Sweet 16 Update - July 4
Posted: Fri Jul 03, 2015 5:36 pm
It was a rough week for the Sweet 16 as oil prices pulled back with all the Greek nonsense and the never ending negotiations with the Iranians. The reported build in the U.S. crude oil inventory did not help. My take is that the build was a partial correction of last week's big draw and timing of seaborne oil shipments that were delayed due to Tropical Storm Bill. The market pays way too much attention to those weekly storage reports, since there is a lot of guess work in them. The total inventory number includes field level storage and pipeline fill, which is a pure wild ass guess by the government.
An updated Sweet 16 Spreadsheet will be posted to the website on Saturday. It shows my valuations compared to First Call's Price Targets for each company.
The North American Active Rig count was up 7 for the week to 1,001. This compares to 2,183 active rigs a year ago.
> Rigs drilling for oil in the U.S. was +12 to 640 (1,562 a year ago)
> Rigs drilling for gas in the U.S. was -9 to 219 (311 a year ago)
> Rigs drilling in Canada was +4 to 139 (309 a year ago)
It takes a lot more active drilling rigs than this to keep North American production from falling. I hope you all read the Raymond James report we sent out on Thursday.
The Sweet 16 is now up just 2.6% YTD, compared to the S&P 500 Index that is up just 0.9%.
Assuming we do not have a major terrorist attack over the weekend, I expect a bounce back next week.
> The Greek economy is 1/6th the size of the Texas economy. Whatever happens to Greece is not going to cause Europe to fall off a cliff.
> Congress is not going to rubber stamp the deal Kerry makes with Iran. The chance of sanctions being lifted soon is very small.
We are in the period of an information void until the companies start releasing 2nd quarter results that should be much better than 1st quarter results. Several companies will give us a preview by releasing "Operational Updates". Financial results will not start coming out until the last week of July.
None of my Fair Value Estimates have changed for the Sweet 16 and there was very little movement in First Call's Price Targets.
I still think we see $70/bbl WTI by year-end. As I have said here many time, the return of oil prices to the trend line will not happen in a straight line. Fundamentals do drive long-term commodity prices, but the day-to-day price movement is totally in the hands of the speculators.
Enjoy the 4th of July and keep your head down.
I will be speaking to an investment club called "The Rebels" on Saturday morning and I will begin working on the newsletter this weekend.
I will be attending the EnerCom Conference in Denver August 16-20. Over 100 companies will be presenting, including most of our model portfolio companies.
An updated Sweet 16 Spreadsheet will be posted to the website on Saturday. It shows my valuations compared to First Call's Price Targets for each company.
The North American Active Rig count was up 7 for the week to 1,001. This compares to 2,183 active rigs a year ago.
> Rigs drilling for oil in the U.S. was +12 to 640 (1,562 a year ago)
> Rigs drilling for gas in the U.S. was -9 to 219 (311 a year ago)
> Rigs drilling in Canada was +4 to 139 (309 a year ago)
It takes a lot more active drilling rigs than this to keep North American production from falling. I hope you all read the Raymond James report we sent out on Thursday.
The Sweet 16 is now up just 2.6% YTD, compared to the S&P 500 Index that is up just 0.9%.
Assuming we do not have a major terrorist attack over the weekend, I expect a bounce back next week.
> The Greek economy is 1/6th the size of the Texas economy. Whatever happens to Greece is not going to cause Europe to fall off a cliff.
> Congress is not going to rubber stamp the deal Kerry makes with Iran. The chance of sanctions being lifted soon is very small.
We are in the period of an information void until the companies start releasing 2nd quarter results that should be much better than 1st quarter results. Several companies will give us a preview by releasing "Operational Updates". Financial results will not start coming out until the last week of July.
None of my Fair Value Estimates have changed for the Sweet 16 and there was very little movement in First Call's Price Targets.
I still think we see $70/bbl WTI by year-end. As I have said here many time, the return of oil prices to the trend line will not happen in a straight line. Fundamentals do drive long-term commodity prices, but the day-to-day price movement is totally in the hands of the speculators.
Enjoy the 4th of July and keep your head down.
I will be speaking to an investment club called "The Rebels" on Saturday morning and I will begin working on the newsletter this weekend.
I will be attending the EnerCom Conference in Denver August 16-20. Over 100 companies will be presenting, including most of our model portfolio companies.