Concho Resources Inc

The Permian Basin is one of the US’s primary drivers of oil production growth. Market Realist provides an overview of this prolific hydrocarbon asset with a primer piece: “Introduction to the Permian Basin”.

This was the seventh straight weekly decline in the Permian Basin oil rig count. Overall, the weekly US crude oil rig count was down 4%.

Apache’s stock has fallen almost 20% this year. However, since October, it has remained above approximately $47 on an average.

APA’s high target price stands at $73, its low target price stands at $42, and its median target price stands at $60.

According to the U.S. Energy Information Administration (or EIA), the Permian Basin is the largest crude oil–producing region in the US.

About 76% of the analysts covering Anadarko Petroleum (APC) have rated the stock a “buy,” and 21% have rated it a “hold.”

Concho Resources (CXO) will release its 4Q15 earnings on February 25, 2016. The estimate for 4Q15 revenue is ~$592.4 million. Revenue in 4Q14 was ~$692.4 million.

In the weeks leading up to Apache’s (APA) 1Q16 earnings release, Wall Street analysts have provided target prices for the next 12 months.

The WTI-Brent spread remained relatively unchanged last week, but has closed in significantly since year-end 2012.

On September 8, 2017, the short interest as a percentage of float in Whiting Petroleum (WLL) stock, or its short interest ratio, was ~21.4%.

Rig counts in the Permian Basin can gauge drilling activities for upstream companies. The Permian Basin rig count is now at its lowest since May 2011.

As 2015 came to a close, Concho Resources’ (CXO) stock started falling. CXO has fallen ~21% since February 2015.

The spread between WTI crude and Brent crude moved wider on Libya supply disruptions.

In 3Q15, EOG has continued to improve cost efficiency by reducing its primary cost heads including lease and well costs, measured on a per barrel of oil equivalent basis.

Concho Resources and Pioneer Natural Resources have the most “buy” recommendations as compared to peers at 82% and 93%, respectively.

The Permian Basin spreads across a wide swath of western Texas and southern New Mexico. The name “Permian Basin” generally refers to a combination of the Delaware Basin and Midland Basin.

Anadarko Petroleum’s (APC) revenue rose ~16.2% YoY (year-over-year) in 4Q16. In comparison, its YoY revenue growth was -35% in 4Q15 and 12% in 3Q16.

The spread between WTI and Brent crudes is currently near $8 per barrel because a recent production surge in the U.S. has caused a buildup of crude oil inventories at Cushing, Oklahoma, where WTI is priced.

Current lower oil prices and growth from China, India, the United States and Asia Pacific countries will drive crude oil consumption in the long term.

According to the EIA’s latest Drilling Productivity Report on June 12, crude oil production in the Permian is expected to have risen 2.4 million barrels per day in May.

On November 2–9, the United States Oil ETF (USO) and the United States 12-Month Oil ETF (USL) fell 4.6% and 3.8%, respectively.

The referendum on June 23 caused the dollar to rise. Needless to say, a stronger dollar put pressure on crude oil prices.

The Brent-WTI Midland spread reached $23.11 per barrel on May 31, which was its highest level since August 2014.

Current implied volatility in Whiting Petroleum (WLL) is ~49.9%, 0.20% higher than its 15-day average of 49.8%.

Whiting’s 4Q16 revenue was ~$474 million versus an estimate of $345 million. Its revenue in 4Q15 was ~$467 million.

In 3Q16, Callon Petroleum (CPE) reported CFO (cash flow from operations) of ~$12.3 million, which is ~51% lower than its CFO in 3Q15.

Apache stock (APA) has fallen 6.6% year-over-year driven by lackluster first-quarter earnings and increasing price differentials in the Permian.

On February 19, Brent crude oil April futures settled ~$10 higher than WTI crude oil April futures—near its four-month high.

The API reported that US crude oil inventories rose by 5.6 MMbbls (million barrels) on July 20–27.

On July 2, US crude oil August futures closed ~$10 above the August 2019 futures contract. On June 25, the futures spread was at a premium of $5.4.

Saudi Arabia’s crude oil production increased by 60,000 bpd to 10,120,000 bpd in May—compared to the previous month.

The EIA reported that US crude oil production increased by 2,000 bpd (barrels per day) to a record high of 10,725,000 bpd on May 11–18.

The WTI-Brent spread narrowed to ~$6 per barrel last week and the prices between WTI and Brent have generally been moving closer over the past few months.

US crude oil September futures closed at $68.69 per barrel on July 27—the fifth straight closing below $70.00 per barrel.

On June 11, US crude oil July futures rose 0.5% and settled at $66.10 per barrel.

Apache (APA) stock hasn’t risen as much as its peers this year. On a YoY (year-over-year) basis, Apache stock has declined 6.85%.

The WTI-Brent spread continued to narrow last week. The EIA recently revised its prediction for 2014′s average WTI-Brent spread.

In 3Q16, Oasis Petroleum (OAS) increased its 2016 production guidance to 49.3 Mboepd–50 Mboepd.

On February 20, Concho Resources (CXO) fell 7.1%.

On March 27, 2017, WTI (West Texas Intermediate) crude oil May futures closed at $47.73 per barrel, ~0.5% lower than their previous closing price.

The WTI Cushing-WTI Midland spread was at $4.12 per barrel on June 25—compared to $9.7 per barrel on June 18. The spread fell 58% on June 18–25.

Whiting Petroleum’s (WLL) 4Q16 revenue rose ~1.4% YoY (year-over-year). Its YoY revenue growth was -38% in 4Q15 and -37.4% in 3Q16.

The WTI Cushing-WTI Midland spread was $11.25 per barrel on July 16, compared to $13.25 per barrel on July 9.

The spread between WTI and Brent crudes closed at $7.51 per barrel on February 21, compared to the previous week’s spread of $8.81 per barrel.

The overall production cost structure is important to withstand the crude oil price onslaught.

Approximately 52% of analysts covering Hess (HES) recommend “hold,” ~43% recommend “buy,” and 5% rate it as “underperform.”

On June 21, the EIA released its natural gas storage report. It reported that US natural gas inventories rose by 91 Bcf (billion cubic feet) to 2,004 Bcf from June 8 to 15.

Wolfcamp, which lies in the Permian Basin, has given the company a strategic edge. It seems to make sense to move its capital to more operationally efficient regions.

Concho Resources (CXO) stock has been mostly on an uptrend recently. It’s riding high on its Permian acquisitions last year.

WTI-Brent spread traded slightly narrower last week. WTI had been trading as low as $23 per barrel under Brent in February of 2013. Over the course of the year, the spread narrowed due to several factors.

From June 29 to July 6, US crude oil August futures fell 0.5%. On July 6, US crude oil August futures settled at $73.80 per barrel.

It may take sharper declines in rig counts this time around for a substantial downward trend in production to be seen.

Continental Resources’ net debt-to-EBITDA multiple of 1.6x is one of the highest among its peers. This could indicate a potential liquidity crunch, or insufficient cash to repay debt, particularly when crude oil prices are falling.

The EIA reported that US crude oil inventories decreased by 4.1 MMbbls (million barrels) to 432.4 MMbbls on June 1–8.

Last week’s narrowing in the WTI-Brent spread might have been partly due to the rise in WTI crude oil prices on positive U.S. economic indicators and a drop in U.S. gasoline inventories.

Following its Reliance Energy Midland Basin assets acquisition, Concho Resources (CXO) increased its 2016 production growth guidance.

The WTI-Brent spread moved wilder last week, but the market expects it to close in soon. Investors may want to monitor the spread.

APC short interest ratio on February 27, 2017, was ~1.75%. Its short interest ratio at the beginning of the year was ~2.2%.

US crude oil inventories fell 9.2 MMbbls (million barrels) to 421.4 MMbbls from June 15–22.

Since the beginning of 2017, Concho Resources (CXO) has risen approximately 5.0%, outperforming the energy sector.

Apache Corp’s (APA) short interest ratio (short interest as a percentage of float) on February 6, 2017, was ~5.3%.

For the week ending September 26, 2014, the number of horizontal rigs increased by six to 1,347—compared to 1,341 last week. This is the highest horizontal rig count on record.

On August 2, 2017, Concho Resources (CXO) reported its 2Q17 earnings after the markets closed. It reported revenue of $567.0 million.

On March 21, 2018, US crude oil May futures rose 2.6% and closed at $65.17 per barrel.

The spread between WTI and Brent Crude closed at $6.61 per barrel on May 30, compared to the spread of $6.11 per barrel for the week ending May 23, 2014.

On December 19, US crude oil February futures rose 3.4% from the lowest closing level in more than a year and closed at $48.17 per barrel.

On April 3, US crude oil May futures declined just 0.2% and closed at $62.46 per barrel.

Concho Resources’ (CXO) key focus this year is apparently to strengthen its position in the Permian Basin. Earlier this year, it announced a trio of deals to enhance its position.

Approximately 74% of Wall Street analysts tracking Pioneer Natural Resources surveyed have recommended a “buy” or equivalent, while ~18% have recommended a “hold.”

Anadarko Petroleum’s (APC) short interest ratio on February 10, 2017, was ~1.6%. At the beginning of the year, its short interest ratio was ~2.2%.

US commercial crude oil (USO) (UWTI) inventories fell by 3.4 MMbbls (million barrels) compared to the previous week for the week ending May 6, 2016.

In the past year, the Permian Basin activity was lower because it lost 24 oil rigs. There were also 33 oil rigs shut down in the Williston Basin.

The WTI-Brent spread continues to move wider as Libya experiences unrest, dampening its oil production, and U.S. production keeps surging.

The U.S. Energy Information Administration (or EIA)—in its Short-Term Energy Outlook released in August, 2014—reported that dry natural gas production is expected to total 69.6 billion cubic feet (or bcf) per day in 2Q14.

In this series, we’ll look at Apache’s key fundamentals and compare them with those of energy peers.

Following Concho Resources’ (CXO) 2Q17 earnings release after the markets closed on August 2, 2017, its stock rose 0.26% in pre-market trading on August 3, 2017.

Eagle Ford producers Key producers in the Eagle Ford Shale include Marathon Oil (MRO), ConocoPhillips (COP), Carrizo Oil and Gas, and EOG Resources (EOG). As shown in the image above, all the above companies have at least one-third of their production coming in from the Eagle Ford. While Carizzo Oil and Gas saw a YoY […]

Whiting Petroleum’s (WLL) current implied volatility is ~63%, which is ~7% lower than its 15-day average of ~68%.

In 2016, Concho Resources (CXO) expects its annual production to be flat compared to 2015.

The divergence between WTI and Brent crude oil prices slightly narrowed. Brent prices saw a more pronounced effect from the Fed’s announcement.

PDC Energy’s (PDCE) total production volume in 2Q16 was ~57.1 Mboepd (thousand barrels of oil equivalent per day).

This week’s fall in oil rig count marked the third decrease in the past four weeks, and the highest decrease since August 22’s fall.

The ban on the U.S. crude oil exports, which has been in effect since 1975, is being reviewed by U.S. lawmakers.

Producers in the Permian had suffered in the past when takeaway capacity was not sufficient for the growth of West Texas oi production. However, at present it seems that these issues have been resolved.

Anadarko Petroleum (APC) reported its 1Q16 earnings on May 2, 2016, after the market closed.

Range Resources (RRC) reported adjusted EPS of -$0.07 in the third quarter. Let’s talk about institutional investor activity in RRC in the quarter.

The Elliott Wave Theory was developed by R.N. Elliott in the 1930s. The theory proposed that market trends moves in repeated cycles. The cycles are classified based on how long they last.

The symmetry pattern is formed when there’s indecision in the price movements. At this price point, there’s equal buying pressure and selling pressure. The prices form a zigzag shape.

The Permian Basin is in western Texas and southern New Mexico. The name Permian Basin usually refers to a combination of the Delaware Basin and the Midland Basin.

In 2019 so far, upstream energy companies Hess Corporation (HES) and Noble Energy (NBL) have risen 61.8% and 15.1%, respectively.

The magnitude of hydrocarbons available in the Permian Basin is one of the factors that make it an attractive place to drill for oil and gas. Another major factor is the oil and gas split given current commodity prices.

The prices for West Texas Intermediate (WTI) crude at Midland, TX traded at a discount of $10.50/Bbl to WTI at Cushing, OK on Thursday, last week.

Permian production has ramped up and any disruption in takeaway capacity, which had been tight, causes spreads to blow out.

Permian crude is an attractive enough resource for many companies to have long-term plans to continue to grow in the region.

Entry and exit strategy is recommended for short and long-term trading in technical analysis. Fundamental analysis is used for the long-term entry and exit point.

Technical analysis is used to forecast stocks. All of the technical indicators give possible entry and exit points. The forecasting accuracy isn’t 100%. This is one of disadvantages of technical analysis.

Crude oil prices have been on a roller coaster ride in 2014. This series will help crude oil investors recognize key factors that are impacting oil prices.

The common factor during an economic crisis is that economic growth slows down. Demand declines, which has a negative impact on oil prices.

A glut in crude oil supply could mean that political tensions in the near term may not impact oil prices.

Spreads between Midland crude and WTI crude have remained tight, which is a positive for Permian producers.