Blog - Feb. 26
Posted: Tue Feb 26, 2013 7:32 pm
With all the 4th quarter results pouring out and constant e-mails asking for my opinion, it gets a bit crazy around here.
So far, all of the Sweet 16 that have reported Q4 results have impressed me. We have solid growth companies in the group. I took a hard look at CRZO, OAS and ROSE. I've updated my forecast models on all three and posted them to the website under the Sweet 16 Tab. Just log on, click on the Sweet 16 Tab and click on the company logos for my current forecast on each company. I trying to stay up with all the companies that have posted Q4 results.
I have been very impressed by the year-end reserve reports.
CRZO looks like the most under valued of the three I looked at today. Their Q4 results topped my forecast and the company has double digit production growth locked in for several years. They have 50,000 mcfpd of their natural gas for 2013 (about half my forecast gas production) hedged at $4.63/mcf and they have collars on more than half of this year's crude oil production with $87.32/bbl floors. The risk/reward on CRZO looks very good to me.
OAS is an incredible growth story with over 100% production growth the last two years. My forecast is based on "only" 50% production growth this year. Most E&P companies would die for 50% annual growth. If you find some, please let us know.
ROSE sold off today because they announced a change at the CEO position. IMO it is a buying opportunity. ROSE has incredible cash flow from operations and strong production and proven reserve growth locked in. It is also a PRIME TAKEOVER TARGET. My forecast is inline with what First Call is showing, which means they should have over $11/share in cash flow in 2013. Ask yourself, what multiple of cash flow should an E&P company with over a decade of low risk drilling inventory in the Eagle Ford sell for?
No matter what those idiots in Washington do, we are not going over a cliff. Any one of us could cut $85 Billion from a $3.6 Trillion budget and it wouldn't even be missed. They just want to control the sheep and fear is working. We have forgotten what true leadership looks like. The energy sector is leading us back regardless of what happens in Washington. Hang tough.
So far, all of the Sweet 16 that have reported Q4 results have impressed me. We have solid growth companies in the group. I took a hard look at CRZO, OAS and ROSE. I've updated my forecast models on all three and posted them to the website under the Sweet 16 Tab. Just log on, click on the Sweet 16 Tab and click on the company logos for my current forecast on each company. I trying to stay up with all the companies that have posted Q4 results.
I have been very impressed by the year-end reserve reports.
CRZO looks like the most under valued of the three I looked at today. Their Q4 results topped my forecast and the company has double digit production growth locked in for several years. They have 50,000 mcfpd of their natural gas for 2013 (about half my forecast gas production) hedged at $4.63/mcf and they have collars on more than half of this year's crude oil production with $87.32/bbl floors. The risk/reward on CRZO looks very good to me.
OAS is an incredible growth story with over 100% production growth the last two years. My forecast is based on "only" 50% production growth this year. Most E&P companies would die for 50% annual growth. If you find some, please let us know.
ROSE sold off today because they announced a change at the CEO position. IMO it is a buying opportunity. ROSE has incredible cash flow from operations and strong production and proven reserve growth locked in. It is also a PRIME TAKEOVER TARGET. My forecast is inline with what First Call is showing, which means they should have over $11/share in cash flow in 2013. Ask yourself, what multiple of cash flow should an E&P company with over a decade of low risk drilling inventory in the Eagle Ford sell for?
No matter what those idiots in Washington do, we are not going over a cliff. Any one of us could cut $85 Billion from a $3.6 Trillion budget and it wouldn't even be missed. They just want to control the sheep and fear is working. We have forgotten what true leadership looks like. The energy sector is leading us back regardless of what happens in Washington. Hang tough.