Sweet 16 Update - September 30

[dan_s]

The Sweet 16 was up 2.21% for the week ending 9/29/2017, but we still have a long way to go. The Sweet 16 are some of the top upstream companies in North America and they are all in much better shape today than they were on 1-1-2017, yet the portfolio is still down 22.99% year-to-date. Why?, because of FEAR. Fear and Greed drive the stock market.

As I pointed out in my weekly podcast:
> The oil "glut" is over.
> Demand for oil exceeds supply today, which is why crude oil in storage is falling all over the world. Probably by close to 2 million barrels per day.
> Demand for refined products is stronger than it has ever been and getting stronger
> Natural gas and NGL prices will also move higher in the 4th quarter.

The first step during the rebound stage of an oil price cycle is to convince investors that the price of oil is not going to plunge again. We should be past that now. The second step is to convince investors that upstream companies can make money at these commodity price levels. The Sweet 16 all make money at $50 oil and $3.00 ngas.

Continental Resources (CLR) is the only company in the Sweet 16 that did not report positive earnings for the first half of the year, primarily because none of their oil is hedged. That is a good thing during a period of rising oil prices. All 16 companies are generating strong cash flow from operations and they will all report increasing production in Q3 and even higher in Q4. You can find actual and forecast production by quarter at the bottom of each forecast model.

This weekend I am going to review carefully my forecast/valuation models for each company. On Friday, I updated RSPP, RRC, PXD and PDCE. You can view the updated forecasts on the EPG website (you must log in to see them). I will comment on individual companies after I finish all of the updates.