CXO price drop
CXO price drop
Do you have any explanation for the drop of 28 points off the high? I can't find any news.
Re: CXO price drop
Read this: https://finance.yahoo.com/news/concho-r ... 02935.html
The decline is probably just the general concerns about the oil price pullback and increasing oil price differentials in the Permian Basin.
Keep in mind that Concho is a company "in transition". Investors / Fund Managers don't like the uncertainty. I like the deal and think Concho got RSPP at a good price.
The merger with RSPP is a really big deal and most Wall Street Analysts have a very tough time forecasting how a deal of that size will impact future results. Download my forecast/valuation model for CXO and you will see that I assume that the merger closes on 9/30/2018. You can see the big increase in production and revenues in Q4. I think my forecast is conservative. I am assuming some merger related increases in G&A (with G&A savings in 2019) and you can see the oil & gas prices that I am using for future periods.
Raymond James recently took a hard look at Concho's exposure to the Permian Basin oil price differentials. Per RJ, Concho has 58% of the oil in 2018 and 34% of their oil in 2019 protected from the rising differentials due to the basis hedges that they have in place. It is not clear to me that RJ is considering the increased oil volumes coming from RSPP.
Concho is a big company with a strong marketing group. They will work around the bottlenecks and get their oil to market.
The decline is probably just the general concerns about the oil price pullback and increasing oil price differentials in the Permian Basin.
Keep in mind that Concho is a company "in transition". Investors / Fund Managers don't like the uncertainty. I like the deal and think Concho got RSPP at a good price.
The merger with RSPP is a really big deal and most Wall Street Analysts have a very tough time forecasting how a deal of that size will impact future results. Download my forecast/valuation model for CXO and you will see that I assume that the merger closes on 9/30/2018. You can see the big increase in production and revenues in Q4. I think my forecast is conservative. I am assuming some merger related increases in G&A (with G&A savings in 2019) and you can see the oil & gas prices that I am using for future periods.
Raymond James recently took a hard look at Concho's exposure to the Permian Basin oil price differentials. Per RJ, Concho has 58% of the oil in 2018 and 34% of their oil in 2019 protected from the rising differentials due to the basis hedges that they have in place. It is not clear to me that RJ is considering the increased oil volumes coming from RSPP.
Concho is a big company with a strong marketing group. They will work around the bottlenecks and get their oil to market.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: CXO price drop
Thanks Dan These downdrafts are painful, but hopefully everything will work out in the end.
Re: CXO price drop
The Permian Basin pure plays are getting hammered today. Wall Street Gang is worried about the takeaway capacity issue, which is real. Note that non-Permian companies like CLR and NFX are holding up much better. The "gassers" are all green today as well.
I posted here last week that Raymond James sent out a report on the Permian Basin takeaway issue. Send me an email if you'd like to see the full report. There is a table that shows most of the Permian companies and their exposure to big regional price differentials. Send me a note at dmsteffens@comcast.net and I will send you the RJ report. They get pissed if I post it to the EPG website.
I posted here last week that Raymond James sent out a report on the Permian Basin takeaway issue. Send me an email if you'd like to see the full report. There is a table that shows most of the Permian companies and their exposure to big regional price differentials. Send me a note at dmsteffens@comcast.net and I will send you the RJ report. They get pissed if I post it to the EPG website.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group