Sweet 16 Update - August 20

[dan_s]

I am posting this on Friday evening because I have a webinar tomorrow morning. I will have a few more comments late on Saturday.

The Sweet 16 gained 3.27% and is now up 60.60% YTD. The five Gassers (AR, CRK, EQT, RRC and SBOW) continue to lead the pack (up 87.27% for RRC to up 139.26% for AR). This is definitely the year for investing in natural gas and NGLs. On Friday I worked on PDC Energy (PDCE) and SM Energy (SM). Both of them have a lot of exposure to natural gas and both are trading at less than half of my valuation.

The S&P 500 Index lost 1.08% and is now down 11.28%. FEAR of recession and FEAR of the Fed are in control.

I have updated all of the forecast models and 15 of the 16 profiles. Ovintiv (OVV) is the only profile that I still have not update. The profile is sitting here for my final review and I will finish it on Saturday. Ovintiv has a very good production mix and the increase in natural gas and NGL prices will more than offset the recent decline in oil prices.

Callon Petroleum (CPE) is the only Sweet 16 company that is down YTD and I cannot justify it. My valuation is $100/share. On 8/10/2022 RBC Capital Maintains Outperform on Callon Petroleum, Lowers Price Target to $72. TipRanks' average price target is $74.88. CPE closed at $41.05 on August 19 and I rate it a "Screaming Buy" up to $50/share.

Others trading at less than 50% of my valuations are CRK, ESTE, LPI, NOG, PDCE, SBOW and SM. SBOW is up 114% YTD and if their actual results for Q3 match my forecast, it has the potential to be a quick double for us. SBOW is an "Aggressive Growth Gasser". Read the profile carefully.

As posted earlier, I have "officially" lowered my 2H 2022 oil price assumptions and raised my 2H 2022 natural gas price assumptions for 2H 2022. I do believe the risk is to the upside for oil and gas prices because the space heating fuel shortages are going to draw a lot of attention this fall. I will discuss this on tomorrow's podcast. If you heat with propane, I highly recommend that you fill you tank early this year. Propane rationing is likely in Q4.

This has already been a great year for the Sweet 16 and "The Best is yet to come".

The Sweet 16 main summary spreadsheet with updated stock valuations and First Call's price targets will be posted to the EPG website this evening.