Sweet 16 Change

[dan_s]

Just giving you a heads up. In Monday's newsletter I will be adding Noble Energy (NBL) to the Sweet 16 and I'm dropping Laredo Petroleum (LPI).

Laredo's production will be flat to slightly lower in 2016 and I am concerned with the debt the have on the balance sheet. They have 85% of this year's oil hedged at $70.84/bbl. If oil prices are still low when those hedges expire in 2017, Laredo might have a balance sheet issue.

NBL is a large-cap with $5 Billion of liquidity and production should be up 10% to 12% this year, even though their capital program is designed to live within cash flow.

I am still working on EQT and it may go into the Sweet 16 in the following newsletter.

BCEI is being dropped from the Small-Cap Growth Portfolio.

[setliff]

dan, LPI is making a major move today, up 16% as of this writing. you have them with flat to down production this year. can 40+ crude chg that?

and something that i always wonder about is with 85% hedged at $70, why the big move now?

jim

[dan_s]

LPI will be fine, if oil prices move to over $60/bbl. BUT.....Take a look at the balance sheet. They have approximately $1.3 Billion total debt less current assets and a VERY HIGH Debt/Equity ratio. They have 85% of this year's oil hedged at $70.84/bbl, but only 30% of 2017 oil hedged at $77.22.

If WTI is still below $50/bbl heading into 2017 the debt holders will get very nervous.

I like LPI's assets, which is why I put them into the Sweet 16.

I just needed a place to but NBL, which has 10% YOY production growth forecast.

What you buy, sell or hold is 100% up to you. I just want the Sweet 16 to be a collection of rock solid companies.

If all goes well, LPI is a candidate for our Small-Cap Growth Portfolio.