For the week ending June 13 the Sweet 16 gained 6.72% and is now down just 2.32% YTD, not counting dividends or the gain realized on VRN.
For the week the S&P 500 Index lost 0.50% and is now up 1.62% YTD.
WTI oil price increased 7.26% on Friday to close at $72.98/bbl due to Israel's attack on Iran. WTI is down 6.5% year-over-year.
HH natural gas price increased 2.55% on Friday to close at $3.58. Natural gas price is up 24.3% year-over-year.
If oil & gas prices hold near these levels for the remainder of the year, all 16 companies will report strong financial results for 2025. If WTI just holds over $65/bbl they are in good shape. All 16 companies are free cash flow positive.
Iran's oil infrastructure was not targeted by Israel. Friday's oil price spike is appropriate due to the increased risk to supply. If Iran does attack U.S. military bases in the region, I would expect oil prices to go higher. If shipping lanes through the Strait of Hormuz are impacted, oil prices could go much higher.
U.S. natural gas prices are set by regional supply/demand. Natural gas prices in Asia and Europe are $12.32 and $12.46. I doubt they will be impacted by the fight between Israel and Iran unless the conflict spreads.
Nine of the Sweet 16 are now up YTD, still lead by three of the gassers > EQT up 23.51% YTD, AR up 18.86% YTD, RRC up 15.04% YTD. I do consider Coterra Energy (CTRA) a gasser with 79.5% of its production on a Boepd basis being natural gas & NGLs. CTRA is up 4.58% YTD, and it should have a lot more upside if natural gas moves over $4.00/MMBtu in July, which is my forecast.
Based on my valuations Civitas Resources (CIVI) down 25.3% YTD and SM Energy (SM) down 27.4% YTD have the most upside.
On Friday CIVI closed at just 1.17X my operating CFPS forecast for 2025 and SM closed at just 1.6X my operating CFPS forecast for 2025. Both companies are profitable and free cash flow positive. CIVI has the highest dividend yield in the Sweet 16 at 6%.
Crescent Energy (CRGY) is down 33% YTD and closed on Friday at just 1.59X my operating CFPS forecast for 2025. With a production mix of approximately 40% crude oil and 60% natural gas & NGLs it should be up YTD. Based on my forecast, which now looks to conservative, Crescent Energy should generate over $600 million of free cash flow this year. TipRanks: "In the last 3 months, 10 ranked analysts set 12-month price targets for CRGY. The average price target among the analysts is $13.89. The 10 price targets range from $12.00 to $20.00 (Wells Fargo)."
Northern Oil & Gas (NOG) also has nice dividend yield of 5.6% and it expects to report ~8% YOY production growth in 2025.
Size does matter in this business, if the Wall Street Gang does start rotating more money into upstream oil & gas companies it is a good bet that EOG Resources (EOG) and Diamondback Energy (FANG) will get a lot of that money.
Profiles and forecast models for each company can be downloaded from the EPG website.
Sweet 16 Update - June 14
Sweet 16 Update - June 14
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Update - June 14
At this point, there is no way to know where oil prices will be next week or next month.
For example CNBC reported that:
JPMorgan analysts are convinced that escalating geopolitical tensions in the Middle East won’t have a lasting impact on oil prices in the second half of 2025.
In a note to clients, they argued oil supply from Iran will remain intact as diplomacy prevails in its flaring conflict with Israel.
Additionally, JPMorgan expects macroeconomic headwinds, including potential rate hikes and a global economic slowdown to weigh on oil prices through the remainder of this year as well.
Investors should note that global push for energy transition could also dampen the possibility of a drastic increase in oil prices.
What Could Trigger a More Than 100% Increase in Oil Prices to $130?
On the flip side, if worst-case scenarios were to play out, rising tensions between Israel and Iran could push Brent crude up significantly to a multi-year high of $130, according to JPM experts.
The investment firm agreed that a military confrontation involving the U.S., Iran, and Israel could prove catastrophic for oil’s supply chain, especially if it blocks the Strait of Hormuz – a chokepoint for nearly 20% of the world’s oil supply. < Iran closing the Strait of Hormuz is highly unlikely because (a) Iran imports a lot of food through the strait and (b) the U.S. navy will not allow it to be closed.
For example CNBC reported that:
JPMorgan analysts are convinced that escalating geopolitical tensions in the Middle East won’t have a lasting impact on oil prices in the second half of 2025.
In a note to clients, they argued oil supply from Iran will remain intact as diplomacy prevails in its flaring conflict with Israel.
Additionally, JPMorgan expects macroeconomic headwinds, including potential rate hikes and a global economic slowdown to weigh on oil prices through the remainder of this year as well.
Investors should note that global push for energy transition could also dampen the possibility of a drastic increase in oil prices.
What Could Trigger a More Than 100% Increase in Oil Prices to $130?
On the flip side, if worst-case scenarios were to play out, rising tensions between Israel and Iran could push Brent crude up significantly to a multi-year high of $130, according to JPM experts.
The investment firm agreed that a military confrontation involving the U.S., Iran, and Israel could prove catastrophic for oil’s supply chain, especially if it blocks the Strait of Hormuz – a chokepoint for nearly 20% of the world’s oil supply. < Iran closing the Strait of Hormuz is highly unlikely because (a) Iran imports a lot of food through the strait and (b) the U.S. navy will not allow it to be closed.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Update - June 14
Watch this video: https://www.msn.com/en-us/news/world/us-ready-to-do-more-amid-israel-iran-conflict-wesley-clark/ar-AA1GGtPW
If the real goal is regime change in Iran, this conflict will go on for months.
If the real goal is regime change in Iran, this conflict will go on for months.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Update - June 14
Kharg or Khark Island. Iran's Persian Gulf export terminal. No on mentions it anymore. Definitely a flaming "Achilles
Heel", easy to take out/shut down. A bomb or two or special ops and everyone will start talking.
Heel", easy to take out/shut down. A bomb or two or special ops and everyone will start talking.
Re: Sweet 16 Update - June 14
I took a hard look at the at Crescent Energy (CRGY) this morning.
Crescent Energy is a "Growth by Acquisitions" company, which is out-of-favor by most of the Wall Street Gang these days because their first assumption is that the Company paid too much for the acquired assets. Q2 2025 will be the first full quarter since the Ridgemar Energy Acquisition closed, so it will give the Wall Street Gang more information on which to value the company.
Two highly respected energy sector analysts have recently updated their forecasts and price targets for CRGY.
Note that both of the updates were before the oil price spike on 6/13.
> On 6/9/2025 Mark Lear (rated 5-Stars by TipRanks) at Piper Sandler rated CRGY a BUY with a price target of $14.00
> On 6/3/2025 John Freeman (rated 5-Stars by TipRanks) at Raymond James rated CRGY a BUY with a price target of $16.00
TipRanks' consensus EPS forecasts of $0.27 for Q2 and $0.33 for Q3 are now higher than my forecasts. TipRanks' consensus operating cash flow per share forecasts for Q2 and Q3 are also higher than my forecasts.
On January 31, 2025 Crescent Energy close a large Eagle Ford acquisition from Ridgemar Energy for $905 million which increased the Company's production by approximately 20,000 Boepd (~70% oil). For the year 2025, the Company's production is now expected to be 251,000 to 261,000 Boepd with a mix of 40% crude oil, 42% natural gas and 18% NGLs.
On May 5, 2025 Crescent released its full-year 2025 outlook, forecasting approximately 30% year-over-year production growth. The Company plans to operate a flexible 4 - 5 rig program, allocating capital across its oil and gas assets to maximize returns and free cash flow. The outlook incorporates an 11-month contribution from the recently acquired Ridgemar assets, following the successful closing on January 31, 2025
TipRanks' consensus price target of $13.89 (average of 10 analysts' PTs) is only 2.16 X TipRanks' consensus operating cash flow per share forecast of $6.42. That is a very low valuation multiple for a company of this size.
The only negative that I can see, is that the Company has some work to do on the balance sheet, but the size of their debt is reasonable for this much production. A big plus, is that most of their production is in South Texas, which has plenty of pipeline takeaway capacity for all of their production. In Q1 2025 they generated $432.4 million ($1.66/share) of Adjusted Operating Cash Flow, with realized commodity prices (including the cash settlements on their hedges) of $67.17/bbl of crude oil, $3.09/mcf of natural gas and $25.15/bbl of NGLs.
Crescent Energy pays a small dividend of $0.12/quarter and it does have a stock buyback underway, which might be suspended while they use more free cash flow to pay down the debt.
~41% of their crude oil for Q2 thru Q4 2025 is hedged at a blended price of $70.40/bbl. Their natural gas hedges are good and should not have a big impact on realized gas prices.
If the Company's Q2 results are in line with TipRank's consensus forecast, my valuation of $19.00 will be going up.
Crescent Energy is a "Growth by Acquisitions" company, which is out-of-favor by most of the Wall Street Gang these days because their first assumption is that the Company paid too much for the acquired assets. Q2 2025 will be the first full quarter since the Ridgemar Energy Acquisition closed, so it will give the Wall Street Gang more information on which to value the company.
Two highly respected energy sector analysts have recently updated their forecasts and price targets for CRGY.
Note that both of the updates were before the oil price spike on 6/13.
> On 6/9/2025 Mark Lear (rated 5-Stars by TipRanks) at Piper Sandler rated CRGY a BUY with a price target of $14.00
> On 6/3/2025 John Freeman (rated 5-Stars by TipRanks) at Raymond James rated CRGY a BUY with a price target of $16.00
TipRanks' consensus EPS forecasts of $0.27 for Q2 and $0.33 for Q3 are now higher than my forecasts. TipRanks' consensus operating cash flow per share forecasts for Q2 and Q3 are also higher than my forecasts.
On January 31, 2025 Crescent Energy close a large Eagle Ford acquisition from Ridgemar Energy for $905 million which increased the Company's production by approximately 20,000 Boepd (~70% oil). For the year 2025, the Company's production is now expected to be 251,000 to 261,000 Boepd with a mix of 40% crude oil, 42% natural gas and 18% NGLs.
On May 5, 2025 Crescent released its full-year 2025 outlook, forecasting approximately 30% year-over-year production growth. The Company plans to operate a flexible 4 - 5 rig program, allocating capital across its oil and gas assets to maximize returns and free cash flow. The outlook incorporates an 11-month contribution from the recently acquired Ridgemar assets, following the successful closing on January 31, 2025
TipRanks' consensus price target of $13.89 (average of 10 analysts' PTs) is only 2.16 X TipRanks' consensus operating cash flow per share forecast of $6.42. That is a very low valuation multiple for a company of this size.
The only negative that I can see, is that the Company has some work to do on the balance sheet, but the size of their debt is reasonable for this much production. A big plus, is that most of their production is in South Texas, which has plenty of pipeline takeaway capacity for all of their production. In Q1 2025 they generated $432.4 million ($1.66/share) of Adjusted Operating Cash Flow, with realized commodity prices (including the cash settlements on their hedges) of $67.17/bbl of crude oil, $3.09/mcf of natural gas and $25.15/bbl of NGLs.
Crescent Energy pays a small dividend of $0.12/quarter and it does have a stock buyback underway, which might be suspended while they use more free cash flow to pay down the debt.
~41% of their crude oil for Q2 thru Q4 2025 is hedged at a blended price of $70.40/bbl. Their natural gas hedges are good and should not have a big impact on realized gas prices.
If the Company's Q2 results are in line with TipRank's consensus forecast, my valuation of $19.00 will be going up.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Update - June 14
On Newsmax this morning:
The Middle East situation is "going to get rough" and "we're going to see the Iranians out of desperation throw everything they can," at Israel, retired Air Force Brig. Gen. Blaine Holt said on Newsmax, Friday.
"They'll try to probably close the Straits of Hormuz. I'm confident that the Israelis ... have had their greatest achievement since the Six-Day War," Holt told "Rob Schmitt Tonight" on Friday.
"What my concern is in the days ahead, this will sort. And the United States will be right there with Israel. But my concern is domestic. We have terror groups.
"After four years of open borders from Hezbollah, Iran, Venezuela and, you know, they don't wait for the ayatollah to give them a green light. They look for conditions on their activation orders. And we already have these protests this weekend. So, I would urge all Americans to take their personal security and safety very, very serious."
Israel launched blistering attacks on the heart of Iran's nuclear and military structure Friday, deploying warplanes and drones previously smuggled into the country to assault key facilities and kill top generals and scientists — a barrage it said was necessary before its adversary got any closer to building an atomic weapon.
Iran retaliated late Friday by unleashing scores of ballistic missiles on Israel, where explosions flared in the skies over Jerusalem and Tel Aviv and shook the buildings below.
The Middle East situation is "going to get rough" and "we're going to see the Iranians out of desperation throw everything they can," at Israel, retired Air Force Brig. Gen. Blaine Holt said on Newsmax, Friday.
"They'll try to probably close the Straits of Hormuz. I'm confident that the Israelis ... have had their greatest achievement since the Six-Day War," Holt told "Rob Schmitt Tonight" on Friday.
"What my concern is in the days ahead, this will sort. And the United States will be right there with Israel. But my concern is domestic. We have terror groups.
"After four years of open borders from Hezbollah, Iran, Venezuela and, you know, they don't wait for the ayatollah to give them a green light. They look for conditions on their activation orders. And we already have these protests this weekend. So, I would urge all Americans to take their personal security and safety very, very serious."
Israel launched blistering attacks on the heart of Iran's nuclear and military structure Friday, deploying warplanes and drones previously smuggled into the country to assault key facilities and kill top generals and scientists — a barrage it said was necessary before its adversary got any closer to building an atomic weapon.
Iran retaliated late Friday by unleashing scores of ballistic missiles on Israel, where explosions flared in the skies over Jerusalem and Tel Aviv and shook the buildings below.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group