As its name might suggest, this is another top player in the Permian. RSP Permian Inc. (NYSE: RSPP) is an independent oil and natural gas company focused on the acquisition, exploration, development and production of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin. The vast majority of the company’s acreage is located on large, contiguous acreage blocks in the core of the Midland Basin, a subbasin of the Permian.
The company caught a string of upgrades from top Wall Street companies last year and many have pointed to the possibility that the company may very well be a potential takeover candidate. Historically a vertical producer, the company has been transitioning to horizontal drilling the past few years. RSP Permian has conducted five acquisitions since its initial public offering in early 2014 and currently has 1,700 horizontal locations across eight prospective zones.
The company’s margins are amongst the top in the industry. There is visibility for over 30% growth in 2018 at cash flow levels assuming at least $55 per barrel. The analysts feel the company will be proactive and target near cash flow neutrality and remain disciplined if oil prices remain below $50 a barrel.
The $47 Jefferies price target compares with the $44.54 consensus target and the most recent closing share price of $34.24.
This is one of the small cap stocks that Jefferies feels comfortable about now. Callon Petroleum Co. (NYSE: CPE) is an independent oil and natural gas company engaged in the exploration, development, acquisition and production of properties, with a focus on unconventional oil and natural gas reserves in the Permian Basin.
Callon’s drilling activity focuses on the horizontal development of various prospective intervals in the Midland Basin, including multiple levels of the Wolfcamp formation and the Lower Spraberry shale. It owns additional immaterial properties in Louisiana. As of December 31, 2016, the company owned leaseholds in 39,570 net acres in the Permian Basin, all of which was located in the Midland Basin.
Jefferies has set its price target at $16. The consensus target is $15.78, and shares were last seen trading at $10.90.
This is a top natural gas play for investors to consider. CONSOL Energy Inc. (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin.
The company’s divisions include Exploration and Production (E&P), Pennsylvania (PA) Mining Operations and Other. The E&P division operates through four segments — Marcellus Shale, Utica Shale, Coalbed Methane and Other Gas — which produce pipeline quality natural gas for sale primarily to gas wholesalers.
CONSOL’s E&P division focuses on Appalachian area natural gas and liquids activities, including production, gathering, processing and acquisition of natural gas properties in the Appalachian Basin. The Other Gas segment is primarily related to shallow oil and gas production and the Chattanooga shale in Tennessee.
The Jefferies price objective is $20, and that compares with the consensus price target of $19.82. The stock was trading at $16.10, giving investors solid upside potential to the Jefferies target.
Five top picks from Jefferies, most of which have massive exposure to the Permian Basin. With demand and exports growing, and pricing finally appearing to be stabilizing, these all make good long-term plays for growth portfolios with a degree of risk tolerance.