Sweet 16 Update - May 22
Posted: Fri May 21, 2021 6:58 pm
The Sweet 16 finished the week ending May 21 up 87.06% year-to-day, a gain of 3.86% for the week. The S&P 500 Index lost 0.48% for the week, but is still up 10.64% YTD. Money is still rotating into the energy sector, the top preforming sector this year.
Since May 15, I have adjusted my valuations for XEC, DVN, EOG, LPI, RRC and PXD. See detailed update for LPI in the next post.
Only six of the stocks in the portfolio moved higher last week, but Laredo Petroleum's (LPI) gain of more than 24% last week carried the entire profile. All of the gassers (AR, CRK, EQT and RRC) were all up on the week as is finally sinking in that the U.S. natural gas and NGL markets are tight and about to get a lot tighter this summer. Unless we have a very mild summer, there is already almost no chance for inventories of dry gas and propane (both used for space heating) to get back to the 5-year average before the next winter heating season. And BTW we use a heck of a lot more gas for space heating than we did five years ago. The situation with propane actually looks dangerous. If you heat and cook with propane I highly recommend that you fill you tanks before the first cold wave in October and you might want to add a few extra tanks.
Talos Energy (TALO) gained over 6% with most of it coming today after their update on the big Zama Oilfield Development Project offshore Mexico. Talos will be hosting our next webinar on June 7 and I highly recommend that you get on that one. My $22 valuation has nothing in it for their significant upside at Zama and West Puma, operated by BP. Talos has lots of near-term upside because of rising commodity prices + it has HUGE long-term upside for us. We will be publishing an update profile on Talos a few days after the webinar.
Laredo's big move was caused by the "Game Changing" acquisition of producing assets from Sabalo Energy LLC that they announced on May 14. I have updated my forecast/valuation model for LPI and posted it to the EPG website. My updated valuation of $58.00 now looks too conservative to me. Laredo is on a pace to generate over $28/share of operating cash flow this year and if their realize oil price is $60/bbl in 2022 they should generate over $41/share of operating cash flow next year. If both deals they announced close in July, my valuation will go to AT LEAST $90/share. I cannot stress enough how import and valuable Laredo's relationship with EnCap is going to be. Add this one NOW to your portfolio because the Wall Street Gang is going to be head over heals in love with LPI by year-end.
Range Resources (RRC) is up 110% YTD and approaching my valuation. Might be a good time to harvest that gain and move it to AR, XEC, DVN or OVV. They all have lots of exposure to rising natural gas and NGL prices. Comstock Resources (CRK) is also poised to join the "Gas Party".
We will be sending out an updated profile on EOG Resources (EOG). I raised my valuation to $114/share today.
After I finish my podcast on Saturday morning, I will finish my review of the updated profiles for EQT, PDCE and ESTE. Steven will finish his work on Diamondback Energy (FANG) next week.
Since May 15, I have adjusted my valuations for XEC, DVN, EOG, LPI, RRC and PXD. See detailed update for LPI in the next post.
Only six of the stocks in the portfolio moved higher last week, but Laredo Petroleum's (LPI) gain of more than 24% last week carried the entire profile. All of the gassers (AR, CRK, EQT and RRC) were all up on the week as is finally sinking in that the U.S. natural gas and NGL markets are tight and about to get a lot tighter this summer. Unless we have a very mild summer, there is already almost no chance for inventories of dry gas and propane (both used for space heating) to get back to the 5-year average before the next winter heating season. And BTW we use a heck of a lot more gas for space heating than we did five years ago. The situation with propane actually looks dangerous. If you heat and cook with propane I highly recommend that you fill you tanks before the first cold wave in October and you might want to add a few extra tanks.
Talos Energy (TALO) gained over 6% with most of it coming today after their update on the big Zama Oilfield Development Project offshore Mexico. Talos will be hosting our next webinar on June 7 and I highly recommend that you get on that one. My $22 valuation has nothing in it for their significant upside at Zama and West Puma, operated by BP. Talos has lots of near-term upside because of rising commodity prices + it has HUGE long-term upside for us. We will be publishing an update profile on Talos a few days after the webinar.
Laredo's big move was caused by the "Game Changing" acquisition of producing assets from Sabalo Energy LLC that they announced on May 14. I have updated my forecast/valuation model for LPI and posted it to the EPG website. My updated valuation of $58.00 now looks too conservative to me. Laredo is on a pace to generate over $28/share of operating cash flow this year and if their realize oil price is $60/bbl in 2022 they should generate over $41/share of operating cash flow next year. If both deals they announced close in July, my valuation will go to AT LEAST $90/share. I cannot stress enough how import and valuable Laredo's relationship with EnCap is going to be. Add this one NOW to your portfolio because the Wall Street Gang is going to be head over heals in love with LPI by year-end.
Range Resources (RRC) is up 110% YTD and approaching my valuation. Might be a good time to harvest that gain and move it to AR, XEC, DVN or OVV. They all have lots of exposure to rising natural gas and NGL prices. Comstock Resources (CRK) is also poised to join the "Gas Party".
We will be sending out an updated profile on EOG Resources (EOG). I raised my valuation to $114/share today.
After I finish my podcast on Saturday morning, I will finish my review of the updated profiles for EQT, PDCE and ESTE. Steven will finish his work on Diamondback Energy (FANG) next week.