Share values and oil prices now unhinged

[Fosterplc]

Despite the fall in crude prices today, with the return to work of the Kuwaiti oil workers, share values in several of our sweet 16 and small cap targets continue to rise. Has the market finally woken up to the inevitability of a supply shortage later in the year and decided to build positions in well run companies? Lonestar, Sanchez, SM Energy, Range all looking good today. Even our arch nemesis, Bonanza Creek has improved.

[dan_s]

Yes, it is becoming quite clear that supply/demand will be much tighter in Q3. 2/3 of the OPEC countries are probably on decline now and they are in deep financial trouble. Saudi Arabia and Iran "pissing match" is a side show to the fundamental reality.

Read: http://oilprice.com/Energy/Energy-Gener ... ction.html

There are links in the article to some good reports to help you understand what is happening. You should read them all, especially the one from Credit Suisse and take a hard look at the Raymond James forecast on the last page.

A Raymond James energy sector analyst will be our opening speaker on Monday, April 25 at The Hess Club.

[jb2257]

Which stocks have the most upside now that these have all run up?

[Fosterplc]

They've all got big upsides. We are only now coming out of the trough. Current values are in anticipation of $45-$50 oil price, once we see $60 in sight, they will go up even more.

[prince_jake_33]

things look good now

[setliff]

take a look at the charts and pick the ones most beat up that are expected to weather the storm and they will be best upsides. i like sm, bcei, vnr, memp, and maybe tplm.

[dan_s]

My valuations in the newsletters and on the individual profiles are based on the following oil and gas prices (WTI and Henry Hub).

Qtr Oil Gas
Q1 $30 $1.70
Q2 $35 $1.70
Q3 $40 $2.00
Q4 $50 $2.50
2017 $60 $2.70

Oil & gas prices in the forecast periods are adjusted for the company's hedges and regional price differentials. < It is VERY IMPORTANT for you to consider hedges

If you download the forecast models from the website to EXCEL, you can change the oil, gas and NGL prices in the forecast periods yourself. The EXCEL spreadsheets are "macro driven" and will automatically update EPS, CFPS and the stock valuations.

Setliff is right, the small-caps, which the Wall Street gang has written off as going backrupt, have the most upside. They also have the most risk. I have taken a VERY HARD look at all of the companies in our Small-Cap Growth Portfolio and I believe they are well positioned to survive through 2016. BCEI got hammered when the midstream sale (RMI) fell through. If they can find a new buyer, the share price should double.

Lonestar Resources (LNREF) should double when it is up listed to NASDAQ.

Denbury Resources (DNR) was a "Ten Bagger" for us at the end of the last oil price cycle. I hope to find time to take a hard look at it next week.

[dan_s]

As of today's close, all 16 companies in our Sweet 16 are now up year-to-date.

CLR, XEC, FANG and PXD all closed today above my valuations. These are all rock solid companies that have the potential to go higher. CLR has HUGE upside in SCOOP & STACK, which we are going to talk about at our luncheon on Monday.

FANG has a big stake in Viper Energy Partners LP (VNOM). I have not given it the value it probably deserves in my valuation of FANG. I will take a hard look at that when I update FANG for Q1 results.

On Saturday, I took a very hard look at XEC and valued it at $102.20/share. Until I get more info, I can't justify a higher valuation.