Energy Prospectus

RBC Capital has raised its oil price and has four of our Sweet 16 in their "Top Six Picks" in the energy sector: CPE, CXO, CDEV and MTDR

Read: https://247wallst.com/energy-business/2 ... all+St.%29

Note that all four of the Sweet 16 in their Top Picks are primarily in the Permian Basin. MTDR is the only one with some operations in the Eagle Ford.

The Wall Street Gang is coming around to the fact that the Permian Basin takeaway capacity issue is a short-term issue that has very little impact on their valuations. See Slide #3 in my July 7 podcast.

Comments below are from the RBC Capital report with my valuations for each stock in BLUE

Concho Resources ($186)

This company recently bought RSP Permian for $9.5 billion, and most on Wall Street like the deal. Concho Resources Inc. (NYSE: CXO) is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties.

It offers investors a unique combination of investment themes, including valuation, rate-of-change and resource expansion themes. The company is the largest acreage holder of the publicly traded Permian large-caps and provides investors peer-leading exposure to three of the most impactful catalysts across the Delaware Basin, including the Wolfcamp XY, Wolfcamp D and Bone Spring Shale.

RBC boosted its price target from $190 to $200, and the consensus target is $180.55. The stock closed Monday at $145.41 a share.

Callon Petroleum ($16)

RBC currently feels comfortable about this small-cap stock. Callon Petroleum Co. (NYSE: CPE) is an independent oil and natural gas company engaged in the exploration, development, acquisition and production of oil and natural gas properties. The company focuses on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin.

The company’s drilling activity focuses on the horizontal development of various prospective intervals in the Midland Basin, including multiple levels of the Wolfcamp formation and the Lower Spraberry shale. Callon made a huge $570 million acquisition of 29,000 net acres in May that more than doubled its Delaware Basin footprint.

The $15 RBC price target compares with a $16.68 consensus target. The stock closed trading on Monday at $11.29.

Centennial Resource Development ($30)

This off-the-radar stock could have solid upside potential. Centennial Resource Development Inc. (NASDAQ: CDEV) is a pure play Permian oil and gas producer. The company holds 87.9 thousand net acres across the Delaware Basin, with its largest position in Reeves and Pecos, Texas, (76.1 thousand net acres) and its recently acquired position in Lea County, New Mexico, (11.9 thousand net acres). The company’s legacy position, which it was held since the time of its initial public offering (IPO) in late 2016 covers 42.5 thousand net acres in Reeves, Pecos and Ward counties.

First-quarter net income increased 116% to $66.1 million, or $0.25 per diluted share, compared to the fourth quarter 2017. For the quarter, average daily crude oil production increased 15% from the prior quarter and 201% year over year.

The RBC price target was raised to $28 from $26, while the consensus target was last seen at $25.82. The stock closed trading on Monday at $18.47.

Matador Resources ($47)

This company has been mentioned recently as a potential takeover target. Matador Resources Co. (NYSE: MTDR) is an independent energy company that engages in the exploration, development, production and acquisition of oil and natural gas resources in the United States.

The company primarily holds interests in the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. It also operates the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas.

Since its IPO, Matador has grown its Permian acreage by more than tenfold as a result of acquisitions, and it has 2,151 net horizontal locations across multiple prospective zones.

The $39 RBC price target was raised to $42. The posted consensus target is $37.44, and the shares closed Monday at $32.52.