Sweet 16 Valuation Updates for price deck changes - Oct 10

[dan_s]

Today I have updated my oil & gas price deck, which will impact my Sweet 16 valuations.

Oil Prices used in the forecasts will stay the same: $95/bbl for Q4 and $100/bbl for 2023 < I expect WTI to move quickly over $100/bbl when Biden stops draining the SPR. It will happen soon after the midterms since it is just a political move. Draining the SPR is a threat to our national security and everyone in Washington knows it (at least they should).

Natural gas prices used in the forecasts will increase from $8.00 to $8.20 for Q3, decrease from $9.00 to $7.50 for Q4 and increase from $5.00 to $6.50 for 2023. These prices compare to Raymond James forecast of $8.40 for Q3, $8.00 for Q4 and $7.00 for 2023.

I do believe that OPEC+ now controls the oil price and they seem to want Brent to average $100/bbl. Stopping the SPR draws, OPEC+ production cuts and sanctions against Russia should reduce the global oil supply by 2.5 to 3.5 million bpd by year-end; that could push oil prices much higher. Europe will be burning a lot more oil (coal and wood) for space heating and power generation this winter.

Forecasting natural gas prices in the U.S. market is like trying to forecast the weather. A mild winter in North America could push ngas back down to $5.00 and a colder than average winter could cause a spike to $15.00. With Miss La Nina's help, using $6.50 for 2023 s/b conservative.

I will update all of the "gassers" first. The changes above will increase my valuations of the "gassers".