Sweet 16 Update - Feb 21

[dan_s]

We got back late on Saturday from Dallas because of a traffic jam on Beltway 8. It seems that every trip to Dallas and back includes a 30 to 60 minute traffic delay, usually on highway 45. I have updated the Sweet 16 Summary Spreadsheet, which shows my current valuation for each company. You can find it under the Sweet 16 tab on the EPG website.

During the week ending February 20th the Sweet 16 gained 3.19% and is now up 18.07% YTD.
CRGY, OVV, PR and SM lead the pack, all up more than 25% YTD.
The S&P 500 Index gained 0.48% and is now up 0.94% YTD.

Last week I took a hard look at six of the forecast models (AR, CTRA, CRGY, DVN, EQT and MGY). My updated forecast/valuation models for each company have been posted to the EPG website.

Only AR, DVN, EQT and MGY have released Q4 2025 results. The other 12 companies will be releasing Q4 results this coming week. I expect all of them to meet or exceed my forecasts since realized oil prices were higher than my forecast.

EIA's natural gas storage report for the week ending February 20th will wipe out most of the storage deficit to the 5-year average of 123 Bcf on February 13. However, the next three storage draws are now expected to be larger than the 5-year average. HH natural gas prices in Q1 are ALWAYS determined by the weather. All we need now is average draws from storage in March to start the refill season with a deficit in storge.

Crescent Energy (CRGY) and SM Energy (SM) have the most upside to my current valuations. Both companies are closing "Transformative" mergers that put them in the Top Ten largest upstream oil & gas companies in the U.S. as measured by Boepd of production. The Wall Street Gangs' most influential energy sector analysts will be on their Q4 earnings calls and so will I. I expect both of them to get significant price target increases.

A more bullish weather pattern should give the gassers (AR, CTRA, EQT, RRC and TOU.TO) some support this week. Oil prices depend on Trump's next move against Iran.

If you live in Houston, I hope you will join me for dinner at Flemings on Tuesday.

[mikelp]

some popular energy ETFs YTD

XLE +22%
XOP +20 %
OIH +35%

[dan_s]

I was planning to finish my February newsletter this coming week, but I am going to push it back a week to March 8 because so many of our model portfolio companies have pushed back Q4 results and 2026 guidance updates to late in February. I will be overwhelmed with new information this coming week. Most of the small caps are not releasing results until mid-March.

I will try to keep up and post my "Quick Takes" on the Forum each day. We will be publishing updated company profiles on all of the model portfolio companies and the Sweet 16 are the top priority.

Here are the companies I expect to release Q4 2025 results this week after the markets close each day.
Feb 23: FANG, OVV, BSM, VNOM, SDE.TO
Feb 24: EOG, MTDR, RRC, SEI,
Feb 25: CRGY, NOG, PR, SM, TOU.TO
FEB 26: CTRA, KRP

Plus, my lovely wife Susan has booked a short two-day casino trip over to Lake Charles for my birthday (#72) on March 2 & 3. So, I will focus all my attention on the next newsletter starting on March 4 with most of the newsletter focused on the Sweet 16. < PS my wife has total control over our vacation schedule.

[dan_s]

I updated my forecast/valuation model for Ovintiv for the impact of the sale of their Anadarko assets for $3 billion. The sale is expected to close in April. My valuation increases by $2.50 to $60/share, based on just 4.25 X annualized operating cash flow per share. That is a low multiple for a company of this size and quality.

My updated forecast model will be posted to the EPG website this afternoon.

TipRanks rates OVV a Strong Buy: "Based on 10 Best Performing Wall Street analysts offering 12-month price targets for Ovintiv in the last 3 months. The average price target is $55.11 with a high forecast of $58.00 and a low forecast of $52.00. The average price target represents a 8.96% change from the last price of $50.58."