Concho Resources thinks big in Permian Basin race to the top


Concho Resources' (CXO) plan to double its oil production in three years wins Wall Street praise, though investors mostly greeted the news with a yawn as shares fell 1% in regular trading.

CXO aims to catch Diamondback Energy (FANG) and Pioneer Natural (PXD) in the race to become top producer in the Permian Basin.

Citi analysts reiterate that CXO is their top small and mid-cap oil and gas E&P company, setting a target price of $120 on the stock.

The plan is one the company is likely to deliver, Simmons analysts say, believing it should be "the primary focus for investors as it highlights a robust inventory of drilling locations" - adding that CXO's forecast 2014 production Y/Y gain of 18%-22% might prove a conservative estimate.

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  • User 353732
    , contributor
    Comments (5152) | Send Message
     
    A target of $120 on a stock trading at $110 is hardly inspirational. Other analysts have a target closer to $140.

     

    Doubling production would mean a more than doubling of cash flow given the amortization of overhead over scale and continued reductions in capital and operating costs.

     

    The leading E&P companies today have to combine rapid volumetric growth with operational excellence.
    8 Nov 2013, 02:22 PM Reply Like
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