Sweet 16 Update - March 2

[dan_s]

I just posted an updated spreadsheet for the Sweet 16 that shows my Fair Value Estimate compared to First Call's price target for each company in the portfolio.
> All of the S-16 have now reported 4th quarter results. With a few minor exceptions, they met or exceeded my forecasts.
> All 16 are off to a great start in 2013.
> The portfolio is heavily weighted to oil.

Despite more than a 5 percent drop in crude oil prices last week, the portfolio held up well. CLR, GPOR and RRC made significant moves up. EXXI and SFY are the only two that are struggling this year. They both look like strong buys to me at their current prices. As a group, the S-16 is trading 49 percent below my updated Fair Value Estimate.

I have updated my forecast models for all of the S-16. EPG members can find them under the Sweet 16 Tab. All of my forecast models are still assuming $85 WTI and $3.50 for natural gas in 2013. If crude oil prices stay elevated, it is going to be a great year for this group.

Company profiles for EOG, EXXI, HP and UNT have been updated. We hope to finish the rest of them next week. I urge all of you to read our profile on Unit Corp. (UNT). I think it has a lot of upside, especially if the natural gas market improves. The outlook for natural gas looks a lot better to me than it did just a few weeks ago. Cold weather continues to drive down the amount of gas in storage, which is very bullish for the gassers and the onshore drillers.

I will comment on several of the Sweet 16 at our luncheons in Houston and Dallas next week. I hope to see you there.

[dan_s]

I just updated all the Balance Sheet and Proven Reserves on the Sweet 16 Spreadsheet to 12-31-2012 actuals.