Northern Oil & Gas Inc (NOG)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 838,534 | 1,136,410 | 856,669 | 65,614 | -847,704 |
| Interest expense | US$ in thousands | 157,717 | 135,664 | 80,331 | 59,020 | 58,503 |
| Interest coverage | 5.32 | 8.38 | 10.66 | 1.11 | -14.49 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $838,534K ÷ $157,717K
= 5.32
The interest coverage ratio measures the ability of Northern Oil & Gas Inc to cover its interest expenses with its operating income.
Looking at the data provided:
- As of December 31, 2020, the interest coverage ratio was -14.49, indicating that the company did not generate sufficient operating income to cover its interest expenses, which could be a cause for concern.
- By December 31, 2021, the interest coverage ratio improved significantly to 1.11, moving into positive territory but still relatively low.
- Subsequently, the company continued to strengthen its ability to cover interest expenses, with ratios of 10.66, 8.38, and 5.32 for the years ending December 31, 2022, 2023, and 2024, respectively.
Overall, Northern Oil & Gas Inc significantly improved its interest coverage over the years, indicating a better ability to meet its interest obligations from operating income. However, it is advisable to continue monitoring this ratio to ensure the company maintains a healthy financial position.
Peer comparison
Dec 31, 2024