Energy Prospectus

All 16 stocks were up for the week. The Sweet 16 is now up 15.3% YTD compared to S&P 500 Index that is up 9.4% YTD.

I was very impressed by Bonanza Creek's Q4 results and their outlook for 2013. Production should be up over 60% in 2013. Heavily weighted to oil.

S-16 that will get the most bang from improving natural gas prices: CRZO, XEC, EOG, EXXI, HP, RRC, SM and UNT.

RRC has moved above my Fair Value, but I'm still using $3.50/mcf for gas in all of my models. I will take a hard look at RRC tomorrow. Unit Corp (UNT) looks like a Screaming Buy to me, assuming gas prices drift up to $4.00 (which I now believe they will). UNT is still trading 44% my Fair Value Estimate even if you assume gas averages $3.50/mcf all year. You should all read our profile on this one.

I need to update the ROSE forecast model to include the acquisition from CRK that was announced today.

After looking at the weather forecasts for the remainder of March, I now think we have a shot as NG storage dipping down to 1,700 bcf. That would be EXTREMELY BULLISH FOR GAS PRICES.

We will be publishing updated profiles on BCEI, CRZO and WLL next week.

I will be finishing up a profile on MMP this weekend. Magellan Midstream Partners (MMP) is one of the MLPs in our High Yield Income Portfolio. For high yield, PetroBakken, EPM-PA and GST-PA look very attractive to me.

On Saturday, I will post an updated Sweet 16 with all of my Fair Value Estimates updated. I will post an alert here.

One of our top interns at SMU finished the profile update on Whiting Petroleum (WLL). We will publish it on Monday. The common stock continues to trade at a very low multiple of CFPS. I just don't see what justifies its discount to the other mid-cap Bakken companies. WLL is trading at less than 4X my 2013 CFPS estimate, which right in-line with what First Call is showing. They have rock solid double digit production growth locked in for several years. I have increased my Fair Value Estimate to $83.25/share. I have posted the updated Net Income & Cash Flow Forecast model under the Sweet 16 Tab.

I have updated the Range Resources (RRC) forecast model and posted it to under the Sweet 16 Tab. I have increased my Fair Value Estimate to $85/share. If you think natural gas prices are going higher (I certainly do), then RRC is definitely worth taking a hard look at. It is the only true "gasser" in our Sweet 16.
RRC has an outstanding management team. If their new Mississippi Lime play in Oklahoma & Kansas starts ramping up, the share price will too. RRC is a very well respected company and they have the best acreage position in the Marcellus Shale, bar none.

The updated Sweet 16 spreadsheet has been posted under the Sweet 16 Tab. All of my Fair Value Estimates and First Calls' adjusted price targets have been updated.

Tab 1 is a summary of the EPS and CFPS forecasts, Tab 2 shows our Fair Value Estimate compared to First Call's Price Target for each company as of 3-16-2013 (Excel).

Of note: First Call has increased their price target for CLR to over $100/share.

Here is something to keep in mind. It takes quite awhile for all of the analysts to update their forecast models and submit them to Reuters / First Call. Therefore, if you watch the weekly movement in the First Call price targets (which I do carefully) you can see how the analysts feel about the previous quarter's results and their outlook for a company. All of the Sweet 16 price targets have been drifting higher, especially GPOR and HP. XEC's target made a big move last week.