Concho Resources: Drilling Gushers On Wall Street
Mon, Aug. 15, 4:38 PM
- Concho Resources (NYSE:CXO) -1.4% AH after agreeing to acquire ~40K net acres in the Midland Basin from privately-held Reliance Energy for $1.625B in cash and stock.
- CXO says the deal includes 10K boe/day of production from 326 vertical wells and 44 horizontal wells, only one of which was completed in 2016, and expands its core Midland Basin position to more than 150K net acres and production of 30K boe/day.
- To help fund the deal, CXO announces a 9M-share public offering, with an underwriters option to purchase up to an additional 1.35M common shares.
Mon, Aug. 8, 11:57 AM
- SM Energy’s (SM +7.2%) $980M purchase of drilling rights in the Permian Basin shows that producers are willing to pay a premium for access to one of the few spots where oil exploration still turns a profit, Bloomberg reports.
- SM will pay the equivalent of $39.5K/acre for drilling rights across 24,783 acres in the Permian Basin, will ahead of the $25K-$35K that acreage in the Permian’s Midland Basin section had been fetching as recently as May and almost doubling SM's holdings in the region.
- Other Permian producers also are trading higher, including: PXD +2.2%, CXO +1.8%, XEC +2.1%, CWEI +6.1%, APA +3.8%, FANG +2.1%, PE +1.2%, QEP +3.6%, RSPP +2.4%, APC +2.6%, DVN +3.7%, MTDR +2.3%.
Wed, Aug. 3, 3:28 PM
- The Permian energy producers remain "the envy" of their non-Permian peers following Q2 earnings beats (I, II) from Concho Resources (CXO +3.4%) and Diamondback Energy (FANG +1.8%), Deutsche Bank analysts say.
- Advantaged with solid balance sheets, strong margins, capital market access, improving well productivity and persistent pressure on costs, the Permian players are "visibly turning operating leverage into momentum," the firm writes.
- Q2 marked the second straight quarter that XCO reported a "beat-and-raise" set of results, with volumes, cash costs and cash flow all beating expectations while guiding full-year volumes higher and costs lower; CXO has now raised the midpoint of volume guidance from -2.5% Y/Y to +1% Y/Y in the last six months from an unchanged ~$1.2B budget, which Deutsche Bank says shows the strength of CXO’s asset base that continues to churn out strong results.
- FANG’s Q2 offered few financial surprises but finally delivered the first set of strong results from Howard county, with two wells registering average IP30s of ~1,300 boe/day; as the northern Midland basin has received increased industry attention, the firm says the results and FANG’s next set of Howard wells and northwest Martin county should be closely watched.
Tue, Aug. 2, 5:06 PM
Mon, Aug. 1, 5:35 PM
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Wed, Jul. 13, 3:19 PM
- Whiting Petroleum (WLL -2.3%) is upgraded to Outperform from Neutral with a $14 price target, up from $13, at Credit Suisse, which says the stock's pullback following the recent debt swap has provided a compelling entry point.
- The firm says WLL's extensive inventory in the core of the Williston coupled with improving type curves from larger completions provide compelling near-term catalysts, as drilling activity should accelerate in 2017 at the latest; asset sales remain another key catalyst, with remaining assets on the block including North Ward Estes and the monetization of WLL’s Williston Basin gas plants.
- Credit Suisse also sees strong upside potential for Concho Resources (CXO -1%), Pioneer Natural Resources (PXD -1.7%) and Newfield Exploration (NFX -1.1%) as well performance improves in the Permian and STACK.
- WLL and other oil companies are broadly lower after WTI crude fell below $45/bbl as EIA weekly storage data showed a surprise rise in stockpiles.
Mon, Jun. 13, 2:45 PM
- Plenty of upside remains in E&P names even after sharp YTD gains, Morgan Stanley analysts say amid confidence that the oil market recovery is occurring and oil prices will need to hit $80/bbl or so to deliver the production growth the world will need.
- Given recent production outages, the firm sees a risk of an H2 pullback yet also a long-term recovery that is "the bigger and a higher conviction event in a low conviction world and we add risk, yet not go 'all-in' here."
- Stanley upgrades Concho Resources (CXO +0.1%) and Cenovus Energy (CVE +0.9%) to Overweight from Equal Weight, and says it also remains positive on Pioneer Natural Resources (PXD +0.6%), Devon Energy (DVN +2.4%), Continental Resources (CLR +1.7%) and Cimarex Energy (C -0.8%); the firm cuts Occidental Petroleum (OXY -0.3%) to Equal Weight from Overweight on relative value.
Tue, Jun. 7, 3:44 PM
- Seaport Global Securities upgrades a half-dozen energy E&P stocks - and downgrades two others - even after the group has rallied YTD, saying it is "willing to overlook higher leverage as long as the operational trajectory is notably improving."
- Noble Energy (NBL +4.2%) and Eclipse Resources (ECR +5.5%) are upgraded to Buy from Neutral, as NBL boasts "strong growth and cheap valuation relative to peers" and ERC is "among the cheapest NE gas names while offering good compression in out-year multiples."
- Seaport hikes Synergy Resources (SYRG +2.4%) to Buy from Accumulate thanks to "top-tier growth potential at >$50 oil."
- Upgraded to Accumulate from Neutral are Carrizo Oil & Gas (CRZO +4.3%), as “strong Eagle Ford returns justify return to growth,” and Concho Resources (CXO +4.6%), with “high-quality exposure to the Delaware Basin poised to garner further credit."
- The firm raises WPX Energy (WPX +0.2%) to Neutral from Sell, citing “leverage burden eased with equity, higher commodity price deck assumptions, recent operational progress."
- However, Oasis Petroleum (OAS +0.7%) is downgraded to Neutral from Buy as “NAV valuation gap has closed after a 54% move since our March 30 report," and Petroquest Energy (PQ +1.3%) is cut to Accumulate from Buy as “risk/reward upside has tempered" following a 67% move since March 30.
Thu, May 19, 5:31 PM
- Concho Resources (NYSE:CXO) says CFO Darin Holderness will retire in January, and current Executive VP Jack Harper assumes the additional role of CFO, effective immediately.
- Matthew Hyde, Senior VP of Exploration, also will retire in January.
- Holderness has been CFO since joining the company in 2018 after four years at Pioneer Natural Resources; Harper has been with CXO since 2006 in various management roles except for a year away from the company.
Wed, May 4, 4:40 PM
Tue, May 3, 5:35 PM
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Mon, Apr. 18, 2:31 PM
- Investors should stay on defense through select oil and gas stocks such as Concho Resources (CXO +2.5%), Noble Energy (NBL +0.9%), PDC Energy (PDCE +4.3%), Parsley Energy (PE +2.2%), Pioneer Natural Resources (PXD +2.3%), Synergy Resources (SYRG +1.5%) and Cimarex Energy (XEC +1.8%) following the producers' failure to reach a deal at Doha, Stifel says.
- The firm says the balance sheets of the seven companies should remain sound even if WTI oil prices fall short of its $37/bbl forecast for 2016, and the group also owns some of the strongest assets as measured by half-cycle returns.
- A re-surging market share battle between Saudi Arabia and Iran casts doubt on the timing of a realignment of oil supply and demand, and the divide between the two countries runs deep and could widen if the Saudis flood an oversupplied market with additional barrels, Stifel says.
- Now read Stifel downgrades "riskier" oil stocks ahead of OPEC meeting
Fri, Apr. 15, 6:30 PM
- North Dakota crude oil production fell for the third straight month in February to hit its lowest level in 18 months, while the state's rig count sunk to its lowest since October 2005, according to the latest data from the state's Department of Mineral Resources.
- The U.S.’s second largest oil producing state pumped 1.118M bbl/day in February, down very slightly from January's 1.122M but January output fell 2.6% from December, which fell 2.5% from November.
- The number of rigs drilling for oil in North Dakota is now at 29, down from 52 in January and 40 in February; the all-time high was 218 in May 2012.
- However, natural gas production in the state rose 2.9% in February to 1.69B cf/day, a new all-time high.
- Bakken shale exposure includes: CLR, HES, WLL, STO, OAS, MRO, EOG, XOM, NOG, CHK, DNR, SM, NFX, OXY, MUR, COP, SSN, CXO, EOX
- Now read U.S. oil rig count falls by three in latest Baker Hughes tally
Thu, Apr. 14, 12:58 PM
- Simmons analysts raise EPS estimates and price targets for oil and gas E&P stocks to reflect a mark-to-market update to the forward curve through 2018.
- “Our E&P coverage universe now offers ~13% upside potential on average as upward revisions to our price targets were more than offset by the bounce in equities,” Simmons says.
- The firm's top large-cap E&P stocks: Apache (APA +0.2%), Concho Resources (CXO -0.3%), EOG Resources (EOG -0.1%), Noble Energy (NBL -0.7%), Pioneer Natural Resources (PXD +0.8%).
- Favorite small- to mid-cap names: Diamondback Energy (FANG -0.7%), Newfield Exploration (NFX -0.3%), Parsley Energy (PE -0.4%).
- Simmons' top natural gas pick: Gulfport Energy (GPOR -1.5%).
- Now read Apache: Turnaround and future growth
Tue, Apr. 5, 3:58 PM
- Concho Resources (CXO -0.4%) is initiated with a Hold rating and $95 price target at Canaccord Genuity, which says it has a constructive view of the shares over the longer term but would wait for a better entry point before buying.
- The firm says CXO possesses the best asset base in the Delaware Basin, with activity weighted primarily towards the north but with a substantial and intriguing position in the south intrigues where results have been steadily improving.
- CXO will be in maintenance capex mode this year, but management has stated that it expects to grow "double-digits" in 2017 with the same rig count as 2016 and remain cash flow neutral; while somewhat skeptical of this claim, the firm thinks CXO easily could grow 10% with a modest outspend and is well positioned to weather the current down-cycle.
- Now read Shale oil output still on the rise in the Permian Basin
Tue, Mar. 22, 3:57 PM
- Concho Resources (CXO -0.9%) is lower after registering ~2.2M shares now owned by Jetta Energy Resources III, a private investment vehicle created by Gregory Bird, whose current stake represents ~1.7% of CXO's outstanding shares and was acquired through a private placement of stock finalized yesterday.
- A corresponding SEC filing sets the stage for Jetta to eventual sell the shares from time to time either in a single transaction or a series of deals on the open market, through another private transaction or using a secondary offering by the company.