Concho Resources (CXO)

[dan_s]

Concho reported solid Q4 results that beat my forecast with higher production and higher cash flow from operations than I was expecting.

They are now "living within cash flow" that is pretty much locked in for 2016 by hedges on most of their oil at $70.13/bbl. Q1 production will be down a bit due to weather related issues and repairs at a 3rd party gas plant. They are expecting production to flat to down 5% YOY in 2016. No good reason to bring on a bunch of new high decline rate wells at today's oil price.

My valuations adjusts down a bit to $120.00/share, compared to First Call price target of $112.41.

CXO is a lot like EOG. They have HUGE P2 reserves and over 18,000 low-risk development drilling locations.

My updated forecast model will be posted to the EPG website late today.