Energy Prospectus

Since my last Sweet 16 Update (four weeks ago) the portfolio has declined by ~24%. Unless you believe WTI is going to settle below $50/bbl and stay there, the pullback is not justified. In my opinion, sub $55/bbl oil is unsustainable.

FEAR related to the Corona Virus is responsible for the drop in oil prices. I'm not a doctor and I have no way of knowing if the virus will spread death and destruction around the world. However, all previous fears related to health matters (Aides, SARs, Ebola, Bird Flu, etc.) were way over-blown and had no impact on the demand for oil. What I do know is the media in the country is all about ratings and spreading FEAR is a good way to draw in viewers.

The situations in Libya ( https://oilprice.com/Energy/Energy-Gene ... -Zero.html# ) and Venezuela are getting worse. U.S. continues to tighten sanctions against Iran and global demand for oil always spikes in the summer. OPEC+ has already said they will extend their production cuts through June.

My Take is that oil prices will rebound when the FEAR of the Corona Virus backs down. BTW Corona is my favorite beer. Google "Corona Beer Virus" to see how fast fear spreads.

4th quarter results are going to be good for the Sweet 16. The price of oil was actually higher in Q4 than what I used in my forecast/valuation models.

The companies will not be reporting Q4 results until mid-February because it takes longer to complete the year-end reserve reports.

An updated Sweet 16 spreadsheet will be posted to the EPG website this afternoon.

Corona Virus Update: No deaths have been reported outside China.

Chinese officials on Saturday reported the highest death toll so far in a 24-hour period.

◆ The 46 new deaths in China raised the toll to 259.

◆ About 2,100 new cases were also recorded in the country in the past 24 hours, raising the worldwide total to nearly 12,000, according to Chinese and World Health Organization data. The vast majority of the cases are inside China; about 100 cases have been confirmed in 21 other countries.

◆ All of China’s provinces and territories have now been touched by the outbreak.

◆ Countries and territories that have confirmed cases: Thailand, Japan, Hong Kong, Singapore, Taiwan, Australia, Malaysia, Macau, Russia, France, the United States, South Korea, Germany, the United Arab Emirates, Canada, Britain, Vietnam, Italy, India, the Philippines, Nepal, Cambodia, Sri Lanka, Finland and Sweden.

◆ Cases recorded in Thailand, Taiwan, Germany, Vietnam, Japan, France and the United States involved patients who had not been to China.

◆ No deaths have been reported outside China.

◆ China has asked the European Union for help in purchasing urgent medical supplies from its member countries, the official Xinhua news agency said on Saturday.

Coronaviruses (CoV) are a large family of viruses that cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV). A novel coronavirus (nCoV) is a new strain that has not been previously identified in humans.

Coronaviruses are zoonotic, meaning they are transmitted between animals and people. Detailed investigations found that SARS-CoV was transmitted from civet cats to humans and MERS-CoV from dromedary camels to humans. Several known coronaviruses are circulating in animals that have not yet infected humans.

Common signs of infection include respiratory symptoms, fever, cough, shortness of breath and breathing difficulties. In more severe cases, infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and even death.

Standard recommendations to prevent infection spread include regular hand washing, covering mouth and nose when coughing and sneezing, thoroughly cooking meat and eggs. Avoid close contact with anyone showing symptoms of respiratory illness such as coughing and sneezing.