Sweet 16 Update - Feb 18
Posted: Sat Feb 18, 2017 12:26 pm
The Sweet 16 drifted lower by 1.88% last week and is now down 3.46% year-to-date. The S&P 500 Index is up 5.02% YTD.
Despite reporting outstanding Q4 results and year-end proven reserves Pioneer Natural Resources (PXD) pulled back, which tells us that investors are worried about the direction of oil prices. There certainly are a lot of confusing signals about the global oil market with increasing U.S. oil inventories, falling OECD oil inventories (down over 70 million barrels in Q4 per IEA Oil Market Report) and reports from OPEC that their members are within 90% compliance with their agreement to cut production. On Friday, EIA increased their oil demand forecast for 2017.
In addition to PXD: XEC, DVN, FANG, GPOR and NBL have reported solid Q4 results. As I mentioned in my weekly podcast, the biggest surprise for me was the spike in NGL prices from Q3 to Q4. I talked to RRC on Friday morning and they are bullish on NGL prices in 2017. See: https://ycharts.com/indicators/mont_bel ... spot_price
I have updated my forecast/valuation models for the six companies that reported Q4 results. You can view them on the EPG website.
Production Growth in 2017 (YOY) expected:
XEC = +13%
DVN = -8.5% < Down YOY because of big asset sales program in early 2016. Growth from Q4 2016 low point of 537,500 BOE/day to Q4 2017 of 573,000 BOE/day is expected.
FANG = +70% < WOW!
GPOR = +47% < Primarily from SCOOP. See GPOR's February presentation to get an idea of the upside potential that SCOOP gives this company.
NBL = +1% < Asset sales will cause production to dip to ~375,000 BOE per day in Q1, then ramp to 470,000 BOE per day by year-end 2017. Aggressive drilling program this year.
PXD = +16%
NBL's acquisition of CWEI should close in Q2 and then they will move to "aggressive growth" in the Permian Basin.
Reporting Q4 results this coming week: CXO, CLR, NFX, PE, RRC, RSPP, SM
Reporting the last week of February: AR, EOG, PDCE
I will get the forecast models updated as soon as I can, but travel to Dallas (Feb. 22 - 23) and our Houston luncheon on Feb. 24 will delay most of the updates until next weekend.
I will be making a few changes to the Sweet 16 after I get a chance to compare all of the Q4 results. Several of our Small-Cap Growth Portfolio companies definitely deserve a promotion.
An updated Sweet 16 speadsheet showing my current valuations and First Call's price targets for each company is available for viewing on the EPG website.
Despite reporting outstanding Q4 results and year-end proven reserves Pioneer Natural Resources (PXD) pulled back, which tells us that investors are worried about the direction of oil prices. There certainly are a lot of confusing signals about the global oil market with increasing U.S. oil inventories, falling OECD oil inventories (down over 70 million barrels in Q4 per IEA Oil Market Report) and reports from OPEC that their members are within 90% compliance with their agreement to cut production. On Friday, EIA increased their oil demand forecast for 2017.
In addition to PXD: XEC, DVN, FANG, GPOR and NBL have reported solid Q4 results. As I mentioned in my weekly podcast, the biggest surprise for me was the spike in NGL prices from Q3 to Q4. I talked to RRC on Friday morning and they are bullish on NGL prices in 2017. See: https://ycharts.com/indicators/mont_bel ... spot_price
I have updated my forecast/valuation models for the six companies that reported Q4 results. You can view them on the EPG website.
Production Growth in 2017 (YOY) expected:
XEC = +13%
DVN = -8.5% < Down YOY because of big asset sales program in early 2016. Growth from Q4 2016 low point of 537,500 BOE/day to Q4 2017 of 573,000 BOE/day is expected.
FANG = +70% < WOW!
GPOR = +47% < Primarily from SCOOP. See GPOR's February presentation to get an idea of the upside potential that SCOOP gives this company.
NBL = +1% < Asset sales will cause production to dip to ~375,000 BOE per day in Q1, then ramp to 470,000 BOE per day by year-end 2017. Aggressive drilling program this year.
PXD = +16%
NBL's acquisition of CWEI should close in Q2 and then they will move to "aggressive growth" in the Permian Basin.
Reporting Q4 results this coming week: CXO, CLR, NFX, PE, RRC, RSPP, SM
Reporting the last week of February: AR, EOG, PDCE
I will get the forecast models updated as soon as I can, but travel to Dallas (Feb. 22 - 23) and our Houston luncheon on Feb. 24 will delay most of the updates until next weekend.
I will be making a few changes to the Sweet 16 after I get a chance to compare all of the Q4 results. Several of our Small-Cap Growth Portfolio companies definitely deserve a promotion.
An updated Sweet 16 speadsheet showing my current valuations and First Call's price targets for each company is available for viewing on the EPG website.