Northern Oil and Gas (NYSE: NOG) is a hyper growth small capitalization exploration and production company with a fairly unique non-operated business model. The company also carries ample cash for any contingencies and no debt.
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Williston Basin

The main area that Northern Oil and Gas focuses on is the Williston Basin, where the company targets the Bakken and Three Forks formation. The company has exposure to 115,000 net acres that are prospective for these formations, and it has been involved in more than 300 wells to date in the Williston Basin.

Northern Oil and Gas produced an average of 2,000 barrels of oil equivalent (BOE) per day in the second quarter of 2010, and the company expects to grow that production by 30-35% on a sequential basis in Q3 2010.

Business Model

Northern Oil and Gas participates only on a non-operated basis in wells in the Williston Basin. The company believes that this is the superior business model, as it only has to pay for direct drilling, development and operating costs and avoids paying expensive overhead.

Northern Oil and Gas has small working interests in hundreds of wells, and the company partners with some of the biggest and well-known players in the Williston. One recent well for the company included a 10% working interest in a well drilled by EOG Resources (NYSE: EOG) in Mountrail County that targeted the Three Forks formation. This well produced an average of 931 BOE per day during the first 100 days of production.

Continental Resources (NYSE: CLR) was the operator of four wells that Northern Oil and Gas participated in during Q2 2010. These wells are located in Divide County, and Northern Oil and Gas owned working interests ranging from 9-37%.

Balance Sheet

Northern Oil and Gas is also fiscally sound and has $65 million in cash and no debt on its balance sheet. This may provide protection if the economy contracts again and oil prices fall.

Other Players

Other operators in the Williston Basin that are targeting the Bakken and Three Forks formations include Oasis Petroleum (NYSE: OAS), with approximately 292,000 net acres as of the end of 2009.

Brigham Exploration (Nasdaq: BEXP) also has extensive acreage in the Williston Basin in both North Dakota and Montana. The company holds the record for the most productive Bakken well drilled to date, which produced at a peak 24-hour rate of 5,133 BOE per day.

Moving Rapidly Forward In Williston Basin

Northern Oil and Gas is moving rapidly forward with the non-operated development of the Bakken and Three Forks formations in the Williston Basin. The company is one of the fastest-growing exploration and production companies and is also debt free. (For related reading, see Peak Oil: What To Do When The Well Runs Dry.)

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Tickers in this Article: NOG, CLR, BEXP, OAS, EOG

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