Energy Prospectus

I spent the morning working on an updated profile for SN that we will send out via e-mail late today. I see nothing that makes me change my valuation of $28.00/share.

First Call's price target is $15.40.

The 2nd quarter will be the first quarter that shows the full impact of their big acquisition from Anadarko. I think the Wall Street Gang will be very impressed.

I have posted the updated profile and forecast/valuation model for SN to the EPG website.

Dan,

SN share price continues to be under pressure, having fallen below support at 9, and now 8 (currently 7.81).

Is your "Fair Value Estimate" still 28? Are you aware of any change, positive or negative, in the fundamentals discussed in your March 24 profile?

Thanks.

Scott

Nothing changed in my forecast. The production volume of 80,000 BOE per day for 2017 ties to what they have in their April presentation, plus Sanchez has a history of beating their production guidance. Everything is down today because of the $2 drop in oil price.

40% of SN's oil is hedged at $55 for 2017

Actually, my forecast assumes operating cash flow of $3.73/share for 2017, compared to First Call's CFPS forecast of $4.30/share for 2017.

The acquisition from Anadarko is a MAJOR transaction for SN. The Wall Street Gang is often "uncomfortable" when small-caps make of deal of this size. It may take a full quarter of post-acquisition results (the 2nd quarter) before Wall Street gets what is happening here.