Sweet 16 Update - January 18

[dan_s]

The Sweet 16 is now up 8.1% YTD and all 16 are positive (thanks to CRZO having a strong week). The only stock moving a bit lower this week was Unit Corp. (UNT), which makes no sense with gas prices drifting higher. UNT is really an E&P company with a drilling division now. My Fair Value is $82.55.

I attended the Australian American Conference in Houston today. Australian is moving forward on a lot of very large LNG projects. I sure wish the U.S. would approve more LNG exports as that would improve our balance of trade, create more jobs and bring a lot of capital into the U.S. Obama and the unions should be all over this issue.

I will have more on the Sweet 16 tomorrow.

I took a hard look at TPLM this week and I hope to send out a profile on the company early next week. Very impressive production and reserve growth.

[bearcatbob]

Yesterday MMR stated that they sold the Lophraing (sp?) Field interest to EXXI. Dan - do you have any thoughts on that?

[dan_s]

First Call has raised their price targets for the following Sweet 16 members: DNR, EOG, EXXI, HP, ROSE, SFY and WLL.

On January 17, 2013, McMoRan completed the sale of the Laphroaig field to EXXI for cash consideration of $80 million, before closing adjustments, and the assumption of related abandonment obligations. The field represented approximately 10 percent of McMoRan’s total average daily production for the fourth quarter 2012. The transaction was effective January 1, 2013. McMoRan expects to record a net gain of approximately $74 million in the first quarter of 2013 in connection with this transaction.

This deal immediately adds production for EXXI but not a game changer. EXXI has excess cash flows to pay for it.

[dan_s]

EXXI and HP will release results for the quarter ending December 31st on January 31st. They are both on fiscal year-ends, so they don't have to wait on their annual audits or reserve reports like the other. All of the rest will release Q4 results during the last two weeks of February.

I will update the individual forecast models as quickly as I can after getting the fresh quarterly results.

I am expecting Q4 results to be very strong for the Sweet 16 and Q1 is shaping up to be outstanding since oil prices continue to drift higher.

[dan_s]

Sweet 16: An updated Net Income & Cash Flow Forecast model for Energy XXI (EXXI) has been posted under the Sweet 16 Tab. Energy XXI plans to release results for their fiscal 2nd quarter ending December 31, 2012 on Thursday, January 31st.

My forecast for EXXI has nothing in it for their Ultra-Deep Shelf program.

The company's fiscal 1st quarter production of 37,300 boepd was significantly impacted by Hurricane Isaac. I am expecting Q2 production to bounce back to around 46,500 boepd ( ~73% oil ). Since they sell all of their production into the Gulf Coast market, EXXI gets close to Brent pricing. They also get a premium on their natural gas because it has a high btu content.

They should report increasing production from their horizontal development wells and I am now forecasting daily production near 62,000 boepd by their fiscal year-end of June 30th.

My adjusted Fair Value Estimate can be found near the bottom of the forecast spreadsheet.