cpe, lpi
Re: cpe, lpi
CPE went into the Wall Street "penalty box" because a few loud mouth analysts thought they paid too much for Carrizo. Now that oil & gas prices are moving higher, the merger looks brilliant.
LPI went to the penalty box because in 2019 they were drilling horizontal development wells too close together, which caused formation pressure to drop rapidly and caused sharp declines in the production of nearby wells. Again, several analysts beat the crap out of them and the stock became grossly oversold. They have corrected the problem and LPI is now a strong candidate for a move back to our Sweet 16. On January 26th, Stifel increased their price target by $13 to $36. My forecast model, based on WTI averaging $52.50/bbl this year, shows LPI generating over $28 per share of operating cash flow in 2021. The only negative is that they have ~84% of their 2021 oil (per their guidance) hedged at $50.80 Brent. Sounds bad, but it does add a lot of certainty to my model.
If Goldman Sachs' forecast of $65/bbl Brent by July is what happens, these two have a lot more upside.
LPI has some crazy "per share" results because they only have 12 million shares outstanding after they did a 1 for 20 reverse stock split.
LPI went to the penalty box because in 2019 they were drilling horizontal development wells too close together, which caused formation pressure to drop rapidly and caused sharp declines in the production of nearby wells. Again, several analysts beat the crap out of them and the stock became grossly oversold. They have corrected the problem and LPI is now a strong candidate for a move back to our Sweet 16. On January 26th, Stifel increased their price target by $13 to $36. My forecast model, based on WTI averaging $52.50/bbl this year, shows LPI generating over $28 per share of operating cash flow in 2021. The only negative is that they have ~84% of their 2021 oil (per their guidance) hedged at $50.80 Brent. Sounds bad, but it does add a lot of certainty to my model.
If Goldman Sachs' forecast of $65/bbl Brent by July is what happens, these two have a lot more upside.
LPI has some crazy "per share" results because they only have 12 million shares outstanding after they did a 1 for 20 reverse stock split.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group