Watch List Addition: TXO

Post Reply
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Watch List Addition: TXO

Post by dan_s »

From my pals at Raymond James: TXO is a candidate for our High Yield Income Portfolio

TXO Energy Partners, L.P.
Initiating at Strong Buy; Getting the Band Back Together
by John Freeman , CFA (RJA)
TXO-NYSE | $22.93
We are initiating coverage on TXO Energy Partners, L.P. following the initial public offering
Strong Buy 1 with $34.00 target

(IPO) of units in late January. Led by former XTO Energy founder Bob Simpson (along
with prior XTO management), TXO Energy is rewriting the E&P MLP story — the company
operates solely conventional assets (i.e. non-frac’ing) within the San Juan (New Mexico and
Colorado) and Permian (Texas and New Mexico) basins, resulting in an industry-low ~9%
annual base decline rate. This, in turn, equates to lower reinvestment rates versus traditional
E&Ps (RJe ~27% 2023 reinvestment rate vs. ~51% RJ average), and thus more cash available
for distribution. Furthermore, TXO possesses a robust balance sheet with virtually zero
leverage, a stark difference to E&P MLPs of years past.
All aforementioned factors contribute
to TXO’s est. 2023 distribution yield of ~13%, best amongst our entire E&P coverage. As such,
we are initiating coverage of TXO with a Strong Buy rating and a $34/share target price.
Cash Distribution/Unit: 2023E $2.86 2024E $3.25 | Market Cap of $688 million
Dan Steffens
Energy Prospectus Group
Post Reply