Energy Prospectus

Today I am updating all 16 individual company forecast models. They are being posted to the EPG website soon after I update them. You can find them on the EPG website home page.

My office AC went out yesterday, so this afternoon I will know what it is like to work in a 3rd world country without steady electricity.

I have updated five of the Sweet 16 forecasts so far, and I will get all of them updated today.

Since most of the Sweet 16 produce a lot of natural gas, rising natural gas prices are offsetting most of the impact of falling oil prices. I just finished Diamondback Energy (FANG) and my valuation actually went up $2 to $226 per share.

I just finished updating my forecast model for SilverBow Resources (SBOW), which will soon be merging into Crescent Energy (CRGY).

My valuation of SBOW is as a separate company. My valuation stays at $63/share because ~73% of the SilverBow's production is natural gas and NGLs. Rising natural gas prices have more than offset the decline in oil prices. SilverBow also has ~65% of their 2024 oil hedged, which also softens the impact of the oil price dip. My valuation is based on 2.5 X annualized operating cash flow per share. That is a VERY LOW multiple.

I am comparing all of my forecasts and updated price targets to what other analysts have submitted to TipRanks. There has been no significant changes in my valuations or the updated price targets submitted to TipRanks for any of the Sweet 16. For a few of the Sweet 16 that produce a lot of unhedged natural gas, my stock valuations have increased.

Back to SilverBow. Since the merger with Crescent Energy is now 99% sure to close late in Q3, the Wall Street Gang is basing their valuations of SBOW on the exchange rate of 3.125 X CRGY, which is much lower than my $63 valuation. That does not mean that SilverBow made a bad deal. CRGY is also trading way below my current valuation. SBOW and CRGY are both trading below book value per share and there is nothing to support those low stock prices that I can see.

SIZE MATTERS IN THIS BUSINESS: When the merger closes, Crescent Energy will be a mid-cap with a strong balance sheet and lot of high-quality "Running Room"; drawing a lot more of the Wall Street Gang's attention. If you are looking to add more exposure to rising natural gas prices, CRGY and SBOW both look like "Screaming Buys" to me.

After the deal closes in September, the Wall Street Gang will take a much harder look at the combined company. If U.S. natural gas prices do move up to current strip prices for 2025, CRGY should be a double for us.