Sweet 16 Q2 Results and Updates - Aug 9

[dan_s]

All 16 companies in our Sweet 16 Growth Portfolio have announced Q2 results that were at or above my forecasts. Most of them reported Adjusted Operating Cash Flow that exceeded my forecast.

All 16 forecast/valuation models have been updated for Q2 results and fresh guidance. All of the companies provide detailed guidance for production volumes and cash expenses per boe. All of them will continue to generate a lot of operating cash flow and they are all free cash flow positive at current oil & gas prices.

The companies are in good to very good financial shape, but the share prices have not moved up because of the recent pullback in natural gas prices and the significant amount of uncertainty about where oil prices are heading. My take is that Putin is not going to end the war in Ukraine unless Ukraine is willing to give Russia the eastern third of their country. The war between Israel & Iran is far from over. There is still significant risk to the global oil supply. OPEC+ is now done increasing their quotas, but it really doesn't matter because most of the cartel countries cannot produce oil up to their quotas. Saudi Arabia holds almost all of the spare oil production capacity within OPEC+, and I doubt they want lower oil prices.

The natural gas storage reports for the last three weeks of August should show builds much smaller than the 5-year average and U.S. LNG exports will be ramping up, in fact LNG exports are going to ramp up a lot in Q1 2026. The European Union will be buying a lot of U.S. LNG (See page 5 of the EQT profile we sent out this morning.)

For the week ending August 8 the Sweet 16 lost 0.41% and is now down 11.24% year-to-date.
The S&P 500 Index gained 2.72% and is now up 8.63% YTD. FEAR of the Tariff War is all but gone and the Fed should soon be lowering interest rates.

The One Big Beautiful Bill lowers the current income tax rates for all of the Sweet 16 companies. If the Fed does lower interest rates, it will also be a positive for all of the companies.

We have published updated profiles for AR, EQT, MTDR, OVV, RRC and SEI. Profiles for CRGY, CTRA, MGY and NOG are just waiting for my final review, so they will be published in the next few days. My goal is to have the rest of them done before next weekend.

This weekend I will be updating the forecast models for all of the Small-Caps that have released Q2 results.