Northern Oil, Occidental, Ovintiv cut at Morgan Stanley, shifting more defensive after strong summer

[oil pumps on sunset]
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Northern Oil and Gas (NYSE:NOG [https://seekingalpha.com/symbol/NOG]) -2.5% as Morgan Stanley lowered to Underweight from Equal Weight with a $27 price target, trimmed from $29, one of three downgrades as the oil and gas sector already reflects much of the uplift from cash flow tailwinds from efficiency gains enjoyed by many oil and gas producers from lower spending for the same or higher production; as seasonal tailwinds fade, the bank sees downside risk to crude prices into the back half of the year.

Morgan Stanley analysts led by Devin McDermott downgraded Northern Oil and Gas (NYSE:NOG [https://seekingalpha.com/symbol/NOG]) after the company cut production guidance for both oil and total production for the rest of 2025 on its Q2 earnings conference call [https://seekingalpha.com/article/4807783-northern-oil-and-gas-inc-nog-q2-2025-earnings-conference-call-transcript], implying ratably lower H2 2025 production compared to prior messaging for growth, with the changes reflecting shut-ins and fewer completions, largely in the Bakken.

Lower H2 2025 production and less growth also pulled down FY 2026 volumes expectations compared to prior estimates, with risk of further non-operated activity reduction if oil prices move lower, McDermott wrote.

The analyst also cut Occidental (NYSE:OXY [https://seekingalpha.com/symbol/OXY]) and Ovintiv (NYSE:OVV [https://seekingalpha.com/symbol/OVV]) to Equal Weight from Overweight with respective $52 and $48 price targets, as Occidental has made good progress on debt reduction since closing CrownRock but leverage is still well above peers, and Ovintiv's Q2 brought another
solid operational quarter, but the stock has outperformed peers by 11% YTD while carrying above-average net debt/EBITDAX.

McDermott also initiated Viper Energy (VNOM [https://seekingalpha.com/symbol/VNOM]) at Overweight with a $46 PT, noting the stock trades at a similar 2026 free cash flow and shareholder return yield to oil E&Ps but offers above
average growth, all with zero drilling and completion capex needs.

MORE ON NORTHERN OIL & GAS AND OCCIDENTAL PETROLEUM

* Northern Oil & Gas: A Fair Income Play With Potential Price Recovery [https://seekingalpha.com/article/4797210-northern-oil-and-gas-a-fair-income-play-with-potential-price-recovery]
* Occidental Petroleum: The Bottom Might Really Be In (Rating Upgrade) [https://seekingalpha.com/article/4814496-occidental-petroleum-bottom-might-really-be-in]
* Occidental Petroleum: Q2 Results Point To Stronger FCF Ahead [https://seekingalpha.com/article/4812490-occidental-petroleum-q2-results-point-to-stronger-fcf-ahead]