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YTD Returns: 86%
Concho Resources(CXO) is a Texas-based independent oil and natural gas company, engaged in the acquisition, development, exploitation and exploration of producing oil and natural gas properties.
Its operations are focused in the Permian Basin of Southeast New Mexico and West Texas, the largest onshore oil and gas basin in the U.S.
The company swung to profit in the third quarter, reporting net income of $20.8 million compared to a net loss of $19.8 million in the year ago quarter. Production rose 36% to 3.9 MMBoe (million barrels of oil equivalent).
The company forecasts production to grow to 22.5 to 23 MMBoe in 2011 from an estimated 15 MMBOE in 2010.
Earlier this year, the company acquired
Marbob Energy for $1.65 billion. The acquisition was financed by $1.3 billion debt.
Moody's recently issued a negative outlook for the company, because too much of its assets are financed by debt. Still, it maintained its non-investment grade, speculative rating of B1, as the company had a track record of reducing its debt following acquisitions and on the assumption that Concho will not buy more companies in 2011 and plunge itself further into debt.
Concho recently said it intends to offer at least 2.3 million shares, with plans to use the proceeds from the sale to repay part of the oil-and-gas producer's outstanding balance under its credit facility.
12 out of 22 analysts rate it a buy or outperform, 9 rate it a hold.