Energy Prospectus

I assume there are no "buys" right now. I also assume everything you cover is a hold as you haven't suggested we sell anything. What would you have to see in the market to become a buyer again?
I look forward to your next View as things have weakened so dramatically.

It is difficult to be bullish on the upstream companies now because the needs to see a bottom for crude oil prices first. However, for those with a long-term (more than six months) time horizon, there are some incredible values. Take a look at the updated Sweet 16 spreadsheet and you will see that several companies are trading below 1/3 of my valuation.

Also, look carefully at the schedule of hedges I posted under the Sweet 16 Tab yesterday. NFX has the most production hedged.

For those seeking to lock in high dividend yield, the upstream MLPs that have a lot of their 2015 production hedged at high prices (LINE, BBEP, MEMP, VNR) are nice value plays now. MLPs grow via acquisition, so they could be winners in all of this.

Natural gas prices are holding up much better than oil. Look at RRC, GPOR, UNT, GST.

I will be working on the companies in the Small-Cap Growth Portfolio today, so today is a good time to ask me about that group.

I just posted an updated forecast for TPLM under the Watch List Tab. First Call's Price Target of $9.45 is reasonable for that one. TPLM has more than 50% of their fiscal 4th quarter oil production hedged at $87.40. Their balance sheet is in good shape and they have decent cash flows from operations locked in for next year. TPLM has a "seasoned" management team with lots of operational experience. Listen to their fiscal Q3 conference call and I think you will understand what I mean. They are running a 3 rig program now, but they can drop to a one rig program and still maintain current production level.

Dan, with respect to TPLM does their service company cause more concern as I believe they have another Frac Spread that will be added in 2015?

TPLM's service company should be in good shape for the next two quarters as they have plenty of "inventory". My forecast model assumes a 25% profit margin for RockPile. Even if it narrows to 15% they should be OK.

You can download the TPLM forecast model and adjust the marco for row 21 to see what it does to the bottom line.

Before you invest in TPLM, I highly recommend you listen to their conference call early this week. They are "straight shooters".