NEW YORK (TheStreet) -- Concho Resources (CXO) is a rare energy stock that remains unswayed, despite more than 20% drops in benchmark West Texas Intermediate and Brent crude prices over the past three months.
The Midland, Texas-based company has planned to accelerate its production growth next year from its properties in the prolific Permian Basin of West Texas and Southeastern New Mexico.
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Concho Resources is one of the most active drillers at the Permian Basin, running 31 horizontal rigs in the region in the previous quarter. The horizontal rigs are used for directional drilling, particularly for shale oil and gas wells and can be up to 20 times more productive than vertical rigs.
Consequently, Concho Resources has been able to post year-over-year growth of crude oil production for 19 consecutive quarters, including a 23% increase in the previous quarter.
Some of Concho Resources' competitors, such as Pioneer Natural Resources (PXD) , a major Permian Basin producer, are still mulling next year's budget, while others such as ConocoPhillips (COP) , Continental Resources (CLR) and Halcon Resources (HK) will reduce their operations in 2015 in the face of double-digit drops in crude prices. Concho Resources, however, has decided to ramp up its drilling activity.
Concho Resources' quarterly results, which were released this month, showed that the company is targeting an 11% increase in production in the fourth quarter as compared with the third quarter, as per the midpoint of its guidance.
This should set up Concho Resources "well for strong 2015 growth," Goldman Sachs analyst Brian Singer wrote in a November report.
Two years ago, Concho said that it would double its production by 2016 over 2013, and it hasn't made any changes to that plan. For next year, the company has forecast a 15% increase in capital expenditures from this year to $3 billion, increasing the average number of horizontal rigs to 34 units.
This will lead toward between a 28% and 32% increase in production next year, which is even higher than its production growth estimate of between 20% and 24% for 2014. Similarly, Singer has forecast a 29% increase in production next year.
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