Over the next two days I will be updating all of the Sweet 16 forecast valuation models for any new information that I have and for the changes to my oil and gas price deck. I hope to have all of the Small-Cap updated by Wednesday.
I'm lowering my WTI oil prices in Q3 and Q4.
> Q3: $70/bbl down to $65/bbl
> Q4: $72.50/bbl down to $70/bbl
> 2026 stays at $75.00/bbl
I'm also lowering my HH natural gas prices in Q3 and Q4
> Q3: $4.25/MMBtu down to $3.75/MMBtu
> Q4: $4.75/MMBtu down to $4.25/MMBtu < Today the DEC25 NYMEX contract for HH gas is $4.47/MMBtu
> 2026 stays at $5.00 < If we have a normal winter, I do think HH gas prices will move well over $5.00 in 2H 2026.
As forecast models are updated, they will be posted to the EPG website. Check the EPG home page Monday morning. The forecast models for AR, CIVI, CTRA, CRGY, DVN, FANG, EOG, and EQT will be available early on Monday. The remaining eight will be updated by Monday afternoon.
I expect all 16 companies to report solid financial results for Q2, and I expect all of them to be free cash flow positive in Q2 and in 2H 2025.
After the markets close on Tuesday, July 22nd EQT, MTDR and RRC will report Q2 financial results and updated guidance.
Sweet 16 Updates - July 21
Sweet 16 Updates - July 21
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Updates - July 21
I have now finished updating all 16 forecast models.
> They should all report Adjusted Net Income for Q2 that meets or exceeds my forecasts.
> All 16 are generating and should continue to generate free cash flow from operations. None of them have trouble servicing their debt.
> The companies with a lot of production hedged should report large mark-to-market gains on their hedges because oil and ngas prices did decline from Q1 to Q2, making their hedges more valuable.
> My valuations are based on Adjusted Operating Cash Flow per share, so the MTM adjustments on hedges and other non-cash line items on the Income Statement do not impact my stock valuations.
Based on my forecasts, CIVI, CRGY and SM are trading at less than 50% of fair value. SM is the safest bet in this group. Go to their website and spend 30 minutes looking at the company's June 24th slide deck and you will understand why Harry and I are bullish on this stock. SM has lots of high-quality "Running Room" in all three of their core areas. The Uinta Basin is looking very good based on SM's recent well results. The Wall Street Gang has yet to recognized how good the Uinta Basin is. Better technical tools, higher quality logs and better completion "recipes" are getting much better well results in all three of SM's core areas.
NOG and PR also look very attractive to me. Raymond James calls PR the most under-valued Delaware Basin company. I expect PR to report some strong well results.
EQT and RRC, two of our four "Gassers" are the only two stocks trading close to my valuations.
My advice on the four gassers is "Buy the dips". At $33.46, AR is now down YTD. Natural gas prices on the strip are down today, but they should be a lot higher at the end of August. There are a lot of Paper Traders working the HH NYMEX contracts this year, so there will continue to be lots of volatility in the futures contracts for HH gas. Natural gas demand for power generation and LNG exports will increase in August.
> They should all report Adjusted Net Income for Q2 that meets or exceeds my forecasts.
> All 16 are generating and should continue to generate free cash flow from operations. None of them have trouble servicing their debt.
> The companies with a lot of production hedged should report large mark-to-market gains on their hedges because oil and ngas prices did decline from Q1 to Q2, making their hedges more valuable.
> My valuations are based on Adjusted Operating Cash Flow per share, so the MTM adjustments on hedges and other non-cash line items on the Income Statement do not impact my stock valuations.
Based on my forecasts, CIVI, CRGY and SM are trading at less than 50% of fair value. SM is the safest bet in this group. Go to their website and spend 30 minutes looking at the company's June 24th slide deck and you will understand why Harry and I are bullish on this stock. SM has lots of high-quality "Running Room" in all three of their core areas. The Uinta Basin is looking very good based on SM's recent well results. The Wall Street Gang has yet to recognized how good the Uinta Basin is. Better technical tools, higher quality logs and better completion "recipes" are getting much better well results in all three of SM's core areas.
NOG and PR also look very attractive to me. Raymond James calls PR the most under-valued Delaware Basin company. I expect PR to report some strong well results.
EQT and RRC, two of our four "Gassers" are the only two stocks trading close to my valuations.
My advice on the four gassers is "Buy the dips". At $33.46, AR is now down YTD. Natural gas prices on the strip are down today, but they should be a lot higher at the end of August. There are a lot of Paper Traders working the HH NYMEX contracts this year, so there will continue to be lots of volatility in the futures contracts for HH gas. Natural gas demand for power generation and LNG exports will increase in August.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group