Sweet 16 Update - Dec 31
Posted: Sat Dec 31, 2016 12:14 pm
There are lots of details on the Sweet 16 in the newsletter we just sent out via e-mail, including my current valuation of each stock.
2016 was a GREAT year for the Sweet 16. The group finished the year up 47.02%, compared to the S&P 500 Index that was up 9.54% for the year.
Gulfport Energy (GPOR) was the only stock down for the year and I am expecting it to make a big comeback in 2017. It takes awhile for the Wall Street Gang to figure out the significance of an acquisition the size of their $1.85 Billion purchase in SCOOP. Higher natural gas and NGL prices will really help their quarterly reports. Gulfport has been in the Sweet 16 since 1/1/2010 and I have an extremely high confidence level in this company's management team and my forecast model. BTW Gulfport's current production is approximately 150,000 BOE per day; this is not a small company. When the acquisition closes, Gulfport's production will be ~180,000 BOE per day.
Continental Resources (CLR) took 1st Place, up 124.28% for the year. It was grossly oversold at the end of 2015. Combine that with outstanding well results in SCOOP and STACK lead to its comeback.
As I said in the newsletter, SCOOP and STACK are going to draw a lot of attention in 2017.
Rounding out the Top Four:
> Parsley Energy (PE) up 91.0%
> RSP Permian (RSPP) up 82.9%
> SM Energy (SM) up 75.4%
SM Energy is a good example of how long it often takes for Wall Street to figure out an upstream oil & gas company. You may recall that my valuation of SM was way above Wall Street's price target all through 2015. SM is one of the smaller companies in the Sweet 16, so it was not getting the attention from the Wall Street firms it deserved. I still think it is trading at a deep discount to its break-up value. Look for Anadarko Petroleum to announce soon the sale of the Eagle Ford package they have on the market. Anadarko is the operator of this large AMI that they operate and SM is their primary partner.
I expect Devon Energy (DVN) to be a big winner for the Sweet 16 in 2017. 2016 was a "Transition Year" for Devon. They raised $3.2 Billion in non-core asset sales and they are very well positioned to accelerate growth in STACK. Newfield Exploration (NFX) is my other Top Pick for STACK.
Range Resources (RRC) is the Top Gasser in North America. Now is a good time to add it as one of your Core Holdings.
NGL prices could have a big impact on some of my valuations. It is hard to know where NGL prices are today and each company has a different mix of liquids, but it is clear that supply/demand for NGL has tightened and will continue to tighten in Q1. The January weather forecast is VERY BULLISH for propane.
The Sweet 16 is a "Growth Portfolio". All of these companies have strong production and proven reserve growth locked in. My valuations will change as I roll forward my forecast models, adding 2018. Year-end reserve reports will also have an impact.
2016 was a GREAT year for the Sweet 16. The group finished the year up 47.02%, compared to the S&P 500 Index that was up 9.54% for the year.
Gulfport Energy (GPOR) was the only stock down for the year and I am expecting it to make a big comeback in 2017. It takes awhile for the Wall Street Gang to figure out the significance of an acquisition the size of their $1.85 Billion purchase in SCOOP. Higher natural gas and NGL prices will really help their quarterly reports. Gulfport has been in the Sweet 16 since 1/1/2010 and I have an extremely high confidence level in this company's management team and my forecast model. BTW Gulfport's current production is approximately 150,000 BOE per day; this is not a small company. When the acquisition closes, Gulfport's production will be ~180,000 BOE per day.
Continental Resources (CLR) took 1st Place, up 124.28% for the year. It was grossly oversold at the end of 2015. Combine that with outstanding well results in SCOOP and STACK lead to its comeback.
As I said in the newsletter, SCOOP and STACK are going to draw a lot of attention in 2017.
Rounding out the Top Four:
> Parsley Energy (PE) up 91.0%
> RSP Permian (RSPP) up 82.9%
> SM Energy (SM) up 75.4%
SM Energy is a good example of how long it often takes for Wall Street to figure out an upstream oil & gas company. You may recall that my valuation of SM was way above Wall Street's price target all through 2015. SM is one of the smaller companies in the Sweet 16, so it was not getting the attention from the Wall Street firms it deserved. I still think it is trading at a deep discount to its break-up value. Look for Anadarko Petroleum to announce soon the sale of the Eagle Ford package they have on the market. Anadarko is the operator of this large AMI that they operate and SM is their primary partner.
I expect Devon Energy (DVN) to be a big winner for the Sweet 16 in 2017. 2016 was a "Transition Year" for Devon. They raised $3.2 Billion in non-core asset sales and they are very well positioned to accelerate growth in STACK. Newfield Exploration (NFX) is my other Top Pick for STACK.
Range Resources (RRC) is the Top Gasser in North America. Now is a good time to add it as one of your Core Holdings.
NGL prices could have a big impact on some of my valuations. It is hard to know where NGL prices are today and each company has a different mix of liquids, but it is clear that supply/demand for NGL has tightened and will continue to tighten in Q1. The January weather forecast is VERY BULLISH for propane.
The Sweet 16 is a "Growth Portfolio". All of these companies have strong production and proven reserve growth locked in. My valuations will change as I roll forward my forecast models, adding 2018. Year-end reserve reports will also have an impact.