Energy Prospectus

CXO beat my Q2 forecast for production, EPS and CFPS. I'm updating the forecast model now. - Dan

Concho Resources Inc. (CXO) (“Concho” or the “Company”) reported financial and operating results for the second quarter and first half of 2014. Highlights for the second quarter of 2014 include:
• Average production totaled 107.8 thousand barrels of oil equivalent per day (“MBoepd”) for the second quarter of 2014, at the high end of its previously announced quarterly guidance range of 104 - 108 MBoepd
• Announced third quarter 2014 production guidance range of 113 - 116 MBoepd
• Added 31 new wells in the northern Delaware Basin with strong average 30-day and 24-hour peak rates of 931 and 1,420 Boepd, respectively
• Entered into agreements to acquire approximately 13,000 net acres for $95 million in the northern Delaware Basin1
• Net income of $11.8 million, or $0.11 per diluted share, for the second quarter of 2014, as compared to net income of $84.7 million, or $0.81 per diluted share, for the second quarter of 2013
• Adjusted net income2 (non-GAAP) of $113.8 million, or $1.04 per diluted share, for the second quarter of 2014, as compared to $102.5 million, or $0.98 per diluted share, for the second quarter of 2013
• EBITDAX3 (non-GAAP) of $504.0 million for the second quarter of 2014, a 19% increase over the second quarter of 2013

Concho Resources (CXO): An updated Net Income & Cash Flow Forecast model has been posted under the Sweet 16 Tab.

My Fair Value Estimate stays the same at $155.60, compared to First Call's Price Target of $160.04.

When we update the CXO profile later this month, I will take a hard look to see if a higher valuation multiple is justified. They are one of the most active companies in the Permian Basin and they are going to add a lot of proven reserves this year. With a decade of low risk drilling inventory, this one definitely deserves "Core Holding" status. Plus, it is a Prime Takeover Target for any major that wants to jump into the Permian Basin in a big way.