| | | For the week ending December 19th the Sweet 16 lost 4.84% and is now down 11.01% YTD.
The S&P 500 Index gained 0.12% and is now up 16.20% YTD.
Only three of the Sweet 16 stocks are up YTD: Devon Energy (DVN), EQT Corp. (EQT) and Solaris Energy Infrastructure (SEI).
The merger of Vital Energy (VTLE) into Crescent Energy (CRGY) closed on December 15th. CRGY sold off for no specific reason other than oil & gas prices declining. Evercore ISI initiated coverage on December 16th with a price target of $13 and Piper Sandler reiterated their price target of $13 on December 19th. It will take time for the Wall Street Gang to figure out how accretive this merger is going to be. TipRanks shows that eleven analysts cover CRGY and nine of them rate it a BUY and two of them rate it a HOLD even though their price targets are $12 and $14. TipRanks consensus price target is $13.50.
> In addition to strong free cash flow from operations, they will be selling a lot of non-core assets with hopes of raising close to $1Billion in sales proceeds.
Seven of the Sweet 16 are trading below book value: CIVI, CRGY, FANG, MTDR, NOG, OVV and SM. I expect all seven of them to report solid Q4 2025 results. Higher natural gas prices will offset lower oil prices in Q4. All of them are free cash flow positive.
Civitas (CIVI) will be merging into SM Energy (SM). The transaction should close in Q1 2026, making SM Energy the 5th largest independent upstream oil & gas company. The combined revenues should be close to $8 billion with total production of approximately 535,000 Boepd. My proforma forecast for SM Energy can be downloaded from the EPG website.
According to "Spark", TipRanks’ AI Analyst, SM is an "Outperform". > "SM Energy’s stock score is supported by strong profitability and operational plans for growth. However, technical indicators suggest caution due to bearish trends. Valuation suggests potential undervaluation, and strategic initiatives reflect a positive outlook, though cash flow constraints and high leverage remain concerns."
Good news for AR and NOG: On December 8th Antero Resources (AR) announced that it would acquire HG Energy, a privately held E&P with operations contiguous to AR’s core in West Virginia. AR is paying $2.8 billion for the assets, while divesting its non-core Ohio Utica assets for $800 million to Infinity and Northern Oil & Gas (NOG). In a related deal, AR’s midstream operator, Antero Midstream (AM), will simultaneously acquire HG’s midstream system for $1.1 billion and sell its Utica midstream footprint for $400 million.
Here are the Sweet 16 that have the highest dividend yield: NOG 8.36%, CRGY 5.96%, PR 4.34%, SM 4.28% and EOG 4.00%. < Dec 8, 2025 Press Release: Northern Oil & Gas (NOG) will acquire 49% of an Ohio Utica Shale Asset package which will be operated by Infinity. Closing is expected in March, 2026. Adding 65,000 Mcfe per day, 92% Ngas. NOG's dividends are sustainable and my current valuation is $42.50 per share.
All 16 profiles and forecast/valuation models can be found on the EPG website under the Sweet 16 tab.
Dan Steffens
Energy Prospectus Group |
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