Sweet 16 Portfolio Update August 5
The Sweet 16 was doing well last week until Friday's big selloff when oil prices pulled back. Lots of noise is impacting the oil price and OPEC+ has finally come to the end of its production quota increases, which are not actual supply increases.
During the week ending August 2n the Sweet 16 lost 2.38% and is now down 10.83% YTD, not including dividends and the gain we harvested on the merger of Veren into Whitecap Resources (WCP.TO) a few months ago. I have added Whitecap to our High Yield Income Portfolio.
It was also a down week for the S&P 500 Index which lost 2.78%, but it is still up 5.91% YTD.
Nine of the Sweet 16 (AR, EQT, MGY, MTDR, NOG, OVV, RRC, SM, SEI) have reported Q2 financial results and fresh guidance. They all reported solid Q2 financial results that beat my forecasts.
Northern Oil & Gas (NOG) is the only one that lowered their guidance a bit for the remainder of the year, but it is still in very good shape. I have updated my forecast/valuation models for all nine of them and we have updated profiles for AR, MTDR, OVV and RRC. NOG pays nice quarterly dividends of $0.45/share for annual yield of more than 7%. It has more than enough free cash flow to cover the dividends.
We will be sending out the profile on Ovintiv (OVV) on Monday morning. I urge you to read it carefully. Ovintiv is a large-cap with production of approximately 620,000 Boepd that should be drawing a lot more attention. If I am right about where North American gas prices will be next year, OVV should be a double for us in less than a year. Several highly respected energy sector analysts have raised their price targets for OVV since they announced Q2 results.
SM Energy (SM) announced outstanding Q2 results. SM still trades at less than 50% of what I consider a very conservative valuation of $58/share. It keeps reporting strong well results and their Unita Basin results are very good.
We will be publishing updated profiles on EQT, MGY, NOG, SM and SEI this coming week.
Q2 results expected this week from:
Aug 4: CTRA, CRGY, FANG,
Aug 5: DVN
Aug 6: CIVI, PR
Aug 7: EOG
My "Quick Takes" will be posted to the EPG Forum soon after they release Q2 results.
By mid-week I will suffering from "information overload" since many of the companies in our Small-Cap Growth and High Yield portfolios will also be announcing Q2 results. Keeping the Sweet 16 forecast models up-to-date is always a priority.
Hang Tough: All of our model portfolios are doing well financially, and they have a lot of high-quality Running Room. All 16 companies are free cash flow positive. We are still dealing with FEAR of the Tariff War, FEAR of "What will OPEC+ do next?" and now the uncertainty of how Trump will deal with Russia. Demand for oil is not going down anytime soon, the weekly natural gas storage reports will turn bullish in August, and the war between Israel & Iran is far from over. Keep an eye on the weather because the hurricane wave train looks like it is picking up.
Listen to this podcast to gain an understanding why oil prices should be going higher in 2026.
https://thefelderreport.com/2025/06/25/leigh-goehring-on-the-coming-revolution-in-asset-markets/
Dan Steffens
Energy Prospectus Group |
