Wells Fargo's new NAV for our Sweet 16

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Wells Fargo has adjusted their official oil, gas and NGL price forecasts for 2019 and 2020. As a result they have adjusted their Net Asset Valuations for a number of our Sweet 16 companies. Keep in mind that they do not cover all of them. Below are Wells Fargo's new NAV's for several of our Sweet 16.

CLR: $63.00
CXO: $171.00
EOG: $119.00
FANG: $157.00
PE: $30.00
PXD: $190.00

AR: $22.00
ESTE: $9.00
GPOR: $11.00
MTDR: $31.00
NFX: $23.00

To come up with the NAV's above, WF is using the following oil & gas price forecasts:
2019: $57.02 for WTI and $3.08 for HH gas
2020: $60.49 for WTI and $2.75 for HH gas

Following OPEC’s decision to reduce overall production by 1.2mmb/d from October levels, we have
revisited the Wells Fargo Commodity Outlook. Our colleague Roger Read discusses the rationale for our
updated views on Brent and WTI pricing between F2018 and F2021 in his recent note (Oil Macro: Post
OPEC Adjustments, 12/10/2018). In summary, we expect continued global inventory builds in 1H19 to
keep oil prices lower. However, lower U.S. production growth along with anticipated expiration of Iran
waivers by May 2019, should set up for inventory draws in 2H19, leading to higher oil prices globally. We
are marking to market (QTD) our 4Q18 oil prices, while reducing our F2019E Brent and WTI outlook by
~21-22%, to $66.00/$57.00 per barrel. Our F2020E Brent/WTI prices decline by ~10-12%, to
$66.50/$60.50 per barrel, respectively, while our long-term (F2021E+) estimates are lower by ~9-10%
for both Brent ($66.00/bbl) and WTI ($62.00/bbl). We note that our 2019E price outlook is still ~10%
above Nymex futures prices for both Brent/WTI as of 12/10/18.

On the natural gas side, we are marking 4Q18 to market (QTD) and increasing 1Q19E Henry Hub to
$3.75/mcf to reflect stronger weather-related demand. Our F2019E natural gas price forecast increases by
~9%, to $3.08/mcf, primarily to reflect stronger 1H19 pricing. However, longer term, we remain cautious,
given an oversupplied U.S. natural gas market, due to the growth of associated gas from the Permian and
Anadarko basin, which has put pressure on Henry Hub pricing. Thus, our long-term natural gas outlook
remains relatively unchanged at $2.75/mcf. Our colleague Michael Blum has updated his NGL price
outlook down ~5% in F2019E/F2020E.