Research Update: Northern Oil and Gas Inc. Downgraded To ?CCC+? From ?B-? On Lower Commodity Prices; Outlook Negative

In our view, the recent collapse in commodity prices is likely to hurt U.S.–based crude oil and natural exploration and production (E&P) company Northern Oil and Gas Resources' liquidity, given the risk of a reduction to its reserve-based lending (RBL) facility's size. In addition, the rating action reflects weak capital market conditions, current debt trading levels as well as Northern Oil's history of distressed exchanges. As a result, we are lowering our issuer credit rating on the company to 'CCC+' from 'B-'. The outlook is negative. The negative outlook reflects the risk that liquidity could become less than adequate if the company's RBL facility size were reduced. We expect average funds from operations (FFO) to debt in the high 20%

...- In our view, the recent collapse in commodity prices is likely to hurt U.S.¡based crude oil and natural exploration and production (E&P) company Northern Oil and Gas Resources' liquidity, given the risk of a reduction to its reserve-based lending (RBL) facility's size. - In addition, the rating action reflects weak capital market conditions, current debt trading levels as well as Northern Oil's history of distressed exchanges. - As a result, we are lowering our issuer credit rating on the company to '###+' from 'B-'. The outlook is negative. - The negative outlook reflects the risk that liquidity could become less than adequate if the company's RBL facility size were reduced. We expect average funds from operations (FFO) to debt in the high 20% to low 30% over the next two years, supported by the company's strong hedging in 2020....

Research Update