Sweet 16 Promotions

[dan_s]

Over the last two weeks I've been taking a hard look at each of the companies in our Small-Cap Growth Portfolio. Here's where things stand today.

Callon Petroleum (CPE) will be promoted to the Sweet 16
Carrizo Oil & Gas (CRZO) will be promoted to the Sweet 16
Earthstone Energy (ESTE) is still too small and I want to see a few quarters of results after the merger with Bold Energy
Evolution Petroleum (EPM) too small and just one asset. No debt is great and makes the preferred stock dividends rock solid.
Jones Energy (JONE) looks like a Screaming Buy, but we need to see solid results from the "Merge Area". If so, there is a lot of upside for us with JONE.
Laredo Petroleum (LPI) deserves a promotion, but it is sitting in 4th place today
Lonestar Resources (LONE) is too small, but now looking at 50% production growth in the Eagle Ford. < Lonestar is hosting our next Dallas luncheon on April 12
Matador Resources (MTDR) looks even better after they increased production guidance last week. Sitting in 3rd place, I just need to figure out which Sweet 16 company it can replace
Ring Energy (REI) is too small, but has a lot of upside if the Central Basin Platform wells exceed the pre-drill type curve
Sanchez Energy (SN) is definitely big enough, but I want to see Q2 results and 2nd half guidance.
SRC Energy (SRCI) has 50% annual production growth locked in for 2017 and 2018, but just a tad too small for the Sweet 16. Leading candidate for promotion next year if there 2017 exit rate goes over 26,000 BOE per day as forecast.

As a group, this gang is selling at a deep discount to my valuation. If I were still working for Hess Corp. (thank God I'm not), I would tell senior management that this is a good list of prime takeover targets. If oil prices firm up, there is a lot of upside here.