Sweet 16 Update

[dan_s]

I have check all of my individual company forecast models and compared my Fair Value Estimates to the current First Call Price Targets. I have posted updated spreadsheets to the website under the Sweet 16 Tab.

> This sector is grossly oversold unless you think WTI is going to $60/bbl and staying there.

> The Sweet 16 as a group is now trading 81% below my Fair Value Estimates and I have gone VERY CONSERVATIVE on my valuation multiples. I have never seen the sector trade at this discount to break-up values for this long. Buying proven reserves on Wall Street is the way to go if you are a large-cap with a lot of cash.

> A prime example is Oasis Petroleum (OAS). Forget about their production growth, just take their net acres in the Bakken and multiply by the going rate for raw acreage and you get a number larger than the current OAS market cap. Now consider that 85% of Oasis Bakken acreage is in the fairway that should sell for double the going rate. Now consider that their drilling program has proven up the acreage. Now consider that OAS is going to report 90% production growth this year and a HUGE increase in proven reserves at year-end. Check out my updated forecast model which can be found under the Sweet 16 Tab. Check the First Call Price Target for this one and look at their forecast of revenue growth.

What stikes me as weird is that we are not seeing some hostile takeovers at these levels. It may have more to do with the investment banks.

I will be making 4 to 6 changes to the Sweet 16, effective July 1st. I will announce then with a special EPG Alert late next week.