Sweet 16 Update - May 3

[dan_s]

For the week ending May 2, the Sweet 16 lost 0.24% and is now down 13.86% YTD.
For the week ending May 2, the S&P 500 Index gained 2.59% and is now down just 3.47% YTD and 2.0% higher than where it was on March 31st. So, it has rebounded back to more than where it was on "Independance Day".
My IRA account has survived the FEAR of the Tariff War!

FEAR of "Drill Baby Drill" should be gone, FEAR of the Tariff War seems to be fading, we just need FEAR of "What will OPEC+ do next?" to fade and maybe some common sense can return to the Global Oil Market. Just remember that global demand for oil is close to 103,000,000 barrels PER DAY, so whatever OPEC+ announces next week it will be a very small percentage of global demand AND demand for oil always goes up in June. Plus the quotas they increased on May 1 are not really additional barrels coming to the market. They are just catching up to what several "cheaters" were already selling. With U.S. oil production on decline (as reported by EIA a few days ago) the global market needs more OPEC oil.

Seven of the Sweet 16 (AR, EOG, EQT, MTDR, NOG, RRC and SM) have reported solid Q1 2025 results. They are all profitable and free cash flow positive. Higher Natural Gas prices (up 69.5% year-over-year) and NGL prices (up 6.1% YOY) should continue to offset much of the impact that lower oil prices are having on their revenues. My forecast/valuation models for all 7 have been updated for Q1 results and their fresh guidance. We have published updated profiles on MTDR and RRC. You can find them on the EPG website under the Sweet 16 tab.

We will update the EOG Resources (EOG) profile this weekend. EOG is the largest company in the Sweet 16 and it is a Strong Buy for any of you that believe oil prices will rebound. EOG now produces over a million Boe per day. EOG's production mix is approximately 45% crude oil, 32% natural gas and 23% NGLs.

Antero Resources (AR) is the only Sweet 16 company that does not pay dividends. It is now generating a lot of free cash flow (over $1.4 billion this year), so dividends should be announced soon.

Range Resources (RRC) is one of our four "Gassers" (AR, CTRA, EQT, RRC). RRC is down 2.5% YTD, which makes no sense. Based on my forecast, which is based on Range's always reliable guidance, the Company's net income per share will more than triple this year to $3.66 and adjusted operating cash flow per share should be going up from $4.49 in 2024 to $6.87 in 2025. If EIA's current natural gas price forecast for 2026 ($4.60/MMBtu) is accurate, Range's operating cash flow per share should go over $10.00 next year.
> EQT is up 12.41% YTD
> AR is up 2.48% YTD
> CTRA is up just 0.16% YTD. It will announce Q1 financial results on May 5 after the markets close, which should be strong. Coterra's production mix is approximately 66.5% natural gas, 14.5% NGLs and 19.0% crude oil.

All of the remaining companies will report Q1 financial results this coming week on:
May 5: CTRA, CRGY, FANG
May 6: DVN, OVV,
May 7: CIVI, PR
May 9: VRN < Veren's merger into WhiteCap (WCP.TO) is expected to close on May 12.

A lot of the companies in our Small-Cap Growth and High Yield Income portfolios will also be announcing Q1 financial results over the next two weeks. I will do my best to keep up. The Sweet 16 is my top priority.

[dan_s]

Here are the companies in our Small-Cap and High Yield Income portfolios that will be announcing Q1 results May 5-9.

May 5: BTE, BSM, VNOM
May 6: none
May 7: REPX, REI, STR, SGY.TO
May 8: KRP,
May 9: ENB, PAA

The following week
May 12: VTLE
May 14: KGEI

I don't have firm dates for JOY.TO, ROK.V, RBY.TO, SDE.TO, HME.V, IPO.TO, PEY.TO

With oil, natural gas and NGL prices higher in Q1 2025 than in Q4 2024, I'm expecting all of them to report solid Q1 results.

All eyes will be on the Brent and WTI oil prices tomorrow morning to see how the Paper Traders react to the OPEC+ announcement to increase production quotas in June by 411,000 bpd. Just remember that "quotas" and "physical" increases in exports are not the same. OPEC+ April production was 200,000 bpd below quotas. Saudi Arabia is the only cartel member that can significantly increase production.