
- NOG reported more than $1 billion of liquidity, including $975 million of committed borrowing capacity, and is targeting net debt/adjusted EBITDA below 1.5x by year-end.
NOG is around $23–$24, well below its $31.17 52-week high. It has produced substantial cash flow through the recent energy cycle, and we are comfortable with the idea of owning it around $20 if the market gives us that opportunity.
