Sweet 16 Update - June 29

[dan_s]

WTI dropped sharply just before the close as computerized trading at the end of Q2 closed out a lot of long positions with nice gains. At $58.20/bbl WTI finished June about 9% higher.

The Sweet 16 moved 1.83% higher on the week, but it is still down 0.85% YTD. This is amazing since WTI is about $12/bbl higher YTD.

If I remove the four "gassers" (AR, GPOR, RRC and SWN) the other 12 companies are up 7.24% YTD.

What's weird is that all four of the gassers are quite profitable and they are all generating ample free cash flow from operations. They have a lot of their gas hedged at good prices, so "Reported Net Income" s/b very impressive because it will include big gains due to mark-to-mark adjustments on their hedges.

For the quarter: WTI averaged about $4/bbl higher in Q2 than it averaged in Q1, HH natural gas was about $0.30/MMBtu lower and NGLs were about $0.10/gallon lower. NGLs includes a large mix of liquids and regional price differences are quite large.

All of the 16 individual company forecast/valuation models have been updated. They should all report positive "Adjusted Net Income" for the quarter and higher cash flow from operations.

All eyes and ears will be focused on news from the G20 Summit meeting between Trump and Xi Pinging on Saturday. Then early next week we get a new OPEC+ production quota agreement. Regardless, demand for oil should exceed supply by over a million barrels per day in Q3.

I will send out a podcast on Saturday and I will be working on the newsletter during the weekend. I now plan to finish it on July 3rd, after the OPEC+ announcement.