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Concho Resources Files for 2.2M Shares Private Offering

Zacks Equity Research
Updated

Independent exploration and production company Concho Resources Inc. CXO has filed for a 2.2 million share common stock shelf offering. The shares were sold through a private transaction that was consummated on Mar 21, 2016.

As of Dec 31, 2015, Concho had long-term debt of $3.3 billion and cash of $0.2 billion. Concho’s net debt-to-EBITDA ratio was 1.8 times at year-end 2015. In addition, Concho has a revolving credit facility with $2.5 billion in commitments from its bank group. As of Dec 31, 2015, the company had no outstanding borrowings on its credit facility, leaving it with total liquidity of $2.7 billion.  

Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development, exploitation and exploration of oil and natural gas properties. The company's conventional operations are primarily focused on the Permian Basin of Southeast New Mexico and West Texas. In addition, the company is involved in a number of unconventional emerging resource plays. The company operated an average of 12 rigs during the fourth quarter of 2015, down from 15 rigs in the prior quarter.

However, the company has lately been hassled by a number of issues. In February, the company reported lackluster fourth-quarter numbers. In the light of the beleaguered oil prices, Concho has scaled back its capital expansion plans. For 2016, capital expenditure budget is now $1.1–1.3 billion (90% allocated to drilling and completion activity), down from the preliminary budget of $1.4 billion.

Concho expects 2016 production to be flat-to-down approximately 5% from 2015. The year’s production outlook is primarily driven by the reduction in activity year over year, shifting to pad drilling and the timing of completion activity.

The company currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the same space are SolarEdge Technologies, Inc. SEDG, Braskem S.A. BAK and Enviva Partners, LP EVA. All these stocks sport a Zacks Rank #1 (Strong Buy).

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BRASKEM SA (BAK): Free Stock Analysis Report
 
CONCHO RESOURCS (CXO): Free Stock Analysis Report
 
SOLAREDGE TECH (SEDG): Free Stock Analysis Report
 
ENVIVA PARTNERS (EVA): Free Stock Analysis Report
 
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Zacks Investment Research