Sweet 16 Update - Jan 16

[dan_s]

Each weekend I update the primary Sweet 16 spreadsheet and post it to the website.
> Tab one shows my EPS and CFPS forecast for each company. It is VERY IMPORTANT to note that cash flow per share (CFPS) is net of ALL expenses, including interest on their debt. Even at today's low oil prices, these companies generate positive CFPS. See column T on the spreadsheet.
> Tab two shows my valuation compared to First Call's price target for each company. My valuations only change when I get some new information, but First Call's price targets do change a little each week. The larger companies have a lot more analysts covering them. First Call's price target is the average of all analysts' forecasts submitted to Reuters.

The Sweet 16 is down 15% YTD, compared to the S&P 500 Index that is down 8% YTD. This is the worst start to a year for the Sweet 16 since 2001 (when EPG was founded).

Obviously, these oil & gas producers aren't going up until oil & gas prices stabilize. Oil, natural gas and NGLs trade on much different markets. Oil prices are determined on the global market, while natural gas & NGLs trade on regional markets. In fact, there are numerous sub-regions for gas in the United States. Weather has a lot to do with natural gas prices and NGL prices to a lesser extent.

As I posted here a few weeks ago, the four "gassers' (AR, GPOR, RRC and SWN) under-preformed last year, but may end up leading the pack this year. AR, which continues to report outstanding operating results, leads the pack. 100% of AR's gas production for 2016 is hedged at very good prices. All four produce a lot of gas from the Marcellus / Utica. Netback prices in this region are improving thanks to several large midstream projects that recently came on-line.

You can find a table of each company's hedge positions at the bottom of the individual company forecast models (under the Sweet 16 tab on the EPG website).