Morningstar Rating

Stock Research and Analysis

by Mark Hanson, CFA

Bulls Say

Concho's sizable inventory of low-risk drilling opportunities, attractive oil/gas mix, minimal lease expiration issues, and better-than-average cost structure should support several more years of profitable, double-digit growth.
With the acquisition of Marbob in late 2010 and Three Rivers in early 2012, Concho transformed itself into one of the leading players in the Permian Basin.
Management is especially skilled at identifying and integrating acquisition targets, which should prove useful as the firm looks to expand its Permian position. Read more 

Bears Say

Service provider availability and intermittent takeaway tightness remain factors to watch, although Concho has generally been able to work through issues that have arisen without needing to curtail production or slow drilling activity.
Concho has historically relied on equity offerings to help expand its asset base. Shareholder dilution could be in the cards if the firm does another sizable deal.
With investment activity in the Permian continuing at a fever pitch, cost inflation remains a threat. Read more 

Management

Concho has demonstrated fairly good stewardship in its brief time as a public company, with a focus on capital discipline and operational efficiency. Management employs a conservative financing strategy and has generally avoided overpaying for growth,  Read more 

Profile

With headquarters in Midland, Texas, Concho Resources is an independent oil and natural gas company with operations primarily in the Permian Basin of western Texas and southeastern   Read more 

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2 Energy Stocks With Plenty of Gas Left in the Tank 
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