Sweet 16 Update - Jan 18
Posted: Sat Jan 18, 2025 2:51 pm
During the week ending January 17th the Sweet 16 gained 4.84% and the portfolio is now up 12.25% YTD.
The S&P 500 Index was up 3.16% during the week and is now up 2.23% YTD.
All 16 companies in the portfolio are up YTD because of rising oil & gas prices and the fact that most of the upstream companies were grossly oversold in December. A lot of fund managers do rebalance their portfolios at the beginning of the year and a lot of money should continue to rotate into these very profitable upstream energy companies.
The Sweet 16 closed on Friday at a 36.8% discount to my current valuations.
Oil and gas prices have moved over the commodity prices I have been using in my forecast models. I will be updating my stock valuations for the next EPG newsletter that I plan to send out on January 27th.
We have four "gassers" in the Sweet 16 (AR, CTRA, EQT and RRC). EQT has moved over my valuation of $52.00 and AR & RRC are getting close to my valuation. I used $3.25/MMBtu in my Q1 forecasts and it looks like HH Ngas will average closer to $3.75 in Q1. The FEB25 NYMEX futures contract spiked to over $4.30/MMBtu on January 16th after EIA reported a larger than expected draw from natural gas storage. Several more BIG DRAWS from storage are coming in January and early February.
Most of the Wall Street Gang has no idea how tight the U.S. natural gas is, and it will be getting a lot tighter. From a 77 Bcf surplus to the 5-year average in storage on January 10th, CelsiusEnergy is now forecasting that storage will be sitting at a 160 Bcf deficit to the 5-year average on February 7th. By April, the NGas storage level could be close to 1,000 Bcf below where it was a year ago.
All of the Sweet 16 produce a lot of natural gas and NGL's. Other than the four "gassers" listed above, my Top Picks due to their natural gas production volumes are SM, CRGY, DVN, OVV and VRN. Veren (VRN) is a Canadian company.
Fear of Trump's Tariff threats are impacting the Canadian companies. IN MY OPINION, this is a FEAR that will not come to pass. A tariff on oil imports from Canada (over 4 million bpd) would send gasoline and diesel prices through the roof. I doubt Team Trump wants to risk that.
The Sweet 16 Summary will be updated and posted to the EPG website this afternoon. Except for some of the Canadian companies, the share prices were up in all three of our model portfolios.
Small-Caps drawing attention
Harry Van Neck's Top Pick (out of 84 energy companies) is Kolibri Global Energy (KEGI). The share price is up 81% since they announced the excellent results of their 3 new Alicia Renee horizontal development wells in November, but it still trades at a deep discount to my current valuation. My guess is that their 2024 year-end 3rd party reserve report will show a PV10 Net Asset Value per share of over $12/share based only on their proved (1P) reserves. KEGI closed at $6.62 on Friday, January 17th. They have stated a stock buyback, which will be increasing my per share valuation.
Vital Energy (VTLE) is finally drawing the attention that it deserves. The stock price is up 21.4% YTD, but it still trades at just 1.3 X 2024 operating CFPS, and their operating CFPS will be going up in 2025. IMO Vital Energy is a Screaming Takeover target because it is cheap and a pure play on the Permian Basin.
The S&P 500 Index was up 3.16% during the week and is now up 2.23% YTD.
All 16 companies in the portfolio are up YTD because of rising oil & gas prices and the fact that most of the upstream companies were grossly oversold in December. A lot of fund managers do rebalance their portfolios at the beginning of the year and a lot of money should continue to rotate into these very profitable upstream energy companies.
The Sweet 16 closed on Friday at a 36.8% discount to my current valuations.
Oil and gas prices have moved over the commodity prices I have been using in my forecast models. I will be updating my stock valuations for the next EPG newsletter that I plan to send out on January 27th.
We have four "gassers" in the Sweet 16 (AR, CTRA, EQT and RRC). EQT has moved over my valuation of $52.00 and AR & RRC are getting close to my valuation. I used $3.25/MMBtu in my Q1 forecasts and it looks like HH Ngas will average closer to $3.75 in Q1. The FEB25 NYMEX futures contract spiked to over $4.30/MMBtu on January 16th after EIA reported a larger than expected draw from natural gas storage. Several more BIG DRAWS from storage are coming in January and early February.
Most of the Wall Street Gang has no idea how tight the U.S. natural gas is, and it will be getting a lot tighter. From a 77 Bcf surplus to the 5-year average in storage on January 10th, CelsiusEnergy is now forecasting that storage will be sitting at a 160 Bcf deficit to the 5-year average on February 7th. By April, the NGas storage level could be close to 1,000 Bcf below where it was a year ago.
All of the Sweet 16 produce a lot of natural gas and NGL's. Other than the four "gassers" listed above, my Top Picks due to their natural gas production volumes are SM, CRGY, DVN, OVV and VRN. Veren (VRN) is a Canadian company.
Fear of Trump's Tariff threats are impacting the Canadian companies. IN MY OPINION, this is a FEAR that will not come to pass. A tariff on oil imports from Canada (over 4 million bpd) would send gasoline and diesel prices through the roof. I doubt Team Trump wants to risk that.
The Sweet 16 Summary will be updated and posted to the EPG website this afternoon. Except for some of the Canadian companies, the share prices were up in all three of our model portfolios.
Small-Caps drawing attention
Harry Van Neck's Top Pick (out of 84 energy companies) is Kolibri Global Energy (KEGI). The share price is up 81% since they announced the excellent results of their 3 new Alicia Renee horizontal development wells in November, but it still trades at a deep discount to my current valuation. My guess is that their 2024 year-end 3rd party reserve report will show a PV10 Net Asset Value per share of over $12/share based only on their proved (1P) reserves. KEGI closed at $6.62 on Friday, January 17th. They have stated a stock buyback, which will be increasing my per share valuation.
Vital Energy (VTLE) is finally drawing the attention that it deserves. The stock price is up 21.4% YTD, but it still trades at just 1.3 X 2024 operating CFPS, and their operating CFPS will be going up in 2025. IMO Vital Energy is a Screaming Takeover target because it is cheap and a pure play on the Permian Basin.