St. Anthony: Northern Oil & Gas predicts staying power in flagging North Dakota fields

Wayzata-based Northern Oil & Gas (NOG), which operates in the oil fields of North Dakota and Montana, has the financial wherewithal to survive more rough times in the energy patch, an executive predicted last week.

Just 65 drilling rigs are operating in North Dakota, down two-thirds from a year ago. More than a dozen small drillers have folded or sold out, thanks to a 50 percent price cut over the last year to under $40 per barrel.

Even big Occidental Petroleum, the fourth-largest U.S. oil producer, said last month it would exit North Dakota.

Brandon Elliott, an executive vice president of Northern Oil, said at the Capital One Energy Conference in New Orleans, that, despite losing more than $800 million through September, Northern has ample cash and borrowings to hunker down and await better prices later in 2016 and 2017.

The price of NOG gushed above $4 per share late last week, following a big oil-stock sell-off earlier. NOG fell from $16 per share two years ago to under $3.50 early last week.

Northern may be more nimble than most industry players in the Williston Basin because it doesn't drill wells or own equipment and employ a big workforce. Northern, with a staff of about 20, invests in minority-space tracts of land within larger fields. When the majority-field owners decide to drill, Northern can opt in and incur its proportionate share of the production cost for its share of the oil and gas.

In addition to nearly $400 million in available credit and cash, Elliott said the firm, profitable from 2009 to 2014, also has lower-than-average production costs through its partnerships with leading producers on some of the best acreage in North Dakota and Montana.

Michael Reger, 40, the founder of the company that went public in 2007, became a millionaire in what has been one of Minnesota's most volatile stocks. Reger, who hails from a Montana family in the land-brokerage business, was criticized in 2011-12 for questionable accounting practices and replaced several executives, and NOG's accounting firm. And short sellers who didn't buy the optimistic story in early 2011, helped cut the price in half to $16 by 2012. Those were good oil years. Reger and NOG are still standing amid the worst oil market in 30 years.

Meanwhile, Minnetonka-based Pine River Capital, a private investment firm that operates hedge funds, this year took a 1.5 million share position in NOG, about 2.5 percent of the company. It has fallen in value from $1 billion to $275 million since 2011. Pine River's investment is believed to be a long hedge against a short position Pine River took against falling-value NOG bonds.

A Pine River spokesman said he couldn't comment on Pine River's plans or strategy with NOG or other investments.

Some analysts predict oil will drop to $30 a barrel or less. Others believe we've bottomed close to $40 per barrel. It all depends upon demand in 2016 and how much oil-and-gas production is shut down and how soon.

Pine River, formed in 2002, is best known for starting and managing mutual funds that invested in the beaten-down mortgage market and directly in housing following the Great Recession. It also runs stock portfolios for institutions and wealthy families.

His company PlugInConnect hosts the EV Sales Savvy website.So far, it lists only six recommended salespeople at Twin Cities-area dealers selling four EV makes — BMW, Chevrolet, Nissan and Tesla. In Minnesota, 12 EVs from nine automakers are available, and Kukkonen expects the list of recommended salespeople to grow.

DAVID SHAFFER

A project aimed at developing polyurethane foam that can be recycled has won a corporate-environmental competition this month at the University of Minnesota's Institute on the Environment in St. Paul.

The collaboration between the institute and Dow Chemical Co., recognizes innovation and research that promotes sustainable and potential commercial solutions to pressing economic and environmental problems. This year's award was presented to a team of four Ph.D. candidates in the University's College of Science and Engineering.

"Polyurethane foams are important materials that are utilized in a range of applications including mattresses, seat cushions and home insulation," said Tessie Panthani, one of four team members. "The majority of polyurethane foams are derived from nonrenewable resources, do not degrade … and have chemical structures that preclude being recycled."

Other team members included Alex Mannion, Debbie Schneiderman and Marie Vanderlaan.