72.91 0.00 (0.00%)
After hours: 4:50PM EDT
|Bid||72.95 x 900|
|Ask||73.22 x 1200|
|Day's Range||71.68 - 73.44|
|52 Week Range||63.92 - 160.81|
|Beta (3Y Monthly)||1.63|
|PE Ratio (TTM)||27.99|
|Earnings Date||Oct 28, 2019 - Nov 1, 2019|
|Forward Dividend & Yield||0.50 (0.69%)|
|1y Target Est||116.66|
(Bloomberg) -- Oil producers drilling so-called parent-child wells in the Permian Basin are risking the loss of 15% to 20% of the crude that can ultimately be recovered from those wells by spacing them too close together, according to a Houston-based investment bank.The analysis from Houston-based investment bank Tudor, Pickering, Holt & Co. -- contained in a 61-page presentation seen by Bloomberg -- is the latest salvo in the debate on the spacing of so-called parent-child wells in the Permian, the most prolific oil patch in the U.S.When drilled too close to the initial “parent” well, output from a “child” can be much less prolific. But producers risk leaving oil in the ground if the spacing is excessive.In much of the Permian, a region that stretches across West Texas and New Mexico, the amount of oil that can be recovered from child wells is on average about 20% to 30% lower than that of the parent, the analysis shows. That means overall production from a particular area could be some 15% to 20% lower than projections made by producers.“Child wells get progressively worse relative to their parent well with tighter spacing,” according to the analysis.In a note to clients Friday, Sanford C. Bernstein analyst Bob Brackett said parent-child interference could end up decreasing overall production by a million barrels a day. “But it’s back end loaded,” he said.It’s not all bad news. One solution to the parent-child problem is to drill and frack both wells at the same time, which has been shown to improve recoveries, according to Tudor, Pickering, Holt. Those “co-developed” wells are showing results that are largely in line with company projections, the analysis said.Last year, 60% of wells in the Permian’s Delaware sub-basin were child or co-developed wells, according to the bank. Until 2017, the bulk of the Delaware was made up of parent wells. Tudor, Pickering, Holt declined to comment on the presentation.Concho ExampleConcho Resources Inc.’s experience highlights how the spacing issue can trip up even well-regarded industry names. Concho shares plunged 22% on Aug. 1 after the company revealed it had spaced a 23-well pad too tightly.Two pioneers of the industry -- Mark Papa and Scott Sheffield, CEOs of Centennial Resource Development Inc. and Pioneer Natural Resources Co. respectively -- warned earlier this month that producers are running out of prime drilling areas and that the issue will lower U.S. production over time.The phenomenon exacerbates challenges posed by the very nature of shale: With well output falling off by as much as 70% in the first year, drillers need to pedal faster and faster just to maintain output.The number of Permian drill-rigs in operation have slumped, something Sheffield said is largely due to the “down spacing” issue. “It’s all because a lot of people are drilling parent-child-relationship wells,” he said in a Bloomberg Television interview this week.(Updates with analyst comment in sixth paragraph.)\--With assistance from David Wethe.To contact the reporters on this story: Rachel Adams-Heard in Houston at email@example.com;Kevin Crowley in Houston at firstname.lastname@example.orgTo contact the editors responsible for this story: Simon Casey at email@example.com, Joe Carroll, Steven FrankFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The Zacks Analyst Blog Highlights: Pioneer Natural Resources, Concho Resources, Callon Petroleum, Parsley Energy and Diamondback Energy
Production from the Permian Basin of Texas and New Mexico is set to climb by 71,000 barrels per day to a record of about 4.485 million barrels per day in October.
The world just lost 5% of its daily oil output, as Saudi Arabi cut production by half in the wake of a drone attack on Saudi Aramco oil fields. The attack was claimed by the Houthi rebels of neighboring Yemen, and is part of an ongoing conflict on the Arabian Peninsula.In immediate, practical terms, industry analysts expect crude to gain as much as $10 per barrel when trading resumes after the weekend. From Seaport Global, head of energy trading Roberto Friendlander said after the attack that the exact spike in oil prices will depend on how long Saudi production is disrupted: “If it is a few days, the Saudis are working to restore production and will provide more information in the next 48 hours, the impact is more likely to be $3-5…”As of early Monday, September 16, Brent crude, the key international benchmark, is up $5.82, or 9.66%, in early hours trading. The price spike, which exceeded $11 in the first few seconds of London’s trading, was the largest intraday jump ever recorded in oil trading. The 5.7 million barrel per day drop in output is the worst disruption the oil markets have ever faced.Of course, every market disruption marks an opportunity for someone. If Saudi oil is off the markets, the supply has to be compensated somewhere, and this where the last few years’ surge in American output is important. Increased production from US oil and gas fields have made the country the world’s top oil producer, and at current trends the US will become a net exporter of oil and gas in 2020.With this in the background, it’s time again to look at the Texas oil companies. The Permian Basin oil fields of West Texas are richest petroleum producing areas in the United States. We’ve dipped into TipRanks’ database, to find out what Wall Street’s analysts are saying about the energy companies working in the Texas oil fields. Concho Resources, Inc.Concho (CXO – Get Report) is one of many energy companies that focuses on the Permian Basin. The company’s specific operating areas are in the Delaware Basin, the Permian’s second largest subdivision, and CXO controls over 1.1 billion barrels of proven hydrocarbon reserves.The stock offers buyers a discount at the moment, as it’s down 24% in the markets following an EPS miss in July’s Q2 earnings report. Despite the miss, both hedge funds and market insiders are picking up this stock. Hedge funds increased holdings in CXO by 1.7 million shares in Q2, while last month, after the earnings report, industry insiders bought over $1.5 million worth of shares in Concho.Wall Street analysts are also bullish on CXO. From MKM Partners, John Gerdes gives it a $116 price target, indicating confidence in an impressive 57% upside. Jefferies analyst Mark Lear is even more optimistic about Concho. His $127 target implies an upside of 72%.Overall, CXO has a $118 average price target from the analysts, suggesting an upside of 61% from the share price of $73. The Moderate Buy consensus rating is based on 12 buys, 2 holds, and 1 sell set in the last three months. Diamondback Energy, Inc.Diamondback (FANG – Get Report) offers investors a firm base of 992 million barrels of proven oil and gas reserves in the Permian Basin. Petroleum makes up 63% of the company’s recoverable assets, while natural gas and natural gas liquids make up the remaining 37%.Diamondback reported a mixed result in the second quarter. EPS and revenues, at $1.70 and $1.02 billion, were both up year-over-year, but missed the forecasts. Net profit was a robust $349 million, and the company continues to pay out its quarterly dividend of 18.75 cents per share. Looking at long-term trends, FANG shares are up 29% in the last five years.Writing from Roth Capital, analyst John White, described the Q2 results as “solid,” and added that he was “encouraged as the company lowered the midpoint of 2019 capital expenditure guidance and increased the midpoint of full year 2019 production guide.” His $140 price target suggests an upside of 44%.Kashy Harrison, of Piper Jaffray, is also bullish on FANG. He raised his price target by a half percent, from $155 to $156, implying an impressive upside potential of 61%.Diamondback’s analyst consensus rating of Strong Buy reflects a unanimous outlook – of 12 recent reviews, all are buys. Shares sell for $96, and the average price target of $143 gives the stock a 48% potential upside. Parsley Energy, Inc.Our third -buy rated Permian producer is Parsley Energy (PE – Get Report). One month ago, Parsley beat the Q2 earnings estimates, reporting 32 cents per share against a forecast of 31, and showing revenues of $498.54 million. Both EPS and revenues easily beat the year-ago numbers. After the earnings beat, company management announced a modest 3-cent quarterly dividend would be initiated, payable on September 30 to shareholders of record as of September 20.The strong quarter has Wall Street analysts bullish on PE. At Merrill Lynch, Asit Sen boosted his price target from $23 to $27, an increase of 17%. The new $27 target suggests an upside of 45% for PE shares.Neal Dingmann, of SunTrust Robinson, maintained his target of $23, along with this buy rating. In his comments on the stock, he wrote, “We continue to forecast Parsley to growth ˜2%+/qtr and become FCF positive this month while remaining FCF positive in 2020 even if oil prices fall as low as ~$51/bbl. Further, we estimate upcoming incremental shareholder returns as seen with the recent institution of a dividend. We believe the company could pursue spin-offs/equity monetizations/sales of its water infrastructure & minerals holdings that could represent upcoming catalysts for the stock.” Dingmann’s price target implies an upside of 24%.PE is the lowest cost of the three stocks in this list, with a share price of $18.50. It represents an affordable point of entry to the explosive Texas oil market. The $23.73 average price target gives the stock an upside potential of 28%. Parsley’s Strong Buy consensus rating comes from 9 buys and 2 holds given in the past three months.Visit TipRanks’ Stock Comparison tool, and take a look at other top oil stocks.
While Concho Resources (CXO) is looking to boost the value of its legacy assets and minimize cost structure, Crescent Point Energy (CPG) is focusing on debt reduction.
Concho Resources' (CXO) stock repurchase program is a validation of the company's motive to generate strong cash flow alongside sustainable oil production.
(Bloomberg) -- Oil slid to the lowest in a week amid U.S. President Donald Trump’s dire trade warning to China and a surprise cutback in American manufacturing.Futures fell 2.1% in New York on Tuesday. Trump tweeted that China will have a much tougher time securing a trade deal if the Asian nation waits until after the 2020 U.S. presidential election and he wins. Crude also was undermined by plunging gasoline futures as Hurricane Dorian threatened the U.S. East Coast and prompted evacuation orders from Florida to the Carolinas.The futures market “looks like a bloodbath,” said Phil Streible, senior market strategist at RJO Futures in Chicago, who predicted U.S. crude prices may dip below $50 a barrel. “The fundamentals aren’t strong.”Further fueling worries over the state of the crude market, OPEC’s monthly output rose slightly in August, a Bloomberg survey showed. The group and its partners -- a 24-nation coalition known as OPEC+ -- had agreed to cut output by 1.2 million barrels a day at the start of this year.West Texas Intermediate for October delivery declined $1.16 to settle at $53.94 a barrel on the New York Mercantile Exchange. Trades made on Monday are being booked for settlement on Tuesday because of the U.S. Labor Day holiday.Brent for November settlement fell 40 cents to end the session at $58.26 a barrel on the ICE Futures Europe Exchange, the lowest in more than two weeks. The global benchmark crude sold at a $4.50 premium to New York futures for the same month.The U.S. and China have failed to agree in the past week on at least two requests -- an American appeal to set some parameters for the next round of talks and a Chinese call to delay new tariffs, said two people who asked not to be identified as the discussions were private.\--With assistance from James Thornhill and Sharon Cho.To contact the reporters on this story: Alex Nussbaum in New York at firstname.lastname@example.org;Grant Smith in London at email@example.comTo contact the editors responsible for this story: Simon Casey at firstname.lastname@example.org, Carlos CaminadaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
U.S. oil and gas producer Concho Resources Inc said on Tuesday it would sell a portion of its New Mexico assets for $925 million to KKR-backed Spur Energy Partners LLC and plans to use the money to lower its debt and buyback shares. Concho, which operates in the prolific Permian basin's Delaware and Midland areas, had taken an impairment charge of $868 million on the New Mexico assets in the second quarter and reported profit below analysts' estimates. The company, the top oil producer in New Mexico, also said in a post earnings conference call in August that it did not plan to allocate capital to the assets for the next five years.
Concho Resources Inc. said Tuesday it has agreed to sell its assets in the New Mexico Shelf to an affiliate of Spur Energy Partners LLC for $925 million. At the same time, the company's board has approved a share buyback program of up to $1.5 billion. The assets for sale include about 100,000 gross acres that produce about 25 thousand barrels of oil equivalent a day. Proceeds of the sale will be used to pay down debt and fund the share buybacks. The deal is expected to close in November. Shares rose 1.2% premarket, but have fallen 28.8% in 2019, while the S&P 500 has gained 16.7%.
Permian shale producer Concho Resources Inc. has entered into a definitive agreement to sell its assets in the New Mexico Shelf to an affiliate of Spur Energy Partners LLC for $925 million.
Concho Resources Inc. today announced that Tim Leach, Chairman and Chief Executive Officer, is scheduled to present at the Barclays CEO Energy-Power Conference in New York City, on Wednesday, September 4, 2019 at 9:05 AM ET.