The Sweet 16 moved slightly higher (0.29%) during the week ending March 3, but it is still down 8.06% YTD. This compares to the S&P 500 Index that is up 6.45% YTD.
My Take is that investors (fund managers) are waiting for confirmation that the OPEC + Russia production cuts will actually tighten the global oil market. The last two U.S. oil storage reports seem to be indicating some tightening, but I don't expect conclusive evidence until April. The next IEA Oil Market Report, which should come out on March 10, should give some indication of what's happening in the world. Just remember that U.S. refiners ALWAYS build up inventories in Q1 and ALWAYS draw them down in Q2. Gasoline demand starts ramping up in April and really takes off in June. Pickup and SUV sales way up in February, adding more demand.
I have updated all of the Sweet 16 forecast/valuation models for Q4 results and their 2017 guidance. As of March 3rd the Sweet 16 is 57.4% below my combined valuation.
Last week First Call's price targets went up for: XEC, CXO, DVN, EOG, NBL, PXD and RSPP. Credit Suisse is very high on DVN and highlighted it in their U.S. Large-Cap E&P Update.
Most of my valuations are close to the First Call price targets. My valuations are quite a bit higher for AR, CXO, CLR, DVN, NFX and PDCE
Wall Street's love affair with the Permian Basin continues. IMO STACK should be getting a lot more love, but so few companies are in the play that Wall Street is not paying much attention.
It is extremely important that you know the production mix of the companies you own. I show it at the bottom of each model. Why? - Because prices of oil, natural gas and NGLs are determined by individual markets. NGL prices are ramping up as supplies tighten.
We are going to send out an updated profile on SM Energy this weekend.
Sweet 16 Update - March 4
Sweet 16 Update - March 4
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Update - March 4
You can download the Sweet 16 spreadsheet from the EPG website. It shows:
> My valuation for each stock compared to First Call's price target
> Proven reserves for each company as of 12-31-2016
> Market cap for each company compared to their net book value
> Actual GAAP EPS for 2015 & 2016 and my forecast EPS and operating cash flow per share ("CFPS") for 2017
On the individual company forecast/valuation models, I break out EPS and CFPS by quarter for 2017 and for 2018.
> My valuation for each stock compared to First Call's price target
> Proven reserves for each company as of 12-31-2016
> Market cap for each company compared to their net book value
> Actual GAAP EPS for 2015 & 2016 and my forecast EPS and operating cash flow per share ("CFPS") for 2017
On the individual company forecast/valuation models, I break out EPS and CFPS by quarter for 2017 and for 2018.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group