"In particular, the bear market in oil exploration and production companies has created value that can hardly be believed. We analyzed the universe of all US-listed E&P companies with market capitalizations over $100mm and proved reserves that are at least 50% oil. We then compared the current stock price to the net-debt adjusted SEC PV-10 measure from their 2018 10Ks. As you may recall, a company’s PV-10 measures the discounted cash flow of all proved reserves at the prevailing oil and gas prices. Under normal market conditions, E&P stocks trade at a premium to their SEC PV-10, reflecting the expected value of any future reserves not yet “booked” in the reserve statement. However, due to the overwhelming bearishness among energy investors, the average company now trades at a 12% discount to its net-debt adjusted SEC PV-10 per share value."
Read more: http://blog.gorozen.com/blog/oil-a-mark ... om-reality
The article at the link above is dated 11/13/2019, but it explains why there is significant upside in the upstream oil & gas companies that are heavily weighted to oil. I believe the escalation of the war between the U.S. & Iran (yes it is a "war") will add at least $5.00/bbl to WTI. The stock valuations shown in the newsletter are based on WTI averaging $60/bbl for the year AND they are based on historically very conservative multiples of operating cash flow per share.
Sweet 16: Why companies weighted to oil could double in 2020
Sweet 16: Why companies weighted to oil could double in 2020
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group