How to use EPG forecast models

[dan_s]

All of my forecast/valuation models housed on the EPG website are "macro driven" Excel spreadsheets. You can download them to Excel on your computer and change the oil, gas and NGL prices at the bottom for forecast periods to see how commodity prices impact revenues, earnings and operating cash flow per share, which is the primary driver of my stock valuations. The spreadsheets automatically update stock valuations when the forecast period assumptions are changed.

There are also tables of each company's hedges at the bottom of each spreadsheet. The mark-to-market adjustments on hedges go both ways.

Keep in mind that realized commodity prices used in each forecast model are net of regional price differentials and projected cash settlements on hedges during each forecast period. The easy way to make an adjustment for example, if a company has 50% of their oil hedge and you want to see how a $10/bbl drop in crude oil prices impacts them, just lower the realized price in the future periods by $5. In other words, get the percentage of unhedged oil in each future period and multiple it against the drop in WTI you expect for each future period. Very easy to do.

For now, I am assuming that we don't go back to "Pandemic World" anytime soon no matter how many variants Dr. Fauci comes up with.

I believe the forecast models are good tools that can help you make wise investment decisions vs FEAR based decisions. Keep in mind that all of our model portfolio companies survived MUCH LOWER oil prices during 2020 and they will make a lot of money even if oil goes back to $60/bbl.

Also keep in mind that OPEC+ does control the oil price and cartel members want and need higher oil prices.

[ajootian]

Thanks for the info Dan, very helpful. By any chance do you (or anyone else) know offhand which of the companies in your coverage has the highest amount of their '22 oil production hedged? I know I can check this for myself but I haven't had a chance to do that yet. Next question would be, might there have been a company out there that you passed on covering previously because you thought they had too much production hedged?

[CreativeEquity]

Are you going to update your pricing models to reflect the lower wti price this quarter ?

[dan_s]

I will wait and see where the WTI price settles. I believe Friday's selloff was overdone and I expect WTI to bounce back. The inventories of refined products are still way below where they should be for this time of year.

I am using $75/bbl WTI in Q4 forecasts and since we are 2/3rds of the way thru the quarter WTI should be near that average for the quarter. Natural gas and NGL prices are likely to average more during the quarter than what I used in the models.

[CreativeEquity]

thanks Dan. ajootian also had a question above mine in case you missed it.

[Fraser921]

Hedges

https://twitter.com/otcengine/status/14 ... 1976659969

viewtopic.php?p=37784

[dan_s]

Also, send me an email and I will send you a recent report on hedges published by Raymond James.

Most of the gassers hedged a lot of production thru 2021 because a year ago they could lock in at the time looked like good prices.

Just because I don't have time, I don't look at a lot of companies beyond our portfolio companies. I try to look at the ones recommended to me by some of our members that are smarter than I am.

Riley is likely to replace GDP. I may take a hard look at APA and OXY.

I will have some time late in December.

[Fraser921]

found this

https://www.bloomberg.com/news/articles ... ce=twitter