Sweet 16 Update - Jan 1

[dan_s]

There is only one recent change to the Sweet 16: Earthstone Energy (ESTE) replaces Parsley Energy (PE).

The "Elite Eight" are XEC, CLR, DVN, EQT, EOG, FANG, PXD and RRC.

The ones that pay quarterly dividends are: XEC, DVN, EOG, FANG, OVV, PXD < Some hedge funds can only invest in companies that pay dividends.

AR, CRK, EQT and RRC are the four most highly leveraged to natural gas and NGL prices.
CRK is the most leveraged to dry gas prices. It is also controlled by Jerry Jones, owner of the Dallas Cowboys.

AR is the most highly leveraged to NGL prices.

CLR is the most highly leveraged to oil prices because none of their oil is hedged.

EOG is the largest company with a market-cap of $29.1 Billion and ESTE is the smallest company with a market-cap of $348 million.
On September 30, 2020 ESTE's book value was $832, so it is trading at less than 1/3rd of book value. Their book value will go up when they close the acquisition of IRM in a few months, which will also raise their production by over 50%.

PXD expects to close their merger with PE within two weeks.

Regional commodity price differentials in West Texas have come way down recently, which will give all of our Permian Basin companies a nice revenue boost.

AR, CPE and OVV are the only stocks that have moved over First Call's price targets, Per my valuations they still have 65%, 37% and 22% more upside. OVV deserves to be in the "Elite Eight".

I have a few more midstream company forecast/valuation models to update (OKE, OMP and KMI). After those are finished I will be rolling the Sweet 16 forecasts forward to add quarter forecasts for 2021 and my first WAG forecast for full year 2022.

If the Covid-19 vaccines work, all 16 companies have HUGE upside.