Sweet 16 Update - Mar 4

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dan_s
Posts: 31677
Joined: Fri Apr 23, 2010 8:22 am

Sweet 16 Update - Mar 4

Post by dan_s »

Our Sweet 16 Growth Portfolio gained 5.42% during the week ending March 3rd. It is now up 3.89% YTD.
The S&P 500 Index also had a good week, gaining 1.97% and it is now up 5.37% YTD.

We found out that Ranger Oil (ROCC) is merging with Baytex in a "Stock + Cash" deal that will close in a few months. I will be replacing ROCC after I have time to look over some candidates.
> Only a few of our Small-Cap Growth Portfolio companies have reported Q4 results, so it is too early to know if any of them deserve a promotion.
> Baytex is a possible addition, but I need more time to develop a proforma forecast/valuation model.
> Surge Energy (SGY and ZPTAF) is a candidate. They will be hosting our next Houston luncheon on April 11.

Cresent Point Energy (CPG) released Q4 results and updated guidance for 2023 on March 2. I will be updating my model this weekend.

Earthstone Energy (ESTE) will announce Q4 results on March 8. They have already announced Q4 production, 12-31-2022 reserves, an operations update and guidance for 2023, so I have a high level of confidence in my current valuation of $34/share. First Call's price target is $25.33.

Permian Resources (PR) announced fantastic Q4 results and it now leads the pack, up 26.17% YTD. I have raised my valuation to $16.25, but if their results keep meeting my expectations there is a lot more upside for this mid-cap. They are getting outstanding results in the Delaware Basin and 2023 production should top the high end of their guidance (155,000 to 168,000 Boepd) within six months. PR is an Aggressive Growth company with the potential to become the next Diamondback Energy (FANG), one of my all-time top picks.

Rounding out the Top Four are Callon Petroleum (CPE) up 13.89% YTD. Range Resources (RRC) up 11.89% YTD, Vital Energy (VTLE) up 10.97% YTD. RRC is a bit of a surprise since it is a "gasser". CPE and VTLE are on pace to be the most profitable companies in the Sweet 16 this year on a per share basis. They are both trading at less than half of my valuation.

SilverBow Resources (SBOW) definitely has the potential to move to the top of the "Leader Board" this year.

AR, CRK, MGY and SM are still down YTD. They are all going to be profitable and should generate plenty of free cash flow again this year. Rising natural gas prices should push all of them into positive territory. All of the "gassers" are profitable with natural gas over $2.50/mcf since they have very low cash operating expenses.

The updated Sweet 16 summary spreadsheet will be posted to the EPG home page this afternoon.

We will be publishing updated profiles on all of the portfolio companies (except for ROCC) this month. Profiles for AR, CRK and RRC have already been update. You can find them under the Sweet 16 tab on our website.
Last edited by dan_s on Sat Mar 04, 2023 1:22 pm, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
ChuckGeb
Posts: 488
Joined: Thu Nov 21, 2013 2:46 pm

Re: Sweet 16 Update - Mar 4

Post by ChuckGeb »

Range and CRK will have the most upside in 2025 if we can get the Green Energy Syndicate Gooks out of government in 2024 and start building some NG pipelines again in 2025. Vast locations for RRC restricted by takeaway capacity.
dan_s
Posts: 31677
Joined: Fri Apr 23, 2010 8:22 am

Re: Sweet 16 Update - Mar 4

Post by dan_s »

Our gassers will actually make more money if the idiots running this country don't allow more pipeline construction. Why? Because natural gas demand will exceed supply starting late in 2024 and gas prices will go a lot higher in 2025 and 2026.

I see the most upside for Comstock (CRK) because the Haynesville will have direct access to the LNG exporters.
Dan Steffens
Energy Prospectus Group
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