Sweet 16 Update - May 25

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Sweet 16 Update - May 25

Post by dan_s »

The Sweet 16 Main Spreadsheet has been updated and posted to the EPG website.

I have FINALLY finished updating all of the Sweet 16 individual company profiles for Q1 results. We will be sending out the updated profile for Parsley Energy (PE) later this weekend. Sabrina actually sends them out and she's taken off for the Memorial Day weekend. I'm a "workaholic", so I will be working on the newsletter this weekend. I will spend some time at the neighborhood swimming pool with Susan helping with her PT. She is well on her way to recovery from her back surgery.

Thanks to the dip in oil prices, the Sweet 16 dropped 10.78% during the week ended May 24th and is now only up 1.37% YTD. Unless you think "the sky is falling", this is time to add some super high quality "Elite Eight" stocks at bargain basement prices. Unless Trump lifts the sanctions against Iran and Venezuela, the global oil market is going to get a lot tighter this summer.

Not a single First Call price target was lowered last week and I do not recall ever seeing a week where all of the price targets remained the same. The Sweet 16 closed Friday 60% below the First Call price targets and 115% below my valuations, which have all be updated for Q1 results and fresh guidance.

The "Tariff War" with China and Trump's refusal to work with the Democrats on a much need infrastructure bill are IMO the justifications for the dip in oil prices. Yes, there was a small increase in U.S. crude oil inventories but (a) it was caused by just moving oil from ships to onshore tanks and (b) U.S. refiners are going to need every drop of black oil because they have a lot of work to do to meet rising demand for transportation fuels.

All of the Sweet 16 companies reported solid Adjusted Net Income and Cash Flow from Operations for Q1, which I think will be the low point for 2019.

We will be publishing the next edition of The View From Houston newsletter on Wednesday morning.
Dan Steffens
Energy Prospectus Group
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