Yahoo Finance A Look at CXO’s Management’s Comments and Stock Forecast
Are Things Looking Up for Concho Resources after a Volatile 2015?
Management’s objectives
Concho Resources (CXO) has taken several steps to counter lower commodity prices, including capital and cost reductions.
CXO’s exploration and development capex (capital expenditure) is expected to be $0.9 billion–$1.1 billion in 2016, a fall of 44% at the midpoint compared to 2015’s exploration and development capex.
Many upstream companies have been reducing their 2016 capex due to low energy prices (USO) (UNG). Hess (HES) and Anadarko Petroleum (APC) lowered their capex by 40% and 50%, respectively, compared to 2015.
Newfield Exploration’s (NFX) 2016 capex is expected to be ~50% lower than its 2015 capex. Combined, the above-mentioned companies make up ~0.25% of the iShares Core S&P 500 ETF (IVV).
Management’s comments
At the company’s 1Q16 earnings conference, its CEO Tim Leach said, “Our success is a direct result of our high-quality drilling inventory across all our assets in the Permian Basin and our relentless focus on driving low costs and optimizing field development.”
Leach continued, “During the first quarter, we also closed two transactions that high-graded the portfolio – selling lower rate of return assets, while adding top tier acreage – resulting in improved leverage metrics and additional cash on our balance sheet. With a strong financial position and premier asset base, we are well-positioned to execute a disciplined, returns-based capital plan and deliver differentiated value over the long term.”
Analysts’ targets for Concho Resources
The above graph notes the high, low, average, and median analyst target prices for CXO. Compared to its current levels, CXO’s consensus target price of $125 indicates a potential return of ~6.2% over the next 12 months.
Continue to the next part to read about CXO’s 1Q16 production mix and realized prices.
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