Capital One Southcoast Maintains an 'Add' Rating on Concho Resources (CXO); Raises PT

November 9, 2009 10:51 AM EST

Capital One Southcoast maintains an 'Add' rating on Concho Resources (NYSE: CXO), increases price target from $48 to $49.

Capital One analyst says, "We are bumping up our CXO target price by $1 to $49 based on the company increasing its total Lower Abo acreage to 42.3K net acres from 28.3K at 2Q09. CXO has been enthusiastic about the potential for the Lower Abo but has remained quiet regarding recent well results as it amassed additional acreage in the play. We currently model the Lower Abo using 375 Mboe EURs on 160-acre spacing, but the last few wells reported earlier this year had IP rates that point to higher EURs. Our NAV would increase by $5 if we modeled 700 Mboe average wells.

"We continue to favor CXO's strong combination of solid balance sheet (33% debt/cap with $600MM available on its credit facility), oil exposure (liquids account for 67% of current production), and consistent growth (+7% sequentially in 3Q). Our new target represents 19% upside."

To see more analyst ratings on CXO Click Here.

Concho Resources Inc. (Concho) is an independent oil and natural gas company. The Company is engaged in the acquisition, development, exploitation and exploration of oil and natural gas properties.

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