Energy Prospectus

Working gas in storage was 3,215 Bcf as of Friday, July 17, 2020, according to EIA estimates. This represents a net increase of 37 Bcf from the previous week.
Stocks were 656 Bcf higher than last year at this time and 436 Bcf above the five-year average of 2,779 Bcf.
At 3,215 Bcf, total working gas is within the five-year historical range.

This is the 3rd week in a row that the build in storage has come in below the 5-year average. I am expecting the trend to continue.
> HEAT in July and August has increase demand for power generation.
> LNG exports should increase
> Some HOPE that industrial demand will pick up soon
> Lack of new well completions combine with depleting production from existing wells should reduce supply heading into the next winter heating season.

If storage continues to move back to the 5-year average the NYMEX futures contracts for December to March should firm up over $2.50. The December contract trading at $2.69 as I post this.

Read This: https://oilprice.com/Energy/Natural-Gas ... -Come.html

Both of the "gassers" in our Small-Cap Growth Portfolio (GDP and GPOR) should make a nice comeback if they can survive until winter heating season causes actual natural gas prices to ramp up. I am going to update both companies' forecast/valuation models today and post them to the EPG website.

Gulfport Energy (GPOR) is a much larger company that should produce about 172,500 Boe per day this year, but it has more RISK because of nervous debt holders. Based on the Company's guidance, they should generate more than enough cash flow from operations to pay all vendor invoices and the interest on their debt. Their 6/30/2020 balance sheet may be out of compliance with debt covenants, but debt holders should remain "flexible" because of the NYMEX strip prices for gas.
June 2nd Update from Gulfport: 2020 Operational Plans
As a result of the current commodity price environment, Gulfport recently made the strategic decision to defer near-term production to later periods in 2020 and early 2021, when natural gas prices are expected to be materially higher when compared to mid-year strip pricing. In addition, Gulfport plans to complete an additional 3 gross wells in the Utica Shale during in the second half of 2020, providing incremental production late this year and into early 2021 in the anticipation of higher prices during the winter months. Lastly, Gulfport’s updated production guidance reflects the recent production impacts due to shut ins from both the Company and its non-operated partners due to low prices. Considering all these factors, Gulfport now expects 2020 full year net production to average 1,000 MMcfe to 1,075 MMcfe per day. In addition, Gulfport forecasts its second quarter of 2020 production to average approximately 1,000 MMcfe to 1,050 MMcfe per day.

With the addition of this activity in late 2020, Gulfport is currently projecting 2020 total capital expenditures to be at the midpoint of the previously provided range of $285 million to $310 million, which compares to my 2020 cash flow forecast of $319 million. - Dan
---------------------------
Goodrich Petroleum (GDP) is a much smaller company with only 23,150 Boepd of production this year (99% natural gas). They hold some outstanding Haynesville Shale leasehold and 100% of this year's gas is hedged at good prices. If ngas prices do spike late this year, Goodrich can quickly ramp up production because their Haynesville horizontal wells come online at over 20,000 Mcfe per day and payout rapidly with gas selling at $2.50/mcf. GDP should be a double for us if ngas prices move over $2.50.