Sweet 16 Update - Nov 10

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

Sweet 16 Update - Nov 10

Post by dan_s »

The main Sweet 16 spreadsheet has been updated and it will be posted to the EPG website on Saturday morning.

1. The Sweet 16 was up 1.26% for the week ending Friday, November 9. Considering the headwind of falling oil prices, it was a good week.

2. Cimarex Energy (XEC) had the best week.

3. All 16 companies reported solid Q3 results and most of them exceeded my forecasts. The only slight disappointment was Antero Resources (AR).

4. The most pleasant surprise was that NGL prices exceeded my forecasts by ~10%. The U.S. petrochemical industry is "booming".

5. Four companies have market-caps below book value, which makes no sense since GAAP accounting requires upstream assets to be written down to "fair value" at the end of each quarter. The companies are AR, ESTE, GPOR and RRC.
> Considering the SIGNIFICANT improvement in the U.S. natural gas and NGL markets, there is no reason that I can think of for our three "gassers" to be trading below book value.
> If you can think of any reason for it, please share it here. ESTE is the smallest company in the Sweet 16, but it will soon be doubling its production.
> Gulfport Energy (GPOR) is the most profitable company in the Sweet 16 (lowest PE ratio). GAAP EPS were $2.38 in 2017 and they are on-track for $2.26 EPG this year.

6. Newfield Exploration (NFX) is merging with EnCana. I plan to take a hard look at the "New EnCana" in December.

All of the Sweet 16 individual company forecast/valuation models are now up-to-date.

I will be updating all for the Small-Cap Growth Portfolio companies forecasts this weekend.
Dan Steffens
Energy Prospectus Group
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