Energy Prospectus

11 of 16 set new 52-week lows today. The exceptions are the four gassers (AR, CTRA, EQT, RRC) and Veren (VRN) that is merging into WhiteCap.

The fundamentals for U.S. natural gas are strong and should not be impacted by the tariffs very much if at all. The natural gas prices in Asia and Europe are so high (over $12/MMBtu) that LNG exports from the U.S. will keep setting new records.

On Tab 2 of the Sweet 16 Summary Excel workbook (updated each weekend) you can find the production mix of each company. All 16 companies sell a lot of natural gas and NGLs.

I won't be adjusting my oil & gas price deck for a couple of weeks because I want to see how this plays out.

All of the Sweet 16 forecast models are macro-driven Excel spreadsheets, so you can download them to Excel and change the oil, gas and NGL price assumptions at the bottom to see how it impacts the revenues, net income, operating cash flow and stock valuations.
The forecast models all update automatically when you change the commodity price assumptions.

Dan,

I greatly appreciate your Forecast Models.

Yesterday I downloaded all of them and adjusted the Oil prices going forward to see how earnings are impacted, and at what oil price earnings go negative. I kept Nat Gas unchanged because I think your forecasts are good. The worst companies I found would have negative earnings at about the $48-$50 WTI range. Most oil producers were good down to $40, many could handle even lower prices due to hedges. I assumed these extreme prices covered the rest of 2025 and all of 2026.

I can't imaging the current negativity lasting the entire Q2, much less to year end. However, looking around the various markets, it seems like a Sell Everything mentality. I'm concerned that could easily turn into a growing feedback loop. Even so, Oil and Gas are absolute essentials to any economy, even one in a recession.

To quote Louis-Vincent Gave: "Own what people Must Have, not what they would like to have!"

Producers will cut drilling rigs and the market will come back into balance, even if we go into a recession.

Goehring and Rozencwajg in their Q2 2022 Commentary "WHY RESOURCES DURING A RECESSION" discusses the past behavior of commodities, and perhaps what to expect this time around.

https://www.gorozen.com/commentaries

Kevin

https://www.msn.com/en-us/money/markets/goldman-cuts-oil-price-forecasts-amid-tariff-fears-higher-opec-supply/ar-AA1Ch4hj

Goldman Sachs oil price target is $66/bbl WTI for the rest of 2025. My forecast models are based on WTI averaging $70/bbl for 2025, Q1 WTI price was close to $70/bbl.

If WTI averages $60/bbl for the remainder of the year, all of our model portfolio companies should be profitable. By "profitable" I mean able to generate enough operating cash flow to cover ALL of their expenditures, even capex.

I want to see what happens to WTI oil price and the HH natural gas price over the next few weeks before I adjust my price deck.