Energy Prospectus

This weekend I will be updating all of the Sweet 16 stock valuations based on my lower oil & gas price deck, which was mentioned under the View From Houston tab yesterday. I am now using $85 WTI and $6.00 HH gas for 2023. I believe the "Right Price" for WTI is over $100/bbl as OECD petroleum inventories keep falling.

As each forecast/valuation model is updated, it will be posted to the EPG website home page.

The S&P 500 Index lost 1.72% last week, thanks to "FEAR of the Fed".

The Sweet 16 gained 5.56% last week as oil and gas prices firmed up, thanks to rising demand for space heating fuels and IEA's monthly report that reminded investors how tight the global oil market is. SM Energy (SM) was the only stock that was down slightly during the week.

The Sweet 16 is now up 37.26% YTD and still trading at less than half of my Fair Value Estimate for the group. I expect most of the Sweet 16 companies to publish 3rd party reserve reports that show their PV10 Net Asset Value per share on 12-31-2022 was higher than their stock price. Companies of this quality should NEVER trade below the PV10 NAV of their P1 reserves.

Permian Resources (PR) is a strong candidate for promotion to the Sweet 16 in 2023.
I've gained a lot of confidence in my forecast/valuation model, primarily because three highly respected energy sector analysts have published new reports and updated price targets on PR this month.

12/1/2022: Mark Lear at Piper Sandler rates PR a BUY with a price target of $14.00

12/2/2022: Neal Dingmann a 5 Star analyst at Truist Financial rates PR a BUY with a price target of $15.00

12/5/2022: Zach Parham at J.P. Morgan rates PR a BUY with a price target of $12.00

PR closed at $8.84 on 12/16/2022. My updated valuation is $13.00.

I am bringing this one to your attention today because PR is going to report a BIG INCREASE IN PRODUCTION FROM Q3 TO Q4.

We will be publishing a profile on Permian Resources on Monday.

For those of you who are bullish on natural gas (including me).

EQT Corp. (NYSE: EQT) is the largest producer of natural gas in the U.S. (over 5.2 Bcfep per day) or ~5% of the nation's total gas production.

EQT closed at $37.24 on December 16.

TipRanks: "In the last 3 months, 14 ranked analysts set 12-month price targets for EQT. The average price target among the analysts is $62.58. On December 16th CapitalOne analyst Brian T. Velie lowered the price target on EQT Corp. (NYSE: EQT) to $78.00 (from $83.00) while maintaining an Overweight rating."

TipRanks average forecasts for 2023
> Revenues of $10.5 billion, which compares to my forecast of $10.6 billion
> Net Income per share of $10.00 < How does a large-cap of this quality trade for a PE ratio under 4 ???
> Operating cash flow per share of $15.16

My Fair Value Estimate as of today is $62.00/share.

The 10 Day weather forecast for the U.S. is the most bullish December forecast that I have seen for at least the last ten years. For the week ending December 23 we should see EIA report more than a 200 Bcf draw from storage and it could be as high as 250 Bcf. The week ending December 30 could also be close to a 200 Bcf draw.