Sweet 16 Update
Posted: Sat Jan 28, 2012 6:15 pm
The Sweet 16 is now up 7.75% YTD. CLR and DNR lead the pack. GTE and TGA are also off to strong starts, not surprising since they are both pure plays on oil. IMO, if you can stand the geopolitical risk in Egypt, TGA appears to have incredible near-term upside. Their production is going to ramp up to over 20,000 BOPD quickly and they sell it all on contracts tied to Brent. The big jump in their proven reserves means lower DD&A and much higher reported EPS.
GTE is debt free and generating more than enough free cash flow to fund their growth. Take a look at my forecast model for GTE. It is one of the best I have ever seen. It is trading at about half my Fair Value estimate.
CRZO, GST, RRC and PTEN all down YTD due to market fears over lower gas prices. I talked to PTEN last week and they have yet to see any dip in rig demand for their top end rigs. CRZO is on the ropes and may be dropped from the S-16 if they report Q4 results below my forecast. GST and RRC are in the S-16 because I'm expecting significantly higher liquids production from both. RRC has 75% of their NG for 2012 hedged at $4.45.
I got a call about MIND yesterday from a "nervous" EPG member. I have seen nothing from the company to make me doubt my forecast for MIND. In fact, I think they will report stunning results the next two quarters.
GEOI has moved over my Fair Value estimate but that should not be a concern. My Fair Value estimates for all the Sweet 16 will be going up if I see solid Q4 results and year-end reserve reports. My Fair Value estimate for GeoResources is more than $3/share below the First Call estimate, so I do need to take a hard look at it.
The Sweet 16 start reporting Q4 results next week. HP and PTEN are up first. I will do my best to update the company profiles and forecast models as soon as I can after I listen to the conference calls. I am expecting strong Q4 results from all.
Drops:
PetroBank and Petrominerales are both up more than 30% YTD. I really like both of these companies. Both are heavily weighted to oil.
GTE is debt free and generating more than enough free cash flow to fund their growth. Take a look at my forecast model for GTE. It is one of the best I have ever seen. It is trading at about half my Fair Value estimate.
CRZO, GST, RRC and PTEN all down YTD due to market fears over lower gas prices. I talked to PTEN last week and they have yet to see any dip in rig demand for their top end rigs. CRZO is on the ropes and may be dropped from the S-16 if they report Q4 results below my forecast. GST and RRC are in the S-16 because I'm expecting significantly higher liquids production from both. RRC has 75% of their NG for 2012 hedged at $4.45.
I got a call about MIND yesterday from a "nervous" EPG member. I have seen nothing from the company to make me doubt my forecast for MIND. In fact, I think they will report stunning results the next two quarters.
GEOI has moved over my Fair Value estimate but that should not be a concern. My Fair Value estimates for all the Sweet 16 will be going up if I see solid Q4 results and year-end reserve reports. My Fair Value estimate for GeoResources is more than $3/share below the First Call estimate, so I do need to take a hard look at it.
The Sweet 16 start reporting Q4 results next week. HP and PTEN are up first. I will do my best to update the company profiles and forecast models as soon as I can after I listen to the conference calls. I am expecting strong Q4 results from all.
Drops:
PetroBank and Petrominerales are both up more than 30% YTD. I really like both of these companies. Both are heavily weighted to oil.