Northern Oil and Gas, Inc. (NOG)

[Enterprising Investor]

Is Dallas billionaire Bob Rowling making a play for a North Dakota oil company? (8/25/16)

By Jeffrey Weiss

These days, Bob Rowling's name is likely to be associated with the hospitality business — the Omni Hotel and Resort chain. Or maybe fitness — Gold's Gym. But he and his father made their first money in the oil and gas business.

That's why media reports that TRT Holdings, one of Rowling's companies, may be making a play for a Dakota-based oil company is interesting. And more than interesting: If the reports are true, it raises a question of what Rowling and his troops are seeing that others don't.

Here are the basics: the Minnesota Star Tribune has a report this week speculating that Rowling's companies may be poised to buy the troubled Northern Oil and Gas. Here's a nugget from that report:

"TRT Holdings and other firms affiliated with Bob Rowling have built up about a 19 percent stake in Northern Oil and Gas since early 2015. They control a big chunk of the company's 8 percent unsecured debt, too..."

"Wayzata-based Northern last Wednesday fired its CEO Michael Reger after federal securities regulators indicated they were pursuing an enforcement action against him. The case involves alleged manipulation of the stock of Dakota Plains, a separate company. Northern says it's cooperating with the investigation."

So Northern could clearly use some help. But it's not just fraud allegations that have put the company behind the eight ball. All of Northern's assets are in the Bakken and Three Forks basins, the North Dakota and Montana shale gas and oil fields that had a tremendous boom a few years back — followed by a tremendous bust.

Here's a map from the Northern website showing where it has holdings.

[map deleted]

Here's why that matters: Depending on which analysts you want to look at, the break-even price for crude oil in the Bakken averages around $65 a barrel. Today's WTI price is bouncing around $47 a barrel.

So what does Rowling see?

As my colleague Karen Robinson-Jacobs reported in a profile of Rowling earlier this year, he and his family have a history that may provide them some insights:

"As a youth growing up in Corpus Christi, Robert Brian Rowling was attracted to basketball (he tops 6 feet) and golf. As a tween, he envisioned a life as a professional golfer."

"Instead, along with his father, Reese, Rowling helped create Tana Oil & Gas, a Corpus Christi-based oil production and pipeline company. Much of the company was sold to Texaco in 1989 for a reported $480 million."

Some of that money was used to create the Omni hotel chain and to buy the Gold's Gym chain. Tana Exploration Co., however, still exists. Its operating portfolio, according to the company website, is all offshore Gulf Coast plays. Which is also a region struggling financially with current crude oil prices.

http://www.dallasnews.com/business/energy/20160825-is-dallas-billionaire-bob-rowling-making-a-play-for-a-north-dakota-oil-company.ece