Sweet 16 Gassers - August 30

[dan_s]

If natural gas prices remain close to the NYMEX strip prices, all of the “gassers” (AR, CRK, EQT, RRC and XEC) have the potential to double. They will all be reporting a SIGNIFICANT INCREASE in the PV10 value of their proved reserves (P1) as of December 31, 2021 and they are all trading today at a discount to their debt adjusted net asset value.

Goodrich Petroleum (GDP) and SilverBow Resources (SBOW) are the two “gassers” in our Small-Cap Growth Portfolio. Per Goodrich’s guidance, they should report a 9% to 10% increase in production (98% natural gas) from Q2 to Q3 and operating cash flow of $2.10 to $2.30 for the 3rd quarter. SilverBow is on-track for ~13% year-over-year production growth with higher natural gas and NGL prices pushing their operating cash flow over $15/share this year. Based on the current NYMEX strip prices for natural gas there is significant upside for both companies.

On August 13, 2021 SilverBow announced a bolt-on acquisition of 45,000 net acres in the South Texas Eagle Ford play. The all-stock purchase price of 1.5 million shares of SBOW will add net production of approximately 1,580 BOE per day (~36% oil). The Company is now on track to a 2021 exit rate of 38,500 BOE per day (approximately 73% natural gas, 13% NGLs and 14% crude oil). < I like all-stock acquisitions because they improve balance sheet ratios.