Sweet 16 Update - Mar 5

[dan_s]

Thanks to OPEC+'s decision not to raise production, the stock price valuations in the newsletter we sent out yesterday morning are already too low. All of the Sweet 16 get their revenues from the sale of a mix of crude oil, natural gas and NGLs. Crude oil and NGL prices are going up NOW. Natural gas prices should follow the same path once we get to May with gas in storage way below the 5-year average. It is EXTREMELY IMPORTANT that you know the production mix and amount of production that is hedged for each company in your portfolio. I show that information at the bottom of each company's forecast valuation model that is on our website.

We will be publishing detailed profiles on each company in the Sweet 16 this month. I will finish up Continental Resources (CLR) today. After January, 2021 none of CLR's oil is hedged, so my valuation will be going up to at least $40.

The safe bets are the "Elite Eight" in our Sweet 16 because they are the companies that are well known by the Wall Street Gang: XEC, CLR, DVN, EQT, EOG, FANG, OVV and PXD.

CLR and EOG have the most exposure to rising oil prices. EQT is the most heavily weighted to natural gas, but they do sell a lot of NGLS. NGL prices have been going up faster than oil prices.

First Call's price targets are worthless now because they are the average of all price targets included in the Reuter's datebase; many of which are over 3 months old.