How Did Concho Resources’ Stock Fare Last Year?



Concho Resources’ stock performance

Concho Resources’ (CXO) stock was mostly in a falling trend in the second half of 2015. However, since the start of 2016, CXO has been mostly on an uptrend, mirroring the rally in crude oil prices (USO).

Year-over-year, Concho Resources’ stock has risen ~19%. Meanwhile, crude oil prices have fallen ~11% in the same period. The broader energy ETF, the Energy Select Sector SPDR ETF (XLE), has fallen by 3.6% in the same period. As we can see above, CXO stock has recovered significantly in 2016.

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CXO’s portfolio-enhancing efforts

On January 18, 2016, CXO announced three separate transactions that would help to enhance its position in the South Delaware Basin. Below are a few highlights of the transactions:

  • CXO will acquire ~12,000 net acres in Reeves and Ward counties in Texas to complement its core North Harpoon prospect. CXO will acquire the acres from a private operator for $360 million through a combination of stock, cash, and drilling carry.
  • CXO will participate in an acreage exchange with Clayton Williams Energy (CWEI). The exchange will consolidate 21,000 net non-operated acres into “a concentrated, operated position” adjacent to CXO’s Big Chief prospect in Reeves County.
  • CXO will sell 14,000 net acres in Loving County, Texas, for $290 million in cash proceeds.

Upstream companies such as Marathon Oil (MRO), Chesapeake Energy (CHK), and Anadarko Petroleum (APC) have also included asset sales in their key strategies to bolster their financial strengths while energy prices (USO) (UNG) are low.

Combined, these companies make up 4.7% of the Energy Select Sector SPDR ETF (XLE).


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