Market Overview

How Does Northern Oil and Gas's Debt Look?

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Over the past three months, shares of Northern Oil and Gas, Inc. Common Stock (AMEX: NOG) decreased by 37.88%. Before having a look at the importance of debt, let us look at how much debt Northern Oil and Gas, Inc. Common Stock has.

Northern Oil and Gas, Inc. Common Stock's Debt

According to the Northern Oil and Gas, Inc. Common Stock’s most recent financial statement as reported on August 7, 2020, total debt is at $997.07 million, with $924.17 million in long-term debt and $72.89 million in current debt. Adjusting for $1.84 million in cash-equivalents, the company has a net debt of $995.23 million.

Investors look at the debt-ratio to understand how much financial leverage a company has. Northern Oil and Gas, Inc. Common Stock has $1.26 billion in total assets, therefore making the debt-ratio 0.79. Generally speaking, a debt-ratio more than one means that a large portion of debt is funded by assets. As the debt-ratio increases, so the does the risk of defaulting on loans, if interest rates were to increase. Different industries have different thresholds of tolerance for debt-ratios. A debt ratio of 40% might be higher for one industry and average for another.

Why Investors Look At Debt?

Debt is an important factor in the capital structure of a company, and can help it attain growth. Debt usually has a relatively lower financing cost than equity, which makes it an attractive option for executives.

Interest-payment obligations can impact the cash-flow of the company. Equity owners can keep excess profit, generated from the debt capital, when companies use the debt capital for its business operations.

 

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