Sweet 16 Update - April 12

[dan_s]

I needed to finish my federal tax return on Saturday morning, so I am just getting started on updating the forecast/valuation models for the Sweet 16. I did see that First Call's price targets have moved over the valuations in my March newsletter for 9 of the Sweet 16 > AR, DVN, FANG, EQT, MGY, PR, RRC, SEI, TOU.TO. < This tells me that most of the Wall Street Gang is now using higher oil prices to value the companies.

My goal is to get all of the Sweet 16 forecast models updated this weekend. Sabrina will be posting several of them to the EPG website later today.

Forecast models updated on Saturday: AR, CTRA, CRGY, DVN, FANG. < Devon Energy (DVN) is going to draw a lot of attention when the stock-for-stock merger with Coterra (CTRA) closes in a few weeks. Devon will then become a "Must Own" stock of most Growth + Income funds.

TipRanks Premium: "Based on 19 Wall Street analysts offering 12 month price targets for Devon Energy in the last 3 months. The average price target is $55.00 with a high forecast of $67.00 and a low forecast of $41.00. The average price target represents a 15.09% change from the last price of $47.79." < The six most recently updated price targets range from $59 to $62.
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Sunday:

Today I will focus on the Sweet 16 companies that should get the largest reaction to rising oil prices.

EOG Resources (EOG): Based on my updated oil & gas price deck, my valuation of EOG increases by $11 to $170. NONE of EOG's oil is hedged.
TipRanks Premium: "Based on 22 Wall Street analysts offering 12-month price targets for EOG Resources in the last 3 months. The average price target is $150.20 with a high forecast of $199.00 and a low forecast of $110.00. The average price target represents a 10.29% change from the last price of $136.19."
On April 8: "Wells Fargo raised the firm’s price target on EOG Resources (EOG) to $199 from $155 and keeps an Overweight rating on the shares. The firm expects continued robust field execution and financial beats for Q1 2026. Key focus areas include the trajectory of gas realizations as liquefied natural gas-linked volumes ramp and the evolution of cash return framework."

Magnolia Oil & Gas (MGY)
Based on my updated forecast, my valuation of MGY increases by $3 to $36 per share. NONE of MGY's oil is hedged.
TipRanks Premium: "Based on 17 Wall Street analysts offering 12 month price targets for Magnolia Oil & Gas in the last 3 months. The average price target is $32.33 with a high forecast of $38.00 and a low forecast of $26.00. The average price target represents a 8.13% change from the last price of $29.90."

Matador Resources (MTDR) is now one of my TOP PICKS in our Sweet 16. It closed at $59.86 on April 10th. At that price it is a Screaming Takeover Target. Based on my updated forecast, my valuation increases by $8 to $84 per share.
TipRanks Premium: "Based on 17 Wall Street analysts offering 12 month price targets for Matador Resources in the last 3 months. The average price target is $68.19 with a high forecast of $85.00 and a low forecast of $54.00. The average price target represents a 13.92% change from the last price of $59.86." < On April 8, Scott Hanold (a 5-Star rated energy sector analyst) at RBC Capital raised his price target for MTDR from $60 to $77.

Permian Basin (PR): My "Dream Merger" is a stock-for-stock merger of MTDR into PR.
I have increased my valuation by $1.50 to $25.50 per share.
TipRanks Premium: "Based on 18 Wall Street analysts offering 12 month price targets for Permian Resources in the last 3 months. The average price target is $23.41 with a high forecast of $27.00 and a low forecast of $14.00. The average price target represents a 13.31% change from the last price of $20.66."

SM Energy (SM): This is one of three "Special Situation" companies in the Sweet 16 due to the merger of Civitas into SM that closed January 30, 2026, which was followed by the $950 million Maverick Basin Sale that should close in a few weeks. After the sale closes, SM should have production of approximately 420,000 Boepd (~55% crude oil). About 50% of their oil is hedged at a blended price of $64/bbl, which is the only thing keeping a lid on my valuation.
I have increased my valuation by $8 to $57 per share, which is just 3.25 X annualized operating cash flow per share.
TipRanks Premium: "Based on 12 Wall Street analysts offering 12 month price targets for SM Energy in the last 3 months. The average price target is $34.50 with a high forecast of $49.00 and a low forecast of $19.00. The average price target represents a 21.56% change from the last price of $28.38." < After SM announces Q1 results on May 7th and updated guidance for the remainder of the year, I expect SM to get a lot more "love" from the Wall Street Gang.

[dan_s]

DENVER, April 9, 2026 /CNW/ - Ovintiv Inc. (NYSE: OVV) (TSX: OVV) ("Ovintiv" or the "Company") today closed the previously announced all cash sale of its Anadarko assets, located in Oklahoma, for $3.0 billion. After customary closing adjustments, proceeds from the sale are expected to total approximately $2.85 billion.

"The Anadarko sale completes the transformation of our portfolio and our balance sheet," said Ovintiv President and CEO, Brendan McCracken. "Proceeds from the sale will go to debt reduction, marking the achievement of our debt target and unlocking returns for our shareholders."

In addition, the Company today announced that it has issued a notice to the trustee of its 5.650% notes due 2028 to redeem the entire $700 million aggregate principal amount. The outstanding 2028 notes will be redeemed, pursuant to their terms and conditions, on April 20, 2026.

With rising oil prices and a MUCH STRONGER balance sheet, OVV now deserves a higher valuation multiple (4.5 to 5.0 X annualized operating cash flow per share).
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I have updated my forecast/valuation model for Ovintiv to include the impact of the Anadarko sale and my new oil & gas price deck.
OVV closed at $56.09 on April 10th
My valuation increases by $8 to $78/share, primarily due to the increased valuation multiple I am now using.
TipRanks Premium: "Based on 21 Wall Street analysts offering 12-month price targets for Ovintiv in the last 3 months. The average price target is $62.68 with a high forecast of $75.00 and a low forecast of $44.00. The average price target represents a 11.75% change from the last price of $56.09." < Keep in mind that TipRanks' price targets are based on the average of many analysts' individual price targets that are all dated prior to what happened in Pakistan over the weekend. The War in Iran is not going to end in April, so I do expect oil prices to go higher and stay higher than where the NYMEX strip closed on April 10th. If the shooting war is still going on in June, $200/bbl Brent is possible.

[dan_s]

All of the Sweet 16 Growth Portfolio individual forecast/valuation models have now been updated based on these oil and gas prices.

WTI Oil
Q1 2026: $68/bbl, Q2 2026: $95/bbl, Q3 2026: $85/bbl, Q4 2026: $76/bbl, and $75/bbl for the year 2027. < At the time of this post WTI (MAY26) was trading at $104.54/bbl. Oil Traders that shorted the MAY26 NYMEX contract are getting killed.

HH natural gas
Q1 2026: $4.75/MMBtu, Q2 2026: $2.75/MMBtu, Q3 2026: $3.10/MMBtu, Q4 2026: $4.00/MMBtu, and $4.00/MMBtu for the year 2027.

The Sweet 16 companies that are trading at the deepest discounts to my updated valuations are: SM, CRGY, MTDR, OVV and DVN.

The updated Sweet 16 Summary Spreadsheet will be available on the EPG website late this evening.

On Monday I will be updating my forecast/valuation models for the nine companies in our Small Cap Growth Portfolio. BTE, JOY.TO, KGEI, REPX, REI, ROK.V, and RBY.TO have the most exposure to rising oil prices. ROK.V is a "Special Situation" stock that could end up being a big winner for us.

On Tuesday I will be updating the forecast models for the 12 companies in our High Yield Income Portfolio.
VNOM, HME.V, IPO.TO and SGY.TO have the most exposure to rising oil prices.