Despite WTI shooting through resistance at $55 and $57 (closing at $58.97 on Friday), the Sweet 16 was only up 0.61% for the week ending November 24. My hope is that when OPEC and Russia extend their production agreements on November 30 the Wall Street Gang will start rotating a lot of money into the energy sector. All of the Sweet 16 are in MUCH BETTER shape today than they were a year ago.
The Sweet 16 is trading 56% below my valuation as a group and 28% below First Call's price targets. Keep in mind that First Call's prices have not been fully updated based on the higher oil prices. The only price targets that count are the ones that have been updated since the companies have reported Q3 results.
Updated profiles for all but FANG, GPOR and PXD are now on the EPG website. I hope to finish these three today.
Sweet 16 Update - Nov 25
Sweet 16 Update - Nov 25
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Update - Nov 25
The Sweet 16 main spreadsheet has been updated and it will be posted to the EPG website late today.
Tab 2 of the spreadsheet shows my valuations for each company (which are now all up-to-date) compared to the First Call Price Targets. The FC price targets are still not fully adjusted to include Q3 results and updated guidance from the companies. It takes several weeks before the Wall Street Gang gets all of their forecast models updated and sent over to Reuters.
First Call price targets are the average of all of the forecasts submitted to Reuters. The range of forecasts are still very wide because some Wall Street firms are still using very low commodity prices in their forecasts.
Most of the FC price targets are moving toward my valuations. Price targets for FANG and RSPP are actually over my valuations as of today. FC price targets for CPE and PE are getting close.
I now expect WTI oil to move over $60/bbl in December. If so, you can expect the Wall Street Gang to get a lot more bullish about this sector.
ALL of the Sweet 16 have generated strong cash flow from operations in the first nine months of this year and it is just going to get stronger in Q4. I am expecting all of them (except for PDCE) to report positive GAAP earnings for 2017. PDC Energy (PDCE) uses the Successful Efforts method of accounting and they booked a big non-cash impairment expense in Q3 against their Delaware Basin assets. Think of impairment as taking a whole bunch of depletion expense at one time. All it does is insure better reported earnings going forward by reducing future DD&A expense.
Our three "gassers" are getting no love these days, but that can change quickly if the weather changes.
I am expecting Carrizo Oil & Gas (CRZO) to get a very good price for their DJ Basin package. That sale should deleverage the balance sheet and improve Wall Street's opinion of what is really an outstanding growth company. Read the profile.
Tab 2 of the spreadsheet shows my valuations for each company (which are now all up-to-date) compared to the First Call Price Targets. The FC price targets are still not fully adjusted to include Q3 results and updated guidance from the companies. It takes several weeks before the Wall Street Gang gets all of their forecast models updated and sent over to Reuters.
First Call price targets are the average of all of the forecasts submitted to Reuters. The range of forecasts are still very wide because some Wall Street firms are still using very low commodity prices in their forecasts.
Most of the FC price targets are moving toward my valuations. Price targets for FANG and RSPP are actually over my valuations as of today. FC price targets for CPE and PE are getting close.
I now expect WTI oil to move over $60/bbl in December. If so, you can expect the Wall Street Gang to get a lot more bullish about this sector.
ALL of the Sweet 16 have generated strong cash flow from operations in the first nine months of this year and it is just going to get stronger in Q4. I am expecting all of them (except for PDCE) to report positive GAAP earnings for 2017. PDC Energy (PDCE) uses the Successful Efforts method of accounting and they booked a big non-cash impairment expense in Q3 against their Delaware Basin assets. Think of impairment as taking a whole bunch of depletion expense at one time. All it does is insure better reported earnings going forward by reducing future DD&A expense.
Our three "gassers" are getting no love these days, but that can change quickly if the weather changes.
I am expecting Carrizo Oil & Gas (CRZO) to get a very good price for their DJ Basin package. That sale should deleverage the balance sheet and improve Wall Street's opinion of what is really an outstanding growth company. Read the profile.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Update - Nov 25
For those of you worried about natural gas prices. Go here and watch the Saturday Summary: https://www.weatherbell.com/premium/
At November 17th the natural gas in U.S. storage was 121 BCF below the 5-year average. That's great, but it is December weather that determines where natural gas and NGL prices go from here. It is important to remember that a heck of a lot more homes and businesses heat using natural gas than there were five years ago and more areas rely on natural gas fired power plants for electricity than there were five years ago.
At November 17th the natural gas in U.S. storage was 121 BCF below the 5-year average. That's great, but it is December weather that determines where natural gas and NGL prices go from here. It is important to remember that a heck of a lot more homes and businesses heat using natural gas than there were five years ago and more areas rely on natural gas fired power plants for electricity than there were five years ago.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Update - Nov 25
Updated profiles for Diamondback Energy, Gulfport Energy and Pioneer Natural Resources have been posted to the EPG website.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group